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New India Assurance Co. Ltd. and C. Sahadevao and anr. Vs. E.K. Muhammed and ors. and thettan Alavikutty and ors. - Court Judgment

LegalCrystal Citation
SubjectMotor Vehicles
CourtKerala High Court
Decided On
Case NumberM.F.A. Nos. 111, 116, 131 and 132 of 1979
Judge
Reported in[1987]61CompCas490(Ker)
ActsMotor Vehicles Act, 1939 - Sections 103A(1), 103A(2) and 103A(3)
AppellantNew India Assurance Co. Ltd. and C. Sahadevao and anr.
RespondentE.K. Muhammed and ors. and thettan Alavikutty and ors.
Appellant Advocate M.K. Anantha Krishnan and; R. Bhaskaran, Advs. (M.F.A. Nos. 111 and 116 of 1979),;
Respondent Advocate M. Ratna Singh and; Pulikool Aboobacker, Advs. for respondent Nos. 2 and 4 in M.F.A. Nos. 111, 116 o
DispositionAppeals allowed
Cases ReferredNew Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani
Excerpt:
.....of vehicle could take effect only in cases where insurer fails to give intimation of refusal to transfer certificate of insurance - for such deeming provision to come into play condition precedent should be fulfilled - unless requirements of such fictional transfer of certificate of insurance and policy described are satisfied it cannot be said that transfer took effect. - - it is to safeguard the interest of the parties to the transaction where the insured intends to transfer the ownership to another person, and intimation regarding the proposal for such transfer of the ownership is given to the insurer, and there is failure on the part of the insurer to give intimation regarding the refusal of the transfer for any of the reasons stated in sub-section (2) of section 103a of the..........and the policy was not transferred or deemed to have been transferred to another person, the insurer-company could be held liable to pay thecompensation arising out of the injuries resulting from the accident involving the vehicle in question. 12. moreover, assuming that in this case the third respondent (the insured who ceased to be the owner of the vehicle) had sent the application for transfer under section 103a on october 5, 1974, that by itself would not create any liability to pay compensation with respect to that vehicle on the part of the insurance company, which had time till october 20, 1974, to effect or refuse to transfer the certificate of insurance and policy described therein to the name of the third respondent (transferee). by the application of the provisions of.....
Judgment:

K. Bhaskaran, Actg. C.J.

1. All these appeals have reference to the same cause of action and are related to the claim for compensation arising out of the injuries sustained by two persons in a traffic accident involving car No. MDA 3353, at 9-00 p.m. on October 10, 1974, near the General Hospital Road, Kozhikode; and, as such, they were heard together and are being disposed of by this common judgment. The injured persons, namely, Thettan Alavikutty and P.K. Muhammed, instituted O.P. (M.V.) Nos. 197 and 203 of 1975, respectively, on the file of the Motor Accidents Claims Tribunal, Kozhikode. By the judgment dated November 18, 1978, the Tribunal awarded the injured--claimant in O.P. (M.V.) No. 197 of 1975, a sum of Rs. 28,800 by way of damages together with interest thereon at 6% per annum from the date of the petition till the date of payment made payable by respondents Nos. 1, 3 and 4 jointly and severally. In O. P. (M.V.) No. 203 of 1975, the Tribunal allowed in favour of the petitioner therein a sum of Rs. 3,960, together with interest at 6% per annum, from the date of the petition till the date of payment made payable jointly and severally by respondents Nos. 1, 3 and 4. In both the O.Ps., the first respondent is the driver, who drove the car, the second respondent, the owner of the vehicle in whose name the registration of the vehicle stood, the third respondent, the person in whose name the ownership of the vehicle is alleged to have been transferred, and the fourth respondent, the insurer with whom the second respondent had insured the vehicle.

2. Aggrieved by the decision of the Tribunal, the fourth respondent-insurance company filed MFA Nos. III and 116 of 1979 against the decision in O.P. (M.V.) No. 203 and 197 of 1975, respectively, MFA Nos. 131 and 132 of 1979 have been filed by respondents Nos. 1 and 3 in O.P. (MV) Nos. 197 and 203 of 1975. For the sake of convenience, reference to the parties would be as in the O.Ps.

