New India Assurance Co. Ltd. Vs. Smt. Sheela Rani & Ors  INSC 473 (15 September 1998)
& A.P. Misra. Venkataswami. J.
appeal arises out of a judgment dated 8.4.87 of the Division Bench of the
Rajasthan High Court in D.B. Civil Special Appeal No.29 of 1987.
facts respondent herein was the owner of a fiat Car bearing Registration No. RSM-9701.
The said Car was insured with the appellant-Insurance Company for the period
16.6.76 to 5.6.77. It appears that the sixth respondent sold the car to the
fourth respondent on 18.6.76. This transfer was accepted on 24.6.76 by the
Regional Transport Authority, Jaipur. The said Car met with an accident on
10.5.77 in which one Moti Lal Jain, husband of the first respondent, died.
Claim Petition was filed before the Motor Accident Claims Tribunal, Jaipur, in
M.A.C. No. 291/77 by the first and second respondents, widow and minor son of
the deceased, respectively. The third respondent, mother of the deceased, was
shown as respondent later on transposed as claimant in the Claim Petition. We
are not concerned with the quantum of compensation in this appeal as the sole
issue raised by the appellant Insurance Company was with reference to its
liability. In other words, according to the appellant, the transfer of the car
by the sixth respondent to fourth respondent was not informed to it by the
sixth respondent (transfer or) as required under Section 103-A of the Motor
Vehicles Act, 1939 (hereinafter called the 'Act') and, therefore, the accident
having taken place subsequent to the transfer, the appellant-Insurance Company
cannot be held liable. All the Courts below, namely, the Tribunal, a learned
Single Judge as also the Division Bench of the High Court have rejected such a
contention holding that the appellant-Insurance Company was liable to pay the
not in dispute that the fourth respondent (transferee) vide letters dated
23.6.76 and 30.6.76 had informed the appellant about the transfer of the Car,
to which there was no reply from the appellant. the contention raised on behalf
of the appellant before the Tribunal and the High Court as well as in this
Court was to the effect that the intimation about the transfer by the
transferee was not in accordance with the prescribed form and, therefore, it
was not taken note of by the appellant-Insurance Company.
it was contended before the Tribunal and the High Court that no such letters
said to have been sent under Certificate of Posting, were received by the High
Court, we cannot allow such contention to be raised in this Court.
coming to the conclusion that in the absence of proper intimation about the
transfer by the transferor in the prescribed form, the Policy will not lapse,
the learned Single Judge of the High Court placed reliance on a judgment of the
Full Bench of the Andhra Pradesh High Court in in AIR 1986 A.P. 62.
the principles laid down in the said judgment, the learned Single Judge
rejected the contention of the Insurance Company that it was not liable on the
facts of this case. The Division Bench also rejected a similar contention and
affirmed the view taken by the learned Single Judge after referring to some
counsel appearing for the appellant-Insurance Company reiterating the same
contention, namely, that the appellant was not liable to pay the compensation
in the absence of valid transfer of the Policy in favour of the transferee,
invited our attention to a recent judgment of this Court in Complete
Insulations (p) 221]. After carefully going through the facts and the ratio of
the said judgment this Court has approved the ratio laid down in thee decision
of the Full Bench of the Andhra Pradesh High Court in Kondaiah's case.
in Complete Insulations's case are more or less identical to the case on hand.
In that case, a transfer took place on 15.6.89. It was the transferee, who
informed on 26.6.89 about the transfer of registration and asked for transfer
of the Insurance Policy. A reminder was also sent on 24.7.89. The Insurance
Company in that case did not respond to the said letters. The transferee
preferred a complaint before the Consumer Disputes Redressal Commission, Chandigarh, claiming compensation for the
damage caused to the Car. The commission, overruling the objection of the
Insurance Company, awarded a sum of Rs. 83,000/- On appeal by the Insurance
Company, the National Consumer Disputes Redressal Commission set aside the
order of the Commission at Chandigarh and
dismissed the complaint. The transferee preferred an appeal to this Court.
