Introduction:-
The Motor vehicles Act, which was passed in the year 1988 by the Indian parliament, governs almost all aspects of vehicles of Road Transport in India, from traffic regulations to permits and penalties. In a recent case of Surendra Kumar Bhilawe V. The New India Assurance Company Limited, issues regarding ownership of a vehicle came under question. The case is of importance as the process of RC Transfer in our country which involves the complete transfer of the vehicle and its legal liabilities to the buyer is a lengthy and complex one and any kind of complications if arise in between these proceedings, issues related to who will be considered as the owner and hence their subsequent rights and liabilities will arise depending upon the ownership of the vehicle in question.Motor Vehicles Act:
The Supreme Court of India, through its judgement in the case of Surendra Kumar Bhilawe vs. The New India Assurance Company Limited has clarified that “Ownership” will mean the person in whose name the motor vehicle stands registered under the Motor vehicles Act 1988.Basic Factsheet:-
The Appellant, Mr. Surendra Kumar Bhilawe was owner of a truck covered by an insurance policy active for a period from 02/06/11 to 01/06/11. The policy was issued by New India Assurance Company Limited.The truck while in transit from Raipur to Dhanbad, carrying Ammonia Nitrate met with an accident in Jharkhand. The driver, Rajendra Singh while negotiating a culvert lost a control to avoid an accident with a cow. The truck lost control, flipped and fell into a river by the side of the road and was heavily damaged. The cargo of Ammonium nitrate was also washed away.
A valuer, assessor, and loss surveyor appointed by the insurance company assessed the recoverable loss at Rs. 4,93,500 after deduction of salvage value
Proceedings in Lower Courts:-
A claim lodged by the appellant was rejected by the insurance company on the grounds that the appellant had sold the truck to Mr. Mohammad Iliyas Ansari on 11.4.2008 for a consideration of Rs.1,40,000/- and also on the ground of delay in filing a police complaint and in lodging the claim for reimbursement of losses.
The appellant then filed a complaint before the District Consumer Disputes Redressal Forum which allowed the complaint and directed the Insurer to pay Rs 4, 93,500/- along with interest. A relief of Rs. 7000/- was also granted for litigation cost and mental agony caused. The said relief was granted on the ground that the ownership of the said Truck never stood transferred to the Transferee. The said Judgment of the District Forum was appealed before the State Consumer Disputes Redressal Commission, which was dismissed by an Order dated 22.07.2014, on the same grounds as before
The Insurer filed Revision Petition before the National Consumer Disputes Redressal Commission challenging the Order of the State Commission. The National Commission allowed the said Revision Petition, and set aside the Orders of the District Forum and the State Commission respectively, and let go the Complaint of the Appellant. It was dismissed on the ground that the Appellant had sold his vehicle to the Transferee and ownership in the vehicle passes to the purchaser thereby the Insurer was not liable to pay for losses.
The Appellant appealed before the Supreme Court and contended that even though he had entered into a Sale Agreement with the Transferee, he had not actually transferred ownership of the vehicle to him. Even after the Sale Agreement, the Appellant had himself been paying instalments, to Bank, towards repayment of the loan obtained by him for purchase of the said Truck.
A claim lodged by the appellant was rejected by the insurance company on the grounds that the appellant had sold the truck to Mr. Mohammad Iliyas Ansari on 11.4.2008 for a consideration of Rs.1,40,000/- and also on the ground of delay in filing a police complaint and in lodging the claim for reimbursement of losses.
The appellant then filed a complaint before the District Consumer Disputes Redressal Forum which allowed the complaint and directed the Insurer to pay Rs 4, 93,500/- along with interest. A relief of Rs. 7000/- was also granted for litigation cost and mental agony caused. The said relief was granted on the ground that the ownership of the said Truck never stood transferred to the Transferee. The said Judgment of the District Forum was appealed before the State Consumer Disputes Redressal Commission, which was dismissed by an Order dated 22.07.2014, on the same grounds as before
The Insurer filed Revision Petition before the National Consumer Disputes Redressal Commission challenging the Order of the State Commission. The National Commission allowed the said Revision Petition, and set aside the Orders of the District Forum and the State Commission respectively, and let go the Complaint of the Appellant. It was dismissed on the ground that the Appellant had sold his vehicle to the Transferee and ownership in the vehicle passes to the purchaser thereby the Insurer was not liable to pay for losses.
The Appellant appealed before the Supreme Court and contended that even though he had entered into a Sale Agreement with the Transferee, he had not actually transferred ownership of the vehicle to him. Even after the Sale Agreement, the Appellant had himself been paying instalments, to Bank, towards repayment of the loan obtained by him for purchase of the said Truck.
Issue before The Supreme Court:-
In the case before the Honorable Supreme Court, the core legal issue which arose was, in view of the Motor Vehicle Act, 1988 and the rules set within it, could the ownership of the vehicle be transferred without transfer of registration in the name of the transferee?JUDGEMENT
In the present case, the bench comprising of Justices R. Banumathi and Indira Banerjee observed that the National Commission had disregarded the definition of 'owner' in Section 2(30) of the Motor Vehicle Act, 1988. In Section 2(30) 'owner' has been defined to mean "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".Taking into light the factual circumstances of the case, the bench also observed that,
It is difficult to accept that a person who has transferred the ownership of a goods carriage vehicle on receipt of consideration, would not report the transfer or apply for transfer of registration, and thereby continue to incur the risks and liabilities of ownership of the vehicle under the provisions of law including in particular, under the Motor Vehicles Act, 1988 and other criminal/penal laws. It does not also stand to reason why a person who has transferred the ownership of the vehicle should, for over three years, benevolently go on repaying the loan for purchase of the vehicle, take out insurance policies to cover the vehicle or otherwise discharge obligations of ownership. . It is equally incredible that an owner of a vehicle who has paid consideration to acquire the vehicle would not insist on transfer of the permit and thereby expose himself to the penal consequence of operating a goods vehicle without a valid permit
The bench also observed in light of other case laws such as Pushpa Leela & others vs. Shakuntala and Naveen Kumar vs. Vijay Kumar.
The dictum of this Court that the registered owner continues to remain owner and when the vehicle is Insured in the name of the registered owner, the Insurer would remain liable notwithstanding any transfer, would apply equally in the case of claims made by the insured himself in case of an accident. If the insured continues to remain the owner in law in view of the statutory provisions of the Motor Vehicles Act, 1988 and in particular Section 2(30) thereof, the Insurer cannot evade its liability in case of an accident.
It was held by the court that on the day of the accident the truck’s ownership stands in the appellant’s name. The court also noted that the appellant’s name is registered as the owner in the certificate of registration of the said vehicle in question. It was the appellant who paid the bank’s installments, not the transferee, in whose name the sale agreement was implemented.
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