1. These two appeals arise out of two claim petitions filed under s. 110A of the Motor Vehicles Act, by the widow of one Dharmaraj and the widow and children of one Thirumal, both of whom died in a motor vehicle accident.
2. On August 22, 1972, at about 12.50 p.m. the said Dharmaraj and Thirumal were going on a motor cycle MSQ 6512, Dharmaraj riding it and Thirumal sitting on the pillion. When they were going in the Kodambakkam bridge in Arcot Road, the motor car MSR 5018, which was coming in the opposite direction, suddenly dashed on the motor cycle as a result of which the right leg of Dharmaraj was cut off below the knee, and thrown to a distance of 12 feet and both the legs of the pillion rider, Thirumal, were fractured. Both the injured were taken to the Government Royapettah Hospital, but in the evening of the same day, both of them succumbed to the injuries. On the ground that the accident was due to the rash and negligent driving of the motor car, MSR 5018, by its driver, the widow of Dharmaraj filed O.P. No. 772 of 1972, claiming a compensation of Rs. 2,00,000, while the legal representatives of Thirumal filed O.P. No. 785 of 1972, claiming a compensation of Rs. 1,50,000. Both the claim petitions had been filed against respondents, Nos. 1 and 2, who are respectively the owner of the car and the insurance company with which the car had been insured.
3. First respondent, the original owner of the car, died even before the summons were served and his widow, third respondent, was brought on record as his legal representative. The second respondent, the insurer of the car, contended that the owner of the car to whom an insurance policy had been issued died on July 10, 1972, that the third respondent, his widow, had sold the said car on August 14, 1972, to one Niranjan Roy, that on such transfer of the ownership of the car, the policy issued in the name of the first respondent had lapsed even before August 22, 1972, the date of the accident, and that, therefore, it is not liable to pay any compensation. The third respondent in both the claim petitions, who came on record as the legal representative of the first respondent, contended that she sold the said car to Niranjan Roy for a valuable consideration on August 14, 1972, that she had informed about the transfer of ownership of the car to the insurance company on the same day, that the person who drove the vehicle at the time of the accident was not her employee and that, therefore, she is not vicariously liable to pay any compensation. On taking note of the defence taken by the third respondent, the purchaser, Niranjan Roy, had been impleaded as the fourth respondent. He contended that there was no transfer of ownership of the said car to him and that therefore, he was not liable to pay any compensation. He also contended that the said car had been left for repairs with M/s. Eswar Automobiles on August 14, 1972, that the accident having occurred while the car was driven by the driver employed by the said automobiles, the partners of the said automobiles are to be added as parties as they were liable to pay compensation. He also pleaded that the accident was caused solely due to the negligence of the motor cycle driver and that, therefore, no compensation was payable by him in respect of the said accident, and that, in any event, the compensation claimed in both the claim petitions was excessive.
4. The parties adduced evidenced to substantiate their respective pleas and, after analysing the evidence, the Tribunal held that the accident had occurred due to the rash and negligent driving of the car, MSR 5018, by its driver, that a fair and reasonable compensation payable in respect of O.P. No. 772 of 1972 will be Rs. 33,000, as against the claim of Rs. 2,00,000 and a sum of Rs. 52,400 will be fair and reasonable in O.P. No. 785 of 1972, as against the claim for Rs. 1,50,000. On the question as to who among the respondents are liable to pay the said compensation, determined in the two claim petitions, the Tribunal held that respondents Nos. 2, 4 and 5 in both the claim petitions are liable to pay the compensation awarded. Respondents Nos. 4 and 5, the transferee and the driver of the car, have not appealed against the award passed by the Tribunal and the award as against them has become final. The second respondent, insurance company, has alone filed these two appeals against the award passed by the Tribunal in O.P. Nos. 772 and 785 of 1972.
5. Even before the Tribunal, the insurance company, appellant herein, had contended that on the transfer of ownership of the vehicle, by the third respondent, the policy in respect of the vehicle had lapsed and that, therefore, the insurance company was not liable to pay any compensation. This contention has been overruled by the Tribunal relying on a decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100.
6. In these appeals filed by the insurance company, the finding of the Tribunal that the insurance company continues to be liable under the policy even after the transfer of ownership of the car, is challenged. The learned counsel for the appellate contends that the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K, Sunder  ACJ 100, does not lay down the correct position of law and that, in any event, the said decision will not apply to the facts of the present case. Thus, the only question that arises for consideration in these appeals is whether the policy taken by the first respondent had lapsed with the transfer of ownership of ownership of the car, as urged by the appellant.
