1. On 18th Mar. 1975, at about 1 P.M., one Kalidas was coming on his cycle near the Town Hall, Nethaji Road, Cuddalore. The bus bearing registration number MDB 1291, which was driven in a rash and negligent manner, dashed against the said Kalidas and caused him multiple injuries resulting in his instantaneous death. The parents of the deceased, respondents 1 and 2 herein, filed claim petition No. 24 of 1975 before the Motor Accidents Claims Tribunal, Cuddalore, claiming a compensation of Rs. 75,000. The vehicle was originally owned by M.Thiagaraian and it was transferred in favour of G. Govindan on 15-8-1974, and they are arrayed as respondents 3 and 4 herein. New India Insurance Company, with whom the vehicle was insured, is the appellant herein. The 3rd respondent wanted to be absolved of t4e liability by pointing out that long before the accident, he had parted with the, ownership of the vehicle to and in favour of the, 4th respondent, The appellant herein, the Insurance company contended that since the vehicle was transferred by the insured, the 3rd respondent, to and in favour of the 4th respondent, the policy of insurance lapsed on such transfer of ownership of the vehicle. The transferee the 4th respondent admitted the change of ownership but contested the claim on other grounds. There was a general contest that the accident was not due to the rash and negligent driving of the vehicle and with regard to the quantum of compensation claimed. The Tribunal rendered a finding that the accident was due to rash and negligent driving of the vehicle and determined the compensation at Rs. 38,000. The Tribunal accepted that there was a change of ownership of the vehicle long prior to the date of accident, but it opined that since the Insurance Company, the appellant, had knowledge of the transfer of ownership, it cannot escape liability under, the policy. In this view, the Tribunal passed an award directing the Insurance Company, the appellant only to pay the compensation to respondents 1 and 2 with interest at 5 per cent per annum from the date of petition till date of payment.
2. The appellant, Insurance Company, questions the award, putting forth the contention that since the ownership of the vehicle was transferred even on 15th August, 1974 long before the date of accident on 18th May, 1975, the insurance policy lapsed and no liability could be pinned down on the Insurance Company.
3. No submissions were made before us attacking the finding of the Tribunal that the accident was due to the rash and negligent driving of the vehicle and with regard to the determination of the compensation at Rs. 38,000. Hence, the only question that arises for consideration in this appeal is, whether the Tribunal was correct in directing the appellant to pay the compensation in spite of the fact that the ownership of the vehicle, which was originally with the 3rd respondent, got transferred in favour of the 4th respondent long prior to the date of the accident on I 8th May, 1975.
4. One of us, viz., Ramanujam, 3 had occasion to deal with the question, even in 1971, as to whether the Policy of insurance could survive when the vehicle was physically transferred by the owner, in the South India Insurance Co. Ltd v. Lakshmi, , and the available case was analysed and it has been held that the policy of insurance came to an end when the vehicle was transferred by the owner; Section 31 of the Motor Vehicles Act (hereinafter referred to as the Act) could not have the effect of keeping the policy alive qua third parties; change of registry under S. 31 was not a condition precedent for the transfer of ownership of the vehicle; S. 31 merely imposed an obligation both on the transferor and the transferee of the vehicle to notify the transfer; and non-compliance with the provisions of S. 31, did not invalidate the transfer.
5. The Tribunal, in the instant case has laboured itself by writing a lengthy judgment; but still we had to wade through it to spell out the reasonings of the Tribunal with great difficulty. The Tribunal has not lost sight of the ratio decidendi of this court found expressed in the above decision. It referred to the decisions of the High Courts of Orissa Allah bad and Punjab and Haryana and distinguished the above decision of this court by stating that it applied only to a case where the Insurance Company was not aware of the transfer and does not apply, to the facts of the present case. There is a discussion by the Tribunal on the aspect that the Insurance Company had knowledge of the transfer by the third respondent to the fourth respondent and in spite of it, the insurance was continued only in favour of the 3rd respondent. This factor seemed to have weighed with the Tribunal to come to the conclusion that the policy would not lapse and on the basis of the policy, the appellant Insurance Company could be made liable, This, in our view, is a misconception of the legal position. A Bench of this court, to which one of us, viz., Ramanujam. J. was a party, inHema Ramaswami v. K. M. Valarence Panjani, , repelled the contention that unless the sale of the vehicle has been recognised and the transfer of registry is effected )y the transport authority, there is no completed transfer 'in law and, therefore, the liability of the insured shall be taken to continue until the registry of the vehicle is transferred in the name of the transferee.
6. Learned counsel appearing for the claimants, respondents 1 and 2 herein drew our attention to the decision of a Bench of the High Court of Andhra Pradesh in J. C. Chennarayudu v. N. Lakshmamma, 1980 Ace CJ 189: (AIR 1980 Andh Pra 143) in support of the proposition that in spite of the transfer, the registry may be continued in the name of the transferor and in such a case - the registered owner also retains some interest in the vehicle and as such, the Insurance Company could be made liable to meet the claim. There, the facts dealt with are entirely different. The finding rendered by the Bench in that decision was that the transferor continued to be the owner of the vehicle for all purposes and the purchaser was on1v given the right to ply the vehicle, The reasoning of the Bench is found expressed in the following passage at p. 192 (of Ace CJ): (at p. 146 of AIR) of the report-
"A reading of the entire document Ex. B-1, leads to the conclusion that in spite of the stipulation that the balance of consideration would be paid with interest and damages of Rs. 2000 the entire interest in the vehicle would completely stand transferred to the purchaser only when the transfer of the 'C' certificate and the road permit is effected. In other words, the transferor continued to be the owner for all Purposes and the 'purchaser' was only given the right to ply the vehicle. Admittedly, the transferee was plying the vehicle under the V certificate and the road permit standing in the name of the first respondent. The first respondent must, in the circumstances of the case, be held to be the 'owner' of the vehicle."
