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P.P Mohammed v. K. Rajappan And Others
Factual and Procedural Background
On 21-6-1977 a motor vehicle accident injured the first respondent. The claimant filed a petition before the Motor Accidents Claims Tribunal (MACT) against three parties: the registered owner of the car (present appellant), the driver, and the insurer. An ex-parte award was initially passed but later set aside, after which written statements were filed.
The appellant asserted he had sold the vehicle to the fourth respondent, who had further transferred it to the fifth respondent. The driver claimed he was employed by the fifth respondent. On 12-11-1986 the MACT allowed the claimant to implead Respondents 4 and 5. After trial, the MACT found the accident was caused by the driver’s negligence, absolved the appellant and the insurer, and fastened liability jointly on the driver, Respondent 4, and Respondent 5.
Respondents 4 and 5 appealed. By judgment dated 13-11-1997 the High Court of Kerala held that, because the vehicle continued to stand in the appellant’s name in the RTO records, the appellant alone was liable; it further held that the appellant was entitled to indemnity from the insurer.
The present appeals to the Supreme Court were filed by the appellant (registered owner). The insurer did not appeal.
Legal Issues Presented
- Whether the registered owner is absolved from liability to third parties when the vehicle had been transferred prior to the accident but the registration continued in his name.
- Whether the transferees (Respondents 4 and 5) can be held liable for compensation despite the transfer and limitation issues.
- Whether the High Court erred in fastening exclusive liability on the appellant and relieving Respondents 4 and 5.
Arguments of the Parties
Appellant's Arguments
- Relied on Rajasthan SRTC v. Kailash Nath Kothari (1997) 7 SCC 481 to contend that once effective control and possession of the vehicle are transferred, the original owner is absolved of vicarious liability.
- Asserted that liability, if any, should rest with Respondent 5 who was in possession at the time of accident.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| T.V. Jose (Dr.) v. Chacko P.M. (2001) 8 SCC 748 | Registration in RTO records determines liability to third parties even after transfer of ownership. | Followed; Court agreed that the appellant (registered owner) remains liable so long as his name appears in RTO records. |
| Rajasthan SRTC v. Kailash Nath Kothari (1997) 7 SCC 481 | Person in actual possession and control of the vehicle is liable for torts committed by the driver under his command. | Clarified that the case dealt with inter-se liability between transferor and transferee; applied to hold that the possessor (Respondent 5) would also be liable, subject to limitation. |
Court's Reasoning and Analysis
The Supreme Court reaffirmed the principle in T.V. Jose that registration records govern liability towards third parties. Consequently, mere transfer of the vehicle could not absolve the appellant while his name remained on the RTO register.
Addressing the reliance on Rajasthan SRTC, the Court observed that the earlier case concerned contractual allocation of risk between owner and transferee and did not decide the original owner’s liability to third parties. Nonetheless, it confirmed that the person in actual possession is also liable.
The Court accepted that the vehicle had been transferred to Respondent 5 on 5-1-1977; therefore Respondent 4, who held it only briefly and not on the accident date, bore no liability. Furthermore, because Respondents 4 and 5 were joined only on 12-11-1986—well beyond the statutory limitation period—the claim against them was time-barred. Although limitation was not raised before the MACT, it was specifically pleaded before the High Court, entitling those respondents to raise the defence.
Accordingly, liability to the injured third party rested on the appellant as registered owner; Respondent 5 would otherwise have been liable but was discharged on limitation grounds. The insurer’s duty to indemnify the appellant, recognised by the High Court, was not disturbed, the insurer having chosen not to appeal.
Holding and Implications
The appeals were disposed of with no order as to costs.
Key consequences:
- The appellant, whose name continued on the RTO register, remains liable to satisfy the award.
- Respondent 4 is absolved because he neither owned nor possessed the vehicle on the accident date.
- The claim against Respondent 5 is barred by limitation, relieving him of liability despite actual possession at the relevant time.
- The High Court’s conclusion that the insurer must indemnify the appellant stands undisturbed, but no new legal precedent beyond reaffirming existing principles has been created.
