1 F.A. No.227 & 228 of 1998 hvn IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO. 227 OF 1998 Smt. Laxmi Gopal Kalro ... Appellant/ Orig.Applicant v/s. 1. Shri. Abdul R. Khan 2. The New India Assurance Co.Ltd 3. Samata Co-op Bank Ltd ... Respondents ALONGWITH FIRST APPEAL NO. 228 OF 1999 Shri. Gopal Nandlal Kalro ... Appellant/ Orig.Applicant v/s. 1. Shri. Abdul R. Khan 2. The New India Assurance Co.Ltd 3. Samata Co-op Bank Ltd ... Respondents * * * * 2 F.A. No.227 & 228 of 1998 Mr. A.M. Gokhale i/by. Mr. M.B. Kotak and Mr. U.N. Mehta, adv. for the appellant. Mr. S.S. Vidyarthi i/by. Mr. S.M. Vidyarthi, adv. for the respondents. CORAM :- Smt. R.P. SondurBaldota, J. 22nd March, 2011. P.C. :- 1. The above two appeals arise out of the common order deciding the applications filed by the appellants for compensation for injuries sustained by them in a motor vehicle accident. As the appeals involve common questions of facts and law, they are being disposed off by this common order. 2. The appellants who are husband and wife were travelling by an autorickshaw from Sahar Airport to their residence at Chembur on 11th October, 1990 at about 3.30 a.m. The autorickshaw turned turtle when it was near Basant Park. Both the appellants were thrown out and sustained injuries. They were treated in LTMG Sion Hospital. As per the RTO information, the autorickshaw was owned by respondent no.1 and 3 F.A. No.227 & 228 of 1998 insured with respondent no.2. It had been hypothecated under an agreement of hypothecation with respondent no.3 bank (hereinafter referred to as the bank”). The applications for “ compensation as filed originally in the year 1991 were only against respondents no.1 and 2. In February, 1995 the appellants' request for amendment of the applications to implead respondent no.3 was allowed and respondent no.3 came to be impleaded to the proceedings. Respondent no.2-Insurance Company in its Written Statement had contended that the autorickshaw was not insured with it. This contention was conceded to by both the appellants on 17th June, 1998 and they made an endorsement on the docket of their respective applications that they were not pressing the applications against the Insurance Company and that the Insurance Company may be deleted from the proceedings. In view of the endorsement, the trial did not proceed against respondent no.2. Respondent no.1- the owner of the vehicle, did not contest it. He remained absent after service of notice upon him and the applications were heard ex-parte against him. With this, the contest before the Tribunal 4 F.A. No.227 & 228 of 1998 was only between the appellants and the Bank. 3. It was sought to be contended before the Tribunal, which contention has been reiterated in the present appeal proceedings that the autorickshaw being hypothecated to the bank, until the installments of the loan obtained from the bank were fully paid up by the borrower, the Bank was the owner of the autorickshaw and hence liable to pay compensation to the appellants. The Bank in its Written Statement contended that there was no privity of contract between it and the appellants. Secondly, that the Tribunal had no jurisdiction to try and entertain any claim against the Bank, it being a Co-operative Bank. Thirdly, the owner of the autorickshaw had repaid, without making any default, the entire bank debt in the year 1992 and as such there was no contract in existence enforceable against the Bank at the time of its impleadment to the applications. 4. On the pleadings between the parties, the Tribunal in addition to the usual issues, framed additional Issues at Serial nos.4, 5 and 6. The same read as follows : 5 F.A. No.227 & 228 of 1998 Sr.No Issues 4. Does the Opp.party No.2 prove that there is no privity of contract between the Bank and the Opp.party No.1 as well as the drive of the offending motor vehicle bearing No.MCQ-253 and as such the Opp.party No.2 is not liable to pay for any claim to the applicant ? 5. Does the Opp.party No.2 further prove that the Opp.party No.1 had paid entire Bank debts in the year 1992 and as such there is no binding contract between the Opp.parties Nos.1 and 2 enforceable under law ? 6. Does the Opp.party No.2 further prove that under the impugned deed of hypothecation, the renewal of the insurance premium was not obligatory and not binding upon the Opp.party No.2 as alleged in para-7 of the written statement (Ex.13) ? 5. By the impugned judgment, the Tribunal found that both the appellants had sustained bodily injuries due to rash and negligent driving by the driver of the autorickshaw on the date and time of the accident and therefore, both were entitled to compensation. It awarded compensation in the sum of Rs. 66,000/- to the appellant in First Appeal No.227 of 1999 and Rs. 1,00,000/- to the appellant in First Appeal No. 228 of 1999. As regards the Bank, the Tribunal answered all the above three 6 F.A. No.227 & 228 of 1998 Issues in the affirmative and held that the Bank was not liable to pay any compensation to the appellants. 6. Though the grounds of challenge in the memo of appeal include challenge to the justness of the quantum of compensation awarded, the arguments advanced are limited to the contention of liability of the Bank to pay compensation to the appellant as the owner of the autorickshaw. Mr. Kotak, the learned counsel for the appellants, submits that since respondent no.1 had taken loan for purchase of the autorickshaw and since the autorickshaw was hypothecated to the Bank for repayment of the loan, the Bank must be treated as the owner of the vehicle. Mr. Kotak has specifically relied upon paragraph-8 of the Undertaking executed by respondent no.1 in favour of the Bank in support of his argument. 