J.C Chennarayudu v. N. Lakshmamma And Others

1. This appeal is filed by the 1st respondent in O. P. No. 36 of 1970 on the file of the Motor Accident Claims Tribunal (Additional District Judge) Chittoor.

2. The appellant is the registered owner of the lorry APD 841 which met with an accident on 16-2-1970 at 5 a.m. on the Highway near Chittoor. As a result of the said accident one Rangaiah Naidu, and agriculturist who was crossing the road, was knocked down and his legs were severed. Three days thereafter i.e. on 19-2-1970 the victim of the accident expired. He was survived by his wife and two sons, who put in a claim for Rs. 50,000/-. To that claim petition they impleaded the 1st respondent the registered owner, the 2nd respondent, Scindia Insurance Company and the 3rd respondent, who is alleged to have purchased the vehicle in question. That claim was resisted by the 1st respondent inter alia on the ground that he sold the lorry to the 3rd respondent on 4-11-1969 and handed over possession of the vehicle to the 3rd respondent. As he was not the owner of the vehicle on the day it met with the accident, he was not liable for any damages. It is unnecessary for the purpose of the disposal of this appeal by the 1st respondent to go into the question whether the accident occurred due to rush and negligent driving. That is not disputed in this appeal. All that is contended is that the 1st respondent having sold away the vehicle long before the date of the accident, to the 3rd respondent and executed Ex. B. 1 sale note and delivered possession of the vehicle to the 3rd respondent, he was not liable to meet the claim of the legal representative of the deceased. The Insurance Company, which is the 2nd respondent also claimed that the registration of the vehicle was not transferred and insurance policy was issued in favour of the 1st respondent and as the 3rd respondent was the owner of the vehicle on the date of the accident, it was not liable. The 3rd respondent chose to remain ex parte. It may not be out of place to note the fact that the 3rd respondent has neither admitted not denied the sale in his favour. If the sale was true, he would not have adopted this attitude towards the claim, but would have contested it. The Tribunal on a consideration of the evidence on record, awarded Rs. 20,000/- by way of damages. Neither the insurance company nor the 3rd respondent has preferred any appeal. The only question that remains to be considered in this appeal by the 1st respondent is whether the 1st respondent parted with the ownership of the vehicle and was not liable to pay any damages.

3. That he continued to be the registered owner of the vehicle is not disputed. A policy was also taken by him with the 2nd respondent Insurance Company. When the 1st respondent claims that he had sold away the vehicle in question for a consideration of Rs. 19,116, executed Ex. B. 1 and also delivered possession of the vehicle to the 3rd respondent he has no title or interest in the vehicle. Merely because he continued to be the registered owner, he cannot be made liable. The transaction between the 1st respondent and the 3rd respondent is evidenced by a written document, Ex. B.. 1 dated 4-11-1969. Under the said document a sum of Rs. 10,160/- was paid by the 3rd respondent to the 1st respondent and the possession of the vehicle together with C Certificate and applications for transfer of ownership addressed to the concerned Regional Transport Authorities were handed over to the 3rd respondent. The balance of consideration of Rs. 9,000/- with interest at 1% per annum was agreed to be paid on the date of the transfer of 'C' Certificate. There was also a specific stipulation in Ex. B. 1 that until the transfer is effected the 3rd respondent would ply the vehicle under the registration certificate and the road permit issued in the name of the 1st respondent. In view of this document, it is contended that the sale of the vehicle was completed on 4-11-1969 when Ex. B. 1 was executed. On the other hand, it is contended by the claimants that as the sale could not be completed in accordance with law, the parties specifically stipulated that the balance of consideration would be paid on the date of the transfer and until then the 3rd respondent would ply the vehicle in the name of the 1st respondent and under the permit issued to him.

4. The learned counsel for the appellant strongly relied upon a decision of this court in V. Kanakalakshmi v. R. V. Subbarao (1972) 1 APLJ 249 to which one of us was a party (Madhava Reddy, J.) in support of his contention that merely because a person was recorded as registered owner, he cannot be made liable when, in fact, the vehicle was sole to another and the purchaser was plying the vehicle.

5. The judgment of this court in the above case apparently supports the contention of the appellant. But a close reading of the judgment would disclose that that was a case of hire purchase in which the hirer and the financier's name were both entered in the 'C' Certificate and the hirer had transferred the vehicle. While the purchaser was plying the vehicle, it met with an accident. The question that was considered therein was whether on the facts and in the circumstances of the case the registered owner therein was liable to meet the claim of the appellants. On a consideration of the facts and circumstances of the case, this court held:

"After sale of the Motor Vehicle the vendor would not be liable for damages for the accident met by the vehicle merely because he continued to be shown in the Registration certificate as the owner thereof.