While affirming the decision of the National Commission, this Court elaborately
considered the nature of a claim by a third party. It was held that the defence
available to the Insurance Company against the claim of the transferee in the
absence of proper transfer of policy regarding the damage to own vehicle or
injury to self will not be available to a claim by a third party. This Court
also compared the relevant provisions of the old Act Section 103-A with Section
157 of the 1988 Act. After comparing the relevant provisions, as noticed above,
this Court held as follows:- "In Kondaiah case the vehicle in question was
transferred but not the insurance policy. The policy or the certificate was not
transferred to the vendee. The victims of the accident filed a claim before the
Motor Accident Claims Tribunal. Broadly four contentions were considered,
the transfer of the vehicle to the purchaser is not complete till the vehicle
is registered in the name of the transferee
on transfer in the absence of the transfer of the insurance policy, the policy
it lapses even against the third party
the insurance company can validly contend that the insurance policy had lapsed.
Full Bench held that under the sale of Goods Act the sale is complete on
payment of the consideration and delivery of the vehicle, regardless of
transfer of registration in the name of the transferee. On the second and third
contentions it was held that notwithstanding the non-transfer of the insurance
policy, the liability qua third party subsists in view of sections 94 and 95 of
the old Act. The last point regarding right of insurance company to raise the
plea of the policy having lapsed is not of any relevance to us. In the separate
judgment of Kodandaramayya, J. relied upon by the National Commission, it was
pointed out that the "third party" referred to in section 95 did not
include a transferee who was not a party to the original contract of insurance
and, therefore, the transferee or vendee could not claim any benefit from the
insurance company for damage to his person or the vehicle.
New Act came into force with effect from 1.7.1989. Since the Vehicle in
question was sold on 15.6.1989 and the letter of intimation of transfer and
request to transfer the Certificate of Insurance and the policy described
therein was sent on 26.6.1989, the old Act applied. Admittedly the request was
not refused under section 103-A of the old Act till the new Act came into
on 24.7.1989 the Insurance Company was once again requested to effect the
transfer of the Certificate of Insurance as well as the policy but to no avail.
By that day the new Act had come into force. Actually the application dated
26.6.1989 was pending when the new Act had come into force. That application
had to be processed under Section 157 of the new Act and hence the certificate
as well as the policy must be deemed to have been transferred in the name of
the transferee. Even if it is assumed that the old Act applied to pending cases
the certificate and policy must be deemed to have been transferred since no
refusal was communicated by the Insurance Company to the transferor or the
transferee. Therefore, in either case the transfer of the Certificate of
Insurance and policy described therein must be taken as complete in view of the
language of Section 103-A of the old Act and Section 157 of the new Act.
157 appears in Chapter XI entitled "Insurance of Motor Vehicles against
Third Party Risks" and comprises Sections 145 to 164. Section 145 defines
certain expression used in the various provisions of that chapter. The
expression "certificate of Insurance" means a certificate issued by
the authorised insurer under Section 147(3). "Policy of Insurance"
includes a certificate of insurance. Section 146(1) posits that 'no person
shall use. except as a passenger, or cause or allow any other person to use, a
motor vehicle in a public place, unless there is in force in relation to the
use of the vehicle by that person or that other person, as the case may be, a
policy of insurance complying with the requirements of this chapter". Of
course this provision does not apply to vehicles owned by the Central or State
Government and used for Government purposes not connected with any commercial
enterprise. This provision corresponds to Section 94 of the old Act. Section
147 provides that the policy of insurance to be issued by the authorised
insurer must insure the specified person or classes of persons against any
liability incurred in respect of death of or bodily injury caused to any
passenger of a public service vehicle in a public place. This provision is akin
to Section 95 of the old Act. It will be seen that the liability extends to damage
to any property of a third party and not damage to the property of the owner of
the stipulates the extent of liability and in the case of property of a third
party the limit of liability is Rupees six thousand only. The proviso to that
sub-section continues the liability fixed under the policy for four months or
till the date of its actual expiry, whichever is earlier.
(3) next provides that the policy of insurance shall be of no effect unless and
until the insurer has issued a certificate of insurance in the prescribed from.