7. The term owner has been defined in the Motor Vehicles Act, 1988. Therefore, any argument advanced on behalf of the appellant must be considered in the light of that definition. The 7 F.A. No.227 & 228 of 1998 definition reads as follows : 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 of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement. (emphasis supplied)” 8. As per the RTO records respondent no.1 is the owner of the auto-rickshaw. However, since the auto-rickshaw is subject to the agreement of hypothecation it is necessary to look into the terms of the agreement to find out the person in possession of the auto-rickshaw under the agreement Perusal of the agreement shows that there is no specific clause thereunder for possession of the auto-rickshaw. Therefore, one has to read the agreement as a whole and understand from the tenor of it as to who could be said to be in possession of the auto-rickshaw under the agreement. A few of the terms of the agreement that can act as guiding factors for the purpose read as follows : 8 F.A. No.227 & 228 of 1998 "8.In the event of any one of more of the events happening namely: (a) ................................. (b).................................. (c) ................................. (d) If in the opinion of the Bank the security hereby created is for any other reason in jeopardy, then the Bank or any person authorised by the Bank may, without being liable for any loss or damage, sustained thereby at any time thereafter, take possession and sell or realise in the Bank's absolute discretion and on such terms and conditions and in such a manner as the Bank may think fit, hypothecated Vehicles and the Bank may apply the net proceeds of the sale and realisation and any other amount received by the Bank in or towards the payment or discharge of all moneys and liabilities, the payment or discharge of which is secured by this security and the previous 9 F.A. No.227 & 228 of 1998 notice to the Borrowers of any such sale or realisation shall be necessary and the Borrowers hereby waives such notice and the Borrower will accept the Bank's acknowledgement as a sufficient evidence of the amount produced by any such sale or realisation or receipt and of the amount of costs, charges and expenses thereof and Borrowers shall sign all the documents and furnish all the information and do such acts and things as may be required by the Bank for enabling such sale or realisation. 9. The Borrower hereby declares and guarantee that the hypothecated vehicle is the absolute unencumbered property of the Borrower with full power of disposition. 10. The Borrower declares that the hypothecated vehicle shall not be subject to any mortgage, charge or lien." Clause 8(d) indicates that the actual possession of the auto- rickshaw is with respondent no. 1 and the Bank was to take it's 10 F.A. No.227 & 228 of 1998 possession only in case it was of the opinion that the security created by the document was in jeopardy. Clauses 9 and 10 indicate that the possession as title holder was also with respondent no. 1. In the circumstances, going by the definition of the term owner, the question of holding respondent no. 3 as the owner of the vehicle does not arise at all. 9. Mr. Kotak, the learned counsel for the appellants has relied upon the decision of Kerala High Court in Secretary, Cannanore Cooperative Autorickshaw Drivers Society Vs. K. Santosh & Ors. reported in 1998 1 CLR 392 in support of his submission that the vehicle obtained by the hirer from the Financier under Hire Purchase Agreement is owned by the Financier untill the full hire amount is paid by the hirer. The facts of the decision cited are entirely different. The agreement to be considered before the Kerala High Court was hire purchase agreement and not the agreement of hypothecation. Under the hire purchase agreement, the financier continues to be the owner of vehicle and principal employer of the driver untill the entire hire 11 F.A. No.227 & 228 of 1998 amount is paid and the vehicle hired is transferred to the hirer. In the instant case, respondent no. 1 had purchased the authorickshaw by taking financial assistance from the Bank and had hypothecated the vehicle to the bank. It mean that in the event of default on the part of respondent no. 1, the bank would get right to seize vehicle from the possession of respondent no. 1 and sell the same for recovering the amount of loan advanced to respondent no. 1. Therefore, the first decision cited is not applicable to the facts of the present case. The second decision cited is of the Apex Court in Mohan Benefit Pvt. Ltd. Vs. Kachraji Raymalji and Others, 1997 ACJ 1438. This decision also involves hire purchase agreement. The Apex Court in that case had drawn adverse inference against the financier for not producing the real documents executed with the borrower to hold that the financier was the owner. 10. Mr. Kotak, then relies upon clause (8) of the Undertaking executed by the owner in favour of the bank to submit that under the clause, the Bank was to take insurance policy and pay 12 F.A. No.227 & 228 of 1998 the premium therefor, and hence, it should be treated as the owner. Clause (8) reads as follows : "I hereby authorise the Bank to take our Insurance Policy in respect of my vehicle/factory/Machinery and keep it in force till the repayment of entire loan. The Insurance premium be added to my loan account as and when paid. I will collect the receipt/insurance Certificate on due date." The clause shows that the responsibility therein was to be discharged by the Bank on behalf of respondent no. 1. Therefore, this clause also does not help the appellant. In the circumstances, I find no infirmity whatsoever in the impugned judgment and order. First Appeals are dismissed. [Judge]