HDFC BANK LTD.versusKUMARI RESHMAAND ORS.

                   [2014] 14 S.C.R. 1007


                     HDFC BANK LTD.                           A
                              v.
               KUMARI RESHMAAND ORS.
          (Civil Appeal Nos. 10608-10609 of2014)
                   DECEMBER 01, 2014                          B
     [DIPAK MISRA, ROHINTON FALi NARIMAN AND
                 UDAY UMESH LALIT, JJ.]
      Motor Vehicles Act, 1988 - ss. 2(30) and 146 - Motor
 accident by uninsured motor vehicle which was hypothecated
 under hire-purchase agreement - Liability of financier - To C
 pay compensation to third party - Held: Where the motor
 vehicle is subject of hire-purchase agreement, the person in
 possession of the vehicle under the agreement would be the
 owner- In the instant case, the vehicle was not in possession
 of the financier and was plied on the road in violation of s. D ·
 146 without the knowledge of the financier - Hence the
 financier cannot be held liable to pay compensation.
       Allowing the appeals, the.Court
       HELD: 1. On a plain reading of definition 'owner' E
  as envisaged u/s. 2(30) of Motor Vehicles Act, 1988, it is
  demonstrable that a person in whose name a motor
  vehicle stands registered is the owner of the vehicle and,
  where motor vehicle is the subject of hire-purchase
· agreement or an agreement of hypothecation, the person F
  in possession of the vehicle under that agreement is the
  owner. The legislature has deliberately carved out the
  exception from registered owners thereby making the
  person in possession of the vehicle under the
  agreements mentioned in the dictionary clause to be the G
  owners for the purposes of this Act. [Para 10][1013-F-H;
  1014-A-C]
      2. In the present case, the vehicle was subject of
 an agreement of hypothecation and was in possession
 and control under respondent No.2. He had taken the H
                            1007
    1008       SUPREME COURT REPORTS                [2014] 14 S.C.R.


     A vehicle from the dealer without paying the full premium
       to the insurance company and thereby getting the
       vehicle insured. The High Court has erroneously opined
       that the financier had the responsibility to get the vehicle
       insured, ifthe borrower failed to insure it. The said term
     B in the hypothecation agreement does not convey that
       the appellant financier had become the owner and was
       in control and possession of the vehicle. It was the
       absolute fault of respondent No. 2 to take the vehicle
       from the.dealer without full payment of the insurance.
     C Nothing has been brought on record that this fact was
       known to the appellant financier or it was done in
       collusion with the financier. [Paras 23 and 25][1026-A;
       1027-C-F]
            3. When the intention of the legislature is quite clear
     D to the effect, a registered owner of the vehicle should
       not be held liable if the vehicle is not in his possession
       and control and there is evidence on record that
       respondent No.2, without the insurance plied the vehicle
       in violation of the statutory provision contained in
     E Section 146 of the Motor Vehicles Act, 1988, the High
       Court could not have mulcted the liability on the financier.
       Thus, the liability to satisfy the 'award is that of the owner,
       respondent No. 2.and not that of the financier. [Paras 25
       and 26][1027-F-H; 1028-A-B]
.    F
            National Insurance Co. Ltd. v. Deepa Devi & Ors.
            2001 (13) scR 134 : 2008 (1) sec 414 ;
            Godavari Finance Company v. Degala
            Satyanarayanamma and Ors. 2008 (6) SCR 231:
            20Q8 (5) SCC 107; Pushpa alias Leela and Ors.
     G       v. Shakuntala and Ors. 2011 (1) SCR 334 : 2011
            (2) SCC 240 ; Uttar Pradesh State Road Transport
             Coporation v. Ku/sum and Ors. 2011 (15)
            SCR 618: 2011 (8) SCC 142; Purnya Kala Devi
            v. State of Assam & Anr. 2014 (4) SCALE 586 -                •
     H      relied on.


                                                                         •
                                                                         '"II"
   HDFC BANK LTD. v. KUMAR I RESHMAAND ORS.              1009


