Hindustan Motors, not dealer, liable for compensation in accident during test drive: Supreme Court

New Delhi: The Supreme Court has held M/s Hindustan Motors Pvt Ltd and not its dealer as liable to pay compensation for tortious liability for the death caused to its employee due to an accident during the test drive of the vehicle.

A bench of Justices J B Pardiwala and Manoj Misra said 'owner’ of a vehicle is not limited to the categories specified in Section 2 (30) of the Motor Vehicles Act.

The court said if the context so requires, even a person at whose command or control the vehicle is, could be treated as its owner for the purposes of fixing tortious liability for payment of compensation.

In its judgment on Tuesday, the court, however, allowed an appeal of Vaibhav Jain, proprietor of Vaibhav Motors by holding, being just a dealer of M/s Hindustan Motors, he was not liable for compensation as the owner of the vehicle.

The bench rejected a contention by M/s Hindustan Motors that the vehicle in the case was sold and delivered to the dealer on a principal to principal to basis, so the driver and the dealer alone would be liable for compensation.

At the time of accident, the driver and the co passenger of that vehicle were employees of M/s Hindustan Motors, the court noted.

The bench said there is nothing on record to suggest that the dealer had the authority to deny those two persons permission to take the vehicle for a test drive. More so, when they were representatives of the owner of the vehicle.

The bench noted no evidence of sale of the vehicle to the dealer was produced by M/s Hindustan Motors, neither did it challenge the tribunal's order before the High Court. So, "it does not lie in the mouth of M/s Hindustan Motors to canvass that it was not the owner of the vehicle," the bench said.

"In these circumstances, we can safely conclude that at the time of accident the vehicle was not only under the ownership of M/s Hindustan Motors but also under its control and command through its employees. Therefore, in our view, the appellant, being just a dealer of M/s Hindustan Motors, was not liable for compensation as an owner of the vehicle," the bench said.

In the case, the tribunal held M/s Hindustan Motors as well as M/s Vaibhav Motors jointly and severally liable for the compensation awarded. The tribunal also held that on the day of accident, M/s Hindustan Motors was the owner of the vehicle though Vaibhav Motors was in possession of the vehicle as its dealer.

On a plea by claimants, the Chhattisgarh High Court enhanced the compensation and dismissed the plea by Vaibhav Motors.

While setting aside the High Court's order, the bench said, the appellant was neither the owner nor in control or command of the vehicle at the time of accident, and the vehicle was being driven by an employee of M/s Hindustan Motors, we are of the view that apart from the driver, M/s Hindustan Motors alone was liable for the compensation awarded".