Oriental Insurance Company Ltd. vs Veena Devi and Others

Mansoor Ahmad Mir, C.J—Subject matter of this appeal is award, dated 17th August 2007, made by the Motor Accident Claims Tribunal (I), Kangra Division at Dharamshala (hereinafter referred to as "the Tribunal") in M.A.C.P. No. 37-K/II-2005, titled as Smt. Veena Devi and others versus Arun Kumar Joshi and others, whereby compensation to the tune of Rs. 3,30,000/- with interest @ 7.5% per annum from the date of the claim petition till its realization came to be awarded in favour of the claimants and the insurer came to be saddled with liability (hereinafter referred to as "the impugned award), on the grounds taken in the memo of appeal.

It is necessary to give a flashback of the case, the womb of which has given birth to this case.

Brief facts:

The claimants have invoked the jurisdiction of the Tribunal in terms of the mandate of Section 166 of the Motor Vehicles Act, 1988 (for short "the MV Act") seeking compensation to the tune of Rs. 10,00,000/-, as per the break-ups given in the claim petition, on the ground that their sole bread earner, Shri Ramesh Chand, became victim of the a motor vehicular accident, which was allegedly caused by driver, namely Shri Arun Kumar Joshi, while driving three wheeler No. HP-04-0451, rashly and negligently, on 06.03.2005 near flour-mill on Kangra-Tanda road, deceased-Ramesh Chand sustained injuries and succumbed to the injuries.

The claimants have specifically averred in the claim petition that they are the dependents of the deceased. Claimant No. 1 is the widow and claimants No. 2 and 3 are minor daughter and minor son of the deceased.

The respondents in the claim petition resisted the claim petition on the grounds taken in the respective memo of objections.

Following issues came to be framed by the Tribunal on 10th November, 2006:

"1. Whether on 6.3.2005, respondent No. 1 was driving vehicle No. HP-04-0451 rashly and negligently and met with an accident, causing injuries to Ramesh Chand, who later on died on the way to Hospital?

OPP

If issue No. 1 is proved, whether the petitioners are entitled for compensation, if so, how much and from whom?

OP Parties

Whether the respondent No. 1 was not holding a valid and effective DL at the time of alleged accident?

OPR

Whether the vehicle in question was not insured with respondent No. 2 as alleged?

OPR

Whether the vehicle was being plied without RC and fitness certificate as alleged?

OPR

Relief."

Parties have led evidence. The Tribunal, after scanning the evidence, oral as well as documentary, awarded compensation to the tune of Rs. 3,30,000/- with interest @ 7.5% per annum from the date of the claim petition till its realization in favour of the claimants and the insurer came to be saddled with liability.

The insurer has questioned the impugned award on the ground that the original registered owner was not the owner of the offending vehicle at the time of the accident and the vehicle was sold by the owner, namely Shri Kuldip Kumar, in the name of Shri Arun Kumar Joshi without intimating the insurer. The sale was effected before the insurance agreement was executed.

The facts and the quantum of compensation are not in dispute. Thus, the only question, which needs to be determined in this appeal, is - whether the Tribunal has rightly saddled the insurer with liability?

It was for the insurer to plead and prove that the vehicle was sold and the owner-insured has committed a willful breach, has not led any evidence, thus, has failed to discharge the onus.

I deem it proper to reproduce Section 157 of the MV Act herein:

"Section 157 of the Act reads as under:

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.

[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."

While going through the aforesaid provision, one comes to an inescapable conclusion that transfer of a vehicle cannot absolve insurer from third party liability and the insurer has to satisfy the award.

