Narbada and Others vs Rajni Kanta and Others

V.K. Gupta, CJ.

Both these connected appeals are being disposed of by this common judgment.

A very short question of law has arisen for consideration in these appeals and its resolution depends upon the interpretation that would be given to Section 157 of the Motor Vehicles Act, 1988 (''the Act'' for short). The facts first.

Two claim petitions being M.A.C. Petition Nos. 62-NS/2 and 63-NS/2 of 1994 were filed by the legal heirs of two deceased persons claiming compensation for the death of the said two deceased persons which resulted because of an accident occurring on 7.5.1994 on Dhararu Dhar Road near Bangora, Tehsil Arki, District Solan in the State of Himachal Pradesh involving truck bearing No. HPA 1435. The following seven issues were framed by the Tribunal for adjudication:

(1) Whether the death of Nikku Ram and Prem Chand has taken place in a motor vehicle accident on 7.5.1994 caused by vehicle No. HPA 1435 being driven by Roop Ram deceased in a rash and negligent manner? OPP

(2) If issue No. 1 is proved in affirmative, to what amount of compensation are the petitioners entitled and from whom? OPP

(3) Whether the petition is bad for non-joinder of necessary parties, as alleged in preliminary objection No. 3 by the respondent No. 1? OPR-1

(4) Whether Roop Ram deceased was not authorised to drive the vehicle in question on the date of accident, as alleged in preliminary objection No. 1 by respondent No. 1? OPR-1

(5) Whether deceased Nikku Ram and Prem Chand were travelling in the truck as unauthorised and gratuitous passengers, if so, its effect? OPR-3

(6) Whether petition is not maintainable against respondent No. 3 as alleged in preliminary objection No. 2 by the respondent No. 3? OPR-3

(7) Relief.

Findings on all the aforesaid issues, except with respect to issue No. 6 went in favour of the claimants-appellants and accordingly in both the claim petitions awards for Rs. 5,16,000 and Rs. 2,42,000 respectively were passed in favour of the claimants. Since, however, the finding on issue No. 6 went in favour of respondent No. 3 Oriental Insurance Co. Ltd., the Tribunal in the operative part of the judgment directed that the aforesaid awarded amounts shall be paid to the claimants by the respondent No. 1 Salig Ram, the owner of the vehicle in question. In these two appeals filed in this court u/s 173 of the Act, the appellants who were the claimants in the above referred two claim petitions before the Tribunal have confined and restricted their challenge only to that part of the award dated 25.9.1998 whereby the Tribunal, after deciding issue No. 6 in favour of respondent No. 3, has consequently decided and ordered that the awarded amounts shall be paid by the respondent No. 1 Salig Ram, the owner of the vehicle, meaning thereby that it shall not be paid by the respondent No. 3 Oriental Insurance Co. Ltd., the insurer of the vehicle in question on the ground that as on the date of the accident respondent No. 2 did not have any insurable interest in the vehicle in question since, as per the Tribunal''s finding, the vehicle in question on the date of accident could not be deemed or considered to have been insured with respondent No. 3.

Section 157 of the Act reads as under:

"157. 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 transfers 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, the certificate of insurance and the polic) 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.

Explanation.-For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.

(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance."

In the present case, we are concerned only with Sub-section (1) of Section 157 inasmuch as the facts relevant in this case, insofar as these are applicable for the purpose of our adjudication in these appeals, are attracted only qua Sub-section (1) of Section 157 (supra).

What is the point of controversy involved in this case which calls for this court''s interpretation of Sub-section (1) of Section 157? To appreciate the point of controversy involved for adjudication, the following additional, but very small and simple, facts have to be noticed.

Before the Tribunal it was an admitted and undisputed fact situation that the vehicle in question, i.e., truck No. HPA 1435 was originally owned by respondent No. 2 Jatinder Gupta and that on 2.2.1993 respondent No. 2 sold this vehicle to respondent No. 1 Salig Ram. Prior to 2.2.93, the date of sale of the truck by respondent No. 2 to the respondent No. 1, a policy of insurance with respect to this vehicle had already been taken out by respondent No. 2 from New India Assurance Co. Ltd. (not a party in these proceedings and rightly so) and the period of validity of this policy was from 25.2.1992 to 24.2.1993. In other words, it was during the subsistence of the said policy of insurance between respondent No. 2 and the aforesaid New India Assurance Co. Ltd. that the ownership of the vehicle was transferred from respondent No. 2 to respondent No. 1.

