New India Assurance Co. Ltd. vs Moti Ram and Others

P.C. Pandit, J.—On 9-12-1958 an accident took place at about 1 P.M. on the Grand Trunk Road at a distance of 18�-miles from Delhi, as a result of which, a collision took place between two trucks Nos. PNR-5133 and DLD-5164. Mela Ram was driving truck No. DLD-5164. Due to the rash and negligent driving by Hari Singh, who was the driver of truck No. PNR-5133, Mela Ram sustained severe injuries, as a result of which he died the same night in the Civil Hospital, Sonepat, district Rohtak. Mrs. Maya Devi, widow of Mela Ram deceased, on her own behalf and on behalf of her minor sons, filed an application before the Provincial Transport Controller, Punjab, Jullundur, on 14 1.1959 for compensation amounting to Rs. 15,000/-on account of the death of her husband. On 10.2.1959 the Motor Accidents Claims Tribunal, Punjab, was established under the Motor Vehicles Act, 1939 and Mrs. Maya Devi was advised to apply to the Chairman of this Tribunal for compensation on the prescribed form. Her application was received by the Tribunal on 26.2.1959 and the same was registered on 3.3.1959. in this application, she impleaded the following persons:

(1) Moti Ram and Desa Singh as the owners of truck No. PNR. 5133;

(2) Hari Singh, the driver of this truck, who was the employee of Moti Ram and Desa Singh: and (3) New India Assurance Company Limited with which truck No. PNR-5133 was insured.

On 3.6.1959 a joint written statement was filed by Moti Ram and Hari Singh. They inter alia pleaded that the truck in question did not belong to them ; that it was originally owned by Desa Singh, who had, however, transferred the same on 29-11-1957, that is more than one year before the alleged accident, to Parkash Chand son of Moti Ram and no claim could, therefore, be made against either Moti Ram or Hari Singh that Hari Singh was not guilty of any rash and negligent act in driving the truck and, as a matter of fact, the accident was brought about by the deceased himself ; that the truck bearing No. DLD-5164 was insured with another Insurance Company, from whom the applicants were entitled to get their compensation ; and that, in any case, truck No. PNR-5133 was insured against third party risk with the New India Assurance Company Limited and in case the applicants were found to be entitled to any compensation, it was only this Insurance Company, which was liable to pay the same.

On the same day, that is, 3.6.1959, the Tribunal ordered that since, according to the above written statement, Parkash Chand was the owner of the truck,'' he should be impleaded as a Respondent. Consequently, his name was added in the original application. Thereupon, the applicants submitted that since the responsibility of Desa Singh had been taken over by Parkash Chand, who had been added as a Respondent, they did not wish to proceed against Desa Singh and wanted to give him up. The said prayer was granted by the Tribunal and his name was struck off from the list of Respondents.

On 11.7.1959 the New India Assurance Company Limited in their written statement, inter-alia, pleaded that the claim was time-barred ; that the applicants had no cause of action against them ; that the alleged accident was due to the negligent act of the deceased himself; and that they were in no way liable to pay any compensation to the applicants.

On the pleadings of the parties, the following issues were framed:-

Whether the claim application is within time ? If not, whether there are sufficient grounds for condoning the delay ?

Whether the accident is the result of the rash and negligent act of the driver of truck No. PNR-5133 ?

To what compensation, if any, are the claimants entitled ?

To what extent the owner and Assurance Company are liable ?

What is the effect of truck No. DLD 5164 being insured with Messrs. Jupiter Insurance Company ?

Relief.

The Tribunal held that the claim application was within time ; that the accident was the result of rash and negligent act of Hari Singh, driver of truck No. PNR- 5133; that the claimants were entitled to Rs. 12,960/- as compensation, out of which Rs. 4,000/- had been got deposited with the Commissioner under the Workmen''s Compensation Act by the Jupiter General Insurance Company, with which truck No. DLD-5164 was insured and, therefore, they were entitled only to the balance of Rs. 8,960/-; and that the New India Assurance Company Limited was liable to pay this amount to the applicants. On these findings, the Tribunal awarded a sum of Rs. 8,960/- in favour of the applicants, against the Respondents, but it was stated by virtue of Section 96 of the Motor Vehicles Act, 1939, as amended by Act 100 of 1956, that the compensation was to be paid by the New India Assurance Company Limited. Against this award the present appeal has been filed by the Company.

