1. The instant appeal is maintained by the appellant (Insurer)/Oriental Insurance Company (hereinafter referred to as “the appellant”), under Section 173 of the Motor Vehicles Act, 1988 (for short “the Act”), against the award dated 29.02.2012, passed by the learned Motor Accident Claims Tribunal-I, Solan, H.P., in MAC Petition No. 5-S/2 of 2009, whereby the petition of Shri Anil Kumar-petitioner/claimant (hereafter referred to as “the petitioner”) was allowed.

2. Succinctly, the facts giving rise to the present appeal are that the respondent No. 1 herein (injured), who was petitioner before the learned Tribunal below (hereinafter referred to as “the petitioner”) filed a petition under Section 166 of the Act, before the learned Tribunal below, seeking compensation. As per the petitioner, on 12.10.2008, at Maryog Kasar, Road, due to the rash and negligent driving of the driver of the offending vehicle, bearing registration No. HP-14-0695, accident occurred, in which he suffered injuries, including permanent disability. It was further averred that on the aforesaid date the petitioner was traveling in the car, bearing registration No. HP-14-0695, which was being driven by Vijay Kant. The driver of the offending vehicle was driving the vehicle in a rash and negligent manner, as a result of which the vehicle met with an accident and the petitioner suffered multiple injuries. The driver Vijay Kant died in the accident and the petitioner was taken to Zonal Hospital, Solan, wherefrom he was referred to PGI, Chandigarh, where he remained admitted as an indoor patient from 12.10.2008 to 27.10.2008 and was operated upon and thereafter also he had to go for regular checkup. The petitioner suffered permanent disability, which rendered him unable to earn anything. It was further averred that the petitioner had to engage an attendant to look after him. As per the petitioner, before the accident, the income of the petitioner was Rs.20,000/- per month from all sources, being an agriculturist and carrying out the work of hiring orchards and forwarding business during the vegetables season. Lastly, the petitioner prayed that his petition be allowed and he be granted compensation.

3. By filing reply to the claim petition, the respondent No. 1-Ramesh Kumar took preliminary objections of maintainability, non-joinder and mis-joinder of the necessary parties and that the petitioner is estopped to file the petition on account of his act and conduct. On merits, the respondent No. 1 denied to be owner of the offending vehicle and also denied rash and negligent driving to be the cause of the accident. As per the respondent No. 1, the offending vehicle was already sold to Shri Dev Swaroop and after receipt of full and final consideration amount, the possession of the same was delivered to him on 25.08.2008, but he failed to get the registration certificate transferred in his name. Lastly, the dismissal of the petition was sought.

4. Respondent No. 2/Insurer of the offending vehicle, in its reply to the claim petition, took preliminary objection qua maintainability of the petition. It is averred that the driver of the offending vehicle was not having a valid and effective driving license and the offending vehicle was being plied without valid registration certificate and fitness certificate at the time of the accident. The rash and negligent driving by the driver of the offending vehicle was denied to be the cause of the accident, including any liability to pay the compensation to the petitioner. Lastly, dismissal of the claim petition was sought.

5. Respondent No. 3-Dev Swaroop failed to contest the claim petition before the learned Tribunal below and was proceeded against ex parte on 08.06.2010.

6. On 27.07.2010 on the basis of the pleadings of the parties, the learned Tribunal below has framed the following issues:

“1. Whether the petitioner received injuries in an accident caused due to rash and negligent driving of respondent No. 1 OPP

2. If issue No. 1 is proved in affirmative, to what amount of compensation, the petitioner is entitled and from whom OPP

3. Whether the vehicle was being plied in violation of the terms and conditions of the insurance policy including driving licence and the respondent no. 2 is not liable to pay the compensation OPR-2

4. Whether the passengers travelling in the car are not covered under the policy OPR

5. Whether the petition is not maintainable against respondent No. 1 as he is not owner of the vehicle OPR

6. Relief”

After deciding issues No. 1 and 2 in favour of the petitioner (claimant) and issues No. 3 to 5 against the respondents, the petition was allowed and the respondents were held liable to pay compensation of Rs.1,62,200/-, jointly and severally, with interest at the rate of 7.5% per annum from the date of filing of the petition, till the date of its realization.

7. Feeling dissatisfied, the appellant (petitioner/claimant) preferred the instant appeal under Section 173 of the Motor Vehicle Act, 1988.

8. I have heard the learned Senior Counsel for the appellant, learned counsel for the respondent No. 1, learned counsel for respondent No. 3, and carefully examined the entire record.

