R.S.A.No.262 of 2007 [1] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH R.S.A.No.262 of 2007 Date of Decision : 05.10.2009 Munni Ram ... Appellant Versus Fakir Chand and another ... Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA Present: Mr. Amit Jain, Advocate, for the appellant. HEMANT GUPTA, J. (ORAL) Defendant No.1 is in second appeal aggrieved against the judgment and decree passed by the Courts below, whereby the plaintiff was declared owner of half share of truck bearing registration No. HR 47-4738. The plaintiff has filed a suit for declaration alleging that defendant No.1 has purchased the aforesaid truck in partnership with him, but the truck was registered as owned by defendant No.1 exclusively. The plaintiff relies upon an affidavit dated 10.9.1996 allegedly executed by defendant No.1, wherein the defendant has admitted the contribution of the plaintiff in the purchase of said vehicle to the extent of half share and that both parties shall be owner of half share each. Both the Courts have relied upon the said affidavit to return a finding that the plaintiff is owner to the extent of half share in the said truck. R.S.A.No.262 of 2007 [2] Learned counsel for the appellant has argued that the truck is recorded to be in the ownership of the defendant alone as per the registration certificate, therefore, on the basis of affidavit dated 10.9.1996, the plaintiff cannot claim to be owner of the said truck to the extent of half share. It is also contended that sale and purchase of a motor vehicle cannot be regulated by way of such an affidavit produced by the plaintiff. Reliance is placed on the Division Bench of this Court in Vipin Kumar Sharma vs. Jagwant Kaur and others, 2005(3) PLR 454. I do not find any merit in the arguments raised by the learned counsel for the appellant. The sale of motor vehicle is governed by the provisions of the Sale of Goods Act, 1930 (for short "the Goods Act") and not by the Transfer of Property Act, 1882. In Vasantha Viswanathan and others vs. V.K. Elayalwar and others, (2001) 8 SCC 133, Supreme Court has interpreted Section 19 of the Goods Act. It was held that if there is a contract for sale of specific or ascertained goods, the property in them is transferred to the buyer at such time as the parties to the contract intend it to be transferred. While considering Section 31 of the Motor Vehicles Act, 1939 (for short "MV Act 1939"), it was held that it prescribes the procedure for entering the factum of transfer in the registration certificate which is an act posterior to the transfer but the transfer of the vehicle would be governed by the provisions of Section 19 of the Goods Act. Similar is the judgment in Panna Lal vs. Chand Mal and others, AIR 1980 SC 871, when after considering section 31 of the MV Act, 1939, it was held that the statute casts an obligation on the transferee to report to the registering authority concerned regarding the transfer of the vehicle along with a certificate of R.S.A.No.262 of 2007 [3] registration and then get the registration transferred in his name but if the purchaser has not chosen to move the registering authority, he cannot be heard to say that he is entitled for refund of the purchase money or claim damages. It was the duty of the plaintiff to have applied to the registering authority under section 31 of the MV Act,1939 and got the registration transferred in his name. Apart from the aforesaid judgments of the Supreme Court, the question as to whether the registered owner alone can be deemed to be owner of the vehicle has come up for consideration in many judgments under the MV Act, 1939 and under the Motor Vehicles Act, 1988 (for short “MV Act” as well. The provisions of the two statutes are substantially same except that the definition of owner as it appears in Section 2(19) of the MV Act, 1939 is different with the definition of "owner" in section 2(30) of the MV Act. Though the definition of owner has been changed but the judgments enunciating the principle of transfer of moveable property has not undergone any change. In Oriental Fire and General Insurance Company Limited vs. Vimal Roy, 1972 A.C.J. 314, a Division Bench of Delhi High Court held to the following effect:- “ Mr. Dhanda contended with force that it is the provisions of the Sale of Goods Act which determine the legal requirements for transfer of a motor vehicle and that section 54 of the Transfer of Property Act does not have any application to the facts of the case. Section 54 occurs in Chapter III of the Transfer of Property Act which exclusively deals with sale of immovable properties and it has prescribed that immovable property of the value of Rs.100/- or more is to be sold by an instrument in writing duly registered and the property of lesser value of such instrument or by delivery of the property...” R.S.A.No.262 of 2007 [4] It also considered that the penalty for contravention of Section 31 of the MV Act, 1939 i.e., for not registration of the motor vehicle, is contained in Section 112 and other provisions in Chapter IX of the MV Act, 1939. It was held as under:- “..... The endorsement of the transfer in the records