The main contention raised by the learned Counsel for the Appellant is that since truck No. PNR-5133 had been sold by Desa Singh to Parkash Chand on 29.11.1957 and the assignment of the insurance policy in favour of the new purchaser had not been assented to by the Insurance Company, therefore, the Appellant-company was absolved of all liabilities arising thereunder after the sale of the truck. This accident had, admittedly, occurred on 9.12.1958 and, thus, the Appellant-Company could not be held liable for payment of this compensation. In this connection, reliance was placed on a Single Bench decision of this Court in Des Raj Pahwa and Anr. v. The Concord of India Insurance Company Limited AIR 1951 P&h 114, where it was observed thus:

A motor insurance policy does not remain in force if there is a change of ownership of the car insured, unless there is an agreement between the Company and the new owner that the policy shall remain in force.

Reference was also made to the decision in Peters v. General Accident Assurance Corporation Limited (1938) 2 All E.R. 267 in which it was observed that an insurance policy was a contract of personal indemnity and the insurer could not be compelled to accept responsibility in respect of a third party, who might be quite unknown to them.

Learned Counsel for Parkash Chand, the transferee of the truck in question, on the other hand, relied on a Single Bench decision of the Madras High Court in the Madras Motor Insurance Co. Ltd., Madras Vs. Mohamed Mustafa Badsha and Others, in which it was held:

In view of the specific provision in Section 96 of the Motor Vehicles Act, it cannot be contended that a policy of insurance lapses the moment the insured parts with the ownership of the vehicle. Even if the insurer has any ground which would entitle him to avoid the policy as against the insured, the insurer cannot escape the liability to pay the victim of an accident so long as the policy is current and valid. Sale of the vehicle is not a ground under the section to avoid a policy of insurance. Hence where the owner of a vehicle, which is insured under the Act against third party risks, sells the same to another but transfer of ownership or transfer of the policy has not yet taken place, and an accident occurs, the insurance company cannot escape its liability under the policy.

In this connection, learned Counsel also relied on a Division Bench decision of the Calcutta High Court in Bir Singh and Anr. v. Mrs. Hashi Rashi Banerjee and Ors. 1966 A.C.J. (1) : AIR 1956 Cal. 556

The point involved is of great importance and, admittedly, there is divergence of judicial opinion on the same. Besides, its decision would effect a large number of persons and, in my opinion, it is a fit case which should be heard by a Division Bench.

I may, however, mention that the learned Counsel for the Appellant also raised another contention, namely, that only the civil Court had the jurisdiction to entertain this application for compensation, because no Motor Accidents Claims Tribunal had been appointed by the Government u/s 110 of the Motor Vehicles Act within 60 days of the occurrence of the accident. Since I am referring this case to a Division Bench, this point can also be considered there.

Let the papers be placed before my Lord and Chief Justice for passing necessary orders in this connection.

[Pursuant to the above order of reference the appeal came up for hearing before a Bench.]

JUDGMENT

S.S. Daulat, J.

On the 9th December 1958 a collision took place on the Grand Trunk Road between two motor vehicles, the driver of one of which was Hari Singh. As a result of that collision the driver of the other vehicle, Mela Ram, died. His widow, Shrimati Maya Devi, filed an application dated the 14th January 1959, before the Provincial Transport Controller, as at that time no Tribunal under the Motor Vehicles Act, had been set up. A Motor Accidents Claims Tribunal was, however, set up on the 10th February 1959 and Shrimati Maya Devi made an application to that Tribunal on the 26th February 1969. In that application, she impleaded four persons as liable to pay compensation. There were (1) Hari Singh, the driver of the truck by whose rash and negligent driving, according to the Petitioner, the death of her husband had occurred ; (2) Moti Ram ; and (3) Desa Singh, the owners of the motor truck driven by Hari Singh; and (4) the New India Assurance Company Limited, being the insurers of the truck in question, No. PNR. 5133. When Desa Singh appeared in Court, he stated that he had sold the truck to Parkash Chand son of Moti Ram long before the accident and was, therefore, not himself liable. On that, Parkash Chand was impleaded as a party and, since he admitted the transfer in his favour, Desa Singh''s name was deleted from the proceedings. The trial of the case then proceeded. In defence, it was said that the application of Maya Devi was time-barred, as it had not been made within two months of the accident. On the merits, it was said that the accident was not the result of the rash or negligent driving of Had Singh. The liability of the insurance company was denied and also the extent of compensation claimed, which was placed at Rs. 15,000/-by the Petitioner.

