Gujarat High Court

Parmar Dayalal Arjanbhai vs Kantibhai Damjibhai Kanjaria on 31 March, 2023

Bench: Gita Gopi

     C/SCA/23349/2022                               JUDGMENT DATED: 31/03/2023




        IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

        R/SPECIAL CIVIL APPLICATION NO. 23349 of 2022
                             With
        R/SPECIAL CIVIL APPLICATION NO. 23984 of 2022
                             With
        R/SPECIAL CIVIL APPLICATION NO. 23986 of 2022

FOR APPROVAL AND SIGNATURE:
HONOURABLE MS. JUSTICE GITA GOPI
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       Whether Reporters of Local              Papers   may be
 1
       allowed to see the judgment ?

 2 To be referred to the Reporter or not ?

       Whether their Lordships wish to see the fair copy
 3
       of the judgment ?
   Whether this case involves a substantial question
 4 of law as to the interpretation of the Constitution
   of India or any order made thereunder ?

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                PARMAR DAYALAL ARJANBHAI
                            Versus
               KANTIBHAI DAMJIBHAI KANJARIA
=======================================
Appearance:
MR MAKBUL I MANSURI(2694) for the Petitioner(s) No. 1,2
MS SABINA M MANSURI(3631) for the Petitioner(s) No. 1,2
DHRUVIK K PATEL(7769) for the Respondent(s) No. 3
MR SUNIL B PARIKH(582) for the Respondent(s) No. 2
NOTICE SERVED BY DS for the Respondent(s) No. 1
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 CORAM:HONOURABLE MS. JUSTICE GITA GOPI

                           Date : 31/03/2023
                        COMMON ORAL JUDGMENT

1. Rule. Learned advocates for the respective respondents

C/SCA/23349/2022 JUDGMENT DATED: 31/03/2023

present, waive service.

2. Prayer in these writ petitions has been sought to quash and

set aside the orders dated 13.10.2022, passed below applications

Exh. 24 in Motor Accident Claim Petition Nos. 4, 5 and 6 of 2021

by the learned Motor Accident Claims Tribunal (Main), Principal

District Judge, Devbhumi Dwarka at Khambhalia. The petitioners

herein are the original claimants. By the said applications Exh.

24, the claimants had sought permission to add A.U. Small

Finance Bank Ltd. (AU Bank) as party respondent No. 2, which

was rejected by way of impugned orders.

3. It is the case of the claimants - petitioners that there was a

Hire Purchase Agreement between the owner of the vehicle and

the Financier and as per the respondent No. 3, who had appeared

as party respondent, the Bolero Pick-up is financed under an

Agreement for Loan and Guarantee Cum Hypothecation,

executed between respondent Nos. 1 to 3 and on that basis, the

claimant had moved applications in each claim petition for joining

AU Bank as opponent No. 2.

4. Learned advocate Mr. M. I. Mansuri for the appellant,

relying upon a decision of this Court in Himmatnagar Nagrik

C/SCA/23349/2022 JUDGMENT DATED: 31/03/2023

Sahakari Bank Ltd. v. Sureshkumar Jayantilal Thakkar,

2016 (4) GLR 3485, submitted that bank being the financier,

having entered into the hypothecation agreement, which

contains stipulation of paying the premium for the policy and

various stipulations on the Agreement for Loan and Guarantee

cum Hypothecation document under the head of Insurance and

Maintenance, lays down all the responsibilities on the financier

since the borrower had expressly agreed to pay advance

premium along with his loan EMIs and the bank was entitled to

credit the amount of advance premium for the insurance policy

so received with the amount of loan EMI to the account of the

borrower which shall be debited at the time of renewal of the

insurance policy. The learned advocate for the petitioner thus

submitted that, all the terms and conditions of the Agreement for

Loan and Guarantee cum Hypothecation are required to be

proved during the course of trial and whether in the terms and

conditions, the financier would become the owner or not would

be a matter of cross-examination and hence, it is submitted that

since in the decision in Himmatnagar Nagrik Sahakari Bank

Ltd. (supra), this fact was taken into consideration and the

award passed against the bank was upheld and it was laid down

that the bank was liable to pay the compensation to the victim of

accident.

C/SCA/23349/2022 JUDGMENT DATED: 31/03/2023

5. While countering the arguments, learned advocate

Mr. Dhruvik Patel for the respondent No. 3, relying on the

decisions in Central Bank of India v. Jagbir Singh, (2015) 4

SCC 788 and HCFC Bank Ltd. v. Reshma and Others, (2015)

3 SCC 679, submitted that the liability of the bank to get the

vehicle insured is only till the vehicle comes out on road and the

creditor bank is not liable to get insurance policy renewed on

behalf of the owner of the vehicle from time to time and the

person in control and possession of the vehicle under

hypothecation, should be construed as owner. It is further

submitted that the financier would not be liable to pay the

compensation in case of accident caused by the vehicle when

vehicle under hypothecation, is not insured by the borrower who

is in possession of the vehicle.

6. While, learned advocate Mr. Sunil Parikh for the respondent

No. 2 - Go-Digit General Insurance Company, relying on a

decision in Tata Motors Ltd. (Tata Finance Ltd.) v.

Kapilaben Wd./o. Deed. Pravin Bhai Keshurbhai Chauhan,

2016 ACJ 825, submitted that the owner and the financier would

be jointly and severally liable since the hypothecation document

between the parties deals with their liabilities and when the

finance company fails to take the insurance policy and the person

C/SCA/23349/2022 JUDGMENT DATED: 31/03/2023

in possession of the vehicle also fails to ensure that the

agreement is enforced in accordance with the terms and

conditions and when there is no insurance policy on record, then

it would be the responsibility of the financier to pay the

compensation.

7. A copy of the Agreement for Loan and Guarantee cum

Hypothecation is produced in all the matters and terms and

conditions with regard to the Insurance and Maintenance are laid

down in paragraph 10, which included conditions 10.1 to 10.15.

It is an agreement between the financier - AU Bank and the

borrower in context of the involved vehicle.

7.1 In the case of Himmatnagar Nagrik Sahakari Bank Ltd.

(supra), a question was raised for consideration: as to whether

the financier, who entered into hypothecation agreement and

agreement of pledge with the borrower, could be held jointly and

severally liable to pay the compensation to the victim of the

accident. In the said case, name of the registered owner of the

vehicle before the RTO was 'Himmatnagar Nagrik Sahakari Bank

Ltd." being the financier. After referring to the conditions of the

agreement, it was observed that the bank could be the owner in

terms of the definition contained in the MV Act.

C/SCA/23349/2022 JUDGMENT DATED: 31/03/2023

7.2 Here, in this case, the Tribunal having observed the

definitions of the term 'Hirer' and owner', as defined in Sections

2(e) and 2(f) of the Hire Purchase Act, 1972. Section 2(30) of the

MV Act defines 'Owner' as under:

"(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 of hypothecation, the person in possession of the vehicle under that agreement."

7.3 The definition of 'Owner' thus would be subject to the Hire

Purchase Agreement or an Agreement of Lease or an Agreement

of Hypothecation with the clarification of the person in possession

of the vehicle under that agreement. Here, in this case, the

Tribunal has not permitted the owner of the vehicle to prove the

conditions laid down in the agreement, and prematurely, has

rejected the applications moved by the claimants, where they

had made a prayer to join AU Bank as a party respondent. The

liability of the parties could be recorded only after an opportunity

has been granted to adduce the evidence. Without the financier

being on record, the terms and conditions between the owner of

the vehicle and the financier could not be proved and it is also in