National Insurance Co. Ltd. vs Ram Gopal Sharma

RESPONDENT purchased a vehicle from the original owner Sh. M.S. Negi on 7.3.2003. The vehicle was insured with the appellant in the name of Sh. M.S. Negi for a period of one year from 20.7.2002 to 19.7.2003, which was stolen on 25.4.2003. A report to this effect was lodged with the police. By that time the vehicle was not transferred in the name of respondent nor was the policy. The policy remained in the name of the original owner Sh. M.S. Negi, who continued to be the registered owner in the record of the RTO. The claim of the respondent was repudiated by the appellant on the ground that since the insurable interests are not transferred in his name, he was not entitled for the benefit of the policy. Feeling aggrieved the respondent filed the instant complaint before District Forum.

WHILE repelling the aforesaid stand of the appellant, the District Forum vide impugned order dated 3.10.2006, allowed the complaint of the respondent with the direction to the appellant to pay a sum of Rs. 72,000 with Rs. 5,000 as compensation and Rs. 2,000 as cost of litigation. As is apparent, the appellant through this appeal filed under Section 15 of the Consumer Protection Act, 1986, has assailed the impugned order mainly on the ground that under Section 157 of Motor Vehicles Act, only third party interest are protected in case insurable interest are not transferred in the Insurance Policy. In support of this contention the Counsel for the appellant has placed reliance upon the judgment of Supreme Court of India in C.A. No. 2131 of 1994 decided on 21.11.1995 entitled Complete Insulation (P) Ltd. v. New India Assurance Co. Ltd., Observations of Supreme Court are as under : On a plain reading of Section 103A it is obvious that the insurer could in a given case refuse to transfer the certificate of insurance and the policy described therein. It is only if the insurer fails to convey the refusal within fifteen days that the deeming clause comes into operation. However, Section 157 of the New Act makes the transfer of the Certificate of Insurance along with the insurance policy described therein automatic along with the transfer of the motor vehicle together with the policy of insurance to the purchaser. This is clearly an improvement over the previous provision on the subject.

We have perused the provision of Section 157 of Motor Vehicles Act, as well as the facts of the cited case and the ratio. None of these provisions are applicable in respect of the facts of the instant case as it is a case of total loss by way of theft of a vehicle,which was insured with the appellant company and not a case in which question of third party claim arises. The case before Supreme Court was not in respect of damage of the vehicle out of total loss. Section 157 of Motor Vehicles Act provides 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 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.

(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 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."

AS is apparent wherever, a vehicle suffers total loss by way of accident or damage only then the concept of third party arises and not otherwise and that too can be taken care of by imposing certain conditions upon the beneficiary so as to avoid the double payment by the Insurance Company towards a single insurance policy. Since in the instant case only vehicle was stolen and there was no damage by way of accident, therefore the question of Section 157 of Motor Vehicles Act and for that purpose the concept of third party interest was not at all applicable or invocable.

ON the concept of equity, it is the vehicle which is insured and not the person and the only safeguard in such cases where total loss is by way of theft is that if the insurable interests have not been transferred in the name of the person who has purchased the vehicle inspite of being the actual owner, the "No Objection Certificate" from the original owner as well indemnity bond from the claimant should be obtained. But in no way the Insurance Company can escape from its liability against the policy. If such a benefit is given to the insurance companies then it will get unjustly enriched whereas the actual consumer would be at great jeopardy and his interest would suffer. We have come across several cases of this nature also where the companies drag their feet to frustrate the rightful claim of the consumer by taking one or the other flimsy ground without realizing aims and object of the policy against a vehicle. Whenever, any statute or contract between the parties is subject matter of interpretation, the interpretation should be always in consonance with the aims and objects of the statute and the terms of the contract and not to the disadvantage of the person who is the beneficiary of the contract. This is universal rule of interpretation and it is also rule of interpretation that no term of the contract would be interpreted or read in isolation. The contract has to be read as a whole in order to provide meaningful interpretation of the contract or the term of the contract, which should never run counter, or against the aims and object of the contract.

