New India Assurance Co. Ltd. vs Dilip Sharma

THIS appeal has been filed by the appellant which was opposite party before the District Forum against order dated 7.2.2005 passed by the District Forum, Ajmer in Complaint Case No. 276/2004 by which the appellant Insurance Company was ordered to pay Rs. 20,193 as amount of damage to the vehicle assessed by the Surveyor after deducting the amount of Rs. 1,500 as salvage along with interest @ 9% p.a. and further to pay Rs. 1,000 as amount of costs.

THE necessary facts giving rise to this appeal are as follows : That on 29.10.2004 the complainant respondent had filed a complaint before the District Forum inter alia stating that he had purchased a Maruti Car from one Narendra Parakh of Beawar on 15.6.2004 and not he same day the car was registered in his name. It was further stated in the complaint that the said car was originally purchased by Narendra Parakh and the insurance was in the name of Narendra Parakh for the period from 22.4.2004 to 21.4.2005. It was further stated in the complaint that on 28.6.2004 the car had met with an accident and damage was got done in the car. It was further stated in the complaint that as soon as the accident had taken place the information was given by the respondent to the appellant and the Surveyor was appointed and claim was preferred by the respondent before the Insurance Company, the appellant. But the claim of the respondent was repudiated by the appellant through letter dated 1.10.2004 that no doubt the registration of the vehicle was changed in the name of the respondent but in the policy the name of the respondent was not entered and, therefore, as per terms of the policy the claim was not payable and the same was rejected. THEreafter the complaint was filed. A reply was filed by the appellant before the District Forum and the same stand was taken which was taken in the repudiation letter and it was further stated that since there was no privity of contract between the complainant and the appellant the complainant-respondent was not a consumer and thus the claim was rightly repudiated. THE District Forum after hearing both the parties accepted the complaint of the respondent and passed the impugned order as stated above inter alia holding that since the registration of the vehicle was in the name of the respondent and since as per Section 157 of the Motor Vehicles Act the Insurance Company was liable to make the payment. Aggrieved from that order this appeal has been filed by the appellant Insurance Company. In this appeal the main contention of the learned Counsel for the appellant is that since on the date of accident there was no subsisting contract between the appelant and the complainant, therefore, Insurance Company should have not been held liable and thus the Forum had committed serious illegality in passing the impugned order and further it was argued that so far as applicability of Section 157 of Motor Vehicles Act, 1988 is concerned the same was not applicable in the present case as that section could be made applicable in case of claim filed by third parties and not in the claim as filed by the respondent complainant.

On the other hand the learned Counsel for the respondent has supported the impugned order of the learned District Forum and he has placed reliance on the decision of Hon''ble Supreme Court in the New India Assurance Co. Ltd. v. Smt. Sheela Rani & Ors., reported in II (1998) ACC 408 (SC)=1986-99 Consumer 3529 (NS) and of National Commission in Haji Daud II (1995) CPJ 1 (NC), Haji Haran Abu v. United India Insurance Co. Ltd., (Original Petition No. 107 of 1993 decided on 12.1.1995) and Oriental Insurance Co. Ltd. v. Dinabandhu Pradhan & Anr., reported in AIR 1994 Orissa 177.

ON the contrary the learned Counsel for the appellant has placed reliance on a decision of Hon''ble Supreme Court in M/s. Complete Insulations (P.) Ltd. v. New India Assurance Co. Ltd., reported in II (1996) ACC 536 (SC). We have heard the learned Counsel appearing for the appellant and the learned Counsel appearing for the respondent and gone through the entire materials available on record.

THERE is no dispute on the point that the car in question was initially purchased by one Narender Parakh of Beawar and later on it was purchased by the complainant respondent from Narendra Parakh and the car was insured for the period from 22.4.2004 to 21.4.2005 and there was also no dispute on the point that the car was registered in the name of the complainant respondent on 14.6.2004. There is also no dispute on the point that on 28.6.2004 the car had met with an accident and for the damage of the vehicle the claim was preferred by the complainant-respondent before the appellant and the Surveyor was appointed. There is also no dispute on the point that after the accident information was given by the respondent that the vehicle had been purchased by him from Narendra Parakh.

THERE is also no dispute on the point that on the date of accident the insurance was in the name of Narendra Parakh the original purchaser of the car.

THE question for consideration is whether in the facts and circumstances just narrated above, the findings recorded by the District Forum could be sustained or not. Fiction of Section 157 must be limited to the third party risks only. Section 157 of Motor Vehicles Act, 1988 appears in Chapter XI entitled ''Insurance of Motor Vehicles against Third Party Risks'' and comprises Sections 145 to 164. Thus, the entire Chapter XI of the New Act concerns third party risks only. It is, therefore, obvious that insurance is compulsory only in respect of third party risk since Section 146 prohibits the use of a motor vehicle in a public place unless there is in relation thereto a policy of insurance complying with the requirements of chapter XI. Thus the requirements of that Chapter are in relation to third party risks only and hence the fiction of Section 157 of the New Act must be limited thereto.

The Hon''ble Supreme Court in the case of M/s. Complete Insulations Pvt. Ltd. (supra) has held that the transferee cannot be said to be third party qua the vehicle. Since there was no agreement between insurer and transferee, and since the insurer had not transferred the policy of insurance in relation thereto to the transferee, therefore, insurer was not liable to make good the damage to the vehicle. The clause "deemed to have been transferred". would not be applicable in cases where third party risk is not involved.

THUS, we are of the view that it is only in respect of third party risk that the Section 157 is applicable. The certificate of insurance together with the policy of insurance shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred. There must be a separate agreement between the insurer and the transferee to cover the risk or damage to the vehicle and in the absence of such agreement, the insurer is not liable to make good the damage to the vehicle. In the present case, since on the date of accident i.e., 28.6.2004 there was no agreement between the insurer (appellant-Insurance Company) and the transferee (respondent-complainant) and since the insurer (Insurance Company) had not transferred the policy of insurance in relation thereto to the transferee (respondent complainant), therefore, in these circumstances, the insurer (appellant-Insurance Company) could not be held liable to make good the damage to the car in question and the learned District Forum has wrongly held so.

THE argument that the original policy was issued by the appellant later on would make any difference as on the date of accident there was no privity of contract between the complainant-respondent and the appellant. For the above reasons the authority on which reliance has been placed by the learned Counsel for the respondent would not be applicable for the simple reason that they pertain to third party claims. Apart from that in our considered opinion the third party will not include the transferee whose transferor had not followed the procedure for transfer of the policy. On passing the title, the transferee cannot enforce his claim in respect of any loss or damage to his person and vehicle unless there is a novation. Since in this case name of the transferee respondent-complainant had not entered as the insured by the appellant, therefore, the Insurance Company would not be liable. Therefore, the argument that the respondent was having insurable interest in the policy could not be accepted. For the reasons mentioned above the findings recorded by the District Forum could not be sustained as they are not based on correct appreciation of law and thus they suffer from basic infirmity or illegality and this appeal deserves to be allowed.

ACCORDINGLY this appeal filed by the appellant is allowed and the impugned order dated 7.2.2005 passed by the District Forum, Ajmer is set aside and the complaint filed by the complainant is dismissed. Appeal allowed.