Report No. 106

Chapter 2

The Present Law

2.1. Three Stages.-

There are three important chronological stages relevant to the issue now being considered. The most convenient course would be to state the present law with reference to each of these three stages.

2.2. The first stage is the transfer of the ownership of the motor vehicle from the previous owner to the subsequent owner. This stage is primarily governed by the Sale of Goods Act. As a matter of the law governing the sale of goods, ownership of the motor vehicle may pass to the purchaser at the specified time. However, the mere fact that the transfer has been effectively achieved for purposes of the general law does not solve the question1 now under consideration, which relates to the transfer of insurance. Transfer of Property in the vehicle does not, in itself, carry a transfer of insurance in favour of the purchase of the vehicle.

1. Para. 1.1., supra.

2.3. The second stage is represented by transfer of the registration certificate of the vehicle in favour of the transferee. This stage is important from the point of view of the administrative provisions of the Motor Vehicles Act. But, here again, the transfer of registration does not, in itself, transfer the benefit of insurance of the vehicle to the transferee. The mere fact that the registration of the vehicle was transferred to the transferee may not, in itself, justify the conclusion that the policy also stood transferred to the transferee. This, at least, is the view of the Madhya Pradesh1 and the Rajasthan2 High Courts, dissenting from the Calcutta view on the subject.3

1. Gyarsilal v. Pandit Sitacharan Dubey, AIR 1963 MP 164.

2. Motor Owners' Insurance Co. v. Khetpal Singh, AIR 1983 Raj 83 (May).

3. Bir Singh v. Hashi Bashi Banerjee, AIR 1956 Cal 555.