The Bombay High Court observed that mere hypothecation of a vehicle to a bank, does not shift the liability of paying the motor accident compensation on the said bank.

The appellant argued that the Motor Accident Claims Tribunal (Tribunal) did not consider that the offending motorcycle was hypothecated with the bank, and hence, it was the bank's duty to secure insurance for the vehicle. The appellant contended that the absence of insurance relieved them of liability to pay compensation.

On the other hand, it was argued that no interference was required with the order of the Tribunal as it had considered all the aspects of the case.

A Single Bench of Justice Shivkumar Dige observed, “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.

Advocate Prashant Kulkarni represented the appellants, while Advocate A.M. Kulkarni appeared for the respondents.

At the time of the accident, the offending motorcycle was hypothecated with Nutan Nagari Sahakari Bank Ltd.

The Court noted, “Though the offending vehicle was hypothecated with the bank, no agreement was produced on record to show that, if there was Terms and Conditions about taking insurance policy of offending vehicle by the Nutan Nagari Sahakari Bank Ltd.

The Court held that the mere hypothecation of the vehicle to the bank, without an agreement specifying insurance terms, does not shift the liability for compensation to the bank. Secondly, the owner of the vehicle was obligated to obtain insurance, and the accident was due to the appellant's negligence. Therefore, the bank cannot be held liable solely based on the hypothecation.

Accordingly, the High Court dismissed the appeal.

Cause Title: Shrikant Annappa Shinde & Anr v. Khiraling Basavannappa Shingshetty & Ors. (2024:BHC-AS:1939)

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