Vehicle Being Collateral Not Ground To Shift Liability Of Paying Motor Accident Compensation On The Bank: Bombay High Court

The Bombay High Court held recently that a vehicle being hypothecated to a bank does not make the bank liable for procuring vehicle insurance or paying accident compensation.

Justice Shivkumar Dige dismissed an appeal against order directing vehicle owner to pay compensation to kin of deceased in a motor accident case observing –

“Mere vehicle was hypothecated to the bank, cannot be a ground to shift liability of paying compensation on the said bank. It was obligatory on the owner of vehicle to take insurance policy of the vehicle. The accident caused due to negligence of the Appellant. Hence bank cannot be hold liable to pay the compensation mere hypothecation with it.”

The appellants raised two central issues. Firstly, the age of the deceased individual was contested, with the appellants claiming it was not adequately proven before the Motor Accident Claims Tribunal (Tribunal).

Secondly, the appellants argued that the motorcycle involved in the accident was hypothecated to the Nutan Nagari Sahakari Bank Ltd., and the bank, being the hypothecatee, should have procured insurance for the vehicle. In absence of insurance, the appellants contended, they were not liable to pay compensation.

On the other hand, the claimants asserted that the Tribunal had thoroughly considered all aspects relevant to the case, and no interference was necessary in the Tribunal's order.

The court upheld the Tribunal's determination that the individual was 26 years old at the time of the accident, finding no infirmity. The court emphasized that the mere fact of hypothecation did not automatically shift the responsibility of insurance to the bank.

Consequently, the court dismissed the appeal. The claimants were granted permission to withdraw the deposited amount along with accrued interest from the respondents. The statutory amount, along with interest, was directed to be transferred to the Tribunal, allowing the parties to withdraw it in accordance with rules.

Case no. – First Appeal No. 344 of 2011

Case Title – Shrikant Annappa Shinde and Anr. v. Khiraling Basavannappa Shingshetty

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