7. Mere knowledge on the part o the Insurance Company of the change of ownership of the motor vehicle would not tantamount to transfer of the certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle is transferred. S. 103-A (1) of the Act reads as follows-
"103-A (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 to 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."
8. When there is a proposal to transfer the ownership of any vehicle in respect of which insurance was taken together with the policy of insurance relating thereto, he has to apply in the prescribed form to the insurer for transfer as contemplated under S. 103-A (1) of the Act. It could not be stated that the mere intimation of the transfer will satisfy the requirements of the said provision, so that if there is a failure to respond on the part of the insurance company by intimating the refusal to transfer, the Policy shall be deemed to have been transferred in favour of the transferee. Knowledge by itself is of no use. There ought to have been an application for transfer in the prescribed form or at least a request thereof. In Calcutta Insurance. Madras, now known asNational Insurance Co. Ltd. v. Tirumalai Ammal alias Nookammal. (C.M.A. 49 and 50 of 1978, judgment dt. 10-2-'81) concisely , a Bench of this court, to
which one of us, viz., Ramanujam J. was a Party, discountenanced the proposition that a mere intimation would suffice the provisions of S. 103-A (1) of the Act, so as to invoke the deeming transfer of the policy as contemplated in the provision. Such being the proposition of law as recognised by judicial precedents of this court, we are unable to sustain the finding of the Tribunal in the instant case, that merely because the Insurance Company, the appellant herein, had knowledge of the transfer of the ownership in the vehicle, its liability under the policy which never got transferred in favour of the transferee, viz., the 4th respondent herein, must be deemed to have continued, so as to bear the liability of compensation.
9. Learned counsel appearing for the claimants, respondents 1 and 2, would submit that in the instant case the en dorsement 13 attached to and forming part of the policy will still make the Insurance Company liable in spite of the transfer of the ownership of the vehicle. We must straightway point out that in spite of the transfer of the ownership of the vehicle on 15-11-1974, policies of insurance seemed to have been taken in the name of the third respondent only. For the relevant period in question, no policy as such has been produced and marked in the case and only the certificate of insurance for the period from 16-11-1974 to 15-11-1975 has been mark ed as Ex. B-2. But, the policies for the subsequent periods have been marked as Ex. B3, B4 and B5. It is not possible for us to assume that endorsement 13 relied on by the learned counsel for respondents I and 2 herein was there in the policy covering the relevant period. Further more, this contention was not put for either by the claimants, respondents 1 and 2 herein, or by the 4th respondent herein, before the Tribunal. Even otherwise, we are of the opinion that this endorsement cannot be availed of by respondents 1 and 2 to pin down the liability on the Insurance Company after the lapse of the -policy. Endorsement 13, as occurring in the policies for the subsequent periods, reads as follows-
"In consideration of an additional premium of Rs.........and notwithstanding any thing to the contrary contained in General Exception No. 4, but subject otherwise to the terms, exceptions, conditions and limitations of this Policy the company will indemnify the insured against liability at law for compensation (including Law costs of any claimant) for death of or bodily injury to any person other than a Person excluded under General Exception No. 3 being carried in or upon or entering or mounting or alighting from any vehicle described in the schedule hereto but such indemnity is limited to the sum of Rs .....in respect of any one Person and subject to the aforesaid limit in respect of any one person to Rs ........in respect of any number of claims in connection with any one such vehicle arising out of one cause.,
General Exception No. 4 is as follows-
"The Company shall not be liable under this 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 vehicle." To invoke this endorsement, the -policy must survive in spite of the transfer. But the law on this aspect, as countenanced by decisions of this court, is that change of ownership in the vehicle puts an end to the policy and the liability on the Part of the insurance company to indemnify the insured comes to an end. When the interest of the insured got terminated by the transfer of the ownership of the vehicle, it is too much to state that the Insurance Company must indemnify third parties on the basis of the lapsed policy. The insurance of the policies for the subsequent periods in the name of the third respondent is a futile process and could not be taken advantage of by the claimants, respondents 1 and 2 here in. Rightly, the Tribunal exonerated the 3rd respondent from liability countenancing the change of ownership in favour of the 4th respondent and that has become final. When the insured himself has been exonerated, no question of in demnity could arise either under S. 96 or under the terms of the policy. But curiously, on an erroneous view of the legal position, the Tribunal chose to thrust the burden of compensation on the Insurance Company, the appellant herein. For all these reasons, we are obliged to interfere with the award of the Tribunal. At the same time, it must be held that the fourth respondent, in whom the ownership of the vehicle stood vested at the time of the accident, is liable to pay the compensation to the claimants. In the last but one paragraph of the judgment, the Tribunal did hold that the owner at the relevant point of time, viz., the fourth respondent herein would be liable to pay the compensation amount. Yet, it chose to pass an award only against the Insurance Company, the appellant herein.
10. As a result, we set aside the award of the Tribunal directing the appellant herein to pay the compensation amount and pass an award directing the fourth respondent herein to pay respondents 1 and 2 herein, the sum of. Rupees 38000 with interest at six per cent per annum from the date of the petition. viz., 20-6-1975 till the date of payment. The parties are directed to bear their respective costs throughout
11. Appeal allowed.