    Mohan Benefit Pvt. Ltd. v. Kachraji Rayamalji &      A
   ·Ors: (1997) 9 SCC 103; Rajasthan State Road
    Transport Corporation v. Kai/ash Nath Kothari &
    Ors. 1997 (3) Suppl. SCR 724 : 1997 (7) SCC
    481 - distinguished.
     Mukesh K. Tripathi v. Senior Divisional Manager      B
     LIC 2004 (4) Suppl. SCR 127 : 2004 (8) sec 387;
     Ramesh Mehta v. Sanwal Chand Singhvi 2004
     (1) Suppl. SCR 418 : 2004 (5) SCC 409 ; State
     of Maharashtra v. Indian Medical Assn. 2001 (5)
     Suppl. SCR 474: 2002 (1) SCC 589; Pandey &          C
     Co. Builders (P) Ltd., v. State ofBihar 2006 (8)
     Suppl. SCR 997: 2007 (1) SCC 467; National
     Insurance Co. Ltd. v. Durdadahya Kumar Sama/
     (1988) 2 TAC 25 (Ori); Chief Officer, Bhavnagar
     Municipality v. Bachubhai Arjanbhai AIR 1996        ·D
     Guj. 51 ; T. V. Jose (Dr.) V Chacko PM. 2001 (3)
     Suppl.-SCR 366: 2001 (8) SCC 748- referred
     to.
               CASE LAW REFERENCE
                                                         E
(1997) 9 sec 103          distinguished.      Para 11
1997 (3) Suppl. SCR 724 distinguished.        Para 13
2007 (13) SCR 134         relied on.          Para 15
2004 (4) Suppl. SCR 127 referred to.          Para 16
                                                          F
2004 (1) Suppl. SCR 418 referred to.         · Para 16
2001 (5) Suppl. SCR 474 referred to.·         Para 16
2006 (8) Suppl. SCR 997 referred to.          Para 16
(1988) 2 TAC 25 (Ori)     referred to ..      Para 16
                                                         G
AIR 1996 Guj. 51          referred to.        Para 16
2008 (6) SCR 231          relied on.          Para 17
2011 (1) SCR 334          relied on.          Para 18

                                                          H
             -
1010         SUPREME COURT REPORTS                 [2014] 14 S.C.R.


 A     2001 (3) Suppl. SCR 366 referred to.              Para 18
       2011 (15) SCR 618           relied on.            Para 19
       2014 (4) SCALE 586          relied on.            Paras 22
           CIVILAPPELLATE JURISDICTION: Civil Appeal No(s).
 B     10608-10609 of 2014._
            From the Judgment and Order dated 22-10-2013 and
       13-05-2014 of the High Court of Madhya Pradesh at Indore in
       Miscellaneous Appeal No. 2261 of 2005 and in Review Petition
       No. 619 of 2013 in Miscellaneous Appeal No. 2261 of 2005
 c     respectively.
             Gopal Subramaniam, Sr. Adv., Raja! Katyal, Dinkar Kalra,
       Ad vs. for the Appellant.
            The Judgment of the Court was delivered by
 D          DIPAK MISRA, J.
            1. Leave granted in both the Special Leave Petitions.
         2. In these appeals, by special leave, the assail is to the
   judgment and order dated 22.10.2013 passed by the learned
   Single Judge of the High Court of judicature of Madhya
 E Pradesh Bench at Indore in Misc. Appeal No. 2261 of 2005
   preferred by the Centurion Bank Limited, the predecessor-in-
   interest of the appellant herein, and Misc. Appeal No. 3243 of
   2005 preferred by the claimants, the 1" respondent herein,
   whereby the High Court has dismissed the appeal preferred
 F by the appellant herein and.allowed the appeal of the claimants
   by enhancing the awarded sum to Rs. 3 lacs opining that the           •
   said amount would be just and equitable compensation for
   the injuries sustained by her. The High Court also dismissed
   the review petition no. 619/2013 vide order dated 13.05.2014
 G preferred by the appellant herein. Be it stated, the Additional
                                                                         •
   Member, Motor Accident Claims Tribunal, Indore had awarded
   Rs.1,75,000/- in Claim Case No.181/2003.
             3. Filtering the unnecessary details, the facts which are
       requisite to be stated are that on 20.12.2002 about 12.30 p.m.
 H
    HDFC BANK LTD. v. KUMAR I RESHMAAND ORS.                        1011
                [DIPAK MISRA, J.]

the claimant was going on a scooter bearing registration No. A
 MP09Q92 from Shastri Bridge to Yashwant Square and at that
 time the Motor Cycle belonging to 2"d respondent and driven
 by the respondent No.3 herein, in a rash and negligent manner
 dashed against the scooter as a consequence of which she
 sustained a fractu"re in the right hand superacondylar fracture B
 and humerus bone fracture and certain other injuries. She
 availed treatment at various hospitals as she had to undergo
 an operation and thereafter advised to take physiotherapy
 regularly. Keeping in view, the injuries suffered and the amount
 she had spent in availing the treatment, she filed a claim petition C
 putting forth the claim for Rs.4,50,000/-. The tribunal as stated
 earlier awarded a sum of Rs.1,75,000/-with 6% interest and
 opined that all the non-applicants to the claim petition were
 jointly and severally liable to pay the compensation amount. It
 is apt to state here the stand and stance put forth by the D
 predecessor-in-interest the appellant bank that it had only ·
 advanced a loan and the hypothecation agreement was
 executed on 1.11.2002 by it. As per the terms of the agreement,
 the owner of the vehicle was responsible to insure the vehicle
 at his own costs. Reliance was placed on Clause 16 and 17 E
 of the loan agreement which stipulated that the bank was
  required to getthe vehicle insured if the borrower failed to or
  neglected to get the vehicle insured. The accident as stated
 earlier had taken place on 20.12.2002 and the vehicle was
llnsured by the owner on 16.1.2003. It was further put forth by F
 the bank that the owner deposited Rs.6,444/- with the dealer
 of the motor cycle i.e. PatwaAbhikaran Pvt. Ltd., whereas it
 was required to pay Rs.9,444/-. Despite the same, he obtained.
 the possession of the vehicle on the same day itself which
 was not permissible.                                                G
       4. It was urged before the tribunal the financer was not
liable to pay the compensation and it was the exclusive liability
of the borrower. The tribunal on scrutiny of the clauses opined
that as the financer had a duty to see that borrower does not
neglect to get the vehicle insured, it was also liable along with    H
1012         .SUPREME COURT REPORTS                   [2014] 14 S.C.R.


