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Report No. 106

Chapter 5


5.1. Having taken into account the present state of the law1, and the hardship caused thereby, and having considered the various shades of view expressed in the comments received on the Working Paper2-3, the Law Commission has come to the conclusion that-

(a) an amendment of the law is badly needed; and

(b) the amendment should proceed on the basis that on the transfer of ownership of a motor vehicle, the policy of insurance shall stand transferred to the transferee from the date of transfer of ownership.

In other words, the Commission favours the second alternative out of the two alternative.- (a) and (b.- which were put forth in the Working Paper4. A point concerning notice will be dealt with in the detailed recommendation.

1. Chapter 2, supra.

2. Chapter 3, supra.

3. Chapter 4, supra.

4. Para. 4.1.(b), supra.

5.2. The alternative favoured by u.- automatic transfer of insurance benefit on transfer of the vehicl.- appears to be badly needed, in order to eliminate the serious anomalies that arise under the present law. If the other alternativ.- i.e., writing for transfer of registratio.- is adopted, there will result considerable delay in the effective transfer of insurance benefits. It would mean that during the inter-regnurn:

(a) the vehicle would have been transferred (physically and legally) to the transferee, who (or whose employees) might be operating it;

(b) and yet, a victim of an accident caused by the negligence of the vehicle by the transferee, and entitled in law to be compensated, cannot enforce the liability against the insurer, since the insurer can take the plea that the transferee of, the vehicle does not automatically become entitled to the benefit of the insurance;

(c) the transferee of the vehicle himself would remain uncovered by insurance against the risks usually covered by policies of insurance of motor vehicles;

(d) the transferor may, in theory, be entitled to the benefit of the insurance, but, as regards him, it is only a right of academic interest, because, having parted with the ownership of the vehicle, he does not need any protection.

Section 103A of the Motor Vehicles Act, 1939 - Effect of Transfer of a Motor Vehicle on Insurance Back

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