The next important provision which we may notice is Section 156 which sets out
the effect of the certificate of insurance. It says that when the insurer
issues the certificate of insurance, then even if the policy of insurance has
not as yet been if the policy of insurance has not as yet been issued, the
insurer shall, as between himself and any other person except the insured, be
deemed to have issued to the insured a policy of insurance conforming in all
respects with the description and particulars stated in the certificate. It is
obvious on a plain reading of this provision that the legislature was anxious
to protect third party interest. Then comes Section 157 which we have extracted
comes Section 157 which we have extracted earlier. This provision lays down
that when the owner of the vehicle in relation whereto a certificate of
insurance is issued transfers to another person the ownership of the motor
vehicle, the certificate of insurance together with the policy described
therein shall be deemed to have been transferred in favour of the new owner of
the vehicle with effect from the date of transfer.
(2) requires the transferee to apply within fourteen days from the date of
transfer to the insurer for making necessary changes in the certificate of
insurance and the policy described therein in his favour. These are the
relevant provisions of chapter XI which have a bearing on the question of
insurer's liability in the present case.
can be no doubt that the said chapter provides for compulsory insurance of
vehicles to cover third-party risks. Section 146 forbids the use of a vehicle
in a public place unless there is in "orce in relation to the use of the
vehicle a policy of insurance complying with the requirements of that chapter.
Any breach of this provision may attract penal action. In the case of property,
the coverage extends to property of a third party i.e. a person other than the
insured. This is clear from Section 147(1)(b)(i) which clearly refers to
"damage to any property of a third party" and not damage to the
property of the 'insured' himself. And the limit of liability fixed for damage
to property of a third party is Rupees six thousand only as pointed out
earlier. That is why even the Claims Tribunal constituted under Section 165 is
invested with jurisdiction to adjudicate upon claims for compensation in
respect of accidents involving death of or bodily injury to persons arising out
of the use of motor vehicles, or damage to any property of a third party so
arising, or both. Here also it is restricted to damage to third-party property
and not the property of the insured. Thus, the entire Chapter XI of the new Act
concerns third-party risks only. It is therefore, obvious that insurance is compulsory
only in respect of third party risks since Section 146 prohibits the use of a
motor vehicle in a public place unless there is in relation thereto a policy of
insurance complying with the requirements of chapter XI. Thus, the requirements
of that chapter are in relation to third-party risks only and hence the fiction
of Section 157 of the new Act must be limited thereto.
certificate of insurance to be issued in the prescribed form (see Form 51
prescribed under Rule 141 of the Central Motor Vehicles Rules, 1989) must.
relate to third party risks. Since the provisions under the New Act and the Old
Act in this behalf are substantially the same in relation to liability in
regard to third parties, the National Consumer Disputes Redressal Commission
was right in the view it took based on the decision in Kondaiah case because
the transferee-insured could not be said to be a third party qua the vehicle in
question. It is only in respect of third party risks that Section 157 of the
New Act provides that the certificate of insurance together with the policy of
insurance described therein "shall be deemed to have been transferred in favour
of the person to whom the motor vehicle is transferred".
policy of insurance covers other risks as well, e.g., damage caused to the
vehicle of the insured himself, that would be a matter falling outside Chapter
Xi of the New Act and in the realm of contract for which there must be an
agreement between the insurer and the transferee, the former undertaking to
cover the risk or damage to the vehicle. In the present case since there was no
such agreement and since the insurer had not transferred the policy of
insurance in relation there to the transferee, the insurer was not liable to
make good the damage to the Vehicle. The view taken by the National Commission
is therefore correct." We are conscious that in the above judgment of this
Court, the claim by the transferee was one relating to damage to the vehicle
and not one relating to third party.
careful reading of the judgment of this Court, extracted as above, will clearly
show that on the transfer of the vehicle about which intimation was given
though not strictly as required under Section 103-A of the Act and in the
absence of refusal from the insurer the Policy already given by the Insurance
Company to the transferor will not lapse. As in the case of Complete
Insulations (supra) in the present case also the transferee had intimated to
the appellant-Insurance Company about the transfer of the vehicle in his favour
though not in the absence of such reply the Certificate shall be deemed to have
been transferred in favour of the transferee as per Section 103-A of the Act.
view of the above discussion, we do not find any merit in this appeal and the
same is accordingly dismissed with no order as to costs.