of the registering authority is, therefore, not a condition precedent to the transfer, nor does it deal with the legality or validity of the transfer which must be determined by other provisions of the law. Should any person, in disregard of the provisions of law, fail to intimate the transfer to the authority or may drive the vehicle in a public place without a certificate of registration, he runs the risk of incurring the penalties provided by the Act, but his title to the purchase of the vehicle undoubtedly remains unaffected, nor does the title remain in suspense during the grace period allowed for effecting endorsements of registration”. Still further, it noticed that the certificate of registration is an important piece of evidence and the transferee is to take steps to have the particulars of transfer endorsed on the certificate of registration but failure to do so cannot be deemed to militate against the validity and legality of the passing of the title in the vehicle so transferred or to expose the innocent seller who may have done his all acts to complete the transfer of legal liabilities for acts and omission in respect of the vehicle subsequent to the transfer. It was held to the following effect:- “...... Moreover, the certificate of registration is not a document of title, it is issued to the owner of the vehicle, that is the person by whom the vehicle is kept and used and although provision made for changes of ownership to be recorded in the book, the name appearing in it may not be that of the legal owner of the vehicle; the registration book is evidence of title and its absence at the time of sale should put a purchaser on R.S.A.No.262 of 2007 [5] enquiry .....” The said judgment has been approved by the Full Bench of Delhi High Court in Anand Sarup Sharma vs. P.P. Khurana and others, AIR 1989 Delhi 88, wherein it was held as under:- “13. We have carefully examined the above provisions. In our considered opinion these provisions do not have the effect of postponing the transfer of property from seller to the buyer till the transferor and transferee make the requisite report and the vehicle is registered in the name of the transferee. Section 22 simply imposes a statutory obligation. It prohibits the driving of any vehicle by any person unless the vehicle is registered. Non-compliance of these provisions does not have the effect of postponing the transfer of property in the vehicle from buyer to seller. To take a contrary view would result in absurd result. If a buyer after purchase does not use the vehicle he is the owner. But if after one year he uses it he ceases to be the owner. It is not and cannot be the law”. “14. Opening words of S.31 “where the ownership of any motor vehicle registered under the Chapter is transferred” make clear that transfer of ownership has to precede the reports required to be made under S.31. Section 31 does not prohibit the transfer of a motor vehicle till the reports are made. These provisions only cast an obligation on the transferor and the transferee to report to the registering authority concerned regarding the transfer of the vehicle after the transfer has already taken place. These provisions have nothing to do with the ownership of the vehicle as such. They merely provide for regulations of use of motor vehicles in public places. Their non-compliance attracts penalties”. A Division Bench of Madhya Pradesh High Court in Balwant Singh vs. Jhannubai and others, 1980 ACJ 126, considered the argument that since the registration certificate was in the name of Ramaratan R.S.A.No.262 of 2007 [6] respondent No.1, therefore, the legal ownership continued to be of that of respondent No.1 alone as in the absence of transfer of registration as contemplated by Section 31 of the MV Act, 1939, the transferee cannot be held to be the owner of the car. The said argument was negated relying upon the decision of Delhi High Court in Vimal Roy's case (supra). A Division Bench of Madras High Court in Hema Ramaswami vs. K.M. Valarence Panjani and others, 1981 ACJ 288 was seized of a case where the vehicle met with an accident after the transfer of ownership but before the same was registered with the Transport Authority. The Court held to the following effect:- “ ...... Having regard to the preponderance of judicial opinion, it is not possible to accept the submission of the learned counsel that the transfer of the vehicle will not put an end to the policy, but it is only the transfer of the registry from the name of the transferor in the name of the transferee alone will have the effect of putting an end to the policy, cannot be accepted. We are, therefore, of the view that in this case, the vehicle having been transferred long before the accident, the transferor and the insurance company with which the vehicle had been insured by the first respondent, cannot be made liable in respect of the accident which admittedly took place long after the transfer while the vehicle was in possession and custody of the second respondent and it is the second respondent's driver who caused the accident by his rashness and negligence in driving the vehicle ...” Similar