Rajasthan High Court
Bajaj Auto Finance Limited C/O P.L. ... vs Raghunath (Deceased) ... on 7 October, 2024
Bench: Manindra Mohan Shrivastava, Ashutosh Kumar
[2024:RJ-JP:42076-DB]
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
D.B. Civil Reference No. 3/2022
Bajaj Auto Finance Limited C/o P.l. Motors Limited, Bhagwati
Bhawan, Mi Road, Jaipur Through Its Branch Incharge Shri G.g.
Shete.
----Petitioner
Versus
1. Raghunath (Deceased), His Legal Representatives.
2. Mahesh Kumawat S/o (Late) Shri Raghunath, Resident Of
Dhani Rambagh, Ward No. 70 Vki Area, Village
Neendharh, District Jaipur
3. Satyendra Kumawat S/o (Late) Shri Raghunath, Resident
Of Dhani Rambagh, Ward No. 70 Vki Area, Village
Neendharh, District Jaipur
4. Kishangopal Son Of Sh. Tulsiram, Resident Of Village
Meena Wala, Kanakpura, Jaipur.
----Respondents
For Petitioner(s) : Ms. Suruchi Kasliwal with
Mr. Vikram Singh
For Respondent(s) : Mr. Abhishek Sharma
HON'BLE THE CHIEF JUSTICE MR. MANINDRA MOHAN SHRIVASTAVA
HON'BLE MR. JUSTICE ASHUTOSH KUMAR
Order
REPORTABLE
07/10/2024
1. Heard.
2. While deciding the appeal filed by the Financer assailing
award of the Motor Accident Claims Tribunal (MACT) and its
liability towards payment of compensation, learned Single Judge
noticed that the view taken by a Coordinate Bench of this Court in
S.B. Civil Miscellaneous Appeal No.439/2002-Bajaj Auto
Finance Limited Vs. Smt. Prem & Ors., appears to be contrary
[2024:RJ-JP:42076-DB] (2 of 7) [CREF-3/2022]
to the law laid down by the Hon'ble Supreme Court in the case of
Godavari Finance Company Vs. Degala Satyanarayanamma
& Ors., reported in (2008) 5 SCC 107 as also a subsequent
authoritative pronouncement in the case of HDFC Bank Limited
Vs. Reshma & Ors., reported in (2015) 3 SCC 679. Accordingly,
following questions have been referred for being answered:-
"(i) Whether the order dated 11.04.2012 passed by the
Co-ordinate Bench in S.B Civil Misc. Appeal No.
439/2002 has been passed in ignorance of the
judgment of Hon'ble Apex Court in the case of
Godawari Finance Company (Supra) and the
provisions contained under Sections 146 and 168 of the
Motor Vehicles Act,1988?
(ii) Whether this appeal can be decided in the light of
the judgment of Hon'ble Apex Court in the case of
HDFC Bank Limited Vs. Reshma (Supra) by taking a
contrary view, to the view taken by the Co-ordinate
Single Bench of this Court vide order dated 11.04.2012
while deciding SBCMA No. 439/2002 against the same
impugned judgment and award dated 10.08.2000
which has attained the finality?"
3. Learned counsel for the appellant-Financer would submit that
the view taken by a learned Single Bench of this Court in the case
of Bajaj Auto Finance Limited (supra) is per incuriam, as it
runs contrary to the law laid down by the Hon'ble Supreme Court
in the case of Godavari Finance Company (supra). Which is
law under Article 141 of the Constitution of India and binding on
all Courts. The other submission of learned counsel for the
appellant is that even subsequently, a Larger Bench of the Hon'ble
Supreme Court in the case of HDFC Bank Limited (supra) has
reiterated the aforesaid legal position, as enumerated in the case
of Godavari Finance Company (supra), that in case of
hire-purchase agreement, the financer is ordinarily not to be
[2024:RJ-JP:42076-DB] (3 of 7) [CREF-3/2022]
treated as owner and it is the person who is in the possession and
control of the vehicle and not the financer who would be liable to
pay damage for the motor accident.
4. A learned Single Judge of this Court while deciding S.B. Civil
Miscellaneous Appeal No.439/2002-Bajaj Auto Finance
Limited Vs. Smt. Prem & Ors., vide order dated 11.04.2012,
upheld the award fastening liability on the financer/appellant. It
was held as below:-
"..........Appellant did not care to contest the matter.
After such a length of time, appellant has for the first
time raised the arguments before this court. Even if,
scooter was sold on higher purchase basis, registration
certificate of vehicle was still in name of appellant and if
vehicle was not insured, it cannot escape of its liability
for making payment of compensation............."