7. It is well established that the insurance policy lapses upon the transfer of the 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 insured or the transferee. The following cases will clearly establish the above position. Peters v. General Accident and Life Assurance Corporation Ltd.  4 All ER 628; Mehtab Singh S. Jot Singh (S.) v. National Fire and General Insurance Co. Ltd., ; Bhoopathy (M.) v. Vijayalakshmi (M.S.) : AIR1966Mad244 and Oriental Fire and General Insurance Co. Ltd. v. Vimal Roy : AIR1973Delhi115 . Even the decision in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100 , referred by the Tribunal and relied on by the claimants, accepts the said well established proposition.
8. However, the learned judges of the Bombay High Court in the last noted case proceeded on the basis that the conduct of the insurance company indicated that it has accepted impliedly the transferee as the insured of the vehicle, that the insurance company having accepted the transferee as the insured, there was a novation of the original contract by a fresh contract of indemnity between the insurance company and the transferee and therefore, the insurance company has to indemnify the transferee in relation to the accident caused by the said vehicle. After pointing out that as the law stood then the insurance policy would lapse upon the transfer of the ownership of the motor vehicle unless, of course, the insurance company agreed to accept the transferee as the insured person in relation to the vehicle, the court proceeded to find out whether the insurance company had agreed to accept the transferee as the insured person relating to the vehicle in that case. After considering the evidence in detail, the court held that the insurance company had impliedly agreed to accept the transferee as the insured in respect of the vehicle because of the following three circumstances - (1) There was no clause in the policy with regard to the transfer of the policy to a purchaser of the car to which it related, and the insurance company did not lead evidence or even produce the original records which would have shown as to what was the correct state of affairs and, on the facts, adverse inference could be drawn against the insurance company for non-production of the necessary materials before the court and even in the written statement filed by the insurance company there was no averment to the effect that the insurance company informed the transferee about the lapse of the insurance policy. (2) Under s. 103A of the Motor Vehicles Act, the insurance company is bound to transfer the benefits of the insurance policy to the transferee, if an application is made to that effect and that the notice of transfer given by the owner of the vehicle in that case can be taken to be an application for transfer of the policy. (3) Section 105 of the Act had imposed a duty on the insurer to notify the registering authority of cancellation or suspension of the policy and the insurance company not having notified such cancellation or suspension of the policy to the registering authority, it should be taken that the insurance company impliedly assented to the transfer the benefits of the policy in favour of the transferee. The question is whether the decision in that case applies to the case on hand.
9. Before we proceed to deal with the facts of this case to find out whether the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100, is applicable, we like to refer to a decision of the Madhya Pradesh High Court in Balwant Singh v. Jhannubai  ACJ 126, which had taken a contrary view on more or less similar facts, of course, without referring to the decision of the Bombay High Court. In that case the vehicle was owned originally by Dr. Joshi, who had transferred the vehicle to one Gyarsilal and the accident occurred after the transfer of the ownership of the car. The controversy between the parties centred round the question whether the insurance policy held by Dr. Joshi in respect of the vehicle was or was not transferred to Gyarsilal, for, the transfer had not been accepted and registered by the motor vehicles authorities. After resolving the dispute by holding that the transfer of ownership of the car did not depend on its registration and that the registration of the motor vehicle was not a condition precedent for a transfer of the vehicle, the court proceeded to decide the further question as to whether the purchaser, Gyarsilal, could claim the benefit of the insurance policy taken by the vendor in respect of the said car. On the question the court took the view that as there was no statutory provision either under the Motor Vehicles Act or under the Insurance Act, about the transferee's right under the motor insurance policy, the contract of insurance being a contract of personal indemnity, cannot be assigned when it is transferred, though there can be a novation of the contract by which the original assured is released and a new assured is accepted. On the facts of that case, where the insurance policy was also handed over by the vendor to the purchaser and the transfer was also notified to the insurance company, the court was of the view that as there was no material on record to indicate how, after the sale of a vehicle, the transfer in the insurance policy was to be effected in the name if the new purchaser and what formalities were required to be undertaken and complied with by the parties concerned for giving due effect to the transfer of the insurance policy in the name of the purchaser and that the insurance company had agreed to keep the policy subsisting after its sale, the insurance company cannot be held liable under the policy for payment of compensation. In this context, it is also pertinent to refer to the following observations of Goddard J. (as he then was), in Peter v. General Accident Fire and Life Insurance Corporation Ltd.  4 All ER 628 , while dealing with the question whether when a motorcar insurance policy is transferred by the owner-vendor to a purchaser there is an assignment of the policy :
'I do not think that you can assign a policy of this nature at all .... You cannot thrust a new assured upon a company against its will. If you do that, you must have a novation. You must have the release of the assured and the acceptance of a new assured.'