 A     the owner anrj accordingly fastened the liability both jointly and
       severally.
               5. In appeal, it was contended that the financercould not
       have been fastened with the liability to pay the compensation.
       The High CA:iurt referred to the definition clause in Section 2
 B     (30) of the 'Motor Vehicles Act, 1988 (for brevity "the Act"), took
       note of thr.:: language employed in Clause 16 of the agreement
       that ifthe owner neglects to get the vehicle insured the bank
       was re•quired to get it insured, and the fact that the financer
       and the borrower were the registered owners and, accordingly
 C     opinfad that the bank was liable to pay. Being of this view the
       learned Judge dismissed the appeal preferred by the bank
       an·d partly allowed the appeal preferred by the claimants. Be
       it. stated, the application for review filed by the Bank did not
        meet with success.
 D           6. We have heard Mr. Gopal Subramaniam, learned
       senior counsel for the appellant. None has appeared on behalf
       of respondent despite service of notice.
          7. We are obliged to mention here that while issuing
 E . notice we had directed that the appellant-bank shall deposit
     the awarded sum before the tribunal which would be at liberty
     to di~burse the same in favour of the claimant. Mr.
     Subramaniam submitted that the bank does not intend to
     recover anything from the claimant but the legal position should
 F be made clear so that the bank, which is the financer, is not \
     unnecessarily dragged into this kind of litigation.
          8. Criticising the impugned award and the order passed
    in. appeal, learned senior counsel has submitted that the
    deffnition of 'owner' under Section 2(30) of the Act would not
. G cover a financer who has entered into a hypothecation
    agreement with the borrower who is in possession and control
    of the vehicle. Learned senior counsel would contend that
    Clauses 16 and 17 of the agreement have nothing to do with
    the finance r's liability, for Section 146 of the Act requires the
  H owner to insure the vehicle before it plies on the road and in
    HDFC BANK LTD. v. KU MARI RESHMAAND ORS.                      1013
                [DIPAK MISRA, J.]

the case at hand the borrower, who was in possession and A
control of the vehicle in question, in a clandestine manner
without paying the insured amount and getting the vehicle
insured had taken the vehicle the same day from the dealer
and got it insured afterwards. It is urged by him that the role of
the bank would come in when there is failure to insure the B
vehicle and, in any case, that will not fasten a statutory liability
on the financer to pay the compensation to the third party, for
the vehicle is not on the road by the financer or at is instance.
Elaborating further, it is submitted by him that if the owner does
not pay, the bank will pay the insurance company and recover C
it from the borrower and hence, it would be inapposite to
interpret the contract in a different way to fasten the liability on
the financer. It is canvassed by him that there is no stipulation·.
in the agreement thatthe financerwould indemnify the borrower
against the third party in the event of an accident and in the D
 absence of such a postulate the interpretation placed by the
 High Court is absolutely erroneous.
      9. To appreciate the said submission, it is appropriate
to refer to Section 2 (30) oftheActwhich reads as follows:-
      "(30). "owner" means a person in whose name a motor         E
      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   F
      under that agreement."
       10. On a plain reading of the aforesaid definition, it is
demonstrable that a person in whose name a motor vehicle
stands registered is the owner of the vehicle and, where motor G
vehicle is the subject of hire-purchase· agreement or an
agreement of hypothecation' the person in possession of the
vehicle under that agreement is the owner. It also stipulates
that in case of a minor, the guardian of such a minor sh~ll be
treated as the owner. Thus, the intention of the legislature in H
    HDFC BANK LTD. v. KU MARI RESHMAAND ORS.                      1015
                [DIPAK MISRA, J.]