The learned Single Judge was of the view that even if vehicle
was sold on hire-purchase basis as registration of the vehicle was
still in the name of Financer/appellant therein, if the vehicle was
not insured, it cannot escape from its liability for making payment
of compensation.
5. Hon'ble the Supreme Court in the case of Godavari Finance
Company (supra) was dealing with an issue regarding liability of
financer in case of hire-purchase vehicle, wherein name of
financer was incorporated in the Registration Book as the owner.
That was a case where the owner was a private person and vehicle
was purchased by him, financed by the finance company. The
vehicle was held under a hire-purchase agreement with the
financer w.e.f. 06.02.1995. Though the agreement was later on
cancelled on 10.11.1995, in the meanwhile, the vehicle met with
an accident on 29.05.1995. The Motor Accident Claims Tribunal
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held the financer liable along with the owner of the vehicle, driver
and insurance company to pay the amount of compensation to the
claimants of the deceased. In this factual background, their
Lordships in the Hon'ble Supreme Court examined the statutory
scheme of provisions contained in Section 168 of the Motor
Vehicles Act, 1988 and various other decisions. It was pertinently
held as below:-
"13. In case of a 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 not the financer being
the owner would be liable to pay damages for the
motor accident."
6. In a subsequent decision in the case of HDFC Bank Limited
(supra), the issue was again considered and the legal position, as
authoritatively pronounced by their Lordships in the Hon'ble
Supreme Court, held as below:-
"22. In the present case, as the facts have been
unfurled, 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 on the road
and the accident took place. Had the vehicle been
insured, the insurance company would have been liable
and not the owner. There is no cavil over the fact that
the vehicle was the subject of an agreement of
hypothecation and was in possession and control of
Respondent 2. The High 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 Raymalji, in our considered opinion,
was inappropriate because in the instant case all the
documents were filed by the Bank. In the said case, the
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. In the
decision in Kailash Nath Kothari, the Court fastened the
liability on the Corporation regard being had to the
[2024:RJ-JP:42076-DB] (5 of 7) [CREF-3/2022]
definition of the 'owner' who was in control and
possession of the vehicle. Similar to the effect is the
judgment in Deepa Devi. 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
registered owner of the vehicle and the insurance
company. In Shakuntala case, the learned Judges
distinguished the ratio in Deepa Devi on the ground
that it hinged on its special facts and fastened the
liability on the insurer. In Kulsum, the principle stated
in Kailash Nath Kothari 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.
23. On a careful analysis of the principles stated in the
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 under which the
insurer can seek exoneration.
24. In Purnya Kala Devi, a three-Judge Bench has
categorically held that the person in control and
possession of the 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 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 1988 Act. In the instant case, the predecessor-in-
interest of the appellant, Centurion Bank, was the
registered owner along with Respondent 2. The
Respondent 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 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
control and possession of the vehicle. It was the
absolute fault of the Respondent 2 to take the vehicle
from the dealer without full payment of the insurance.
Nothing has been brought on record that this fact was
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known to the appellant financier or it was done in
collusion with the financier. When the intention 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 2, without the
insurance plied the vehicle in violation of the statutory
provision contained in Section 146 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.
25. In view of the aforesaid premises, we allow the
appeals and hold that the liability to satisfy the award
is that of the owner, Respondent 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 Senior Counsel for the
appellant, no steps shall be taken for realisation of the
amount. There shall be no order as to costs."
7. In view of the aforesaid decisions of the Hon'ble Supreme
Court, the legal position is no longer res integra and, therefore,
the questions referred to are answered as below:-
Answer to question No.(i):
The order dated 11.04.2012 passed in S.B. Civil Misc. Appeal
No.439/2002 is per incuriam and does not lay down the correct
legal position being in ignorance of the law laid down by the
Hon'ble Supreme Court in the cases of Godavari Finance
Company Vs. Degala Satyanarayanamma & Ors. and HDFC
Bank Limited Vs. Reshma & Ors., wherein it has been held that
in case of a hire-purchase agreement, the person in possession of
the vehicle under the hypothecation agreement has to be treated
as the owner and the financer cannot be treated to be the owner
and, therefore, not liable to pay compensation.
Answer to question No.(ii):
The appeal, out of which present reference has arisen, and
all other appeals are accordingly required to be decided in
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accordance with the law laid down by the Hon'ble Supreme Court
in the cases of Godavari Finance Company Vs. Degala
Satyanarayanamma & Ors. and HDFC Bank Limited Vs.
Reshma & Ors.
8. The reference is accordingly answered.
9. The records of the case be now placed before the learned
Single Judge for decision of the appeal on its own merits.
(ASHUTOSH KUMAR),J (MANINDRA MOHAN SHRIVASTAVA),CJ
RAJAT-RAHUL/38
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