The financier of a vehicle under a hire purchase agreement is not a necessary party in claims proceedings before the Motor Accidents Claims Tribunal; liability lies with the owner in possession.

1The short but interesting question that arises for consideration in this Original Petition is whether the financier of a motor vehicle under a hire purchase agreement has to be impleaded as necessary party in a proceeding before the Motor Accidents Claims Tribunal, under S.166 of the Motor Vehicles Act, 1988 . Relevant facts may be briefly noticed.

2A petition for compensation was filed by the parents of a deceased victim in a motor accident. The accident occurred on March 2, 1994. The insurance company which was impleaded in the case contended that there was no valid insurance in respect of the vehicle on the date of the accident. The petitioner who was impleaded as the owner of the vehicle filed written statement contending that the vehicle in question was the subject matter of a hire purchase agreement with M/s. Sundaram Finance Ltd. (hereinafter referred to as the financier). It was further contended that the financier was bound under the Hire Purchase Agreement to remit the requisite insurance premium against the statutory third party risk as contemplated under the Act. The petitioners in his capacity as the hirer, was regular in remitting the monthly hire charges to the financier which included the amount payable towards the insurance premium also. Petitioner had remitted all the instalments and the entire liability was discharged. Petitioner was not liable if the financier had failed to renew the insurance policy on its expiry.

3Petitioner, therefore, filed an application for impleading the financier in the proceedings before the Tribunal. The above application was initially allowed by the Tribunal. However, the learned Judge reviewed his earlier order suo-motu and dismissed the application, holding inter alia that the breach of a contract entered into between the petitioner herein and the financier is not a matter to be adjudicated upon by the Tribunal. It was further held that the dispute which was sought to be resolved was solely based on a different cause of action. Thus the Tribunal took the view that application for impleading the financier was not maintainable. The order passed by the Tribunal has been placed on record as Ext. P5. Petitioner prays that a writ of certiorari be issued to quash Ext. P5.

4Separate counter affidavits have been filed by respondents 1 and 3. It is contended by respondent No.1, the claimant before the Tribunal, that the financier is not a necessary or proper party to be impleaded in the proceeding. It is further stated that even assuming without admitting that the financier was liable to remit the insurance premium under the hire purchase agreement, it would not absolve the petitioner in his capacity as the owner of the vehicle from the liability to pay the compensation. The order passed by the Tribunal dismissing the application for impleading is therefore just and legal.

5In the counter affidavit filed by respondent No.3, the Insurer, it is averred that there was no valid insurance policy in respect of the vehicle on the date of the accident. In fact the financier had informed respondent No. 3 by their letter dated April 11, 1994 that the vehicle in question was no longer under hire purchase agreement with them and that they have no more interest over the vehicle. Respondent No. 3 has also stated that the order passed by the Tribunal is perfectly legal.

6I have heard learned counsel for the petitioner and the respondents.

7It is contended on behalf of the petitioner that the financier is the real owner of the vehicle by virtue of the Hire Purchase Agreement. Since the financier had undertaken to remit the insurance premium in respect of the vehicle, he is a necessary and proper party in the proceeding before the Tribunal. The compensation, if any, has to be paid by the financier. The insurance premium having been collected by the financier from the petitioner, it was the financier who was responsible for renewing the insurance policy within time. It is further contended that the Tribunal