only of hypothecation in the garb of hire purchase agreement.      A
Affirming the view expressed by the High Court, this Court held
      "Having heard the counsel and read the evidence
      adduced in the case, we have no doubt that the hire-
      purchase agreement produced by the appellant does not
    · spell the true relationship between the appellant and the B
      second respondent. The High Court, therefore, was right
      in coming to the conclusion that, had the documents
      which reflected the true relationship between them been
      produced, they would have "exploded" the case of the
      appellant. Consequently, the adverse inference drawn by C
      the High Court was justified".
      12. After so holding, the Court repelled the submission
of the counsel for the appellant that there was no evidence to
show the appellant had any right to control the driver of the
truck. The Court opined that in the circumstances of the case,     D
the logical inference must be that, had the documents that set
out the true relationship between the appellant and the second
respondent been produced, they would have shown that the
appellant had a right to exercise control in the matter of the
plying of the truck and the driver thereof.      ·                 E
      13. In this context, we may refer to a two-Judge Bench
decision in Rajasthan State Road Transport Corporation
II. Kai/ash Nath Kothari & Others. 2 In.the said case, plea
was taken by the Rajasthan State Road Transport Corporation F
(RSRTC) before the High Court that as it was only a hirer and
not the owner of the bus, it could not be fastened with any liability
for payment of compensation but the said stand was not
accepted. It was contended before this Court that the
Corporation not being the owner of the bus was not liable to G
pay any compensation arising out of the accident because
driver who was driving the bus at the relevant time, was not in
the employment of the owner of the bus and not of the
Corporation and hence, it could not be held vicariously liable
'(1997) 7 sec 481                                                  H
1016         SUPREME COURT REPORTS                  [2014] 14 S.C.R.


 A     for the rash and negligent act.of the driver. The Court referred
       to the definition in Section 2(3), which defines "contract
       carriage", Section 2(19), which defines the "owner", Section
       2(29), which defines "stage carriage" and Section 42 that dealt
       with "necessity of permits". Be it stated, these provisions
 B     reproduced by the Court pertained to Motor Vehicles Act, 1939
       (for short, 'the 1939 Act'). The owner under the.1939 Act was
       defined as follows:
            "2. (19) 'owner' means, where the person in possession
            of a motor vehicle is a minor, the guardian of such minor,·
 C          and in relation to a motor vehicle which is the subject of
            a hire-purchase agreement, the person in possession
            of the vehicle under that agreement;"
            The Court referred to the conditions 4 to 7 and 15 of the
       agreement and in that context held thus:
 D
            "The admitted facts unmistakably show that the vehicle
            in question was in possession and under the actual control .
            of RSRTC for the purpose of running on the specified
            route and was being used for carrying, on hire,
            passengers by the RSRTC. The driver was to carry out
 E
            instructions, orders and directions of the conductor and
            other officers of the RSRTC for operation of the bus on
            the route specified bythe RSRTC".
           While dealing with the definition of the owner under the·
 F 1939 Act, the Court ruled that the definition of owner under
    Section 2(19) of the Act is not exhaustive. It has, therefore to
    be construed, in a wider sense, in the facts and circumstances
  · of a given case. The expression owner must include, in a given
    case, the person who has the actual possession and control
 G of the vehicle and under whose directions and commaAds the
    driver is obliged to operate the bus. To confine the meaning of
    "owner" to the registered owner only would in a case where·
    the vehicle is in the actual possession and control of the hirer
    would not be proper for the purpose of fastening of liability in
 H case of an accident. The liability of the "owner" is vicarious for
     HDFC BANK LTD. v. KUMAR! RESHMAAND ORS.                       1017
                 [DIPAK MISRA, J.]

  the tort committed by its employee during the course of his       A
· employment and it .would be a question of fact in each case
  as to on whom can vicarious liability be fastened in the case
  of an accident.
       14. After so stating, the Court proceeded to analyse the
 conditions of the agreement, especially conditions 6 and 7 B
 which in that case showed that the owner had not merely
 transferred the services of the driver to the Corporation but
 actual control and the driver was to act under the instructions,
 control and command of the conductor and other officers of
 RSRTC. Being of this view, it affirmed the view expressed by C
 the High Court and dismissed the appeal.
       15. In this context, it is profitable to refer to a two-Judge
 Bench decision in National Insurance Co. Ltd. II. Deepa
 Devi & Ors. 3 In the said case the question arose whether in
 the event a car is requisitioned for the purpose of deploying D
 the same in the election duty, who would be liable for payment
 of compensation to the victim of the accident in terms of the
 provisions of 1988 Act. The Court referred to the definition of
 'owner' in the 1939 Act and the definition of 'owner' under·
 Section 2(30) of the 1988 Act. In that context, the Court E
 observed that the legislature either under the 1939 Act or under
 the 1988 Act had visualized a situation of this nature. · The
 Court took note of the fact that the respondent no. 3 and 4
 continued to be the registered owners of the vehicle despite
 the fact that the same was requisitioned by the District Collector F
 in exercise of the power conferred upon him under the
 Representation of People Act, 1951 and the owner of the·
 vehicle cannot refuse to abide by the order of requisition of
 the vehicle by the District Collector. Proceeding further, the
 Court ruled thus:                                                   G
       " ...... While the vehicle remains under requisition, the
       owner does not exercise any control thereover. The driver
       may still be the employee of the owner of the vehicle but
 '(2oos) 1 sec 414                                                  H
1018          SUPREME COURT REPORTS                   [2014] 14 S.C.R.


