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CASE NO.: Appeal (civil)  5796 of 2007

PETITIONER: National Insurance Co. Ltd.

RESPONDENT: Deepa Devi & Ors

DATE OF JUDGMENT: 11/12/2007

BENCH: S.B. Sinha & Lokeshwar Singh Panta

JUDGMENT: J U D G M E N T  

CIVIL APPEAL NO.   5796 OF 2007 [Arising out of  SLP (Civil) No. 22778 of 2005]

S.B. SINHA, J :

        1.      Leave granted. 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. 208 of 1997 is as to whether in the event a car is  requisitioned by the State for the purpose of 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 \026 Company issued a policy of  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  insurance policy provided:

"For private car IXI and Motor Cycle/Scooter  IYI. Use only for social, domestic and pleasures and  insured’s own purpose"

4.      The car in question was requisitioned during the Assembly Elections  in the year 1993 by the Sub-Divisional Magistrate Rampur through the  Deputy Commissioner, Shimla.  The said vehicle was in possession as also  under the control of the said officer.  On or 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 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 in its judgment dated 28.09.1996 upheld  the contention of the Insurance Company 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:

"In view of the above discussion, the appeal is  allowed and the award of the Tribunal is modified

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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 deposit the amount  payable to the claimants\005"

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 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].

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 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 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 1939 Act to mean:   "In this Act, unless the context otherwise requires,

***                     ***                     ***

(19) "owner" means, where the person in  possession of a motor 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 Section  2(30) of the 1988 Act providing:

"In this Act, unless the context otherwise requires,

***                     ***                     ***  (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;"

10.     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 District Magistrate in exercise of its power  conferred upon it under 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 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

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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 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 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, the statutory definitions 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 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 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) "A definition is not to be read in isolation. 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 cannot be assigned. In State of Maharashtra v. Indian Medical Assn.   one of us (V.N. Khare, C.J.) stated that the  definition given in the interpretation clause having  regard to the contents would not be applicable. It  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 \005". Let us find out  whether in the context of the provisions of Section  64 of the Act the defined meaning of the  expression "management" 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 defined 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  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

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defined meaning to the word "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 definition of  ’owner’ under the 1939 Act.  Therein the car was handed 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 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 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 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 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 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:

"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 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.    6. On an analysis of Sections 94 and 95, we further  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 whose benefit the  vehicle was insured. So far, the transferee who is  the third party in the contract, cannot get any

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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."  

       We are also not concerned with such a situation.

15.     In Kailash 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 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:

 "\005Driver of the bus, even though an employee of  the owner, was at the relevant time performing his  duties under the order 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 bus. They 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 driver 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 to 7 of the  agreement ( supra ), the RSRTC must be held to be  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 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 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 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 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.

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16.     In The National Insurance Co. Ltd. v. Durdadahya Kumar Samal 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:

"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."

       [See also New India Assurance Co. Ltd. v. S. Ramulamma and others  1989 ACJ 596]

17.     In Chief Officer, Bhavnagar Municipality and another v. Bachubhai  Arjanbhai and others [AIR 1996 Gujarat 51], the High Court of Gujarat held:

"7. The facts 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 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, the insurer of the vehicle became liable  to pay the 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\005"

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 cannot be  upheld.  It is set aside accordingly.  The appeal is allowed.  No costs.