The Supreme Court held recently held in the case of Pushpa @ Leela & Ors. Versus Shakuntala & Ors that the insurance company will be liable to pay compensation for road accident death even if the owner had sold the vehicle so long as his name is the official register. The previous owner might have handed over possession of the vehicle to the buyer, but he and his insurer continued to be liable to pay compensation to third parties if the insurance policy is in his name. In this case, Pushpa vs Shakuntala, the owner sold the truck to another person. But the vehicle was insured by Oriental Insurance Company in the previous owner’s name. There was an accident killing three persons. Their dependents moved the motor accident claims tribunal against Oriental and the previous owner. The tribunal and the Himachal Pradesh high court held that the previous owner had no liability as he was no longer the owner of the vehicle. They ruled that the new owner alone was liable to pay. The dependents appealed to the Supreme Court. The insurance company argued in the Supreme Court that the liability should entirely be that of the new owner as the old owner had lost control of the vehicle after the sale. Reversing this view, the Supreme Court made the insurance company liable to pay the compensation amount.
Bench: G Singhvi, A K Ganguly
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 6924 OF 2005
Pushpa @ Leela & Ors. … Appellants Versus
Shakuntala & Ors. … Respondents JUDGMENT
AFTAB ALAM, J.
1. Whether in the fact and circumstances of the case the liability to pay the compensation amount as determined by the Motor Accident Claims Tribunal was of the purchaser of the vehicle alone or whether the liability of the recorded owner of the vehicle was coextensive and from the recorded owner it would pass on to the insurer of the vehicle? This is the short question that arises for consideration in this appeal by special leave filed at the instance of the claimants.
2. The appellants, claimants before the Claims Tribunal are the heirs and legal representatives of one Prem Chand who died in a motor accident on May 7, 1994. Prem Chand had hired the truck bearing registration no.HPA- 1435 for carrying some materials and food articles for a wedding in the family. He got the materials to be transported loaded on the truck by a labourer, Nikku Ram whom he had engaged for that purpose and took him along with him on the truck for unloading the consignment at the destination. According to the claimants, the driver Roop Ram was driving the truck rashly and at a very high speed. As a result, the truck met with an accident and at about 6.30-7pm while running on Dhararu Dhar Road near Bangora, Tehsil Arki, District Solan, in the State of Himachal Pradesh, it went off the road and overturned leading to the death of all the three persons, including the driver.
3. The truck had a little history of its own that actually gives rise to the question set out at the beginning of the judgment. It earlier belonged to one Jitender Gupta who was its registered owner. Jitender Gupta sold the truck to Salig Ram on February 2, 1993 and gave its possession to the transferee. On the date of the sale, the truck was covered by an insurance policy taken out by Jitender Gupta from New India Assurance Company Ltd. The insurance policy was issued on February 25, 1992 and it was due to expire on February 24, 1993. Despite the sale of the vehicle by Jitender Gupta to Salig Ram, the change of ownership of the vehicle was not entered in its certificate of registration. After the earlier policy issued by New India Assurance Company Ltd. expired on February 24, 1993, there was a period when the truck was not covered by any insurance policy. Later on, however, Salig Ram took out an insurance policy for the truck from Oriental Insurance Company Ltd. bearing policy no.31/94/00628. The policy was taken in the name of Jitender Gupta, the earlier owner of the truck, and it was valid from December 8, 1993 to December 7, 1994. The accident in which Prem Chand and Nikku Ram lost their lives took place on May 7, 1994, i.e. during the period when the policy taken out from the Oriental Insurance Company Ltd. was subsisting and valid.
