Holding

When a vehicle is requisitioned by the State, the State (or its officer) is deemed to be in control and is liable to pay compensation, not the registered owner or the insurer.

Summary

During the 1993 Assembly elections, a Maruti Gypsy owned by Respondent No.3 and insured by National Insurance Co. Ltd. was requisitioned by the Sub‑Divisional Magistrate under the Representation of the People Act. While the magistrate was travelling in the vehicle, it met with an accident that caused the death of a boy. The boy's heirs filed a claim for compensation under Section 166 of the Motor Vehicles Act, 1988. The Motor Accident Claims Tribunal held the insurer not liable; the Himachal Pradesh High Court reversed that decision, holding the vehicle owner, the State Government and the insurer jointly liable. On appeal, the Supreme Court examined the definition of "owner" in the 1988 Act and observed that when a vehicle is requisitioned, the State exercises control over it, thereby assuming liability for any accident. Consequently, the Court held that the State, not the registered owner or the insurer, is liable to pay compensation. The appeal was allowed and the High Court judgment set aside.

Issues considered

Whether the State or the registered owner/insurer is liable to pay compensation when a vehicle is requisitioned by the State for election duty under the Motor Vehicles Act, 1988.

Legislation cited

Motor Vehicles Act, 1939s. 2(19)
Motor Vehicles Act, 1988s. 166, s. 2(30)
Representation of the People Act, 1951

Subjects

Motor Vehicles Actliabilityvehicle requisitionelection dutyState liabilityinsurancecompensationSection 166Representation of the People Act

Judgment

A NATIONAL INSURANCE CO. LTD.
v.
DEEPA DEVI AND ORS.
DECEMBER 11, 2007
B [S.B. SINHA AND LOKESH\VAR SINGH PANTA, JJ.]

Motor Vehicles Act, 1988: ss.2(30) and 166 - Requisitioning
of vehicle by State for use in the election duty - Liability to pay
compensation to victim of accident - Held: Is on the State and not
c the registered owner of vehicle or its insurer - Motor Vehicles Act,
1939 - s.2(19) - Representation of the People Act, 1951.
The vehicle in question belonging to respondent No.3 was
requisitioned during the Assembly Elections by SDM, and was
D in his possession and control. The SDM was travelling in the
said vehicle when accident took place resulting in death of one
boy. The heirs and LRs of deceased boy filed claim petition for
compensation. MACT held that under the terms of insurance
policy, the appellant-insurer was not liable to reimburse the
E owner of vehicle as regards his liability to pay compensation on
account of the accident. On appeal, High Court held that the
owner of the vehicle, the State Government and insurer were
jointly and severally liable to pay the compensation.
In appeal to this Court, the appellant-insurer contended
F that having regard to the definition of 'owner' as contained in s. ..
2(30) of the Motor Vehicles Act, 1988 and as the vehicle in
question was not used for the purpose for which the contract of
insurance was entered into, the judgment of the High Court was
not sustainable.
G
Allowing the appeal, the Court
HELD: 1.1. For the period the vehicle requisitioned by the
State remains under the control of the State and/or its officers,
H 134
NATIONAL INSURANCE CO. LTD. v. DEEPADEVI 135
AND ORS.
the State shall be liable to pay the amount of compensation to A
the claimants and not the registered owner of the vehicle or the
insurer. [Paras 10, 18] [139-D, 144-E]
National Insurance Co. Ltd. v. Durdadahya Kumar Sama!
and Ors. 1988 (2) T.A.C. 25; New India Assurance Co. Ltd. v. S. B
Ramulamma and Ors. (1989) ACJ 596; Chief Officer, Bhavnagar
Municipality and Anr. v. Bachubhai Arjanbhai and Ors. AIR 1996
Gujarat 51 - approved
Rikhi Ram and Anr. v. Sukhrania (Smt) and Ors. (2003) 3
SCC 97- Distinguished. C
1.2. The Parliament while enacting the Motor Vehicles Act,
1939 or the Motor Vehicles Act, 1988 did not take into
consideration a situation of this nature. If in a given situation,
the statutory definitions contained in the 1988 Act cannot be D
given effect to in letter and spirit, the same should be understood
from the common sense point of view. No doubt, respondent
Nos. 3 and 4 continued to be the registered owner of the vehicle
despite the fact that the same was requisitioned by the SDM in
exercise of its power conferred upon him under the E
Representation of the People Act. It is not a case where the car
was handed over to a person with consent of the owner thereof.
The owner of the vehicle could not refuse to abide by the order
of requisition of the vehicle by the Deputy Commissioner. While
the vehicle remains under requisition, the owner does not exercise F
any control thereover. The driver may still be the employee of
the owner of the vehicle but 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 G
thereover. [Para 10) [138 G-H, 139 A-CJ
Rajasthan State Road Transport Cmporation v. Kai/ash Nath
Kothari and Ors. (1997) 7 SCC 481; Guru Govekar v. Miss
Filomena F Lobo and Ors. (1988) 3 SCC I; J\1ukesh K. Tripathi
H
136 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A v. Senior Division Manager, LIC and Ors. (2004) 8 SCC 387;
Pandey & Co. Builders (P) Ltd. v. State of Bihar and Anr. (2007)
1 sec 467 - referred to
CIVIL APPELLATE illRlSDICTION: Civil Appeal No. 5796
B of2007
From the Judgment and Order dated 17.5.2005 of the High
Court of Himachal Pradesh at Shimla in FAO (MVA) No. 208 of
1997.

