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Naveen Kumar vs Vijay Kumar And Ors on 6 February, 2018

1

REPORTABLE

IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO 1427 OF 2018
(Arising out of SLP (C) No.18943 of 2016)

NAVEEN KUMAR ..Appellant

VERSUS

VIJAY KUMAR AND ORS ..Respondents

JUDGMENT

Dr D Y CHANDRACHUD, J.

1 An accident took place at about 7:30 pm on 27 May 2009 when Smt.

Jai Devi and her nephew Nitin were walking down a street in their

village. A motor vehicle driven by Rakesh in the reverse gear hit

them. Nitin was run over by the rear wheel of the car and died on

the spot. Smt. Jai Devi received multiple injuries. Two claim

petitions were filed before the Motor Accident Claims Tribunal (‘the

Tribunal’). One of them was by Smt. Jai Devi. The second was by

Signature Not Verified
Somvir and Smt. Saroj, the parents of Nitin. The vehicle involved in
Digitally signed by
SATISH KUMAR YADAV

the accident (a Maruti-800 bearing Registration DL-3CC-3684) was
Date: 2018.02.06
14:45:23 TLT
Reason:

registered in the name of Vijay Kumar, the First respondent.

2

According to the First respondent, he had sold the vehicle to the

Second respondent on 12 July 2007 prior to the accident and had

handed over possession of the vehicle together with relevant

documents including the registration certificate, and forms 29 and 30

for transfer of the vehicle. The Second respondent stated before the

Tribunal that he sold the vehicle to the Third respondent on 18

September 2008. The Third respondent in turn claimed before the

Tribunal to have sold the vehicle to the petitioner. The petitioner, in

the course of his written statement claimed that he had sold the

vehicle to Meer Singh. The succession of transfers was put forth as

a defence to the claim.

2 By its award dated 6 October 2012, the Tribunal granted

compensation in the amount of Rs 10,000/- to Smt. Jai Devi and of

Rs.3,75,000/- on account of the death of Nitin, to his parents. The

Tribunal noted that the registration certificate of the offending vehicle

continued to be in the name of the First respondent. The Tribunal

held the First respondent jointly and severally liable together with the

driver of the vehicle. The vehicle was uninsured on the date of the

accident.

3 The award of the Tribunal was challenged by the First respondent in

appeal before the High Court of Punjab and Haryana. A learned

Single Judge of the High Court allowed the appeal on 25 January
3

2016 on the ground that there was no justification for the Tribunal to

pass an award against the registered owner when there was

evidence that he had transferred the vehicle and the last admitted

owner was the appellant herein. In the view of the High Court, the

Tribunal ought to have passed an award only against the appellant

as the owner. In coming to this conclusion the High Court relied upon

two decisions of this Court : HDFC Bank Limited v Reshma1 and

Purnya Kala Devi v State of Assam2.

4 On behalf of the appellant, it has been submitted that the High Court

has proceeded on a manifestly erroneous construction of the legal

position. It has been urged that Section 2(30) of the Motor Vehicles

Act, 1988 indicates that the person in whose name a motor vehicle is

registered is the owner and the only two exceptions to that principle

are where such a person is a minor or where the subject vehicle is

under a hire purchase agreement. The decision of this Court in

Purnya Kala Devi (supra), it has been submitted, related to a

situation where the offending vehicle had been requisitioned by a

state government. Similarly, the decision in Reshma (supra) dealt

with a situation where the vehicle had been financed against a

hypothecation agreement. It was in this background that this Court

held that the person in possession of the vehicle under a

hypothecation agreement was to be treated as the owner. Having

1 (2015) 3 SCC 679
2 (2014) 14 SCC 142
4

regard to the definition contained in Section 2(30), it was urged that

the High Court was in error in foisting the liability on the appellant

who is not the registered owner of the vehicle. Learned counsel

appearing on behalf of the appellant submitted that in Pushpa alias

Leela v Shakuntala3, the position has been clarified by holding that

where notwithstanding the sale of a vehicle, neither the transferor

nor the transferee have taken any step for change in the name of

owner in the certificate of registration, the person in whose name the

registration stands must be deemed to continue as the owner of the

vehicle for the purposes of the Act.