It would be seen that on a consideration of the facts and circumstances of the case the court came to the conclusion that there was, in fact a completed sale in that case. The transferee was in possession of the vehicle only under the hire purchase agreement and the possession of the vehicle was transferred to the transferee. The hirer under the hire purchase agreement is not a purchaser as envisaged by the Sale of Goods Act. Hence the transfer made by him and delivery of possession of the vehicle to the transferee was a transfer of his interest as hirer. He had no further connection with the vehicle. He was neither the owner nor the purchaser. In these circumstances, the Court held that the act of the transferee's driver cannot impose liability upon the transferor, who continued to be shown as the registered owner in the 'C' Certificate. It is also pertinent to notice that in the above case the names of both the hirer and financier were shown in the 'C' Certificate. The principle on which the liability is fastened on the transferee, who happened to come into possession of the motor' vehicle under a hire-purchase agreement is that he had actually become the owner of the vehicle. In fact, taking the special circumstances of the hire-purchase agreement and the fact that the vehicle comes under the full control and possession of the person that takes it on hire-purchase agreement into consideration, the legislature in its wisdom had expanded the definition of owner, in the Motor Vehicles Act by bringing within its fold the person in possession of the motor vehicle under a hire purchase agreement also. The definition given to 'owner' in Section 2 (19) of the Motor Vehicles Act, runs as under :

"(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 the agreement."

Thus the judgment relied upon is in conformity with this definition of course without making a specific reference to this definition. The decision rendered therein is in relation to a transferee under a hire-purchase agreement. Therefore, in our view that decision has no application to the facts to the instant case. The facts in the present case are entirely different. On a reading of Ext. B. 1 though we find in some places recitals to the effect that the vehicle was sold for a consideration, more than half of which was paid on the date of the agreement and that possession of the vehicle was delivered and the application for transfer of 'C' Certificate handed over to the purchaser one essential requirement for the complete transfer of interest in the vehicle which would entitle the purchaser to ply the vehicle, was not completed, that is the transfer of the 'C' Certificate and the road permit in favour of the purchaser. On the other hand, there is a specific stipulation that the transferee shall be entitled to ply the vehicle under the C Certificate and the road permit issued to the transferor. In other words, both the transferor and the transferee agreed that the transferor would continue to be the owner of the vehicle and that the so-called purchaser is legally entitled to ply the vehicle on the public roads. When that was the agreement between the transferor and the transferee and when such a vehicle met with an accident, the parties to that agreement cannot be allowed to resale from that position so as to cause injury to a third party and escape from the liability.

6. A specific undertaking was also given by the 3rd respondent under Ex. B. 1 to the first respondent that he would not transport the prohibited goods or contraband in the vehicle. Such an undertaking would not have been given b y the 3rd respondent to the 1st respondent if the entire right, title and interest in the vehicle stood transferred to the 3rd respondent under Ex. B. 1 itself. That stipulation was necessary only because the 1st respondent retained interest in the vehicle and he was aware that any liability which may be fastened to the vehicle would be the liability of the 1st respondent until there is a valid transfer of the 'C' Certificate and the road permit.

7. A reading of the entire document, Ex. B. 1 leads to the conclusion that in spite of the stipulation that the balance of consideration would be paid with interest and damages of Rs. 2,000/- the entire interest in the vehicle would completely stand transferred to the purchaser only when the transfer of the C Certificate and the road permit is effected. In other words the transferor continued to be the owner for all purposes and the 'purchaser' was only given the right to ply the vehicle. Admittedly, the transferee was plying the vehicle under C Certificate and the road permit standing in the name of the 1st respondent. The 1st respondent must, in the circumstances of the case, be held to be the 'owner' of the vehicle.

8. In the circumstances, the mere fact that the transfer application was also signed by the 1st respondent and handed over to the 3rd respondent along with C Certificate, cannot lead to the conclusion that he ceased to be the owner of the vehicle. We cannot also ignore the fact that if in fact the 3rd respondent had become the owner of the vehicle, he would not have remained ex parte and would have certainly contested the claim. Obviously, the transfer evidenced by Ex. B. 1 did not transfer the ownership to the 3rd respondent. That is why the 1st respondent has been effectively contesting the matter before the Tribunal and this court. we have, therefore, no hesitation in holding that the 1st respondent continued to be the owner of the vehicle in question and is liable to meet the claim of the claimants. We accordingly find no merit in this appeal.

9. The insurance company, the 2nd respondent sought to contend that as the 3rd respondent had not taken any insurance policy in respect of the vehicle in question it was not liable. The Insurance Company has not chosen to file any appeal. Therefore, it cannot be allowed to resist the claim. In any event, as admittedly the 2nd respondent insurance company is the insurer and the 1st respondent is the insured, the 1st respondent must be held liable to meet the claim and consequently the 2nd respondent-Insurance Company is also liable.

In view of the above discussion, this appeal fails and is accordingly dismissed with costs.

10. Appeal dismissed.