4. The heirs and legal representatives of both the deceased, Prem Chand and Nikku Ram filed separate claim applications before the Motor Accident Claims Tribunal, Solan, Himachal Pradesh. In both the claim applications Salig Ram, the transferee was impleaded as respondent no.1, Jitender Gupta, the original owner of the truck as respondent no.2 and Oriental Insurance Company Ltd. as respondent no.3. The two claim applications, MAC petition no.62-NS/2 of 1994 filed by the heirs and legal representatives of the deceased Prem Chand (appellants in this appeal) and MAC petition no.63-NS/2 of 1994 filed by the heirs and legal representatives of the deceased Nikku Ram (who pursued the matter only up to the High Court and who have not been able to come to this Court in appeal) were consolidated and heard together. All the three respondents appeared before the Tribunal and filed their separate replies resisting the claims of the two claimants. But none of the respondents led any evidences before the Claims Tribunal.
5. The Claims Tribunal, on the basis of the ex parte evidence adduced on behalf of the claimants, found and held that both Prem Chand and Nikku Ram died on May 7, 1994, in the accident caused by truck no.HPA-1435 which was being driven by its driver Roop Ram in a rash and negligent manner. It also found that Prem Chand and Nikku Ram were not travelling in the ill-fated truck as unauthorised or gratuitous passengers. The Claims Tribunal further held that the heirs and legal representatives of Prem Chand were entitled to a sum of Rs.5,04,000/- for the loss of dependency and Rs.10,000/- for loss of consortium and Rs.2000/- as cremation charges. The heirs and legal representatives of Prem Chand were, thus, held entitled to a total compensation of Rs.5,16,000/-. In case of the heirs and legal representatives of the deceased Nikku Ram, the Claims Tribunal held that they were entitled to a total compensation of Rs.2,42,000/-.
6. Coming next to the question of liability of payment, the issue that is most crucial for the claimants from the practical point of view, the Claims Tribunal held that no liability for payment of compensation to the claimants would attach to Jitender Gupta since he had ceased to be the owner of the vehicle after its sale to Salig Ram on February 2, 1993. It further held that even though an insurance policy for the truck was taken out from Oriental Insurance Company Ltd., the policy was in the name of Jitender Gupta, who was no longer the owner of the truck on the date the policy was taken out and there was no privity of contract between Salig Ram, the owner of the truck and the insurance company. Hence, the insurance policy was of no use for indemnifying Salig Ram, the owner of the truck. In short, Salig Ram alone was liable for payment of the compensation amount to the two claimants. In this connection, the Claims Tribunal in paragraph 46 of its judgment held and observed as followed:
“Because the subsequent policy was taken by respondent no.2 effective from 08.12.1993 to 07.12.1994 when he was not owner having no right, title or interest to obtain the policy. The owner at that time was respondent no.1 who never entered into any privy of contract with respondent no.3 to cover third party risks qua the vehicle.”
7. Against the judgment and award made by the Claims Tribunal the claimants filed appeals before the Himachal Pradesh High Court being FAO no.459 of 2000 (by the heirs and legal representatives of Prem Chand) and FAO no.77 of 1999 (by the heirs and legal representatives of Nikku Ram). Both the appeals were dismissed by the High Court by a common judgment and order dated July 15, 2004.
8. We have examined the judgments passed by the Claims Tribunal and the High Court and we find that both the Tribunal and the High Court addressed the question of the liability of the recorded owner of the vehicle on the basis of a provision that has no relevance to the issue. Both the Tribunal and the High Court discussed at length the provision of section 157 of the Motor Vehicles Act, 1988 (“the Act” for short) that deals with “Transfer of Certificate of Insurance”. So far as that section is concerned the Tribunal and the High Court were right in holding that section 157 of the Act would apply only to the earlier policy (being that of New India Assurance Company Ltd.) taken out by Jitender Gupta during the validity period of which the truck was sold by him to Salig Ram and it can have no application to the second policy taken out from Oriental Insurance Company Ltd. in the name of Jitender Gupta after the sale of the truck. But as stated earlier, section 157 has no application in the facts of this case.
9. The question of the liability of the recorded owner of the vehicle has to be examined under different provisions of the Act. Section 2(30) of the Act defines “owner” in the following terms: “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;” (Emphasis added)
10. Then, section 50 of the Act lays down the procedure for transfer of ownership. It is a long section and insofar as relevant it is reproduced below: “50. Transfer of ownership.
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