5 On the other hand, learned counsel appearing on behalf of the First

respondent supported the judgment of the Tribunal by submitting

that the appellant as the person in physical possession and control

of the vehicle was liable. Learned counsel appearing on behalf of the

First respondent also relied on the decisions of this Court in Purnya

Kala Devi and Reshma. Learned counsel submits:

(i) “The sale of a vehicle also results in a presumable change of
physical possession and control of the vehicle from the vendor to the
vehicle. The registered owner at the best can be regarded as an
ostensible owner of the vehicle but not the real owner after the sale
of the vehicle, even if his name is there on the Registration
Certificate of the vehicle;

(ii) The definition of owner in the Section 2(30) of the Act, is not a
complete code and the exceptions contained therein are not
exhaustive;

(iii) The Court/Tribunal should apply the test whether the registered
owner has, through legitimate means, fully relinquished his
possession and control over the vehicle or not. If the answer is in the

3 (2011) 2 SCC 240
5

affirmative, he cannot be made liable and the person who is in
physical possession and control of the vehicle should be made liable;
and

(iv) Section 50 casts the onus of changing the name in the registration
certificate, on both the transferor as well as the transferee, and
hence the transferor (the registered owner) cannot be made liable,
and the transferee who has control over the use of vehicle should be
made liable.”

6 The expression ‘owner’ is defined in Section 2(30) of the Act, 1988,

thus:

“2(30) “owner” means a person in whose name a motor vehicle
stands registered, and where such person is a minor, the
guardian of such minor, and in relation to a motor vehicle which
is the subject of a hire-purchase agreement, or an agreement of
lease or an agreement of hypothecation, the person in
possession of the vehicle under that agreement.”

The person in whose name a motor vehicle stands registered is the owner of

the vehicle for the purposes of the Act. The use of the expression ‘means’ is a

clear indication of the position that it is the registered owner who Parliament

has regarded as the owner of the vehicle. In the earlier Act of 1939, the

expression ‘owner’ was defined in Section 2(19) as follows:

“11…2. (19) ‘owner’ means, where the person in possession of
a motor vehicle is a minor, the guardian of such minor, and in
relation to a motor vehicle which is the subject of a hire-purchase
agreement, the person in possession of the vehicle under that
agreement.”

Evidently, Parliament while enacting the Motor Vehicles Act, 1988 made a

specific change by recasting the earlier definition. Section 2(19) of the earlier

Act stipulated that where a person in possession of a motor vehicle is a minor

the guardian of the minor would be the owner and where the motor vehicle

was subject to a hire purchase agreement, the person in possession of the

vehicle under the agreement would be the owner. The Act of 1988 has

provided in the first part of Section 2(30) that the owner would be the person
6

in whose name the motor vehicle stands registered. Where such a person is

a minor the guardian of the minor would be the owner. In relation to a motor

vehicle which is the subject of an agreement of hire purchase, lease or

hypothecation, the person in possession of the vehicle under that agreement

would be the owner. The latter part of the definition is in the nature of an

exception which applies where the motor vehicle is the subject of a hire

purchase agreement or of an agreement of lease or hypothecation.

Otherwise the definition stipulates that for the purposes of the Act, the person

in whose name the motor vehicle stands registered is treated as the owner.

7 Section 50 deals with the procedure for transfer of ownership, and

provides as follows:

“50. Transfer of ownership.—(1) Where the ownership of any
motor vehicle registered under this Chapter is transferred
,— (a) the transferor shall,—

(i) in the case of a vehicle registered within the same State,
within fourteen days of the transfer, report the fact of
transfer, in such form with such documents and in such
manner, as may be prescribed by the Central
Government to the registering authority within whose
jurisdiction the transfer is to be effected and shall
simultaneously send a copy of the said report to the
transferee; and

(ii) in the case of a vehicle registered outside the State,
within forty-five days of the transfer, forward to the
registering authority referred to in sub-clause (i)—
(A) the no objection certificate obtained under section
48; or
(B) in a case where no such certificate has been
obtained,—
(I) the receipt obtained under sub-section (2) of section
48; or
(II) the postal acknowledgement received by the
transferred if he has sent an application in this behalf by
registered post acknowledgement due to the registering
authority referred to in section 48,
together with a declaration that he has not received any
communication from such authority refusing to grant
such certificate or requiring him to comply with any
direction subject to which such certificate may be
granted;

7

(b) the transferee shall, within thirty days of the transfer,
report the transfer to the registering authority within
whose jurisdiction he has the residence or place of
business where the vehicle is normally kept, as the case
may be, and shall forward the certificate of registration to
that registering authority together with the prescribed fee
and a copy of the report received by him from the
transferor in order that particulars of the transfer of
ownership may be entered in the certificate of
registration.