9. The learned Senior Counsel for the appellant/Insurance Company contended that the learned Tribunal below has wrongly and incorrectly fastened the liability to pay the compensation on the appellant/Insurance Company, as the vehicle in question was having “Liability Only Policy” and the persons traveling in the car were not having any insurance coverage. He further submitted that the insured/owner of the vehicle had paid no premium to cover the risk of the persons traveling in the car and the vehicle was not comprehensively insured.

10. At the very out-set, it may be pertinent to mention here that the insurance can be of two types, i.e., comprehensive/package policy of a private car, which covers the insurance of the passengers traveling in the car and the other policy is known as “Liability Only Policy”, wherein only the risk of the driver is covered, but 3rd party risk of an occupant of a private car is not covered.

11. In National Insurance Co. Ltd. vs. Balakrishnan and another, 2013 ACJ 199 [LQ/SC/2012/1016 ;] , the Hon’ble Supreme Court, vide para 21, has observed as under:

“21. In view of the aforesaid factual position, there is no scintilla of doubt that a ‘comprehensive/ package policy’ would cover the liability of the insurer for payment of compensation for the occupant in a car. There is no cavil that an ‘Act policy’ stands on a different footing from a ‘comprehensive/ package policy’. As the circulars have made the position very clear and the IRDA, which is presently the statutory authority, has commanded the insurance companies stating that a ‘comprehensive/package policy’ covers the liability, there cannot be any dispute in that regard. We may hasten to clarify that the earlier pronouncements were rendered in respect of the ‘Act policy’ which admittedly cannot cover a third party risk of an occupant in a car. But, if the policy is a ‘comprehensive/ package policy’, the liability would be covered. These aspects were not noticed in the case of Bhagyalakshmi, (2009) 7 SCC 148 [LQ/SC/2009/1146] and, therefore, the matter was referred to a larger Bench. We are disposed to think that there is no necessity to refer the present matter to a larger Bench as the IRDS, which is presently the statutory authority, has clarified the position by issuing circulars which have been reproduced in the judgment by Delhi High Court and we have also reproduced the same.”

12. In the present case, the policy in question has been placed on record as Ex. RW-1/A, the perusal of which shows that it is only “Liability Only Policy”, wherein only the risk of the driver is covered and in this respect basic premium of Rs.670/- and Rs.25/- was paid by the insured. As per the policy, the Insurance Company will indemnify any driver, who is driving the motor vehicle on the insured’s order or with insured’s permission, provided that such driver shall fulfill and be subject to the terms, exceptions and conditions of the policy in so far as they apply. The perusal of the aforesaid policy shows that the risk of the occupants/persons traveling in the car, other than the owner and driver, has not been covered.

13. The learned Tribunal below, while awarding the compensation in favour of the claimants, had awarded the compensation of Rs.1,62,200/-, alongwith interest at the rate of 7.5% per annum from the date of filing of the petition, till the date of its realization and the liability was fastened on the appellant/Insurance Company. However, in view of the fact that the policy was only “Liability Only Policy”, and the same did not cover the risk of the passengers traveling in the car, therefore, the liability could not have been fastened upon the appellant/Insurance Company as it did not cover the risk of death or bodily injury to the persons traveling in the car. Hence, the appellant-Insurance Company is exonerated from its liability to pay any compensation to the petitioner.

14. Now, the question which arises for consideration in the present appeal before this Court is as to who would be liable to pay the compensation to the petitioner.

15. According to the learned counsel for the respondent No.1, he had sold his vehicle to the respondent No. 3 on 25.08.2008 and after receiving the full and final consideration amount, the possession of the car in question was also delivered to him on 25.08.2008 itself, hence respondent No. 1 is not liable to pay any compensation to the petitioner. Respondent No. 1 has also adduced in evidence copy of affidavit, Ex. RW-2/B, showing the sale of the above said car to respondent No. 3-Dev Swaroop. The perusal of the record also reveals that respondent No. 3-Dev Swaroop had got released his vehicle from the Court, through application, Ex. R-1, vide release order, Ex. R-3, as per supardari bond, Ex.R-4, and copy of power of attorney, Ex.R-2.

16. As observed earlier, the respondent No. 3-Dev Swaroop had failed to appear before the learned Tribunal below and was proceeded against ex parte and even he failed to appear before this Court. Therefore, in view of the unrebutted evidence led on the record by the respondent No. 1, it has become clear that he had sold his vehicle to the respondent No. 3 on 25.08.2008 and the possession of the car was also delivered to him on the said date itself, but the Registration Certificate (RC) had not been transferred in his name, though the respondent No. 3 was in possession of the car in question at the time of the accident.