3. The substance of the contentions in MFA Nos. 111 and 116 of 1979 is that the insurer was not liable to pay compensation for injuries resulting from accident involving a vehicle of which the insured had ceased to be the owner and the insurer had not transferred the certificate of insurance and policy to the transferee of the vehicle. The main contention raised by the appellants in MFA Nos. 131 and 132 of 1979 is that inasmuch as the vehicle had been insured by the first appellant with the insurance company (the appellant in the other appeals and the fourth respondent in the O.Ps.), they are liable to pay the entire compensation as awarded by the Tribunal and the appellants in MFA Nos. 131 and 132 of 1979 were under no legal obligation to pay the compensation. There is no dispute regarding the quantum of the compensation awarded by the Tribunal. The only question, as already noticed, is among the three against whom the decree has been passed, who exactly are liable to pay the compensation awarded by the Tribunal.

4. Counsel for the appellant in MFA Nos. 111 and 116 of 1979 submitted that the admitted fact is that the second respondent (registered owner of the vehicle) had sold the car to the third respondent on September 30, 1974, and, therefore, neither the first respondent (driver) nor the second respondent (registered owner) was entitled to make any claim on the basis of the certificate of insurance and the policy described therein with respect to compensation arising out of accident involving that vehicle of which the second respondent had ceased to be the owner ; and the appellant (fourth respondent) not having transferred the certificate of insurance and policy to the name of the third respondent, the appellant--insurance company--was not under any legal obligation to pay any compensation in respect of the accident involving that vehicle of which, by reason of transfer of ownership, the third respondent had become the owner but in whose favour the insurance company had not transferred the certificate of insurance of policy described therein. It was also pointed out that it was only on October 10, 1974, that the accident took place, whereas the transfer of the vehicle in favour of the third respondent had taken place as early as on September 30, 1974. The Tribunal had already entered the finding that the cause of the injury was the accident resulting from rash and negligent driving by the driver of the vehicle (first respondent). In ground B, it is specifically contended that the Tribunal should have held that there was no notice of transfer to the appellant prior to the date of the accident, and in ground D it is urged that after the termination of the insured's interest in the motor vehicle, the appellant insurance company was not liable to pay damages arising out of accident involving the vehicle. During the course of the arguments, counsel for the appellant-insurance company contended before us that the Tribunal having accepted the case of theappellant that the ownership of the vehicle was transferred to the name of the third respondent prior to the accident, and after having held that the second respondent before the Tribunal had ceased to be the owner of the vehicle, the Tribunal erred in holding that the company was liable to pay the compensation and that there was no case or evidence that the third respondent before the Tribunal had insured the car with the company. Shri T.G. Rajendran, counsel for the appellants in MFA Nos. 131 and 132 of 1979, submitted that, pursuant to the sale note dated September 30, 1974, transferring the ownership of the car from the second respondent to the third respondent on October 5, 1974 (before the accident took place on October 10, 1974), the intimation regarding the transfer was given to the fourth respondent and, therefore, respondents Nos. 1 to 3 were not liable to pay the compensation as it was the liability of the fourth respondent with whom the third respondent should be presumed to have insured the vehicle.

5. The legal position, in our view, hardly admits of any doubt. Section 103A of the Motor Vehicles Act, 1939 (Act IV of 1939), for short ' the Act', lays down :

' 103A. Transfer of certificate of insurance.--(1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter proposes to transfer to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, he may apply in the prescribed form to the insurer for the transfer of the certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle is proposed to be transferred, and if within fifteen days of the receipt of such application by the insurer, the insurer has not intimated the insured and such other person, his refusal to transfer the certificate and the policy to the other person, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer......

(3) Where the insurer has refused to transfer in favour of the person to whom the motor vehicle has been transferred, the certificate of insurance and the policy described in that certificate, he shall refund to such transferee the amount, if any, which, under the terms of the policy, he would have had to refund to the insured for the unexpired term of such policy.'

