1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 21ST DAY OF MARCH, 2019 BEFORE THE HON’BLE MR. JUSTICE P.S. DINESH KUMAR MISCELLANEOUS FIRST APPEAL NO.9749 OF 2011 (MV) BETWEEN:
M/S. CHOLAMANDALAM INVESTMENT AND FINANCE CO. LTD., PREVIOUSLY KNOWN AS CHOLAMANDALAM DBS FINANCE LTD A COMPANY REGISTERED UNDER THE COMPANIES ACT, 1956 AND HAVING ITS REGISTERED OFFICE AT DARE HOUSE NO.2 (OLD No.234) N.S.C. BOSE ROAD PARRYS, CHENNAI-600 001 AND ITS BRANCH OFFICE AT CHOLA HOUSE NO.28/1 KENSINGTON ROAD OPP. GURUDWARA NEAR ULSOOR LAKE BANGALORE-560 042 AND REPRESENTED BY ITS AUTHOIRSED SIGNATORY SRI. NAVEEN H.D S/O N.P. DAMODAR AGE:37 YEARS … APPELLANT (BY SHRI. K.S. RAVI, ADVOCATE) AND:
1. L. RAJU S/O LAKSHMAN MAJOR R/O NO.52, 2ND MAIN ROAD 2 8TH CROSS, B.K.NAGAR YASHWANTHPURA, BANGALORE 2. SMT SAROJAMMA W/O NARASIMHEGOWDA @ PUTTARAJU AGED ABOUT 38 YEARS 3. ARPITHA D/O NARASIMHEGOWDA @ PUTTARAJU AGED ABOUT 21 YEARS 4. CHALUVARAJU.S S/O NARASIMHEGOWDA @ PUTTARAJU AGED ABOUT 19 YEARS 5. NINGAMMA W/O NARASIMHEGOWDA @ HUVINAKULLEGOWDA AGED ABOUT 62 YEARS ALL ARE RESIDENTS OF PETE VOKKALAGERI BY THE SIDE OF ITI COLLEGE KANAKAPURA ROAD MALAVALLI TOWN …RESPONDENTS (BY SHRI. M.Y. SREENIVASAN, ADVOCATE FOR R2 TO R5; R1-SERVED, UNREPRESENTED) THIS MFA FILED U/S 173(1) OF MV ACT AGAINST THE JUDGMENT AND AWARD DATED:28.06.2011 PASSED IN MVC NO.111/2009 ON THE FILE OF THE SENIOR CIVIL JUDGE, MACT, MALAVALLI, AWARDING A COMPENSATION OF Rs.6,87,000/- WITH INTEREST @ 6% P.A. FROM THE DATE OF PETITION TILL DEPOSIT.
THIS MFA COMING ON FOR FINAL HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:-
3 JUDGMENT Heard Shri K.S. Ravi, learned advocate for the appellant and Shri M.Y. Sreenivasan, learned advocate for the respondents.
2. For the sake of convenience, parties shall be referred to as per their status before the learned Tribunal.
3. Appellant - M/s. Cholamandalam Investment and Finance Company Ltd., financed one L. Raju, owner of Lorry bearing No. CNB-5095 to enable him to purchase the said lorry. It met with an accident in which one Narasimhegowda, who was riding a motor cycle bearing No. KA-11/S-4338 sustained grievous injuries and died. His legal representatives filed the instant claim petition seeking compensation in which the appellant has been arraigned as respondent No.2. Learned Tribunal awarded a compensation of Rs.6,87,000/- payable with 6% interest p.a. from the date of petition. Both respondents namely the owner and financier have been held liable and 4 accordingly directed to deposit the aforesaid amount. Hence, this appeal by financier.
4. Shri K.S. Ravi, learned advocate for the appellant argued that appellant being the financier is not liable to pay any compensation to the victim inasmuch as there is no privity of contract between the financier and borrower to indemnify the borrower. In support of his contention, he placed reliance on the decision of Supreme Court of India in HDFC Bank Ltd Vs. Kumari Reshma and Ors1.
5. Shri M.Y. Sreenivasan, learned advocate for the claimants submits that the agreement between the borrower and the financier require the financier also to keep the vehicle insured. Since, the borrower has failed in performing its duty, financier becomes liable to pay the compensation.
6. I have carefully considered the rival contentions and perused the records.
1 2014 AIR SCW 6673 5 7. It is not in dispute that appellant has financed the owner of the Lorry. It is settled that owner of the Lorry is liable to pay compensation to a victim due to any act or omission on the part of the driver of the vehicle. The relation between the financier and the owner is limited to the extent of lending money to purchase the vehicle.
8. The financier may, in his discretion, keep the vehicle insured. But it is the primary responsibility of the owner of the vehicle to keep the vehicle insured. At any rate, the financier has not covenanted with the owner of the Lorry to indemnify him in the event of any accident.
9. In HDFC Bank Ltd (supra), Supreme Court of India has held that liability to satisfy the award is that of owner and not that of financier by recording thus;
“24. On a careful analysis of the principles stated in the foregoing cases, it is found that there is a common thread that he 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 6 unless there is violation of the terms of the policy under which the insurer can seek exoneration.
25. In Purnya Kala Devi (supra), 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 of the vehicle should 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 No.2. The respondent No.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 No.2 to take the vehicle from the dealer without full payment of the insurance. Nothing has been brought on record that this fact was known to the appellant financier or it wads done in the collusion with the financier. When the intention of the legislature is quite clear to the effect, a registered owner 7 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 No.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.
26. In view of the aforesaid premises, we allow the appeals and hold that the liability to satisfy the award is that of the owner, the respondent No.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 realization of the amount. There shall be no order as to costs.
Appeal allowed.” (Emphasis Supplied) 10. In the circumstances, this appeal merits consideration and it is accordingly allowed. Hence, the following;
ORDER (i) Judgment and award dated 28.06.2011 in MVC. 111/2009 passed by Senior Civil Judge & MACT, Malavalli, is set-aside so far as holding the financier (appellant) liable to pay the 8 compensation is concerned. The remaining portion of the judgment and award shall remain in tact; and (ii) Registry shall refund the statutory deposit, which the appellant has made, if request is so made.
No costs.
Sd/- JUDGE AV