c Parmanand Gaur for the Appellant.
J.S. Attri and B.K. Satija for the Respondents.
The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
D
2. The short question involved in this appeal arising out of a
judgment and order dated 17.05.2005 passed by the High Court of
Himachal Pradesh in FAO (MVA) No. 208of1997 is as to whether
in the event a car is requisitioned by the State for the purpose of
E deploying the same in the election duty, who would be liable to pay
compensation to the victim of the accident in terms of the provisions
of the Motor Vehicles Act, 1988 (for short ''the 1988 Act").
3. Respondent No. 3 was the owner of a Maruti Gypsy bearing
Registration No. HIS 6095. Appellant-Company issued a policy of
F insurance in favour of Respondent No. 4 for the said Maruti Gypsy for
the period 10.06.1993 to 9.06.1994. In regard to limitation of its use,
the insmance policy provided:
"For private car IXI and Motor Cycle/Scooter IYI.
G Use only for social, domestic and pleasures and insmed's own
purpose"
4. The car in question was requisitioned during the Assembly
Elections in the year 1993 by the Sub-Divisional Magistrate Rampur
H through the Deputy Commissioner, Shimla. The said vehicle was in
NATIONAL INSURANCE CO. LTD. v. DEEPADEVI 137
AND ORS. [SINHA, J.]
possession as also under the control of the said officer. On or A
' about 17.11.1993 while the Sub-Divisional Magistrate Rampur was
travelling in the said vehicle, an accident occurred as a result whereof
a boy named Satish Kumar sustained injuries. He later on expired.
5. Respondent No. 1 Deepa Devi and Joginder being the heirs
B
and legal representatives of the deceased filed an application for
compensation in terms of Section 166 of the 1988 Act. The State of
-' Himachal Pradesh as also the Sub-Divisional Magistrate Rampur were
impleaded therein. The Motor Accident Claims Tribunal ill its judgment
dated 28.09.1996 upheld the contention of the Insurance Company c
that under the terms of the insurance policy, it was not liable to reimburse
the owner of the vehicle as regards his liability to pay compensation
on account of said accident. A Division Bench of the High Court,
however, by reason of the impugned judgment, has set aside the said
award of the Tribunal, holding: D
"In view of the above discussion, the appeal is allowed and the
award of the Tribunal is modified and it is held that the owner
of the vehicle, the State Government and the Insurance Company
are all jointly and severally liable to pay the compensation. Since
the vehicle was insured with the Insurance Company it shall E
deposit the amount payable to the claimants ... "
6. Mr. Parmanand Gaur, learned counsel appearing on behalf of
the appellant, submitted that having regard to the definition of' owner'
as contained in Section 2(30) of the 1988 Act and as the vehicle in F
question was not used for the purpose for which the contract of
insurance was entered into, the judgment of the High Court cannot be
sustained. Strong reliance in this behalf has been placed on Rajasthan
State Road Transport Corporation v. Kailash Nath Kothari and
Others [(1997) 7 SCC 481]. G
7. Mr. J.S. Attri, learned counsel appearing on behalf of
·'· Respondent Nos. 5 and 6, on the other hand, would support the
judgment contending that this Court in Guru Govekar v. Miss
Filomena F Lobo and Others [(1988) 3 SCC 1] has categorically
H
138 SUPREMECOURTREPORTS [2007] 13(Addl.)S.C.R.