6. From Sub-section (1) of Section 103A, it is clear that the fictional transfer of the certificate of insurance and the policy described in the certificate taken by the transferor of a vehicle to the transferee thereof,could take effect only in cases where the insurer fails to give intimation of refusal to transfer the certificate of insurance and the policy mentioned therein to the transferee within 15 days of receipt of the application for transfer of the same in favour of the transferee. For this deeming provision to come into play, the condition precedent thereto should be fulfilled. A contract of insurance, being a contract of personal indemnity, the insured cannot transfer the benefits under the policy so long as such benefits are contingent. For that reason, the insurance policy in the name of one could not be transferred by him without the consent of the insurer. True, on the insured agreeing to such transfer, there would be a novation of the contract by which the original insured shall stand substituted by a new assured, the transferee to whom the policy has been transferred. Normally, the insurance policy lapses upon the transfer of ownership of the motor vehicle unless the insurance company agrees to accept the transferee as the insured in relation to the vehicle either at the instance of the transferor or at the instance of the transferee. It is to safeguard the interest of the parties to the transaction where the insured intends to transfer the ownership to another person, and intimation regarding the proposal for such transfer of the ownership is given to the insurer, and there is failure on the part of the insurer to give intimation regarding the refusal of the transfer for any of the reasons stated in Sub-section (2) of Section 103A of the Motor Vehicles Act, that in Sub-section (1) of that section, it is provided :

'......if within fifteen days of the receipt of such application by theinsurer, the insurer has not intimated the insured and such other person his refusal to transfer the certificate and the policy to the other person, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.'

7. All the same, unless the requirements of such a fictional transfer of the certificate of insurance and the policy described therein are satisfied, it could not be heard to say that the transfer had taken effect. The onus of proving that the intimation to the insurer regarding the proposal to transfer the vehicle had been given is on the person (or persons) who claims the benefit arising out of the transfer of the certificate of insurance and the policy described therein. In fact, Sub-section (1) of the section enables the insured to apply in the prescribed form to the insurer for the transfer of the certificate of insurance and the policy described therein in favour of the person to whom the motor vehicle is proposed to be transferred ; and that would mean that even at the stage of the proposal for the transfer of ownership of the vehicle, the insured is entitled to apply for the transfer of the certificate of insurance and the policy described therein in favour ofthe person to whom the ownership of the vehicle was proposed to be transferred.

8. Shri Rajendran drew our attention to the wording in Sub-section (3) of the section, where the expression used is 'the motor vehicle has been transferred '. It is his contention that the section contemplates intimation only after the transfer of ownership had taken effect as the expression used is 'the motor vehicle has been transferred'. It has to be noted that that expression has been used in a different context with respect to the right of the insured to get refund of the amount, if any, which under the terms of the policy, the insurer would have had to refund to the insured for the unexpired portion of such policy. That contingency would normally arise only where the transfer of ownership had already taken effect and the insurer had refused to transfer the certificate of insurance and the policy described therein in favour of the person to whom the ownership of the vehicle had been transferred. It does not in any way restrict, much less prohibit, the right of the insured to apply for the transfer of the certificate of insurance and the policy described therein in favour of the person to whom he proposed to transfer the ownership of the vehicle even before the transfer of ownership takes effect in terms of Section 103A(1) of the Act.

9. It was next contended by Sri Rajendran that the liability of the insurer under Sub-section (1) of Section 96 of the Act is absolute and irrespective of the fact that due intimation regarding the transfer of the ownership of the vehicle was sent or not or an application for the transfer of the certificate of insurance and the policy described therein was made or not, the insurer was bound to honour the commitment to pay compensation arising out of the accident involving the vehicle with respect to which the policy had been taken by the insured. In support of this contention, he cited the decision of the Supreme Court in New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani [1964] 34 Comp Cas 693 ; AIR 1964 SC 1736. On a careful consideration of the facts leading to the appeal to the Supreme Court and the legal aspects which fell for decision of that court, we find the dictum laid down therein is not applicable to the facts of the present case. That was a case in which ' A' insured his motor car against third party risk as required under Chapter VIII of the Act under a comprehensive policy; paragraph 3 of that policy was as under (at page 695 of 34 Comp Cas) :

' 3.....the company will indemnify any driver who is driving themotor car on the insured's order or with his permission provided that such driver:--

(a) is not entitled to indemnity under any other policy. '

