Financier Cannot Be Held Liable for Compensation if Vehicle Hypothecation Was Terminated Before the Accident

The appellant, a proprietorship firm, challenged an award dated July 10, 2015, passed by the MACT, North East, Karkardooma Courts

The Tribunal had impleaded the appellant as respondent no. 2 and held them jointly liable for compensation following a motor accident involving vehicle no. "DL-1LD-5510" on July 17, 2010

Although the appellant appeared once to state they were not the owners, they were subsequently proceeded against *ex parte*

The appellant contended that the vehicle was owned by one Sanjay Kumar and that the appellant (acting as Sanjay Finance) was merely the financier whose hypothecation had been terminated via an NOC in 2003, years before the accident

Whether the Motor Accidents Claims Tribunal (MACT) erred in impleading and fastening liability upon the appellant as the "owner" of the offending vehicle based solely on the driver’s statement

Whether the appellant continued to have legal liability for the vehicle despite the termination of hypothecation and issuance of an NOC in 2003

The court examined the principles of motor accident liability under the Motor Vehicles Act, 1988, specifically focusing on the definition of "registered owner" and the evidentiary requirements for impleading parties

It scrutinized the legal effect of Form 35 (Notice of termination of hypothecation) and the issuance of a No Objection Certificate (NOC) as proof of the cessation of a financier's interest in a vehicle

The court also applied procedural principles regarding the necessity of impleading the actual registered owner as per official records (Registration Certificate) rather than relying on hearsay statements of a driver

The Court observed that the Registration Certificate (RC) clearly listed Sanjay Kumar as the registered owner and documented that the financing was through "Sanjay Finance," a sole proprietorship of Sanjay Narula

Crucially, the appellant produced evidence (Form 35 and NOC) showing the loan was prepaid and hypothecation was cancelled on April 3, 2003—seven years prior to the accident in 2010

The High Court found that the MACT had been "amiss" by impleading the appellant as the owner based solely on a statement by the driver, despite the Investigating Officer’s report identifying Sanjay Kumar as the registered owner

The Court noted that the mere presence of a sticker on the car from a previous hypothecation did not constitute legal ownership

Consequently, without material evidence linking the appellant to the ownership on the date of the accident, the finding of joint liability was deemed unsustainable

The MACT was directed to secure the presence of the registered owner (Sanjay Kumar) and the driver (Umesh), potentially through coordination with the Investigating Officer involved in the related FIR No. 130/2010

The Tribunal is ordered to re-examine the matter within six months from March 18, 2026

The appellant's previous deposit will be retained by the Court for the time being, with liberty to withdraw it pending the MACT's final proceedings