 A           he has to drive it as per the direction of the officer of the
             State, who is put in charge thereof. Save and except for
             legal ownership, for all intent and purport, the registered
             owner of the vehicle loses entire control thereover. He
             has no say as to whether the vehicle should be driven at
 B           a given point of time or not. He cannot ask the driver not
             to drive a vehicle on a bad road. He or the driver could
             not possibly say that the vehicle would not be driven in
             the night. The purpose of requisition is to use the vehicle.
             For the period the vehicle remains under the control of
 C           the State and/or its officers, the owner is only entitled to
             payment of compensation therefor in terms of the Act
           . but he cannot not (sic} exercise any control thereupon. In
             a situation of this nature, this Court·must proceed on the
             presumption that Parliament while enacting the 1988 Act
 o           did not envisage such a situation. If in a given situation,
             the statutory definitions contained in the 1988 Act cannot
             be given effect to in letter and spirit, the same should be
             ur.iderstood from the common sense point of view.
        16. Elaborating the concept, the Court referred to
 E Mukesh K. Tripathi V. Senior Divisional Manager LIC',
   Ramesh Mehta V. Sanwal Chand Singhvi5 , State of
   Maharashtra V. Indian Medical Assn. 6 , Pandey & Co.
   Builders (P) Ltd., V. State of Bihar and placed reliance on
   Kai/ash Nath Kothari (supra), National Insurance Co. Ltd.
 F II. Durdadahya Kumar Sama/ 6 and Chief Officer,
   Bhavnagar Municipality V. Bachubhai Arjanbhat"'' and
   eventually opined the State shall be liable to pay the amount of
   compensation to the claimant and not the registered owner of

 G
       '(2004 >a sec 387
       '(2004 >5 sec 409
       0 (2002) 1 sec 589

       '(2007) 1 sec 467
       8(1988) 2 TAC 25 (Ori)

 H     'AIR1996Guj.51
       HDFC BANK LTD. v. KU MARI RESHMAAND ORS.                     1019
                   [DIPAK MISRA, J.]

the vehicle and consequently the appellant therein, the             A
insurance company.
        17. In Godavari Finance Company II. Degala
Satyanarayanamma and others 10 , the core question that
arose for consideration whether a financier wo~Jd be an owner
of the vehicle within the meaning of Section 2(30) of the 1988      B
Act. It was contended before this Court that in terms of Section
168 of the Act, a financier cannot be held liable to pay
compensation as the definition of 'owner' as contained in
Section 2(30) of the 1988 Act would mean only a 'registered
owner'; that it was not the case of the claimants that the          C
appellant therein was in possession or control over the vehicle
at the time of accident and the findings recorded by the trial
Court and the High Court that the appellant as a registered
owner was liable for payment of compensation, was wholly
unsustainable. The Court took note of the fact that the appellant   D
was a financier; that the vehicle was the subject matter of hire-
purchase agreement; and that the appellant's name was
mentioned in the registered book. Dealing with the definition
of 'owner', the Court opined that the definition of "owner" is a
comprehensive one and the dictionary clause itself states that      E
the vehicle which is the subject-matter of a hirecpurchase
agreement, the person in possession of vehicle under that
agreement shall be the owner; and that the name of financer in
the registration. certificate would not be decisive for
determination as to who was the owner of the vehicle. The            F
Court further opined that ordinarily the person in whose name
the registration certificate stands should be presumed to be
the owner but such a presumption can be drawn only in the
absence of any other material brought on record or unless the
context otherwise requires. The Court opined that in case of a       G
motor vehicle which is subjected to a hire-purchase
agreement, the financer cannot ordinarily be treated to be the
 owner. The person who is in possession of the vehicle, and

10
     (2oosi 5sec 101                                                 H
1020            SUPREME COURT REPORTS              [2014] 14 S.C.R.


 A  not the financer being the owner would be liable to pay
  - damages for the motor accident. In that context the Court
   .observed that ordinarily if the driver of the vehicle uses the.
    same, he remains in possession or control thereof. Owner of
    the vehicle, although may not have anything to do with the use
 B of vehicle at the time of the accident, actually he may be held
    to be constructively liable as the employer of the driver. What
    is, therefore, essential for passing an award is to find out the
    liabilities of the persons who are involved in the use of the
    vehicle or the persons who are vicariously liable. The insurance
 C company becomes a necessary party to such claims as in the
    event the owner of the vehicle is found to be liable, it would
    have to reimburse the owner inasmuch as a vehicle is
    compulsorily insurable so far as a third party is concerned, as
    contemplated under Section 147 thereof. Thereafter, the Court
 o  relied upon the decisions in Kai/ash Nath Kothari (supra)
    and Deepa Devi (supra) and came to hold that the appellant
    was not iiable to pay any compensation to the claimants.
               18. In Pushpa alias Leela and others II. Shakuntala
     and others", the question arose whether in the obtaining
 E factual matrix therein the liability to pay the compensation
     amount as determined by the tribunal was of the purchaser of
     the vehicle alone or whether the liability of the recorded owner
     of the vehicle was co-extensive and from the recorded owner
     it would pass on to the insurer of the vehicle. The registered
 F owner of the vehicle was one Jitender Gupta who had sold the
     truck to one Salig Ram and handed over the possession to
     the transferee and on the date of the sale, the truck was covered
     by the insurance policy taken by Jitender Gupta. There was
     no dispute that the policy stood in the name of Jitender Gupta
 G · on the date of the accident who was no longer the owner of the
     truck as he had transferred the vehicle to Salig Ram. The
     Tribunal had come to hold that Salig Ram alone was liable for
     payment of compensation. On an appeal being preferred, the