(2) Where—

(a) the person in whose name a motor vehicle stands
registered dies, or

(b) a motor vehicle has been purchased or acquired at a
public auction conducted by, or on behalf of,
Government,

the person succeeding to the possession of the vehicle
or, as the case may be, who has purchased or acquired
the motor vehicle, shall make an application for the
purpose of transferring the ownership of the vehicle in
his name, to the registering authority in whose
jurisdiction he has the residence or place of business
where the vehicle is normally kept, as the case may be,
in such manner, accompanied with such fee, and within
such period as may be prescribed by the Central
Government.

(3) If the transferor or the transferee fails to report to the
registering authority the fact of transfer within the period
specified in clause (a) or clause (b) of sub-section (1), as
the case may be, or if the person who is required to
make an application under sub-section (2) (hereafter in
this section referred to as the other person) fails to make
such application within the period prescribed, the
registering authority may, having regard to the
circumstances of the case, require the transferor or the
transferee, or the other person, as the case may be, to
pay, in lieu of any action that may be taken against him
under section 177 such amount not exceeding one
hundred rupees as may be prescribed under sub-section
(5):

Provided that action under section 177 shall be taken
against the transferor or the transferee or the other
person, as the case may be, where he fails to pay the
said amount.

(4) Where a person has paid the amount under
sub-section (3), no action shall be taken against him
under section 177.

8

(5) For the purposes of sub-section (3), a State
Government may prescribe different amounts having
regard to the period of delay on the part of the transferor
or the transferee in reporting the fact of transfer of
ownership of the motor vehicle or of the other person in
making the application under sub-section (2). 32

(6) On receipt of a report under sub-section (1), or an
application under sub-section (2), the registering
authority may cause the transfer of ownership to be
entered in the certificate of registration.

(7) A registering authority making any such entry shall
communicate the transfer of ownership to the transferor
and to the original registering authority, if it is not the
original registering authority.”

8 The decision of the Bench of two judges of this Court in Pushpa alias

Leela (supra) was in a case where the offending vehicle was registered in the

name of J who had sold it to S on 2 February 1993 and had given possession

to the transferee. On the date of the transfer the truck was covered by a valid

policy of insurance. Despite the sale of the vehicle the change of ownership

was not reflected in the certificate of registration. The policy of insurance

expired on 24 February 1993. Subsequently S took out an insurance policy in

the name of the registered owner and it was valid and subsisting when the

accident took place on 7 May 1994. The Tribunal held that no liability to pay

compensation attached to J since he had ceased to be the owner of the

vehicle after its sale on 2 February 1993. S alone was held to be liable for the

payment of compensation to the claimants. On these facts the Bench of two

judges of this Court held as follows:

“11. It is undeniable that notwithstanding the sale of the vehicle
neither the transferor Jitender Gupta nor the transferee Salig
Ram took any step for the change of the name of the owner in
the certificate of registration of the vehicle. In view of this
omission Jitender Gupta must be deemed to continue as the
owner of the vehicle for the purposes of the Act, even though
under the civil law he ceased to be its owner after its sale on
2-2-1993.” (Id at page 244)
9

In the course of its decision, the two judge Bench referred to the earlier

decision in Dr T V Jose v Chacko P M4, which had arisen under the Motor

Vehicles Act 1939. In that context, this Court had held thus:

“12…There can be transfer of title by payment of consideration
and delivery of the car. The evidence on record shows that
ownership of the car had been transferred. However, the
appellant still continued to remain liable to third parties as his
name continued in the records of RTO as the owner. The
appellant could not escape that liability by merely joining Mr Roy
Thomas in these appeals.” (Id at page 244)

The decision in Dr T V Jose was followed in P P Mohammed v K Rajappan5.

Noticing that the decision in Dr T V Jose was rendered under the Motor

Vehicles Act, 1939, the Court in Pushpa held that the ratio of the decision

“shall apply with equal force to the facts of the cases arising under the 1988

Act” in view of the provisions of Section 2(30) and Section 50. Consequently,

the view of this Court was that the person whose name continues in the

record of the registering authority as the owner of the vehicle is equally liable

together with the insurer.