After 2.2.1993, the date of transfer of the ownership of the vehicle and much after the expiry of the validity period of the aforesaid policy of insurance issued by New India Assurance Co. Ltd., a fresh insurance policy was issued by respondent No. 3 Oriental Insurance Co. Ltd. and the validity of this insurance policy was from 8.12.1993 to 7.12.1994. This policy of insurance, like the above referred earlier insurance policy had also been issued in the name of respondent No. 2 Jatinder Gupta. This new, i.e., second policy of insurance was not issued in the name of respondent No. 1 Salig Ram. Of course, it was during the subsistence of the second insurance policy issued by the respondent No. 3 that the accident had occurred on 7.5.1994.

The respondent No. 3 took a stand before the Tribunal that since the insurance policy issued by it and effective from 8.12.1993 to 7.12.1994 was not in favour of respondent No. 1, it had no obligation whatsoever to indemnify respondent No. 1 because no contract of insurance subsisted between respondent No. 1 and respondent No. 3. It is in this factual backdrop that the Tribunal decided that because no policy of insurance was issued by respondent No: 3 in favour of respondent No. 1 and since no contract of insurance subsisted between these two parties respondent No. 3 was under no obligation to indemnify respondent No. 1 and, therefore, respondent No. 1 not holding any policy of insurance in his favour, he alone was liable to pay the awarded amount.

A bare reading of Sub-section (1) of Section 157 of the Act clearly stipulates that where a person in whose favour a certificate of insurance has been issued, transfers to another person the ownership of the motor vehicle in respect of which such certificate of insurance had been issued, it shall be deemed that the policy of insurance is transferred in favour of the transferee of the ownership of the vehicle with effect from the date of transfer of ownership. In other words, a plain reading of Sub-section (1) of Section 157 is suggestive of only one fact situation and that is that if, during the subsistence of a policy of insurance, (in other words, while a policy of insurance is effective) transfer in the ownership of the vehicle covered by this policy takes place, the policy shall be deemed to be transferred in favour of the transferee and such transfer shall be effective from the date of the transfer. In this case we are not concerned with either the explanation appended to Sub-section (1) or for that matter the provision contained in Sub-section (2) of Section 157.

What however has happened in the present case, based on the aforesaid fact situation, is not at all covered by sub-section (1) of Section 157 and is totally outside its ambit and scope because here the facts clearly admit of the transfer with respect to the ownership of the vehicle having taken place prior to the coming into force of the policy of insurance. In other words, no transfer of ownership of the vehicle took place during the subsistence of the policy of insurance since the transfer had already taken place (on 2.2.1993), much prior to the period of validity of the policy of insurance (8.12.93 to 7.12.1994) had even commenced.

Section 157 (1) clearly lays down the stipulation of law, closely interlinked as it is with a given fact situation, that in the event of transfer of ownership of the vehicle from one person to another, the certificate of insurance and the policy described in the said certificate shall be deemed to have been transferred in favour of the transferee of the ownership of the motor vehicle. The section opens with the words, "where a person in whose favour the certificate of insurance has been issued...". The words ''has been issued'' with respect to the certificate of insurance clearly stipulate that what the legislature intended was that only such certificate of insurance, along with the policy of insurance would be deemed to have been transferred in favour of the transferee of the vehicle if on the date of transfer of the ownership of the vehicle, the certificate of insurance had already been issued. As the facts in our case clearly point out, respondent No. 2 had transferred ownership of the vehicle in favour of respondent No. 1 on 2.2.1993. As on 2.2.1993 what was in vogue was the erstwhile certificate of insurance issued by New India Assurance Co. Ltd. in favour of respondent No. 2, which was valid for the period w.e.f. 25.2.1992 to 24.2.1993. Applying the aforesaid binding proposition of law enacted by Section 157 (1), it can, therefore, be safely held that what would have been deemed to have been transferred in favour of respondent No. 1 was the certificate and policy of insurance, which was in vogue and operation between 25.2.1992 and 24.2.1993 since it was during the subsistence of this policy that the ownership of the vehicle (on 2.2.1993) had been transferred by respondent No. 2 in favour of respondent No. 1. As on 2.2.1993, therefore, the aforesaid insurance policy (which was to expire on 24.2.1993) should have been deemed, by operation of law, to have been transferred in favour of respondent No. 1. But when this policy expired on 24.2.1993 and admittedly after this date, no transfer took place with respect to the ownership of the vehicle since the transfer had already taken place on 2.2.1993.

