Test Drive Tragedy: Who’s Liable? Supreme Court’s Verdict in recent Landmark Case: Vaibhav Jain v. Hindustan Motors Pvt. Ltd.

Case Title: Vaibhav Jain v. Hindustan Motors Pvt. Ltd.

Citation: [2024] 9 S.C.R. 16; 2024 INSC 652; Civil Appeal No. 10192/2024
Court: Supreme Court of India (Reportable)
Date of Judgment: September 3, 2024
Judges: Hon’ble Justices J.B. Pardiwala and Manoj Misra

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Facts of the Case:

1. The case arose from a fatal accident during a test drive of a vehicle taken from the appellant-dealer Vaibhav Motors by employees of Hindustan Motors Pvt. Ltd.
2. The vehicle was being test-driven by two employees of Hindustan Motors: the driver, Shubhashish Pal, and the deceased, Pranay Kumar Goswami.
3. A claim petition was filed by the legal heirs of the deceased (Respondents 1-4), seeking compensation under the Motor Vehicles Act, 1988.
4. The claim petition was filed against Vaibhav Jain (Proprietor of Vaibhav Motors), Hindustan Motors (manufacturer), and Shubhashish Pal (driver).
5. The key issue was whether Vaibhav Jain, as the dealer, could be held liable as the owner of the vehicle at the time of the accident.
6. The Tribunal held both Vaibhav Jain and Hindustan Motors jointly and severally liable for compensation.
7. The High Court of Chhattisgarh dismissed the appeal of Vaibhav Jain and enhanced the compensation awarded to the claimants.
8. Vaibhav Jain appealed to the Supreme Court, arguing that Hindustan Motors, being the manufacturer and having control of the vehicle, should bear the liability.
9. The appellant contended that at the time of the accident, the vehicle was in control of Hindustan Motors, and no evidence showed that the vehicle had been sold to him.
10. Hindustan Motors argued that it had sold the vehicle to the dealer and that the dealer should be held liable.

Legal Points:

1. Ownership of the Vehicle: Section 2(30) of the Motor Vehicles Act defines the owner as the person in whose name the vehicle is registered, but control and command may also determine ownership.
2. Dealership Agreement: Clauses 3(b) and 4 of the Dealership Agreement were contested for liability determination.
3. Tortious Liability: The manufacturer’s employees had control of the vehicle at the time of the accident, thus shifting liability.
4. Order 41, Rule 33 of CPC: Hindustan Motors tried to argue that it could still contest liability despite not appealing the Tribunal’s decision.
5. Liability of Manufacturer and Dealer: The court examined whether the dealer could be liable jointly with the manufacturer for the accident.
6. Possessory Ownership: Vaibhav Jain was deemed not to be the possessory owner as no sale had been proven.
7. Control of the Vehicle: Hindustan Motors retained control and ownership at the time of the accident.
8. Non-appeal by Hindustan Motors: The non-filing of an appeal by Hindustan Motors solidified its liability.
9. Precedent Cases: Relevant case laws like Rajasthan State Road Transport Corporation v. Kailash Nath Kothari & Ors. and Tata Motors Ltd. v. Antonio Paulo Vaz were discussed.
10. Final Liability: The Supreme Court ruled that Hindustan Motors alone was liable for the compensation.

Arguments by the Parties:

Appellant (Vaibhav Jain):

1. The vehicle was still owned by Hindustan Motors at the time of the accident.
2. The dealership agreement did not transfer ownership.
3. The driver and deceased were both employees of Hindustan Motors.
4. Cited: Rajasthan State Road Transport Corporation v. Kailash Nath Kothari & Ors.

Respondent (Hindustan Motors):

1. Argued that the vehicle was sold to the dealer before the accident.
2. Claimed that the dealer should be responsible based on the dealership agreement.
3. Cited: Tata Motors Ltd. v. Antonio Paulo Vaz.

Judgment Points:

1. Vaibhav Jain, as the dealer, was not the owner of the vehicle at the time of the accident.
2. Hindustan Motors retained control over the vehicle through its employees.
3. The dealership agreement could not absolve Hindustan Motors of tortious liability.
4. The appeal by Vaibhav Jain was allowed to the extent that he was not liable for compensation.
5. The compensation awarded by the Tribunal could still be recovered from Hindustan Motors.
6. Hindustan Motors could not question its liability, having not appealed the Tribunal’s decision.
7. The principles of vicarious liability applied as Hindustan Motors retained control.
8. The appellant-dealer had no control over the vehicle during the test drive.
9. Hindustan Motors was held jointly liable for the compensation.
10. The judgment clarified the limits of the dealership agreement in shifting tortious liability.

Read the Judgement:admin_judgement_file_judgement_pdf_2024_volume 9_Part I_2024_9_16-36_1726814269