A held that even if the vehicle remains in possession of a third party,
the registered owner of the vehicle shall continue to be the owner
within the meaning of the provisions of the 1988 Act and, thus,
would be liable for payment of damages to the victims of an accident.
8. The 1988 Act was enacted to consolidate and amend the law
B
relating to motor vehicles. It repeals and replaces the Motor Vehicles
Act, 1939 (for short "the 1939 Act").

9. "Owner'' has been defined in Section 2(19) of the 193 9 Act
to mean:
c
"In this Act, unless the context otherwise requires,

*** *** ***
(19) "owner" means, where the person in possession of a motor
D vehicle is a minor, the guardian of such minor, and in relation to
a motor vehicle which is the subject of a higher purchase
agreement, the person in possession of the vehicle under that
agreement;"
However, the said definition underwent a change by reason of
E Section 2(30) of the 1988 Act providing:

"In this Act, unless the context otherwise requires,
*** *** ***
F (30) "owner" means 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 ofhypothecation, the person in possession of
G the vehicle under that agreement;"
l 0. Parliament either under the 1939 Act or the 1988 Act did
not take into consideration a situation of this nature. No doubt,
Respondent Nos. 3 and 4 continued to be the registered owner of
the vehicle despite the fact that the same was requisitioned by the
H
NATIONAL INSURANCE CO. LTD. v. DEEPADEVI 139
AND ORS. [SINHA, J.]

District Magistrate in exercise of its power conferred upon it under A
-/ the Representation of People Act. A vehicle is requisitioned by a
statutory authority, pursuant to the provisions contained in a statute.
The owner of the vehicle cannot refuse to abide by the order of
requisition of the vehicle by the Deputy Commissioner. While the
vehicle remains under requisition, the owner does not exercise any B
control thereover. The driver may still be the employee of the
owner of the vehicle but 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 c
as to whether the vehicle should be driven at 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 the D
State and/ or its officers, the owner is only entitled to payment of
compensation therefor in terms of the Act but he cannot not exercise
any control thereupon. In a situation of this nature, this Court must
proceed on the presumption that the Parliament while enacting the
1988 Act did not envisage such a situation. If in a given situation, E
the statutory definitio_ns contained in the 1988 Act cannot be given
effect to in letter and spirit, the same should be understood from
the common sense point of view.

