Sunday, 16 December 2018

Whether registered owner of vehicle can be held liable for accident even if vehicle is transferred by him?


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 (2015)3 SCC 679 and Purnya Kala Devi
(2014) 14 SCC 142.
14. 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 T.V. Jose (2001)8 SCC 748, 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.”
9. The law is thus well settled and can be summarised:-

“Even though in law there would be a transfer of
ownership of the vehicle, that, by itself, would not
absolve the party, in whose name the vehicle stands in
RTO records, from liability to a third person … … …
Merely because the vehicle was transferred does not
mean that such registered owner stands absolved of his
liability to a third person. So long as his name
continues in RTO records, he remains liable to a third
person.” 3
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.11369 OF 2018
(Arising out of SLP(Civil)No.27296 of 2018)

PRAKASH CHAND DAGA  Vs SAVETA SHARMA & ORS.

Dated:December 14, 2018.
Uday Umesh Lalit, J.
Citation: AIR 2019 SC 66

1. This appeal challenges the judgment and order dated 05.04.2018 passed
by the High Court of Punjab and Haryana at Chandigarh in FAO No.7010/2011.
2. The appellant, original owner of a Santro Car sold said vehicle to Ms.
Saveta Sharma, first respondent on 11.09.2009. According to the appellant,
after receiving due consideration, the possession was transferred to said first
respondent. An accident occurred on 09.10.2009 in which one Rakesh Kumar,
second respondent, received injuries. In a claim lodged by second respondent,
the Motor Accident Claims Tribunal assessed the compensation at Rs.12.47
lakhs and directed as under:

“32. In view of my findings on the various issues
above, the claim petition is allowed with costs and
claimant is awarded total compensation of
Rs.12,47,739/- (Rs. Twelve lacs Forty Seven Thousand
Seven Hundred Thirty Nine only), Rs.11,58,489/-
compensation for medical expenses etc. + Rs.60,000/-
as compensation for pain and sufferings + Rs.18,000/-
as compensation for loss of income + Rs.11,250/- as
compensation for temporary disability from respondent
No.2 and 3 alone. Keeping in view prevalent interest
rates, the claimant shall also be entitled to interest on the
above awarded amount at the rate of 7.5% per annum
from the date of filing of petition till final realisation.
The liability of the respondent No.2 and 3 to pay the
compensation shall be joint as well as several. Memo of
costs be prepared and file be consigned to records.”
3. Since the liability was fastened on the driver and first respondent, the
aforesaid decision was challenged by them in the High Court by filing FAO
No.7010/2011. The High Court found that despite the sale of the vehicle on
11.09.2009, no transfer of ownership, in accordance with Section 50 of the
Motor Vehicles Act,1988 (‘the Act’ for short) was effected and as such the
appellant continued to be the owner in terms of definition as incorporated in
Section 2(30) of the Act. Relying on the decision of this Court in Naveen
Kumar vs. Vijay Kumar and others1 the High Court concluded as under.
“Applying the ratio of the above said judgment to the
facts of the present case, the award stands modified to
the above extent that the Insurance Company is liable to
make the compensation to the claimant and the
Insurance Company will have the recovery rights to
1 (2018) 3 SCC 1

recover the same from the registered owner i.e.
respondent No.1 of the offending vehicle. Remaining
conditions of disbursal of amount shall remain
unaltered.”
4. Learned counsel appearing for the appellant submitted that the accident
had occurred within thirty days of the transfer when the statutory period as
prescribed under Section 50(1)(b) of the Act had not expired and as such the
liability could not be fastened on the present appellant. Though served, the
transferee, namely, first respondent has chosen not to appear in the matter. We
have gone through the record and considered the submissions advanced by the
learned counsel for the appellant and the Insurance Company.
5. It is true that in terms of Section 50 of the Act, the transfer of a vehicle
ought to be registered within 30 days of the sale. Section 50(1) of the Act
obliges the transferor to report the fact of transfer within 14 days of the
transfer. In case the vehicle is sold outside State, the period within which the
transfer ought to be reported gets extended. On the other hand, the transferee is
also obliged to report the transfer to the registering authority within whose
jurisdiction the transferee has the residence or place of business where the
vehicle is normally kept. Section 50 thus prescribes timelines within which the
transferor and the transferee are required to report the factum of transfer. As
per Sub-Section 3 of said Section 50, if there be failure to report the fact of
transfer, fine could be imposed and an action under Section 177 could

thereafter be taken if there is failure to pay the amount of fine. These timelines
and obligations are only to facilitate the reporting of the transfer. It is not as if
that if an accident occurs within the period prescribed for reporting said
transfer, the transferor is absolved of the liability.
6. Chapter XII of the Act deals with Claims Tribunals and as to how
applications for compensation are to be preferred and dealt with. While
considering such claims, the Claims Tribunal, in case of an accident is required
to specify the amount which shall be paid by the insurer or owner or driver of
the vehicle involved in the accident or whether such amount be paid by all or
any of them, as the case may be. It is well settled that for the purposes of
fixing such liability the concept of ownership has to be understood in terms of
specific definition of ‘owner’ as defined in Section 2(30) of the Act.
7. In Pushpa alias Leela and Ors. Vs. Shakuntala and Ors.2 the vehicle
in question belonged to one Jitender Gupta who was its registered owner. He
sold said vehicle to one Salig Ram on 02.02.1993 and gave its possession to the
transferee. Despite said sale, the change of ownership was not entered in the
Certificate of Registration. The earlier insurance policy having expired, the
transferee took out fresh insurance policy in the name of original owner
Jitender Gupta. In an accident that took place on 07.05.1994 two persons lost
2 (2011)2 SCC 240

their lives. The heirs and legal representatives lodged separate claims and an
issue arose as to who was liable as owner. The submissions that Jitender
Gupta, the registered owner had no control over the vehicle and the possession
and control of the vehicle was in the hands of the transferee and as such no
liability could be fastened on the transferor were rejected by this Court. It was
observed in para 11 as under:
“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.”
8. In the decision in Naveen Kumar (supra) the legal position was adverted
to and this Court observed as under:
“13. 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, 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 1939 Act. 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 (2015)3 SCC 679 and Purnya Kala Devi
(2014) 14 SCC 142.
14. 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 T.V. Jose (2001)8 SCC 748, 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.”
9. The law is thus well settled and can be summarised:-

“Even though in law there would be a transfer of
ownership of the vehicle, that, by itself, would not
absolve the party, in whose name the vehicle stands in
RTO records, from liability to a third person … … …
Merely because the vehicle was transferred does not
mean that such registered owner stands absolved of his
liability to a third person. So long as his name
continues in RTO records, he remains liable to a third
person.” 3
The High Court was therefore absolutely right in allowing the appeal.
The challenge raised by the appellant must fail.
10. This appeal is dismissed. No costs.
……………….………………………………J.
[UDAY UMESH LALIT]
………………………………………………J.
[DR. DHANANJAYA Y. CHANDRACHUD]
New Delhi;
December 14, 2018.
3 P.P. Mohammed vs. K. Rajappan and Ors. (2008) 17 SCC 624 para 4
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