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PETITIONER: THE NEW INDIA ASSURANCE CO. LTD.,

       Vs.

RESPONDENT: SMT. SHEELA RANI & ORS.

DATE OF JUDGMENT:       15/09/1998

BENCH: K. VENKATASWAMI, & A.P. MISRA.

ACT:

HEADNOTE:

JUDGMENT: JUDGMENT Venkataswami. J. This 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. Brief 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. A 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 compensation. It is 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

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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. Though, 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. In 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 Madineni Kondaiah & Ors. Vs. Yaseen Fatima &  Ors.  reported in AIR 1986 A.P. 62. Applying  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 more cases. Learned      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) Ltd.  Vs.  New India Assurance Co.   Ltd.    [(1996)  1  SCC 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. The  fact 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,   namely,   (i)         whether the transfer of the vehicle to the purchaser         is  not  complete  till the vehicle is registered in         the name of the transferee (ii) whether on  transfer

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       in  the  absence  of  the  transfer of the insurance         policy, the policy lapses (iii)  whether  it  lapses         even  against  the  third  party  (iv)  whether  the         insurance  company  can  validly  contend  that  the         insurance policy  had  lapsed.   The 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.         The 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   force.         Thereafter  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.         Section 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

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       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.         Sub-section  (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.         Sub-section  (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.         There 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

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       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.         The 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.         therefore, 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".         If  the  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. A 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

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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. In 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.