10. These observations make it very clear that when a question is raised as regards the transfer of a motor insurance of a motor insurance policy containing a clause regulating its transfer to the purchaser of the car then what is to be seen and determined is whether there had been a novation of the contract of personal indemnity in terms of the clause. The requisites for the novation of a contract are well known (see s. 62 of the Contract Act). One of the requisites is that there must be an agreement of all the parties to the new contract on the principles generally applicable to the formation of contracts and it cannot be disputed that the consent of parties to a novation may be established by circumstances showing such assent as well as by express words. It is true that whether there was an agreement to substitute a new contract or not is a question of fact depending on the intention of the parties and one must look to the substance of the matter and not to the mere form. The handing over of the policy by the vendor to the purchaser on the sale of a car does not by itself constitute a transfer of the policy to the purchaser.
11. Coming to the facts established in this case it is not in dispute that the original owner of the car died on July 10, 1972, the car was sold on August 14, 1972, and the accident occurred on August 22, 1972. The third respondent, wife of the insured, had reported on August 14, 1972, to the insurance company about the death of her husband on July 10, 1972. Since much turns upon the notice of intimation dated August 14, 1972, the same is extracted below -
'I regret to report the death of Sri K. R. Lakshminarayanan, my husband, owner of the captioned car on July 10, 1972. On his death, the car was transferred to my name, being the legal heir, and on August 14, 1972, the car was sold by me to Mr. Niranjan Roy, No. 7, Cenotaph Road, Teynampet, Madras-18, this is for your information.'
12. A copy of the said letter has also been sent to Niranjan Roy. The third respondent was also examined as R.W. 2. Her deposition indicates that all the papers relating to the said vehicle had been handed over to the purchaser. The accident had occurred on August 22, 1972, within one week from the date of transfer of the ownership of the vehicle. In this case, it is true that the insurance company had not sent any reply to the letter of intimation, sent by the third respondent before the accident took place. In this case, within one week from the date of intimation of the transfer, the accident had happened and whatever the insurance company might say after the date of the accident may not be material for deciding the question as to whether it had impliedly agreed for any novation and to substitute the purchaser as an insured under the policy taken by the first respondent with reference to the vehicle. It is significant to note that the two claim petitions were not preceded by any notice to the insurance company and, therefore, it had no opportunity to put forward its case as to whether the insurance policy has lapsed on the transfer of the vehicle or not. They have, in fact, filed counter-statement in both the claim petitions, contending that the policy lapsed on the transfer of the ownership of the vehicle. In this case, the original insurance policy was not filed before the Tribunal. As the original policy was either with the third defendant or with the fourth defendant, the insurance company could not produce the original policy before the Tribunal. However, they have produced a copy of the insurance policy issued in this case with an application to receive the same as additional evidence in this appeal. Though the said application for reception of the copy of the policy as an additional evidence is opposed by the contesting respondents on the ground that the same had not been produced at the time of enquiry before the Tribunal and that no explanation has been offered as to why it had not been produced before the Tribunal at the stage of inquiry, we are of the view that the copy of the policy is necessary for a proper adjudication of the disputes between the parties in these appeals and, therefore, a copy of the policy could be accepted as an additional evidence under O. 41, r. 27(c), C.P.C. We, therefore, allow the said petition for reception as additional document and mark the same as Ex.R. 10. A perusal of the policy indicates that it contains a clause regarding the transfer of the vehicle under the head of 'General exceptions'. It is stated that the company shall not be liable under the policy in respect of ...... (4) any accident, loss, damage and/or liability caused sustained or incurred after any variation in or termination of the insured's interest in the motor car/vehicle/cycle. This exempts the insurance company from liability in respect of any accident, loss or damage occurring after the insured's interest in the vehicle has ceased. Therefore, one of the reasons given by the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100, cannot be applied to this case. In that case, the Bombay High Court specifically found that there was no clause in the policy dealing with the transfer of the vehicle; but, in this case, we have got a specific clause providing for an exception of the insurance company from liability in respect of an accident after the insured has ceased to have any interest in the vehicle.