10. A permitted one P to drive his car ; then it met with an accident resulting in the death of a person and injuries to another. In suits filed by the persons affected by the accident against P, who also owned a motor car and had insured it under a similar comprehensive policy indemnifying him (P) while driving any other motor car, it was contended by the insurance company that by reason of proviso (a) to para 3, P could not be said to be insured under A's policy. Repelling the contentions of the insurance company, the Supreme Court held that the proviso was not really a classification of drivers but is a restriction on the right of the driver to recover any damages he had to pay, from the company; the driver who could get indemnity from any other company under any other policy, was under this contractual term, not to get indemnity from the company ; the proviso thus affected the question of indemnity between a particular driver and the company and had nothing to do with the liability which the driver had incurred to the third party for the injuries caused to it. In paragraph 22 of the decision, at page 1741, the Supreme Court observed (at page 702 of 34 Comp Cas):

' Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis-a-vis the third parties, in view of the provisions of the Act. We are of opinion that once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. Considering this aspect of the terms of the policy, it is reasonable to conclude that proviso (a) of para. 3 of Section II is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the way of third parties' claim against the company on account of its claim against a person specified in para. 3 as one to whom cover of the policy was extended.'

11. In short, what the Supreme Court highlighted in the decision was that the insurance company could not evade its liability taking shelter under the proviso to a certain clause in the policy, which restricted the right of the driver to recover damages he had to pay, from the company. We do not understand that decision as one laying down a principle that where the insured ceased to be the owner of the vehicle, with reference to which the certificate of insurance and the policy described therein was issued, and the policy was not transferred or deemed to have been transferred to another person, the insurer-company could be held liable to pay thecompensation arising out of the injuries resulting from the accident involving the vehicle in question.

12. Moreover, assuming that in this case the third respondent (the insured who ceased to be the owner of the vehicle) had sent the application for transfer under Section 103A on October 5, 1974, that by itself would not create any liability to pay compensation with respect to that vehicle on the part of the insurance company, which had time till October 20, 1974, to effect or refuse to transfer the certificate of insurance and policy described therein to the name of the third respondent (transferee). By the application of the provisions of the Sale of Goods Act, the second respondent had ceased to be the owner of the vehicle from September 30, 1974, when he passed the sale note in favour of the third respondent. With the transfer of ownership of the vehicle, the transfer of the certificate of insurance and policy described therein, which is a matter governed by the provisions of the Act, does not take place automatically. On October 10, 1974, on which date the accident involving the vehicle took place, the transfer of the certificate of insurance and the policy described therein, not having been transferred to the name of the third respondent (transferee of the vehicle), neither the second respondent nor the third respondent had the right to claim indemnity against damages arising out of the accident involving the vehicle in question.

13. For a better appreciation of the legal position taken by Shri Rajendran, we would extract Sub-section (1) of Section 96 of the Act :

' If, after a certificate of insurance has been issued under Sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under clause (b) of Sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. '

14. No doubt, the liability cast on the insurer to pay the compensation awarded to the beneficiary of the decree is absolute. It does not, however, expressly or by necessary implication state that there is such liability on the part of the insurer in the case of the policy that had already lapsed, as in the present case, on account of the transfer of the ownershipof the vehicle by the insured, in whose name the policy stood, to another person in whose favour the policy had not been transferred and could not be deemed to have been transferred. This contention also, therefore, fails.

15. The insured and the transferee of the vehicle having failed to establish that the insured had applied in the prescribed form to the insurer for the transfer of the policy, or that after the receipt of such an application had either transferred the certificate of insurance and the policy relating to that to the name of the transferee, or that within fifteen days from the date of the receipt of such application for transfer, the insurer had failed to intimate to the insured and the transferee his refusal to transfer the certificate of insurance and the policy, the appellants in MFA Nos. 131 and 132 of 1979 could not succeed. Their appeals have, therefore, to be dismissed ; and we do so, without any order as to costs. For the same reason, the appellant in MFA Nos. 111 and 116 of 1979 is entitled to succeed ; and we allow these appeals modifying the judgment (award) under appeal holding that the compensation awarded is made payable by respondents Nos. 1 and 3 jointly and severally, and that the fourth respondent-insurance company is under no obligation to pay that amount to the petitioners in the original petitions. There will be no order as to costs in these appeals also.


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