ORIENTAL INSURANCE CO. LTD. vs ASHOK KUMAR

TATA Indica car bearing registration No. PB -05 -B -8652 was owned by one Sh. Rajiv Kumar S/o Sh. Mukakh Raj. The aforesaid car was insured with the petitioner company for the period from 29.09.2002 till 28.09.2003. Sh. Rajiv Kumar sold the car to one Darshan Lal who got the vehicle transferred in his name in the record of the concerned Transport Authority. He however, did not apply to the insurance company for transfer of the insurance in his name. Sh. Darshan Lal then sold the aforesaid car to the complainant Ashok Kumar on 25.02.2003. Since the vehicle was financed by Punjab National Bank, a letter dated 26.02.2003 was sent by Punjab National Bank to the petitioner company informing that they had financed the aforesaid vehicle and requesting to change the name of the insured Rajiv Kumar S/o Sh. Mulakh Raj to Sh. Ashok Kumar S/o Sh. Ram Saroop and include bank clause. A letter was sent on the letter head of the bank. No action on the aforesaid letter was taken by the insurance company till it met with an accident on 07.03.2003. Since the vehicle was extensively damaged in the said accident, the complainant lodged a claim of Rs. 1,77,359/ - with the insurance company. The claim having been repudiated, the complainant approached the concerned District Forum by way of a complaint.

THE complaint was resisted by the insurance company primarily on the ground that though the letter sent by the bank sought substitution of the name of Ashok Kumar by the name of Sh. Rajiv Kumar, the vehicle was purchased by the complainant from Sh. Darshan Lal and not from Rajiv Kumar. It was also pointed out in the reply that Sh. Darshan Lal had never applied to the insurance company for transferring the insurance in his name. On merits, it was stated that the surveyor appointed by the insurance company had assessed the loss at Rs. 99894.50p. The District Forum vide its order dated 12.04.2005, directed the insurance company to settle the claim. Being aggrieved, the insurance company approached the concerned State Commission by way of an appeal and placed reliance upon the judgment of "M/s. Complete Insulations (P) Ltd. V. New India Assurance Company : AIR 1996 SC 586". Vide impugned order dated 30.06.2010, the State Commission held that the complainant was entitled to payment of Rs. 1 lac alongwith interest @ 7.5% per annum after expiry of three months from the report of the surveyor till the date of payment and the cost of litigation quantified at Rs. 5000/ -. Being aggrieved, the insurance company is before us by way of this Revision Petition.

SECTION 157(2) of the Motor Vehicles Act requires the transferee of a motor vehicle to 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 on such a request being made the insurer is required to make necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance. Section 157(1) of the act which provides for deemed transfer of the insurance policy alongwith transfer of the ownership of the vehicle, applies only to third party risks, as held by the Hon''ble Supreme Court in Complete Insulations Pvt. Ltd. (Supra). As held by the Hon''ble apex court, if the insurance policy covers other risks as well, e.g., damage caused to the vehicle of the insured himself, that would be a matter falling outside Chapter XI of the New Act and in the realm of contract for which there must be an agreement between the insurer and the transferee, the former undertaking to cover the risk or damage to the vehicle.

IN the case before us, the vehicle in question was sold by Sh. Rajiv Kumar to one Sh. Darshan Lal who later sold the same to the complainant. The factum of sale of the vehicle to the complainant is not in dispute. The complainant therefore, was required to apply to the insurance company, within 14 days from the date of purchase of the vehicle, seeking transfer of the insurance policy in his name. Failure of Sh. Darshan Lal to seek transfer of the insurance in his name could not have come in the way of the complainant seeking transfer of the insurance in his name since he could not be penalized for the lapse of Sh. Darshan Lal. Instead of applying himself, the complainant applied to the insurance company through his banker for transfer of the insurance in his name. Though the bank did not disclose, in the letter sent to the insurance company, that the vehicle had been sold firstly by Sh. Rajiv Kumar to Sh. Darshan Lal and then by Darshan Lal to the complainant, the insurance company did not return or reject the application on that ground. No attempt was made by the insurance company to verify the sale of the vehicle from Sh. Rajiv Kumar. Had the insurance company made enquiry from Sh. Rajiv Kumar, it would have come to know that the vehicle had been sold by him to Sh. Darshan Lal and on making enquiry from Sh. Darshan Lal, insurance company would have come to know that he had sold the vehicle to the complainant. Such an exercise however, was not even initiated by the insurance company though the application remained pending with it for almost nine days, before the vehicle met with an accident on 07.03.2003. It is contended by the learned counsel for the petitioner that the application seeking transfer of the insurance in his name should have come from the complainant and the bank was not authorized to submit such an application on his behalf. If that be the position, the insurance company ought to have returned the application to the bank requiring that the same should be submitted directly by the transferee under his own signature. Had that been done, the complainant could have applied to the insurance company, under his own hand, for transfer of the insurance in his name. The insurance company therefore, was clearly deficient in rendering services, by not taking any action on the application seeking transfer of the insurance in the name of the complainant Sh. Ashok Kumar. Since the insurance company did not respond to the letter sent by Punjab National Bank, the complainant would be justified in presuming that the insurance company had accepted the request made by him through his banker for transfer of the insurance in his name and endorsement of transfer would be issued to him in due course.

IN our view, the fact that the request to the insurance company for transfer of the insurance in the name of the complainant was made immediately after the transfer of the vehicle to the complainant, but no action on that letter was taken by it, would disentitle the petitioner company from repudiating the claim on the ground that the insurance had not been transferred in the name of the complainant by the time the vehicle met with an accident.

FOR the reasons stated hereinabove, we find no good ground for interference by us in the view taken by the fora below in exercise of our revisional jurisdiction. The revision petition is accordingly dismissed. If the petitioner company had made any deposition in terms of the order dated 19.01.2011, the aforesaid amount alongwith interest which may have accrued on it, shall be released to the complainant by the forum with which the said amount is lying. If any amount was deposited with the State Commission, that amount alongwith interest which may have accrued on it, shall also be released to the complainant. The balance amount shall be calculated and paid by the petitioner within six weeks from today.