 H     11
            (2011)2SCC240
     HDFC BANK LTD. v. KU MARI RESHMAAND ORS.                        1021
                 [DIPAK MISRA, J.]

High Court dismissed the appeals of the claimants. This Court A
referred to the definition of the 'owner' uhder Section 2(30) of
the 1988Act that defines the owner and Section 50 of the 1988
Act that deals with transfer of ownership. That apart, the Court
also took note of the fact that notWithstanding the sale of the
vehicle, neitherthetransferor JitenderGupta northetransferee B
Salig Ram took steps to change the name of the owner in the
certificate of registration of the vehicle. The Court treated
Jitender Gupta to be deemed to continue as the owner of the
vehicle for the purposes of the 1988 Act even though under
the civil law he had ceased to be its owner after its sale. While c
dealing with the facet of liability, the Court referred to the
authority in T. II. Jose (Dr.) II. Chacko P.M. 12 wherein it has
been held thus:
       "There can be transfer of title by payment of consideration
       and delivery of the car. The evidence on record shows D
       that ownership of the car had been transferred. However,
       the appellant still continued to remain liable to third parties
       as his name continued in the records of RTO as the
       owner."·
       Thereafter, the"Court held thus:                                E
       "The decision in T. II. Jose (Dr.) was rendered under the
       Motor Vehicles Act, 1939. But having regard to the
       provisions of Section 2(30) and Section 50 of the Act,
       as noted above, the ratio of the decision shall apply with F
       equal force to the facts of the case arising under the 1988
       Act. On the basis of these decisions, the inescapable
       conclusion is that Jitender Gupta, whose name continued
       in the records of the registering authority as the owner of
       the truck was equally liable for payment of the G
       compensation amount. Further, since an insurance policy
       in respect of the truck was taken out in his name he. was
       indemnified and the claim will be shifted to the insurer,
       Oriental Insurance Company Ltd."
12 (2001   J asec 748                                                 H
1022         SUPREME COURT REPORTS                   [2014) 1.4 S.C.R.


·A           Be it noted, in the said case, the decision rendered in
       Deepa Devi (supra) on the ground that it was rendered on the
       special facts of that case and has no application to the facts of
       the case in hand. Being of this view, it fastened the liability on
       the insurer.
 B          19. In this context, another decision is· apposite to be
     taken note of. In Uttar Pradesh State Road Transport
     Coporation If. Kulsum and others 13 , the question arose if
     an insured vehicle is plying under an agreement or contract
     with the Corporation, on the route as per permit granted in
 C favour of the Corporation, in case of an accident, whether the
     Insurance Company would be liable to pay the compensation
     or would it be the responsibility of the Corporation or the owner.
     The Court referred to Section 103 of the 1988 Act (Uttar
     Pradesh Amendment Act of 1993) wherein the Corporation
 D has been vested with the right to take vehicles on hire as per
     the contract and to ply the same on the roads as the permit
     granted to it. In the said case, according to the terms and'
     conditions of the agreement, t_he mini-bus was to be plied by
     the Corporation on the routes as per the permit issued by the
 E Regional Transport Officer in his favour. Exceptforthe services
    :of the driver which were to be provided by the owner, all other
     rights of the owner were to be exercised by the Corporation
     only. The co.nductor was to be an employee of the Corporation
     and he was authorised and entitled to collect the money after
 F issuing tickets to the passen·gers and had.the duty to perform
     all the incidental and connected activities as a conductor on
     behalf of the Corporation. When'~ claim was lodged before
     the Tribunal, it allowed the claim petition placing reliance on
     Kailash Nath Kothari's case. Being aggrieved, the
 G · Corporation preferred appeal and the owner of the bus also
     filed a cross-objection against the finding recorded by the
     tribunal holding therein that the insurance company was not
     liable to make the payment and had fastened the liability on

 H "(2011) a sec 142
    HDFC BANK LTD. v. KU MARI RESHMAAND ORS.                         1023
                [DIPAK MISRA, J.]