-<
11. In Mukesh K. Tripathi v. Senior Division Manager, LIC F
and Others [(2004) 8 SCC 387], this Court observed:
"The interpretation clause contained in a statute although may
deserve a broader meaning having employed the word "includes"
but therefor also it is necessary to keep in view the scheme of
the object and purport of the statute which takes him out of the G
said definition. Furthermore, the interpretation section begins with
~
the words "unless the context otherwise requires".
In Ramesh Mehta v. Sanwal Chand Singhvi, it was noticed:
(SCC p. 426, paras 27-28) H
140 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A "A definition is not to be read in isoiation. It must be read in the
context of the phrase which would define it. It should not be
vague or ambiguous. The definition of words must be given a
meaningful application; where the context makes the definition
given in the interpretation clause inapplicable, the same meaning
B cannot be assigned.
In State of Maharashtra v. Indian Medical Assn. one of us (V.N.
Khare, CJ.) stated that the definition given in the interpretation
clause having regard to the contents would not be applicable. It
c was stated: (SCC p. 598, para 8)
'A bare perusal of Section 2 of the Act shows that it starts with
the words "in this Act, unless the context otherwise requires ... ".
Let us find out whether in the context of the provisions of Section
64 of the Act the defined meaning of the expression "management"
D can be assigned to the word "management" in Section 64 of the
Act. In para 3 of the Regulation, the Essentiality Certificate is
required to be given by the State Government and permission to
establish a new medical college is to be given by the State
Government under Section 64 of the Act. If we give the defmed
E meaning to the expression "management" occurring in Section
64 of the Act, it would mean the State Government is required
to apply to itself for grant of permission to set up a government
medical college through the University. Similarly it would also
mean the State Government applying to itself for grant of
F Essentiality Certificate under para 3 of the Regulation. We are
afraid the defined meaning of the expression ''management" cannot
be assigned to the expression "management" occurring in Section
64 of the Act. In the present case, the context does not permit
or requires to apply the defined meaning to the word
G "management" occurring in Section 64 of the Act.'"
[See also Pandey & Co. Builders (P) Ltd. v. State of Bihar
and Another (2007) 1 SCC 467] "
12. In Guru Govekar (supra), this Court was considering the
H
~

