IMPORTANT POINT
In hire-purchase agreements, the financer is not considered the owner and is not liable for damages in motor vehicle accidents.

ORDER :

1. Heard.

2. While deciding the appeal filed by the Financer assailing award of the Motor Accident Claims Tribunal (MACT) and its liability towards payment of compensation, learned Single Judge noticed that the view taken by a Coordinate Bench of this Court in S.B. Civil Miscellaneous Appeal No.439/2002-Bajaj Auto Finance Limited Vs. Smt. Prem & Ors., appears to be contrary to the law laid down by the Hon’ble Supreme Court in the case of Godavari Finance Company Vs. Degala Satyanarayanamma & Ors., reported in (2008) 5 SCC 107 as also a subsequent authoritative pronouncement in the case of HDFC Bank Limited Vs. Reshma & Ors., reported in (2015) 3 SCC 679. Accordingly, following questions have been referred for being answered:-

“(i) Whether the order dated 11.04.2012 passed by the Co-ordinate Bench in S.B Civil Misc. Appeal No. 439/2002 has been passed in ignorance of the judgment of Hon’ble Apex Court in the case of Godawari Finance Company (Supra) and the provisions contained under Sections 146 and 168 of the Motor Vehicles Act,1988?

(ii) Whether this appeal can be decided in the light of the judgment of Hon’ble Apex Court in the case of HDFC Bank Limited Vs. Reshma (Supra) by taking a contrary view, to the view taken by the Co-ordinate Single Bench of this Court vide order dated 11.04.2012 while deciding SBCMA No. 439/2002 against the same impugned judgment and award dated 10.08.2000 which has attained the finality?”

3. Learned counsel for the appellant-Financer would submit that the view taken by a learned Single Bench of this Court in the case of Bajaj Auto Finance Limited (supra) is per incuriam, as it runs contrary to the law laid down by the Hon’ble Supreme Court in the case of Godavari Finance Company (supra). Which is law under Article 141 of the Constitution of India and binding on all Courts. The other submission of learned counsel for the appellant is that even subsequently, a Larger Bench of the Hon’ble Supreme Court in the case of HDFC Bank Limited (supra) has reiterated the aforesaid legal position, as enumerated in the case of Godavari Finance Company (supra), that in case of hire-purchase agreement, the financer is ordinarily not to be treated as owner and it is the person who is in the possession and control of the vehicle and not the financer who would be liable to pay damage for the motor accident.

4. A learned Single Judge of this Court while deciding S.B. Civil Miscellaneous Appeal No.439/2002-Bajaj Auto Finance Limited Vs. Smt. Prem & Ors., vide order dated 11.04.2012, upheld the award fastening liability on the financer/appellant. It was held as below:-

“……….Appellant did not care to contest the matter. After such a length of time, appellant has for the first time raised the arguments before this court. Even if, scooter was sold on higher purchase basis, registration certificate of vehicle was still in name of appellant and if vehicle was not insured, it cannot escape of its liability for making payment of compensation………….”

The learned Single Judge was of the view that even if vehicle was sold on hire-purchase basis as registration of the vehicle was still in the name of Financer/appellant therein, if the vehicle was not insured, it cannot escape from its liability for making payment of compensation.

5. Hon’ble the Supreme Court in the case of Godavari Finance Company (supra) was dealing with an issue regarding liability of financer in case of hire-purchase vehicle, wherein name of financer was incorporated in the Registration Book as the owner. That was a case where the owner was a private person and vehicle was purchased by him, financed by the finance company. The vehicle was held under a hire-purchase agreement with the financer w.e.f. 06.02.1995. Though the agreement was later on cancelled on 10.11.1995, in the meanwhile, the vehicle met with an accident on 29.05.1995. The Motor Accident Claims Tribunal held the financer liable along with the owner of the vehicle, driver and insurance company to p