AGREEMENT
Arvind Singh Chauhan
(Querist) 15 February 2010
This query is : Resolved
Sir,
"A" owns a vehicle.He transfers it to "B" on stamp paper, but it is yet registered in the name of "A". Meanwhile "D" causes damage to vehicle and make an agreement on stamp paper, that he will compensate Rs 40000/- to "B". Now "D" is not paying the damges to "B". What may be the proper remedy with "B".
1- whether he can file suit for specific performance of agreemnt.?
2- or he should file a money suit for recovery?
3- Agreemnt between "A" and "B" and between "B" and "D" are legal or not?
B K Raghavendra Rao
(Expert) 15 February 2010
Agreement is between B and D for compensation of Rs. 40,000/- towards the damage caused by D to the vehicle of B. But, in fact, B is not the owner of the vehicle. A has not transferred the vehicle in an appropriate manner prescribed by the Regional Transport Authority. A need to issue a signed transfer form to B and B should register the same with the Regional Transport Office.
As B is not the legal owner of the vehicle he cannot enter into an agreement with D for receiving compensation in respect of vehicle which is not owned by him. This agreement is not enforceable (voidable).
In the matters of payment or receipt of money, specific performance suit is not filed but can file money recovery suit. The agreement between A and B is enforceable for specific performance if A refuses to sign the prescribed form for transfer of ownership of vehicles.
Parveen Kr. Aggarwal
(Expert) 16 February 2010
Section 20 of the Sale of Goods Act, 1930:
"20. Specific goods in a deliverable state.- Where there is an unconditional contract for the sale of specific goods in a deliverable state, the property in the goods passes to the buyer when the contract is made, and it is immaterial whether the time of payment of the price or the time of delivery of the goods, or both, is postponed."
As the Sale of Goods Act, 1930 make provision for sale of movable properties, title in any movable property passes on making of contract.
But for the purposes of transfer of a motor vehicle, the Motor Vehicle Act, 1988 occupies the field being a special law. Section 50(1) of the M.V. Act provides in the following manner:
"50. Transfer of ownership. (1) Where the ownership of any motor vehicle registered under this Chapter is transferred,
(a) the transferor shall,-
(i) in the case of a vehicle registered within the same State, within fourteen days of the transfer, report the fact of transfer, in such form with such documents and in such manner, as may be prescribed by the Central Government to the registering authority within whose jurisdiction the transfer is to be effected and shall simultaneously send a copy of the said report to the transferee; and
(ii) in the case of a vehicle registered outside the State, within forty-five days of the transfer, forward to the registering authority referred to in sub-clause (i)-
(A) the no objection certificate obtained under section 48; or
(B) in a case where no such certificate has been obtained,-
(I) the receipt obtained under sub-section (2) of section 48; or
(II) the postal acknowledgment received by the transferee if he has sent an application in this behalf by registered post acknowledgment due to the registering authority referred to in section 48,
together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted;
(b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, and shall forward the certificate of registration to that registering authority together with the prescribed fee and a copy of the report received by him from the transferor in order that particulars of the transfer of ownership may be entered in the certificate of registration."
So unless the necessary formalities with the Registering Authority is not completed in respect of transfer of a motor vehicle, title therein does not pass.
Still, the agreement between "B" and "D" is enforceable because there is no dispute about the title of the vehicle. "D" being a third party with regard to the vehicle entered into an agreement to compensate "B" for his negligence and "B" accepted the same. "D" is bound by the agreement and "B" can enforce the agreement against "D".
Regarding the form of suit, it is simply a suit for recovery of specific sum payable under the agreement, the only remedy is to file a "suit for recovery" of the damages (liquidated).
The agreement between "A" and "B" is incomplete and it may be completed after compliance of formalities under the M.V. Act.