17. At this juncture, it would be relevant to rely upon the judgment of the Hon'ble Supreme in the case of Anamika and others vs. Jaipal Singh and others, reported in 2023 ACJ 2015. The relevant portion of the aforesaid judgment is extracted below:

“3. In the light of the contentions urged herein, we have referred to the award dated 7.3.2005 passed by the MACT. On the aspect relating to liability for payment of compensation, the Tribunal has recorded the finding as hereunder:

“(30) On the basis of this ruling, the learned counsel for the respondent Nos. 2 and 3 contended that although in the registration certificate, the latter continued to be the registered owners of the offending vehicle, yet because of change of possession thereof, in favour of respondent No. 4 who had employed respondent No. 1 as driver of the offending vehicle, only latter can be held liable to pay the compensation to the claimants in this case. This contention of the learned counsel for respondent Nos. 2 and 3 deserves to be repelled as in the registration record, respondent Nos. 2 and 3, now deceased, continued to be the owners of the offending vehicle and that being so, in view of Dr. T.V. Jose v. Chacko P.M., 2001 ACJ 2059 (SC), rendered by the Hon’ble Supreme Court they continued to remain liable to the third parties when their names continued in the record of the registering authority as owners.

(31) In the ruling supra, it was held that the appellant still continued to remain liable to third party as his name continued in the record of RTO as owner. So, it was held that the appellant could not escape that liability and it will be for the appellant to adopt appropriate proceedings against the vendee if, in law, he is entitled to do so. Even affidavit, mark R7, was given by Sham Singh, respondent No. 2 herein, now deceased, regarding sale of offending truck in favour of respondent No. 4. In this affidavit, he has described himself to be an attorney of the co- owner of the truck, respondent No. 3, but that power of attorney has not been placed on the record, meaning thereby that there is no evidence on the record to indicate that respondent No. 3 had constituted respondent No. 2 as his attorney to sell the offending truck to respondent No. 4.

(32) So, in view of the affidavit, mark R7, respondent No. 3 still continues to be the owner of the offending truck.”

As against the finding recorded therein, the High Court, while reversing the same, has merely taken into consideration that the vehicle, which had been seized by the police after the accident, had been thereafter released by the competent court in favour of the respondent No. 6 herein, who is the subsequent purchaser and that too by ignoring the decision of this court and noting the same.

4. The award passed by the Tribunal would in fact disclose that the Tribunal, at the first instance, while arriving at its conclusion, has taken into consideration the law laid down by this court and on taking note that though the predecessors of the respondent Nos. 1 to 5 and the respondent Nos. 8 to 12 herein had contended that the vehicle had been sold, they continued to be the registered owners and they remained liable to the third parties.

5. In that view, we are of the opinion that the High Court was not justified in modifying the finding which had been rendered by the MACT towards liability. To that extent, we note that the MACT was justified in its conclusion and as such, the registered owner as well as the subsequent purchaser in the instant case would remain liable and the registered owner, who is stated to have sold the vehicle, would be entitled to make appropriate recoveries from their vendee but they would still remain liable to the appellants/claimants herein.”

18. In the present case also, the respondent no.1 was the owner of the vehicle involved in the accident within the meaning of Section 2(30). As per the Act, the person whose name is reflected in the records of the Registering Authority is the owner. On the facts of the case, admittedly respondent's vehicle which was involved in the accident was sold to respondent No. 3 and its possession was also delivered to him, but transfer of name was not done under Section 2(30) of the MV Act. Therefore, in view of the aforesaid judgment of the Hon’ble Supreme Court both the registered owner as well as the subsequent purchaser, i.e., respondent No. 1-Ramesh Kumar and respondent No. 3-Dev Swaroop, are jointly and severally liable to pay the compensation to the petitioner.

19. It is made clear that respondent No. 1, who had sold the vehicle to respondent No. 3, is at liberty to recover the amount of compensation from him, in accordance with law.

20. In view of what has been discussed hereinabove, the appeal is allowed and the appellant/Insurance Company is exonerated from its liability to pay any compensation to the petitioner (claimant) or any component thereof and the liability to pay the awarded amount of compensation rests upon the registered owner and subsequent purchaser of the offending vehicle, i.e., respondent No. 1 and respondent No. 3, jointly and severally.

21. Pending miscellaneous application(s), if any, shall also stand(s) disposed of accordingly.