Order
1. These appeals are filed against the judgment of the High Court of Kerala dated 13-11-1997.
2. Briefly stated, the facts are as follows: on 21-6-1977, an accident took place which resulted in an injury to the first respondent. The first respondent filed a claim before the Motor Accidents Claims Tribunal wherein the person in whose name the car was registered i.e the appellant (herein) was the first respondent, the driver of the vehicle was the second respondent and the insurance company was the third respondent. An ex parte decree came to be passed in that matter. However, the same was set aside and thereafter the appellant and the driver filed written statements. The appellant claimed in his written statement that he had already sold off the vehicle to the 4th respondent herein. The driver in his written statement stated that the vehicle was owned by the 5th respondent (herein) and he was in the employment of the 5th respondent. The claimant, therefore, made an application to join the 4th and 5th respondents to his petition. By an order dated 12-11-1986 they were impleaded as Respondents 4 and 5 to the original petition. The trial then proceeded. Having considered the evidence led by the parties, the Motor Accidents Claims Tribunal came to the conclusion that the accident was due to the negligence of the driver and awarded compensation. It, however, held that the appellant was not liable as he had already transferred the vehicle to Respondent 4 who, in turn, transferred it to Respondent 5. The Tribunal, therefore, fastened the liability on the driver and Respondent 5 but also held Respondent 4 liable to pay compensation. The Tribunal absolved the insurance company on the ground that the sale of the vehicle was not intimated to it and that, therefore, it was not liable to pay compensation.
3. The appeals were filed by Respondents 4 and 5 before the High Court. The High Court has by the impugned judgment held that the appellant alone was liable to pay the compensation because the name of the appellant continued in the records of RTO. The High Court held that the appellant continued to be the owner of the vehicle. The High Court has also held that as the appellant was liable, he was entitled to be indemnified by the insurance company in terms of the insurance policy.
4. These appeals are filed by the appellants. The insurance company has chosen not to file any appeal. The question before this Court is whether by reason of the fact that the vehicle has been transferred to Respondent 4 and thereafter to Respondent 5, the appellant got absolved from liability to the third person who was injured. This question has been answered by this Court in T.V Jose (Dr.) v. Chacko P.M (2001) 8 SCC 748 wherein it is held that 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. We are in agreement with the view expressed therein. Merely because the vehicle was transferred does not mean that the appellant 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.
5. The question then arises whether Respondents 4 and 5 get absolved and/or not liable to pay compensation as held by the High Court. This question has also been answered by this Court in Rajasthan SRTC v. Kailash Nath Kothari (1997) 7 SCC 481 wherein it has been held that the person who is in actual possession of the vehicle would be liable to pay the compensation.
6. On behalf of the appellants it was submitted that the authority of Rajasthan SRTC case (1997) 7 SCC 481 lays down that the owner gets absolved of liability. In support of this contention, the following observations, in para 17, are relied upon:
“17. … If the original employer is able to establish that when the servant was lent, the effective control over him was also transferred to the hirer, the original owner can avoid his liability and the temporary employer or the hirer, as the case may be, must be held vicariously liable for the tort committed by the employee concerned in the course of his employment while under the command and control of the hirer notwithstanding the fact that the driver would continue to be on the payroll of the original owner. The proposition based on the general principle as noticed above is adequately rebutted in this case not only on the basis of the evidence led by the parties but also on the basis of Conditions 6 and 7 (supra), which go to show that the owner had not merely transferred the services of the driver to the Rajasthan SRTC but actual control and the driver was to act under the instructions, control and command of the conductor and other officers of the Rajasthan SRTC.”
(emphasis in original)
7. Undoubtedly, at the first blush it appears as if these observations support the case of the appellants. However, it has to be seen that the question whether the original owner gets absolved of his liability to a third party was not before the Court. The only question which was being considered by the Court (in Rajasthan SRTC case (1997) 7 SCC 481,) was, as set out in para 3, as follows:
“(3) Whether due to the terms and conditions of the contract, the Rajasthan State Road Transport Corporation is not liable?”
8. The abovesaid observation is in the context of this question. All that was being considered in this case were the rights of the original owner vis-à-vis those of the transferee. Also the final decision is based on the terms of the contract between the parties. Therefore, they cannot be drawn out of the context. It will accordingly have to be held that the appellant as the person, in whose name registration continues, will remain liable to a third person. However, the person in actual possession would also be liable.
9. It is admitted that the vehicle stood transferred to the 5th respondent with effect from 5-1-1977. Accordingly, Respondent 4 would not be liable as on the date of the accident he was not the owner nor was the vehicle registered in his name.
10. It has, however, been pointed out to us that the 4th and 5th respondents were only made parties to the claim petition pursuant to an order dated 12-11-1986. The accident having taken place on 21-7-1977 the claim against them was clearly barred by limitation. It is true that the question of limitation was not taken up by these parties before the Motor Accidents Claims Tribunal. However, in the appeal before the High Court, this question has been taken up in the memo of appeal. The High Court has chosen not to consider this question because the High Court has held in favour of these parties on other grounds. However, in law these parties are entitled to agitate this point. Therefore, it would have to be held that the claim as against them would be barred by the law of limitation.
11. The appeals stand disposed of accordingly with no order as to costs.
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