Motor Vehicle Act: SC Decides on “Owner” of Offending Vehicle in case of Successive Transfers

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Accident Claim - Compensation under Motor Vehicles Act

Accident Claim - Compensation under Motor Vehicles Act

February 07, 2018

Case name: Naveen Kumar v. Vijay Kumar & Ors.

Date of Judgment: February 06, 2018 

The instant case is a landmark judgment wherein the Three-Judge Bench of the Supreme Court has deliberated a very crucial issue regarding ownership of offending motor vehicle in case of multiple transfers/ successive transfers which are not registered with the registering authority. Hence, the case decides the liability of the owner of offending vehicle who though was not driving the vehicle at the time of accident is the registered owner of the offending vehicle.

Also read Landmark Judgments on Motor Vehicle Act in 2017

Brief Facts

The offending motor vehicle in May, 2009 had run over two people in which one Nitin died on the spot and other Smt. Jai Devi received multiple injuries. The offending vehicle was registered in the name of First respondent, who contended that in 2007 he had sold the vehicle to the Second respondent i.e. prior to the accident and had handed over possession of the vehicle together with relevant documents including the registration certificate for transfer of the vehicle. The Second respondent stated that he sold the vehicle to the Third respondent in 2008. The Third respondent in turn claimed that he sold the vehicle to the appellant in the instant case. The appellant claimed that he had sold the vehicle to one Meer Singh.

The Motor Vehicle Tribunal in the case noted that as the registration certificate of the offending vehicle continued to be in the name of the First respondent, he was jointly and severally liable together with the driver of the vehicle.

Aggrieved by the Tribunal’s award, the First respondent appealed before the High Court of Punjab and Haryana. Single Judge of the High Court allowed the appeal 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.

Aggrieved by the aforesaid order, the Appellant approached the Supreme Court wherein it was contended that the High Court proceeded on a manifestly erroneous construction of the legal position. It was contended 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. Reliance was also placed on Supreme Court’s judgment in the case of Pushpa alias Leela v Shakuntala[1], wherein it was held 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.

Bench’s Verdict

The Three-Judge Bench of the Supreme Court in the case allowed the appeal and made the following key observations in the case:

Who is “owner” of Motor Vehicle under the MV Act?

That in view of the definition of the expression ‘owner’ in Section 2(30) of the Motor Vehicles Act, 1988 , it is the person in whose name the motor vehicle stands registered who, 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.

Legislative Intent behind Section 2(30) of the Motor Vehicles Act, 1988

That the principle underlying the provisions of Section 2(30) of the Motor Vehicles Act, 1988 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) of the Motor Vehicles Act, 1988. The liability to pay compensation stands fastened upon him.

Hence, the Apex Court has settled the legal position by holding 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) of the Motor Vehicles Act, 1988 is liable to compensate.

The entire case can be accessed here.

Also read All you need to know about Motor Vehicles Accident Compensation under the MV Act

[1] (2011) 2 SCC 240