VidhiSangh

Supreme Court of India · 03/09/2024

VAIBHAV JAIN versus HINDUSTAN MOTORS PVT. LTD.

[2024] 9 S.C.R. 16 · 2024 INSC 652

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Summary

A vehicle in a dealer's custody was being test driven by the manufacturer's own employees when it crashed. The Supreme Court held that the dealer was not liable as owner because the manufacturer owned the vehicle and controlled it through those employees. Clauses of the dealership agreement allocating liability for defects did not shift tortious liability to the dealer, and the manufacturer, which had not appealed the award, could not use Order 41 Rule 33 CPC to escape it. Since the award had become final for the claimants, the dealer was allowed to recover from the manufacturer whatever it pays.

Issues

  1. Whether a dealer holding a vehicle for sale could be treated as its owner, and so be held jointly and severally liable for motor accident compensation, when the manufacturer's employees took it out for a test drive.
  2. Whether clauses 3(b) and 4 of the dealership agreement absolved the manufacturer of liability to pay compensation as owner.
  3. Whether the manufacturer, without filing an appeal or cross-objection against the award, could challenge its liability by invoking Order 41 Rule 33 CPC.

Provisions considered

Held

Result

Appeal allowed in part. The SLP had already been dismissed against the claimants, so the award remains enforceable by them against the owner, dealer and driver. If the dealer has paid or pays any part of the award, it may recover that amount from the manufacturer with 6% interest a year from the date of payment until recovery.

Judgment PDF: Supreme Court of India, [2024] 9 S.C.R. 16.