IN this case the pre-dominant object of the contract i.e. insurance policy was to indemnify the loss of vehicle against theft and therefore neither provisions of Section 157 of Motor Vehicles Act nor the concept of third party claim was available under the term of the contract nor it was proper for the INsurance Company to frustrate the rightful claim of the actual beneficiary.

IT appears that the Counsel for the appellant is labouring under the misconception that the provisions of Motor Vehicles Act in respect of insurance policy binds the consumer and not the Insurance Company. These are the provisions, which lay down certain guidelines and statutory obligations upon the Insurance Company also. Further the Consumer Protection Act, 1986, has widened the definition of ''consumer'' to an extent that it includes a person who is the direct beneficiary of such services other than the person who actually hired or availed the service for consideration.

Let us assume that the original owner had availed the service of the Insurance Company directly but after selling the vehicle which was never in dispute, the direct beneficiary becomes the purchaser and he steps into the shoes of the original owner and, therefore, comes within the definition of ''Consumer'' as defined by Section 2(1)(d)(ii) of Consumer Protection Act, 1986, which is as under : "[hires or avails of] any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who [hires or avails of] the services for consideration paid or promised, or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person."

WE further extend the concept of respondent being direct beneficiary to the effect that transfer of the name of the respondent in the insurance policy was merely an official formality because of respondent''s having already become the actual owner of the vehicle during the subsistence of the existing insurance policy. Once having accepted the respondent as the owner of the vehicle, the insurance policy automatically stood transferred to his name, for the purpose of indemnification of the loss. There was no substantive obstacle or hindrance in indemnifying the loss of the vehicle by way of theft against subsisting insurance policy. The concept of third party claim is respect of a person who suffers injuries or is victim of the accident of the vehicle in respect of which the insurable interests have not been transferred. Requirement of provisions of Motor Vehicle Act is one thing but so far as the indemnification of the loss against policy which is in respect of the vehicle is another thing . That is why Hon''ble Supreme Court has in the above referred case held that the third party claim is only against the person and not the vehicle. There may be thinly veiled distinction between provisions of Sections 147, 156 and 157 of Motor Vehicles Act as concept of third party but this distinction looses its character and gets completely obliterated and wiped out once the following ingredients are fulfilled : (a) The vehicle must be insured against the insurance policy in the name of original owner. (b) The insurance policy should be subsisting at the relevant time. (c) The subsequent purchaser of the vehicle must be legal and valid owner of the vehicle and in this capacity he becomes the direct beneficiary of the policy vis-a-vis the vehicle. Whereas he may not draw the benefit thereof. (d) The claim should be against the loss of vehicle and not comprehensive claim if the insurance interests have officially not been transferred in his name.

WE may further clarify that no provision of Motor Vehicles Act whatsoever may be, can be invoked by the Insurance Company while dealing with the claim of an insured because such a claim has to remain within the four walls of the insurance policy and terms of the contract only. Unless and until there is provision made known to the insured into the policy that he would be governed by certain or specific provision of this Act. Further we may clarify that the remedy under the Consumer Protection Act is additional remedy and independent remedy and is not in derogation of any other law for the time being in force. This remedy is by way of compensation as to the actual loss or injury suffered by a consumer due to negligence on the part of the OP as contemplated under Section 14(1)(d) of Consumer Protection Act and the word ''compensation'' is so wide that it takes into its fold not only the actual loss but also the mental agony which includes emotional, physical suffering on account of negligence on the part of OP and for wrongful dismissal of the claim. Thus from any aspect we may hold up the matter, we do not find any escape from the conclusion that it is the respondent who was the direct beneficiary and was rightly granted benefit by the District Forum. There is no merit in the appeal and the same is dismissed in limine.

APPEAL is disposed of in above terms. Payment shall be made within one month from the date of receipt of this order.

BANK Guarantee/FDR, if any, furnished by the appellant be returned forthwith. A copy of this order as per the statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record Room.

Copy of this order be sent to the Presidents of all the District Forums for information. Appeal disposed of.