NATIONAL INSURANCE CO. LTD. v. DEEPADEVI 141
AND ORS. [SINHA, J.]
definition of '.owner' under the 1939 Act. Therein the car was handed A
over to a mechanic for carrying out certain electrical repairs to the car,
when the accident occurred. This Court in the said fact situation held:
"14. Thus on the facts of the case before us we are of the view
that the insurer is liable to pay the compensation found to be due
B
to the claimant as a consequence of the injuries suffered by her
in a public place on account of the car colliding with her on
account of the negligence of the mechanic who had been engaged
by the repairer who had undertaken to repair the vehicle by
virtue of the provisions contained in Section 94 of the Act which c
provides that no person shall use except as a passenger or cause
or allow any other person to use a motor vehicle in a public
place, unless there is in force in relation to the use of the vehicle
by that person or that other person, as the case may be, a policy
of insurance complying with the requirements of Chapter VIII of D
the Act. Any other view will expose innocent third parties to go
without compensation when they suffer injury on account of such
motor accidents and will defeat the very object of introducing
the necessity for taking out insurance policy under the Act."
13. It is not a case where the car was handed over to a person E
with consent of the owner thereof When a vehicle is requisitioned, the
owner of the vehicle has no other alternative but to handover the
possession to statutory authority.
14. We are not oblivious of another decision of this Court in F
Rikhi Ram and Another v. Sukhrania (Smt) and Others [(2003) 3
SCC 97] wherein keeping in view the provisions of Sections 94 and
95 of the 1939 Act, a plea taken by the owner of the car that he has
transferred the same in favour of another person and, thus, he had no
liability for payment of compensation was negatived, stating: G
"5. The aforesaid provision shows that it was intended to cover
,;
two legal objectives. Firstly, that no one who was not a party to
a contract would bring an action on a contract; and secondly,
that a person who has no interest in the subject-matter of an
H
142 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A insurance can claim the benefit of an insurance. Thus, once the
vehicle is insured, the owner as well as any other person can use
the vehicle with the consent of the owner. Section 94 does not
provide that any person who will use the vehicle shall insure the
vehicle in respect of his separate use.
B
6. On an analysis of Sections 94 and 95, we fu.rther find that
there are two third parties when a vehicle is transferred by the
owner to a purchaser. The purchaser is one of the third parties
to the contract and the other third party is for \vhose benefit the
c vehicle was insured. So far, the transferee who is the third party
in the contract, cannot get any personal benefit under the policy
unless there is a compliance with the provisions of the Act.
However, so far as third-party injured or victim is concerned, he
can enforce liability undertaken by the insurer."
D We are also not concerned with such a situation.
15. In Kai/ash Nath Kothari (supra), however, this Court in a
case, where a bus was given on lease by the owner of the vehicle Shri.
Sanjay Kumar in favour of the Rajasthan State Road Transport
E Corporation, held that when an accident takes place when the bus was
plied under the control of the Corporation, it was the Corporation
alone who would be liable for payment of compensation, stating:
" ... Driver of the bus, even though an employee of the owner,
was at the relevant time performing his duties under the order
F and command of the conductor of RSRTC for operation of the
bus. So far as the passengers of the ill-fated bus are concerned,
their privity of contract was only with the RSRTC to whom they
had paid the fare for travelling in that bus and their safety therefore
became the responsibility of the RSRTC while travelling in the
G bus. lbey had no privity of contract with Shri Sanjay Kumar, the
owner of the bus at all. Had it been a case only of transfer of
services of the dri · e1 and not of transfer of control of the driver
from the owner to RSRTC, the matter may have been somewhat
different. But on facts in this case and in view of Conditions 4
H
-;
NATIONAL INSURANCE CO. LTD. v. DEEPA DEVI 143
AND ORS. [SINHA, J.]
to 7 of the agreement ( supra ), the RSRTC must be held to be A
vicariously liable for the tort committed by the driver while plying
the bus under contract of the RSRTC. The general proposition
of law and the presumption arising therefrom that an employer,
that is the person who has the right to hire and fire the employee,
is generally responsible vicariously for the tort committed by the B
employee concerned during the course of his employment and
within the scope of his authority, is a rebuttable presumption. 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 c
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 D
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 RSRTC but actual control and the E
driver was to act under the instructions, control and command
of the conductor and other officers of the RSRTC."
We may also notice at this stage certain judgments of some High
Courts. F
16. In The National Insurance Co Ltd v. Durdadahya Kumar
Sama! and Others [1988 (2) T.A.C. 25] where the vehicle was
requisitioned by the Collector for election duty, the High Court of
Orissa held:
G
"In a vehicle requisitioned, the driver remains under the control
......
of the Collector and by such driving the vehicle he can be accepted
to have been employed by the Collector. Thus, the Collector
would be vicariously liable for the act of the driver in the present
case." H
-'"': -
144 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A [See also New India Assurance Co. Ltd v. S. Ramulamma
and others 1989 ACJ 596]
17. In Chief Officer, Bhavnagar A1unicipality and another v.
Bachubhai Arjanbhai and others [AIR 1996 Gujarat 51], the High
B Court of Gujarat held:
"7. The fucts on record clearly indicate that the vehicle in question
which belonged to the State of Gujarat was entrusted to the
Municipality for distribution of water to the citizens. It was implicit
in allowing the vehicle being used for such purpose that the State
c of Gujarat which owned the vehicle also caused or allowed any
driver of the Municipality who was engaged in the work of
distribution of water to the citizens, to use motor vehicle for the
purpose. Therefore, when the vehicle was driven by the driver
of the Municipality and the accident resulted due to his negligence,
D the insurer of the vehicle became liable to pay t.11e compensation
under the provisions of the Act. It is, therefore, held that the
State, as the owner of the vehicle and the respondent Insurance
Company as its insurer were also liable to pay the compensation
awarded by the Tribunal ... "
E
18. We, therefore, are of the opinion that the State shall be liable
to pay the amount of compensation to the claimants and not the
registered owner of the vehicle and consequently the appellant herein.
17. For the reasons aforementioned, the impugned judgment
F cannot be upheld. It is set aside accordingly. The appeal is allowed.
No costs.
D.G Appeal allowed.