is the judgment of Full Bench of Andhra Pradesh High Court reported as Madineni Kondaiah and others etc vs. Yaseen Fatima and others etc., AIR 1986 Andhra Pradesh 62. The Full Bench has considered the Supreme Court judgment in Panna Lal's case (supra) and held to the following effect:- R.S.A.No.262 of 2007 [7] “ 14. The Supreme Court considered the appropriate provisions of the Act and held for transfer of ownership of a motor vehicle, mutation of certificate was not necessary. Panna Lal did not move the authority under the Act by filing application under S.31 of the Act and for that reason he was not allowed to claim refund of purchase money. The discussion in the case shows a vehicle can be sold and purchased without following the procedure prescribed in S.31 of the Act. In other words, to make the purchase of a vehicle completed, it is not necessary a fresh certificate should be obtained by the transferee or certificate of the Vendor should be cancelled by the registering authority under the Act”. Within this Court in The New India Assurance Company Limited vs. M/s Jolly Engineers & Contractors (P) Limited, Amritsar and others, 1985(1) PLR 187, it was held that the change of ownership of a vehicle puts an end to the policy of insurance even if the original policy holder continues to be shown as the registered owner of the vehicle concerned. It was held that the endorsement of the transfer of a vehicle in the records of the registering authority was not a condition precedent to its transfer nor did it deal with the legality or authority of the transfer, which fell to be determined by other provisions of law. It was held that it was the real owner who was thus liable whether or not he was the registered owner of the vehicle too. It held to the following effect: - “9. The over whelming weight of judicial precedent, however, points to the contrary view, namely, that the change of ownership of a vehicle puts an end to the policy of insurance even if the original policy holder continues to be shown as the registered owner of the vehicle concerned. The rationale behind this being that a policy of insurance is a contract of personal indemnity and the insurer cannot, therefore, be compelled to accept responsibility in respect of a third party, who may be R.S.A.No.262 of 2007 [8] quite unknown to him. Mr. L.M. Suri, counsel for the Insurance company, cited a string of authorities in support. It would apt to begin with the judgment of the Division Bench of the High Court of Rajasthan in M/s Automobile Transport (Rajasthan) Private Limited and another vs. Dewalal (1977 A.C.J.150) where the earlier view of that Court in Padma Devi and others' case (supra) was expressly dissented from. It was pointed out in this behalf that in Padma Devi and others case (supra) the court followed the judgment of the Single Bench of the High Court of Delhi in Vimal Rai v. Gurcharan Singh (1967 ACJ 115), which was, however, later overruled by a Division Bench of that Court in Oriental Fire & General Insurance Company Ltd. vs. Vimal Rai (1972 ACJ 314), where it was held that the endorsement of the transfer of a vehicle in the records of the registering authority was not a condition precedent to its transfer nor did it deal with the legality or authority of the transfer, which fell to be determined by other provisions of law. It was accordingly held that it was the real owner who was thus liable whether or not he was the registered owner of the vehicle too. This view was followed and approved in this case too”. Later, in Labh Singh vs. Smt. Sunehri Devi and others, AIR 1988 Punjab & Haryana 149, learned Single Judge of this Court relied upon Division Bench of Delhi High Court in Vimal Roy's case (supra) as well as Madras High Court in Hema Ramaswami vs. K.M. Valarence Panjani and others, 1981 ACJ 288 and held to the following effect:- “8. It was thus held that the position of law is well settled that transfer of ownership of a motor vehicle puts an end to the liability of the Insurance Company with which it was insured even though the insured continues to be shown as the registered owner of the vehicle in the records of the registering authority. The liability for the accident, besides that of the person actually causing it, is of the real owner whether or not he also happens to be the registered owner thereof”. R.S.A.No.262 of 2007 [9] The word 'owner' is defined in section 2(30) of the Act. It reads as under:- “ 2. Definitions - 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”. Under Section 40 of the MV Act, 1988, every owner of a motor vehicle is to cause the vehicle to be registered. Similarly, Section 41 of the MV Act, 1988, deals with the application by or on behalf of the owner of a motor vehicle for registration. Therefore, the word owner appearing in Chapter IV in the context will not mean a registered owner as the vehicle is yet to be registered and for which application is required to be made for registration. Section 50 of the MV Act, 1988 is pari materia with section 31 of the MV Act, 1939. A conjoint reading of sub-sections (3) and (5) of Section 50 of the MV Act, 1988, shows that if the