The Supreme Court has ruled that in motor accident compensation claims, the registered owner remains liable to pay until the transfer of ownership is formally completed, and such liability must be indemnified by the insurer, even if the vehicle has been sold or possession handed over.
A Bench of Justice K. Vinod Chandran and Justice N. V. Anjaria allowed appeals filed by Brij Bihari Gupta, setting aside a Chhattisgarh High Court ruling that had absolved the insurer of liability and placed the entire burden on the appellant, who was driving the goods vehicle involved in the accident.
Background of the Case
The case arose from a motor accident that resulted in multiple claims for death and injuries. The Motor Accidents Claims Tribunal (MACT) awarded compensation in 11 claim petitions, holding the registered owner, the driver (appellant), and the insurance company jointly and severally liable.
The insurance company challenged only three awards before the High Court, contending that the victims were gratuitous passengers and that the appellant had taken possession of the vehicle under a sale agreement. The High Court accepted this contention, absolving the insurer of liability, while enhancing compensation in two claimant appeals and dismissing one. The appellant’s review petition against personal liability was rejected, leading to the present appeals.
Arguments Before the Supreme Court
The appellant argued that the victims were petty hawkers travelling with their goods and, therefore, fell within the category of owners of goods under the Motor Vehicles Act, 1988, not gratuitous passengers. It was also contended that legal ownership had not been transferred to him. He further alleged selective challenge by the insurer, which appealed only three of the 11 awards. Reliance was placed on Naveen Kumar v. Vijay Kumar (2018) 3 SCC 1, which fixes liability on the registered owner.
The claimants’ amicus curiae supported the appellant’s stance. The insurer maintained that there was no liability as the victims were gratuitous passengers and the appellant was effectively the owner in possession at the time of the accident.
Court’s Analysis
The Court noted that evidence showed the victims were travelling with goods as owners of those goods — one being a fish monger, the other a vegetable hawker. The insurer’s witness admitted having no knowledge of whether they were travelling with goods. The Tribunal had expressly held:
“…माल वाहक यान में अपनी सामान की सुरक्षा के लिए बैठे व्यक्ति को अनुग्रह यात्री नहीं माना जा सकता।”
The Court held the High Court erred in overturning this factual finding without supporting material. Citing Section 147(1)(b)(i) of the Motor Vehicles Act, the Bench reaffirmed that insurance policies cover owners of goods or their authorised representatives accompanying goods.
On ownership, the Court found the transfer agreement between the registered owner and the appellant transferred only possession, with ownership to pass after full payment and registration change. At the time of the accident, the vehicle remained registered in the name of the original owner, and no intimation of transfer under Section 50 had been given.
Quoting Naveen Kumar, the Court stated:
“The liability to pay falls squarely on the registered owner, even if there has been successive transfers, which has to be indemnified by the insurer.”
The Court also observed that the insurer did not refute the allegation of selectively appealing only three awards.
Decision
The Supreme Court:
- Allowed Civil Appeal Nos. 6338-6339 of 2024 and Civil Appeal No. 6340 of 2024.
- Directed the insurer to satisfy the awards in these appeals.
- Noted that two related appeals stood dismissed as settled in a Lok Adalat.
- Recorded that the Tribunal’s award carried 12% interest from the date of the claim petition, and the High Court’s enhancement carried 6% interest from the same date.
Pending applications were disposed of.