the owner on account of alleged breach of insurance policy. A
The Court analysed the definition under Section 2(30) of the
 1988 Act, Section 103(1-A) which has been inserted by the
 Uttar Pradesh Amendment Act 5of1993, Sections 146 and
 149 of the 1988 Acts and thereafter referred to the authority in
 Kai/ash Nath Kothari (supra) and distinguished the same B
by holding thus:-
     " In our considered opinion, in the light of the drastic and
     distinct changes incorporated in the definition of"owner"
     in the old Act and the present Act, Kai/ash Nath case
     has no application to the facts of this case. We were C
     unable to persuade ourselves with the specific question
     which arose in this and connected appeals as the
     question projected in these appeals was neither directly
     nor substantially in issue in Kai/ash Nath case. Thus,
     reference to the same may not be of much help to us. D
     Admittedly, in the said case, this Court was dealing with
     regard to earlier definition of "owner" as found in Section
     2(19) of the old Act.
     )()()(           )()()(         )()()(          )()()(
                                                                     E
     A critical examination of both the definitions of the "owner"
     would show that it underwent a drastic change in the Act
     of 1988, already reproduced hereinabove. In our
     considered opinion, in the light of the distinct changes
     incorporated in the definition of "owner" in the old Act        F
     and the present Act, Kai/ash Nath Kothari case shall
     have no application to the facts of this case".
      2.0. Thereafter, the Court referred to the relevant clauses
in the agreement and opined that:
     "A critical examination thereof would show that the G
     appellant and the owner had specifically agreed that the
     vehicle will be insured and a driver would be provided bf
     owner of the vehicle but overall control, not only on the
     vehicle but also on the driver, would be that of the
                                                                     H
                     •

1024             SUPREME COURT REPORTS                    [2014] 14 S.C.R.


 A              Corporation. Thus, the vehicle was given on hire by the
                owner of the vehicle together with its existing and running
                insurance policy. In view of the aforesaid terms and
                conditions, the Insurance Company cannot escape its
                liability to pay the amount of compensation.
 B               There is no denial of the fact by the Insurance Company
                 that at the relevant point of time the vehicle in question·
                 was insured with it and the policy was very much in force
                 and in existence. It is also not the case of the Insurance
                 Company that the driver of the vehicle was not holding a
                 valid driving licence to drive the vehicle. The Tribunal has
                 also held that the driver had a valid driving licence at the
                time of the accident. It has also not been contended by it
               · that there has been violation of the terms and conditions
                 of the policy or that the driver was not entitled to drive the
 D               said vehicle".
             21. After so stating, the Court took note of the fact that
       the insurance company had admittedly received the amount
       of the premium; that there was no difference in the tariff of
       premium in respect of the vehicles insured at the instance of
 E     the owner or for the vehicle which is being attached with the
       Corporation; that no statutory duty is cast on the owner under
       the Act or under any rules to seek permission from the insurer
       to get the vehicle attached with the Corporation. On the
       aforesaid reasoning, the Court held the insurer liable.
 F
             22. Recently in Purnya Kala Devi II. State of Assam
       &Anr. 14, a three-Judge Bench was dealing with the issue when
                                                                                  •
                                                                                  I

       an offending vehicle is that under the requisition of the State            F
       Government under the Assam Requisition and Control of·
.G     Vehicles Ac( 1968 ('Assam Act', for short) the registered owner
       would' be liable or the State Government that has requisitioned
       the vehicle. The Court referred to the definition of the term
       'owner' under the 1939 Act as well as the 1988 Act. As was
       necessary in the said case, the Court referred to the relevant
 H     14
            2014 (4) SCALE 586
    HDFC BANK LTD. v. KUMARI RESHMAAND ORS.                       1025
                [DIPAK MISRA, J.]

provisions pertaining to release from the requisition under the A
Assam Act. After analyzing the provisions, the three-Judge
Bench set aside the award passed by the High Court which
had held that owner was liable solely on the basis of the
definition of the word 'owner' contained in Section 2(30) of the
1988 Act. The dictum laid down in the said case is as follows: B
     "The High Court failed to appreciate that at the relevant
     time the offending vehicle was under the requisition of
     Respondent No. 1 - State of Assam under the provisions
     of the Assam Act. Therefore, Respondent No. 1 was
     squarely covered under the definition of "owner" as C
     contained in Section 2(30) of the 1988 Act. The
     High Court failed to appreciate the underlying
     legislative intention in including in the definition of "owner''
     a person in possession of a vehicle either under an
     agreement of lease or agreement of hypothecation or D
     under a hire-purchase agreement to the effect that a
     person in control and possession of the vehicle should
     be construed as the "owner'' and not alone the registered
     owner. The High Court further failed to appreciate the
      legislative intention that the registered owner of the E
      vehicle should not be held liable if the vehicle was not in
      his possession and control.· The High Court also failed ·
      to appreciate that Section 146 of the 1988Act requires
      that no person shall use or cause or allow any ·other
      perspn to use a motor vehicle in a public place without F
      an insurance policy meeting the requirements of Chapter
     XI of the 1988 Act and the State Government has
     violated the statutory provisions of the 1988 Act. "
      (Emphasis supplied)
      23. In the present case, as the facts have been unfurled, G
the appellant bank had financed the owner for purchase of the
vehicle and the owner had entered into a hypothecation
agreement with the bank. The borrower had the initial obligation
to insure the vehicle, but without insurance he plied the vehicle
                                                                   H
. 1026         SUPREME COURT REPORTS                   [2014] 14 S.C.R.