9 The decision of a three judge Bench of this court in Purnya Kala Devi

(supra) involved a situation where the registered owner of a vehicle involved

in an accident denied his liability to compensate the legal heirs of the

deceased victim on the ground that the state government had requisitioned

the vehicle. On the date of the accident, the vehicle stood requisitioned under

the Assam Requisition and Control of Vehicles Act, 1968. The state failed to

establish that the vehicle was released from requisition after service of a

4 (2001) 8 SCC 748
5 (2008) 17 SCC 624
10

notice in writing to the owner, to take delivery, as required by Section 5(1) of

the state Act. Under the Assam Act, it was only upon the service of a notice to

that effect that no lability for compensation would lie with the requisitioning

authority. The High Court absolved the state government on the basis of the

definition of the expression ‘owner’ in Section 2(30) of the Motor Vehicles Act,

1988. Reversing the judgment, this Court held thus :

“16..the High Court, without adverting to Section 5 of the Assam
Act, merely on the basis of the definition of “owner” as contained
in Section 2(30) of the 1988 Act, mulcted the award payable by
the owner of the vehicle. The High Court failed to appreciate that
at the relevant time the offending vehicle was under the
requisition of Respondent 1 State of Assam under the provisions
of the Assam Act. Therefore, Respondent 1 was squarely
covered under the definition of “owner” as contained in Section
2(30) of the 1988 Act. The High Court failed to appreciate the
underlying legislative intention in including in the definition of
“owner” a person in possession of a vehicle either under an
agreement of lease or agreement of hypothecation or under a
hire-purchase agreement to the effect that a person in control
and possession of the vehicle should be construed as the
“owner” and not alone the registered owner. The High Court
further failed to appreciate the legislative intention that the
registered owner of the vehicle should not be held liable if the
vehicle was not in his possession and control. The High Court
also failed to appreciate that Section 146 of the 1988 Act
requires that no person shall use or cause or allow any other
person to use a motor vehicle in a public place without an
insurance policy meeting the requirements of Chapter XI of the
1988 Act and the State Government has violated the statutory
provisions of the 1988 Act. The Tribunal also erred in accepting
the allegation of Respondent 2 that the vehicle was released on
the date of the accident at 10.30 a.m. and the accident occurred
at 10.30 a.m. without any evidence even though in the claim
petition, it was stated that the accident had occurred at 10.15
a.m.” (Id at page 147)

10 The above observations would indicate that a combination of

circumstances cumulatively weighed with this Court. Significantly, for the

purposes of the present discussion, what emerges from the above judgment is

the circumstance that the motor vehicle was on the date of the accident
11

requisitioned by the state government. Requisitioning by its very nature is

involuntary insofar as the person whose property is requisitioned is

concerned. This Court observed that it is the person in control and possession

of a vehicle which is under an agreement of lease, hypothecation or hire

purchase who is construed as the owner and not the registered owner. The

same analogy was drawn to hold that where the vehicle had been

requisitioned, it was the state and not the registered owner who had

possession and control and would hence be held liable to compensate.

Purnya Kala Devi does not hold that a person who transfers the vehicle to

another but continues to be the registered owner under Section 2(30) in the

records of the registering authority is absolved of liability. The situation which

arose before the court in that case must be borne in mind because it was in

the context of a compulsory act of requisitioning by the state that this Court

held, by analogy of reasoning, that the registered owner was not liable.

11 The subsequent decision of a Bench of three judges of this Court in

HDFC Bank Limited v Reshma (supra) involved an agreement of

hypothecation. The Tribunal held the financier of the vehicle to jointly and

severally liable together with the owner on the ground that it was under an

obligation to ensure that the borrower had not neglected to get the vehicle

insured. The High Court had dismissed the appeal filed by the Bank against

the order of the Tribunal holding it liable together with the owner. In the appeal

before this Court, Justice Dipak Misra (as the learned Chief Justice then was)
12

adverted during the course of the judgment to the principles laid down by this

Court in several earlier decisions, including of this Court6.

Noticing that the case before the court involved a hypothecation agreement,

this Court held:

“22. In the present case, as the facts have been unfurled, the
appellant Bank had financed the owner for purchase of the
vehicle and the owner had entered into a hypothecation
agreement with the Bank. The borrower had the initial obligation
to insure the vehicle, but without insurance he plied the vehicle
on the road and the accident took place. Had the vehicle been
insured, the insurance company would have been liable and not
the owner. There is no cavil over the fact that the vehicle was the
subject of an agreement of hypothecation and was in possession
and control of Respondent 2.”(id at page 693)
Since the Second respondent was in control and possession of the vehicle

this Court held that the High Court was in error in fastening the liability on the

financier. The failure of the Second respondent to effect full payment for

obtaining an insurance cover was neither known to the financier nor was there

any collusion on its part. Consequently, the High Court was held to be in error

in fastening liability on the financier.