transferor or the transferee fails to report to the registering authority the fact of transfer, the registering authority may require the transferor or the transferee to pay such amount not exceeding one hundred rupees as may be prescribed under sub- section (5) in lieu of any action that may be taken against him under section 177. Sub-section (5) contemplates that the State Government may prescribe different amount having regard to the period of delay on the part of the transferor or the transferee in reporting the fact of transfer of ownership of the motor vehicle or of the other person in making the application under sub-section (2). It, thus, transpires that the ownership of a movable property R.S.A.No.262 of 2007 [10] is not dependent upon the entries in the registration certificate. For the delay in seeking mutation of change in the registration certificate, the transferor or the transferee, as the case may be, can be penalized and proceeded against in terms of Section 177 of the MV Act, 1988. Such default is again compoundable on payment of prescribed fee under sub-section (5) of Section 50 of the MV Act, but the ownership of the movable property is not dependent upon the registration certificate. From the judgments aforesaid, it transpires that the act of transfer of owner in the registration certificate in terms of Section 31 of the MV Act, 1939 or in terms of Section 50 of the MV Act, 1988 is required to be performed by the transferee. If the transferee does not effect the ownership transferred in the registration certificate in his name, it may liable him for punishment in terms of Section 112 of the MV Act, 1939 and 177 of the MV Act, 1988 but the property in the vehicle will stand transferred in terms of Section 19 of the Goods Act, when it was intended, it being movable property. A Division Bench of this Court in Vipin Kumar's case (supra) has relied upon decision of the Supreme Court in Dr. T.V. Jose vs. Chacko P.M. alias Thankachan, (2001) 8 SCC 748. In Dr. T.V. Jose's case (supra), the argument of learned counsel for the appellant, registered owner, that there can be transfer of title by payment of consideration and delivery of car was accepted. It was held to the following effect:- “10. We agree with Mr. Iyer that the High Court was not right in holding that the appellant continued to be the owner as the name had not been changed in the records of RTO. There can be transfer of title by payment of consideration and delivery of the car. The evidence on record shows that ownership of the car R.S.A.No.262 of 2007 [11] had been transferred....” The appellant was made liable to pay compensation, inter alia, for the reason that the transferee was not party either before the Tribunal or before the High Court and the insurance policy was taken in the name of the appellant even though after the date of transfer of the vehicle. To protect the interest of the third party, the appellant was made liable for the compensation by specifically observing that the Court has not gone into inter se liability between the registered owner and the transferee. The liberty was granted to the appellant to adopt appropriate proceedings against the transferee. The judgment in Dr. T.V. Jose's case (supra) is in respect of the accident prior to the commencement of the MV Act. Under the MV Act, the interest of third parties are protected under its section 157 whereby with the transfer of the motor vehicle, the insurance policy is also deemed to be transferred. Under MV Act, 1939, the transfer of insurance policy was required to be accepted by the insurance company in terms of the procedure contemplated under section 103A of the said Act. Such provision also supports the view that transfer of the vehicle is not dependent upon the entries in the registration certificate. The Division Bench has not considered the long line judgments of this Court as well as of the Supreme Court including the larger Bench judgment in Panna Lal's case (supra). The Bench of this Court referred to word 'owner' in section 168 of the Act and concluded that it is the registered owner of the vehicle in terms of Section 50 of the Act who is liable to satisfy the Award. But that definition in section 2 of the MV Act have to be read in the context in which it appears has escaped the notice of the Court. R.S.A.No.262 of 2007 [12] Therefore, the said judgment is per incuriam. Now coming to the facts of the present case, the defendant- appellant has admitted that both the parties have purchased the vehicle by contributing equal amount and are owner of the truck in equal shares. Therefore, though the registration of the vehicle is in the name of the appellant alone but the title of the movable property would vest with the plaintiff as well as entry in the registration certificate is not a condition precedent for ownership of the movable property. In view of the above, I do not find any patent illegality or irregularity in the judgment and decree passed by the Courts below, which may give rise to any substantial question of law for consideration of this Court in second appeal. Dismissed. 05.10.2009 (HEMANT GUPTA) Vimal / ks JUDGE