Institute of Legal and Management Studies

The Supreme Court held that the insurer of the registered owner of a vehicle will be liable to compensate third-party losses arising out of the use of the vehicle, if the registration of the vehicle was not changed despite its transfer.

A bench of Justices K Vinod Chandran and NV Anjaria heard an appeal by a goods carriage driver challenging the Chhattisgarh High Court's ruling that held him personally liable to compensate passengers who were killed and injured in a fatal accident that occurred while travelling in his vehicle with their goods. The vehicle was under the driver's possession based on the owner's agreement to transfer the ownership to him; however, the registration was not formally transferred.

The insurer denied liability, contending that the passengers were travelling gratuitously. It further contended that since the ownership was in effect trasnferred, the policy issued in the name of registered owner was no longer in effect, and therefore, the loss could not be indemnified under the policy.

Setting aside the High Court's decision, the judgment authored by Justice Chandran rejected the insurer's argument observing that the High Court erred in ignoring Section 147(1)(b)(i) of the MV Act, which “enables indemnification by the insurer, any liability with respect to the death or bodily injury to third parties and any person including owner of the goods or his authorized representative carried in the motor vehicle.”

The Court noted that the injured/killed persons were hawkers who were travelling along with their goods such as fish and vegetables, who would come within the abmit of "owner of goods."
On the insurer's ownership argument, the Court, citing Naveen Kumar v. Vijay Kumar & Ors. (2018), noted that as neither the alleged sale agreement nor the registration transfer to the Appellant had been completed before the accident, the registered owner remained the legal owner at the time. The liability to compensate the passengers thus rested on him, and the insurer was bound to indemnify that liability under the policy.

"The transfer of the registration as per Section 50 of the Motor Vehicle Act, 19882 requires the transferee to report the fact of transfer in the prescribed form to the Registering Authority within whose jurisdiction the transfer is affected within 14 days of the transfer. There is no contention raised by the registered owner that he made such a report as required under Section 50(1)(a)(i) of the Act. Hence the ownership was with the registered owner even at the time of the accident and it is his liability to compensate the victims in the accident, which also has to be indemnified by the insurer.", the court said.

“The liability to pay falls squarely on the registered owner, even if there has been successive transfers which has to be indemnified by the insurer.”, the court added.

Accordingly, the appeal was allowed, and the insurer was directed to fully satisfy the compensation awards, including enhanced amounts.

Cause Title: Brij Bihari Gupta Versus Manmet & Ors.

Citation : 2025 LiveLaw (SC) 787

Click here to read/download the judgment

Appearance:

For Appellant(s) : Mr. Kaustubh Shukla, AOR Ms. Pushpanjali Singh, Adv. Mr. Praveen Singh, Adv.

For Respondent(s) : Mr. Shubhranshu Padhi, AOR Mr. Jay Nirupam, Adv. Mr. D.girish Kumar, Adv. Mr. Pranav Giri, Adv. Mr. Ekansh Sisodia, Adv. Mr. Vikrant Singh Bais, AOR Mr. Rahul Agarwal, Adv. Mr. Utkarsh Singh, Adv. Ms. Neema, Adv. Mr. Rajesh Kumar Gupta, AOR Ms. Jyoti Kaushik, Adv.