12 The consistent thread of reasoning which emerges from the above

decisions is that in view of the definition of the expression ‘owner’ in Section

2(30), it is the person in whose name the motor vehicle stands registered who,
6 Mohan Benefit (P) Ltd. v. Kachraji Raymalji, (1997) 9 SCC 103 : 1997 SCC (Cri) 610; Rajasthan
SRTC v. Kailash Nath Kothari, (1997) 7 SCC 481 ; National Insurance Co. Ltd. v. Deepa Devi, (2008) 1 SCC
414 : (2008) 1 SCC (Civ) 270 : (2008) 1 SCC (Cri) 209; Mukesh K. Tripathi v. LIC : (2004) 8 SCC 387 : 2004
SCC (LS) 1128, Ramesh Mehta v. Sanwal Chand Singhvi (2004) 5 SCC 409, State of Maharashtra v. Indian
Medical Assn. (2002) 1 SCC 589 : 5 SCEC 217, Pandey Co. Builders (P) Ltd. v. State of Bihar (2007) 1 SCC
467 and placed reliance on Kailash Nath Kothari [Rajasthan SRTC v. Kailash Nath Kothari, (1997) 7 SCC
481, National Insurance Co. Ltd. v. Durdadahya Kumar Samal : (1988) 1 ACC 204 : (1988) 2 TAC 25 (Ori)
and Bhavnagar Municipality v. Bachubhai Arjanbhai : 1995 SCC OnLine Guj 167 : AIR 1996 Guj 51; Godavari
Finance Co. v. Degala Satyanarayanamma, (2008) 5 SCC 107 : (2008) 2 SCC (Cri) 531; Pushpa v. Shakuntala,
(2011) 2 SCC 240 : (2011) 1 SCC (Civ) 399 : (2011) 1 SCC (Cri) 682; T.V. Jose [(2001) 8 SCC 748 : 2002 SCC
(Cri) 94] , SCC p. 51, para 10; U.P. SRTC v. Kulsum, (2011) 8 SCC 142 : (2011) 4 SCC (Civ) 66 : (2011) 3 SCC
(Cri) 376; Purnya Kala Devi v. State of Assam, (2014) 14 SCC 142 : (2015) 1 SCC (Cri) 304 : (2015) 1 SCC
(Civ) 251.”
13

for the purposes of the Act, would be treated as the ‘owner’. However, where

a person is a minor, the guardian of the minor would be treated as the owner.

Where a motor vehicle is subject to an agreement of hire purchase, lease or

hypothecation, the person in possession of the vehicle under that agreement

is treated as the owner. In a situation such as the present where the

registered owner has purported to transfer the vehicle but continues to be

reflected in the records of the registering authority as the owner of the vehicle,

he would not stand absolved of liability. Parliament has consciously introduced

the definition of the expression ‘owner’ in Section 2(30), making a departure

from the provisions of Section 2(19) in the earlier Act of 1939. The principle

underlying the provisions of Section 2(30) is that the victim of a motor accident

or, in the case of a death, the legal heirs of the deceased victim should not be

left in a state of uncertainty. A claimant for compensation ought not to be

burdened with following a trail of successive transfers, which are not

registered with the registering authority. To hold otherwise would be to defeat

the salutary object and purpose of the Act. Hence, the interpretation to be

placed must facilitate the fulfilment of the object of the law. In the present

case, the First respondent was the ‘owner’ of the vehicle involved in the

accident within the meaning of Section 2(30). The liability to pay

compensation stands fastened upon him. Admittedly, the vehicle was

uninsured. The High Court has proceeded upon a misconstruction of the

judgments of this Court in Reshma and Purnya Kala Devi.
14

13 The submission of the Petitioner is that a failure to intimate the transfer

will only result in a fine under Section 50(3) but will not invalidate the transfer

of the vehicle. In Dr T V Jose, this Court observed that there can be transfer

of title by payment of consideration and delivery of the car. But for the

purposes of the Act, the person whose name is reflected in the records of the

registering authority is the owner. The owner within the meaning of Section

2(30) is liable to compensate. The mandate of the law must be fulfilled.

14 For the above reasons we allow the appeal and direct that the liability to

compensate the claimants in terms of the judgment of the Tribunal will stand

fastened upon the First respondent. The judgment of the High Court is set

aside. In the circumstances of the case, there shall be no order as to costs.

………………………………………CJI
[DIPAK MISRA]

………………………………………..J
[A M KHANWILKAR]

………………………………………..J
[Dr D Y CHANDRACHUD]

New Delhi;

February 06, 2018

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