The Tribunal found that the application before it was within time and that, in any case, there was good ground for condoning the delay, if any. The Tribunal further found that the accident was the result of the rash and negligent driving of Hari Singh, the driver of truck PNR. 5133, and that the insurance company was liable to pay compensation in spite of the fact that the truck had been transferred by Desa Singh, who had originally taken out the insurance policy, to Parkash Chand. Regarding the amount of compensation the Tribunal held that Rs. 8,960/- was the proper amount payable. On these conclusions, the Tribunal awarded the Petitioner Rs, 8,960/- as compensation against the Respondents and directed that this amount be paid by the New India Assurance Company Limited along with costs of the petition. Against that decision the New India Assurance Company Limited filed an appeal in this Court which, in the first instance, came up for consideration before one of us. The main contention raised on behalf of the Appellant Company at that time was that, since the ownership of the truck had been transferred by Desa Singh to Parkash Chand before the accident, the insurance policy was ho longer in force and, since it was a contract of indemnity personally in favour of Desa Singh, the Company''s liability could not have been assigned in favour of the transferee and in this way the Company was not liable and the Motor Accidents Claims Tribunal was in error in holding to the contrary. There was on this point some conflict of authority and, in view of that conflict, the appeal was ordered to be heard by a larger Bench.

Before us learned Counsel for the insurance company did, to begin with, contend that the person insured in this case was Desa Singh and the Company had merely undertaken to indemnify him against any compensation payable by him, but, because the vehicle was transferred to another person and at the time of the accident Desa Singh was no longer liable to pay any compensation, the insurance company was similarly not liable, the argument being that the transfer of the vehicle prior to the accident did not and could not in law assign to the transferee the rights of the insured person as against the insurance company. Later on, however, when it was pointed out to learned Counsel that, apart from the undertaking to indentify the person named in the insurance policy, that is, Desa Singh, the Company had further undertaken to indemnify the driver of the motor vehicle in question, learned Counsel did not find it useful to press that argument further and he in fact admitted that the question, which was seriously argued before the learned Single Judge, was no longer of importance and need not in this case be decided. The reason is that the insurance policy, under which the Appellant-company has been held liable, was admittedly current at the time of this accident, and a reading of the insurance contract leaves no doubt that, apart from the contract to indemnify Desa Singh, the Company had expressly undertaken to "indemnify any driver who is driving the motor vehicle on the insured''s order or with his permission." Hari Singh was the driver of the vehicle in question. Hari Singh has been held responsible for the accident and there is an order for payment of compensation against him. If-therefore, the Appellant-company had in fact undertaken to indemnify Hari Singh as the driver of the motor vehicle in question, then under the terms of the Motor Vehicles Act the Tribunal below was entitled to direct that the amount of compensation be actually paid by the insurance company. It is true that it has been found that some time before the accident, and in fact it appears that this happened some time before the insurance policy was taken out, the truck in question was transferred by Desa Singh to Parkash Chand, but that, of course, does not necessarily mean that the truck did not actually remain under the control of Desa Singh for the purpose of being plied for hire. Nor is there any suggestion that Hari Singh, the driver of the truck at the time of this accident, was not driving it at the direction or with the permission of Desa Singh. No plea that Hari Singh was not driving the truck of Desa Singh, was ever raised nor any hint of it given in the course of trial. The mere transfer of ownership of the truck, therefore, does not really affect the matter. As I have said, the Appellant-company had under the insurance contract undertaken to indemnify two persons definitely: (1) Desa Singh, in case he became liable in connection with the running of the truck in question and (2) the driver of the truck who may have been driving it with his permission. All that is shown in the present case is that at the time of the accident the owner of the truck was Parkash Chand, but there is nothing to show that the driver of the truck, Hari Singh, was not driving it with the permission of Desa Singh. The Appellant-company''s liability, therefore, to indemnify the driver, being Hari Singh in this case, was intact, and on that ground the direction of the Tribunal below, that the insurance company must pay Rs. 8,960/-as compensation to the Respondent, Shrimati Maya Devi, cannot be disturbed.

Some mention was made before us about the matter of limitation, but it is clear that if there was any delay in the making of the application to the Tribunal, which had to be done within sixty days, that delay was perfectly understandable and the Tribunal was definitely of the view that the delay deserved to be condoned which the Tribunal was entitled to do. The objection on the ground of limitation, therefore, is thus without force.

No other question arises in this case. The appeal, must, in the circumstances, fail and I would dismiss it with costs.

P.C. Pandit, J

I agree.