13. Coming to the other reason given by the Bombay High Court, based on ss. 103 and 105 of the Motor Vehicles Act, that court specifically found that the conduct of the transferee of the insured in the place of the transferee of the insured in the place of the original insured. But the facts of this case are not such as to lead to any such inference. The transfer had taken place just one week before the accident and the insurance company had practically no time to send any reply to the intimation of transfer given by the third respondent. Apart from this, we do not see how a mere intimation of transfer of the ownership of the car will attract the provision in s. 103A of the Act. That section says where an insured proposes 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 had been transferred and if within 15 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 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. In this case, admittedly, except the intimation of transfer, there was no application in the prescribed form sent either by the insured or by the insured or by the purchaser for the transfer of the certificate of insurance and the policy as contemplated in s. 103A. Even if an application for transfer of the certificate of insurance and the policy in the prescribed form is not made, at least a request could have been made to that effect either by the third respondent or by the fourth respondent. In this case, admittedly there is not even a request for transfer of the certificate of insurance or the policy and the letter (Ex.R. 4) of the third respondent intimating the transfer has merely been sent 'for information'. We do not see how such a letter as Ex.R. 4 will amount to an application for transfer of the insurance policy and the certificate as contemplated under s. 103A of the Act. As already pointed out, since the accident took place a week after the transfer of the ownership of the motor vehicle, even if an application for the transfer had been made, the deeming provision contained in s. 103A of the Act could not have been invoked against the insurance company as it had (no ?) time to consider the question of transfer till August 29, 1972. We are, therefore, of the view that s. 103A of the Act cannot be invoked in this case to infer as an implied agreement by the insurance company for substituting the purchaser as the insured in the place of the original insured with reference to the policy taken in respect of the vehicle. Similarly, s. 105 of the Motor Vehicles Act cannot be invoked in this case. Apart from the fact that the said section relates to the cancellation or suspension of the policy, and not to a case of automatic lapse of the policy on the transfer of the vehicle, having regard to the short interval between the date of the transfer and the date of the accident, there is no transfer possibility of the insurer intimating about the factum of lapse of the policy on the transfer to the registering authority. Though the judgment of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100 has proceeded on the basis that s. 105 of the Act will impose a duty on the insurer to inform the registering authority about the lapsing of the policy, with respect, we are not inclined to agree with this view. Cancellation or suspension is different from the automatic lapse of the policy in pursuance of its terms. Normally, cancellation or suspension is a positive step taken by the insurer with reference to the policy. But lapsing of the policy as a result of its terms will not be such a positive step. When the Legislature in s. 105 have specifically stated that only in cases of cancellation or suspension, duty is cast on the insurer to notify such cancellation or suspension, it is not possible for us to invoke that section even in the case of lapsing of the policy.
14. Thus, on a due consideration of the matter, we hold that as there was neither an application for transfer of the certificate of insurance and the policy in the prescribed form nor at least a request therefor, there is no question of any implied agreement by the insurance company to accept the transferee, the fourth respondent, as an insured in the place of the first respondent under the terms of the policy and that the Tribunal is in error in holding that there is such an implied acceptance by the insurance company based on the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sunder  ACJ 100. In this view of the matter, we have to set aside the finding of the Tribunal that the insurance company continued to be liable under the terms of the policy in respect of an accident, notwithstanding the fact that the original insured transferred the insurance policy in favour of the fourth respondent. Therefore, the award passed as against the appellant herein will stand set aside. C.M.A. Nos. 49 and 50 of 1978 are allowed. However, we make no order as to costs.
15. The learned counsel for the respondent in C.M.A. 49 of 1978 and the third respondent in C.M.A. 50 of 1978, seek leave to appeal to the Supreme Court against the judgment just now pronounced by us on the ground that the case involves an interpretation of ss. 103A and 105 of the Motor Vehicles Act. However, having regard to the fact that we have held that the said sections are not applicable on the special facts of this case, we do not think that this is a fit and proper case for the grant of leave. The request for leave is rejected.
16. By an interim order of this court, the insurance company was directed deposit a sum of Rs. 45,500 and respondents Nos. 1 to 4 in C.M.A. 49 of 1978 were permitted to withdraw the interest accured thereon. The learned counsel for respondents Nos. 1 to 4 submits that there need not be any direction for the restitution of the said sum received by them by way of interest from the court as they will, in any event, be entitled to the said interest in the event of the 6th respondent in C.M.A. 49 of 1978 deposits that compensation with interest. Having regard to the fact that respondents Nos. 1 to 4 will, in any event, be entitled to interest on the compensation amount payable by the sixth respondent, we refrain from making any direction for refund of the amount of interest drawn by respondents Nos. 1 to 4. However, when the compensation along with interest is deposited by the sixth respondent in C.M.A. No. 49 of 1978, as per the award of the Tribunal as modified by us, the insurance company can withdraw that portion of the amount which represents interest. Since the insurance company has succeeded in the appeal, the sum of Rs. 45,500, deposited by it in pursuance of an interim direction by the court can be withdrawn by the insurance company.
17. In C.M.A. No. 50 of 1978 the insurance company has deposited a sum of Rs. 16,500, and the same is said to have been withdrawn by the claimants after furnishing security. The insurance company can approach the Tribunal for restitution of the said amount.