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Synopsis

The Supreme Court recently said that the 'owner’ of a vehicle is not limited to the categories specified in Section 2 (30) of the Motor Vehicles Act and if the context so requires, even a person at whose command or control the vehicle is, could be treated as its owner for the purposes of fixing tortious liability for payment of compensation.

A bench of Justices J B Pardiwala and Manoj Misra allowed an appeal of one Vaibhav Jain, by holding that the appellant, being just a dealer of M/s Hindustan Motors, was not liable for compensation as an owner of the vehicle.

Court rejected the submission of the counsel for M/s Hindustan Motors that it could not be saddled with liability for payment of compensation in view of clauses 3 (b) and 4 of the Dealership Agreement.

"In absence of specific exclusion of tortious liability arising from the use of such vehicle, the owner cannot be absolved of its liability under the Motor Vehicles Act and shift it on to the dealer when the vehicle at the time of the accident was under the control and command of the owner (i.e., M/s Hindustan Motors) through its own employees," the bench said.

As per facts of the case, M/s Hindustan Motors Private Limited was the manufacturer of the vehicle, and Vaibhav Jain, proprietor of M/s Vaibhav Motors, was the dealer of the manufacturer.

The deceased, Pranay Kumar Goswami was M/s Hindustan Motors' Territory Manager whereas the driver of the vehicle was the company's Service Engineer. Thus, the driver and the deceased were employees of M/s Hindustan Motors. The accident took place when the vehicle was taken out for a test drive from the dealership of the appellant.

On a claim petition for compensation, the tribunal held M/s Hindustan Motors as well as M/s Vaibhav Motors (the appellant) jointly and severally liable for the compensation awarded. On the issue of ownership, the tribunal held that on the day of the accident, M/s Hindustan Motors was the owner of the vehicle though Vaibhav Motors was in possession of the vehicle as its dealer.

On appeal, the high court enhanced the compensation to be given to the claimants and rejected the dealer's plea against the decision, holding him jointly and severally liable for payment of the compensation.

In his arguments, the appellant dealer contended that Clauses 3 (b) and 4 of the Dealership Agreement, relied to fasten liability on him, were in respect of defects in the vehicle and not in respect of any claim for compensation arising from an accident involving the vehicle.   

He further argued that the concept of a possessory owner, as defined in Section 2(19) of the Motor Vehicles Act, 1939, is no longer applicable under the MV Act, 1988, as the definition of "owner" has significantly changed.

"Once it is established that appellant is neither owner nor driver of the vehicle, he cannot be made liable for the compensation," his counsel submitted.

On the other hand, M/s Hindustan Motors contended that the vehicle in the case was sold and delivered to the dealer on a principal to principal to basis and once the vehicle was sold and delivered to the dealer, the driver and the dealer alone would be liable for compensation.

The bench noted that in Godavari Finance Company Vs Degala Satyanarayanamma & Ors (2008), it was held that the financier was not liable, interpreting the definition of ‘owner’, as provided in Section 2(30).

In Rajasthan State Road Transport Corporation Vs Kailash Nath Kothari & Ors (1997), the RSRTC was held vicariously liable for a hired vehicle for the tort committed by a person under its control and command.

The bench pointed out that the clause defining “owner” is prefaced with the expression “unless the context otherwise requires” and, therefore, in the light of an earlier decision of the top court in Ramesh Mehta Vs Sanwal Chand Singhvi & Ors (2004), it was held that where the context makes the definition given in the interpretation clause inapplicable, the same meaning cannot be assigned.          

In the case, the court noted at the time of the accident, the driver and the co-passenger of that vehicle were employees of M/s Hindustan Motors.

"There is nothing on record to suggest that the dealer had the authority to deny those two persons permission to take the vehicle for a test drive. More so, when they were representatives of the owner of the vehicle. In these circumstances, we can safely conclude that at the time of accident, the vehicle was not only under the ownership of M/s Hindustan Motors but also under its control and command through its employees. Therefore, in our view, the appellant, being just a dealer of M/s Hindustan Motors, was not liable for compensation as an owner of the vehicle," the bench said.

Against the award, the appellant (i.e., the dealer) filed an appeal but no appeal was preferred by M/s Hindustan Motors even though a categorical finding was returned by the tribunal that no evidence of sale of the vehicle to the dealer was produced by M/s Hindustan Motors. In view thereof, it does not lie in the mouth of M/s Hindustan Motors to canvass that it was not the owner of the vehicle, the bench noted.

By not challenging the findings of the tribunal's award through an appeal or cross objection, M/s Hindustan Motors has allowed it to attain finality, the bench also pointed out.

Accordingly, court declared M/s Hindustan Motors alone was liable for the compensation awarded and the appellant should not have been burdened with liability to pay compensation.

With regard to relief, the bench noted that in 2018, a special leave petition was dismissed qua the claimant-respondents, so it would not be able to set aside the award to the extent it enabled the claimant-respondents to recover the awarded compensation, jointly or severally, from the owner, dealer, and driver of the vehicle. 

The court, however, made it clear that if the awarded amount, or any part thereof, had been paid, or was paid, by the appellant, the appellant would be entitled to recover the same from M/s Hindustan Motors along with interest at the rate of 6% with effect from the date of payment till the date of recovery. 

Case Title: Vaibhav Jain v. Hindustan Motors Pvt. Ltd.