The insurance policy in question, the subject matter of controversy in the claim petition as well as in this appeal was issued by respondent No. 3 and was valid for the period from 8.12.1993 to 7.12.1994 and it is during this period that on 7.5.1994 the accident occurred. The proposition of law emanating from Section 157 (1) cannot be held applicable to this policy at all because it was not during the subsistence of this policy that the transfer of ownership of the vehicle had taken place. Actually, one can go so far as to say that after 2.2.1993 and in any case after 24.2.1993, since respondent No. 1 had already become the owner of the vehicle in question, any certificate of insurance or policy of insurance not issued in his name (even though issued in the name of respondent No. 2) had no binding effect and no applicability or enforceability at all, either qua the vehicle in question or with respect to the indemnification of respondent No. 1 relating to any award passed against him by the Tribunal. Actually, I can go so far as to hold that since on 2.2.1993 respondent No. 1 had become the owner of the vehicle in question, after the expiry of the earlier policy of insurance (on 24.2.1993) issued by New India Assurance Co. Ltd., the vehicle can be said not to have been insured at all because the second policy of insurance was issued in favour of a person, who on the date of its issue was not even the owner of the vehicle.

The necessity for insurance against third party risks and accordingly the requirement of obtaining insurance policies, are both covered by Chapter XI of the Motor Vehicles Act, 1988 and even though specifically in explicit terms nowhere has it been laid down that policy of insurance has to be issued only in favour of the owner of a vehicle, by necessary implication, unhesitatingly it can be very safely held that the policy of insurance with respect to a vehicle has to be issued by an insurer only in favour of a person who is the owner of the vehicle. Section 146 (1) of 1988 Act clearly lays down 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 of insurance complying with the requirements of this Chapter". The expression ''no person shall use'' occurring in Sub-section (1) of Section 146 clearly suggests that only such a person who is the owner of the vehicle can use the vehicle because none other than the owner of the vehicle in common law is authorised or permitted to use the vehicle. Similarly Section 147 (1) (b) also stipulates that the policy of insurance issued by the insurer insures ''the person'' against any risk and this also does not specifically use the word ''owner''. In Section 149 of the Act similarly it has been stipulated that if a judgment or award in respect of any liability as is required to be covered by a policy under clause (b) of Sub-Section (1) of Section 147 is obtained against ''any person'' insured by the policy, the insurer shall be liable to pay to the person entitled to the benefit of the award amount. Even though, therefore, repeatedly the legislature has used the words ''any person'' in Sections 146, 147 and 149 of 1988 Act, by necessary implication it has to be held that the ''person'' thought of in these sections can be none other than the owner of the vehicle in question. That being the case, therefore, since after 2.2.93 respondent No. 2 had ceased to be the owner of the vehicle and respondent No. 1 had become the owner of the vehicle, issuance of a policy in favour of respondent No. 2 by respondent No. 3 for the period starting from 8.12.1993 was meaningless since the only person in whose favour after 2.2.1993 the policy of insurance could be issued was respondent No. 1 and none else. In that view of the matter, therefore, it can safely be held that respondent No. 3 was not under a liability to satisfy the award because as on the date of accident, the vehicle in question was not covered by any valid policy of insurance. At the risk of repetition, it is held that Section 157 (1) had no application to the facts of this case.

I have thus no manner of doubt that in the facts and circumstances of this case, the benefit available under Sub-section (1) of Section 157 (supra) could not be availed of by the claimants or respondent No. 1 since this provision of law could not be pressed in aid of these parties. I fully agree with the approach of the Tribunal insofar as its finding on issue No. 6 is concerned and harsh though it may seem, I have no option but to dismiss the appeals, but in the peculiar facts and circumstances of this case, without any order as to costs.

C.M.P. No. 886 of 2003 in F.A.O. (MVA) No. 459 of 2000.

C.M.P. No. 218 of 2003 in F.A.O. (MVA) No. 77 of 1999.

In view of the dismissal of the appeals, both the applications shall stand disposed of.