  A      on the road and the accident took place. Had the vehicle been
         insured, the insurance company would have been liable and
         notthe owner. There is no cavil over the fact thatthe vehicle
         was subject of an agreement of hypothecation and _was ih
         possession and control under the respondent no.2. The.High
  B      Court has proceeded both in the main judgment as well as in
         the .review that ·the financier steps into the shoes of the owner.
         Reliance placed on Kachraji Rayamalji (supra), in our
         considered opinion, was inappropriate because in the instant
         case all the documents were filed by the bank. In the said
  C      case, two-Judge Bench of this Court had doubted the
         relationship between the appellant and the respondent therein
         from the hire-purchase agreement. Be that as it may, the said
         case rested on its own facts. The decision in Kai/ash Nath
         Kothari (supra), the Court fastened the liability on the
  o      Corporation regard being had to the definition of the 'owner'
         who was in control and possession of the vehicle. Similar to
         the effect is the judgment in Deepa Devi (supra). Be it stated,
         in the said case the Court ruled that the State shall be liable to
         pay the amount of compensation to the claimant and not the
  E      registered owner of the vehicle and the insurance company.
         In the case of Degala Satyanarayanamma (supra), the
         learned Judges distinguished the ratio in Deepa Devi (supra)
         on the grourid that it hinged on its special facts and fastened
         the liability on the insurer. In Ku/sum (supra), the principle
  F      stated in Kai/ash Nath Kothari (supra) was distinguished and
         taking note of the fact that at the relevant time, the vehicle in
         question was insured with .it and the policy was very much in
         force and hence, the insurer was liable to indemnify the owner.
            24. On a careful analysis of the principles stated in the
  G · foregoing cases, it is found that there is a common thread that
      the person in possession of the vehicle under the hypothecation
      agreement has been treated as the owner. Needless to
      emphasise, if the vehicle is insured, the insurer is bound_ to
      indemnify unless there is violation of the terms of the policy
  H under which the insurer can seek exoneration.                   ·
      HDFC BANK LTD. v. KUMARI RESHMAAND ORS.                            1027
                  [DIPAK MISRA, J.]

           25. In Purnya Kala Devi (supra), a three-Judge Bench          A
   has categorically held that the person in control and possession
   ofthe vehicle under an agreement of hypothecation should be
   construed as the owner and not alone the registered owner
   and thereafter the Court has adverted to the legislative intention,
. 'and ruled that the registered owner of the vehicle should not         B
   be held liable if the vehicle is not in his possession and control.
   There is reference to Section 146 of the Act that no person
   shall use or.cause or allow any other person to use a motor
   vehicle in a public place without insurance as that is the
   mandatory statutory requirement under the 1988Act. In the             C
   instant case, the predecessor-in-interest of the appellant,
   Centurion Bank, was the registered owner along with
   respondent no.2. The respondent no. 2 was in control and
   possession of the vehicle. He had taken the vehicle from the
   dealer without paying the full premium to the insurance company       D·
   and thereby getting the vehicle insured. The High Court has
   erroneously opined that the financier had the responsibility to
   get the vehicle insured, if the borrower failed to insure it. The
   said term In the hypothecation agreement does not convey
   that the appellant financier had become the owner and was in          E
   control and possession of the vehicle. It was the absolute fault
   of the respondent no.2 to take the vehicle from the dealer
   withoutfull payment of the insurance. Nothing has been brought
   on record that this fact was known to the appellant financier or
   it was done in collusion with the financier. When the intention        F
   of the legislature is quite clear to the effect, a registered owner
   of the vehicle should not be held liable if the vehicle is not in
   his possession and control and there is evidence on record
   that the respondent no.2, without the insurance plied the vehicle
   in violation of the statutory provision contained in Section 146      G
   of the 1988 Act, the High Court could not have mulcted the
   liability on the financier. The appreciation by the learned Single
   Judge in appeal, both in fact and law, is wholly unsustainable.


                                                                          H
1028          SUPREME COURT REPORTS                   (2014] 14 S.C.R.


 A            26. In view of the aforesaid premises, we allow the
       appeals and hold that the liability to satisfy the award is that of
       the owner, the respondent no. 2 herein and not that of the
       financier and accordingly that part of the direction in the award
       is set aside. However, as has been conceded to by the learned
 B     senior counsel for the appellant, no steps shall be taken for
       realisation of the amount. There shall be no order as to costs.


       Kalpana K. Tripathy                                Appeals allowed.