My this view is fortified by the Apex Court Judgment in case titled as G. Govindan Vs. New India Assurance Co. Ltd. and Others, (1999) 1 ACC 483 : (1999) ACJ 781 : AIR 1999 SC 1398 : (1999) 97 CompCas 443 : (1999) 2 CTC 473 : (1999) 2 JT 622 : (1999) 122 PLR 274 : (1999) 2 SCALE 491 : (1999) 3 SCC 754 : (1999) 2 SCR 476 : (1999) 2 UJ 1121 : (1999) AIRSCW 1077 : (1999) 3 Supreme 506 . It is apt to reproduce paras 10, 13 and 15 of the aforesaid judgment herein:

"10. This Court in the said judgment held that the provisions under the new Act and the old Act are substantially the same in relation to liability in regard to third party. This Court also recognised the view taken in the separate judgment in Kondaiah''s case that the transferee-insured could not be said to be a third party qua the vehicle in question. In other words, a victim or the legal representatives of the victim cannot be denied the compensation by the insurer on the ground that the policy was not transferred in the name of the transferee.

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In our opinion that both under the old Act and under the new Act the Legislature was anxious to protect the third party (victim) interest. It appears that what was implicit in the provisions of the old Act is now made explicit, presumably in view of the conflicting decisions on this aspect among the various High Courts.

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As between the two conflicting views of the Full Bench judgments noticed above, we prefer to approve the ratio laid down by the Andhra Pradesh High Court in Madineni Kondaiah and Others Vs. Yaseen Fatima and Others, (1986) 1 ACC 501 : (1986) ACJ 1 : AIR 1986 AP 62 : (1985) 3 APLJ 150 as it advances the object of the Legislature to protect the third party interest. We hasten to add that the third party here will not include a transferee whose transferor has not followed procedure for transfer of policy. In other words in accord with the well-settled rule of interpretation of statutes we are inclined to hold that the view taken by the Andhra Pradesh High Court in Kondaiah''s case is preferable to the contrary views taken by the Karnataka and Delhi High Courts (supra) even assuming that two views are possible on the interpretation of relevant sections as it promotes the object of the Legislature in protecting the third party (victim) interest. The ratio laid down in the judgment of Karnataka and Delhi High Courts National Insurance Co. Ltd. Vs. Mallikarjun and others, (1990) ACJ 688 : AIR 1990 Kar 166 : (1990) 3 KarLJ 154 and Anand Sarup Sharma Vs. P.P. Khurana and others, AIR 1989 Delhi 88 : (1989) 65 CompCas 413 : (1989) 16 DRJ 27 : (1988) RLR 693 differing from Andhra Pradesh High Court is not the correct one."

The Apex Court in case titled as Rikhi Ram and Another Vs. Smt. Sukhrania and Others, (2003) 1 ACC 36 : (2003) ACJ 534 : AIR 2003 SC 1446 : (2003) 1 SCALE 732 : (2003) 3 SCC 97 : (2003) 1 SCR 872 : (2003) 1 UJ 526 : (2003) AIRSCW 780 : (2003) 1 Supreme 1000 held that in absence of intimation of transfer to Insurance Company, the liability of Insurance Company does not cease. It is apt to reproduce paras 5, 6 and 7 of the judgment, supra, herein:-

"5. The aforesaid provision shows that it was intended to cover two legal objectives. Firstly, that no one who was not a party to a contract would bring an action on a contract; and secondly, that a person who has no interest in the subject matter of an insurance can claim the benefit of an insurance. Thus, once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 94 does not provide that any person who will use the vehicle shall insure the vehicle in respect of his separate use.

On an analysis of Ss. 94 and 95, we further find that there are two third parties when a vehicle is transferred by the owner to a purchaser. The purchaser is one of the third parties to the contract and other third party is for whose benefit the vehicle was insured. So far, the transferee who is the third party in the contract, cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer.

For the aforesaid reasons, we hold that whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of insurer does not ceases so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation as required under the provisions of the Act."

The Apex Court in latest judgment titled as United India Insurance Co. Ltd., Shimla Vs. Tilak Singh and Others, (2006) 2 ACC 1 : (2006) ACJ 1441 : AIR 2006 SC 1576 : (2006) 131 CompCas 163 : (2006) 2 CTC 661 : (2006) 4 JT 280 : (2006) 143 PLR 297 : (2006) 4 SCALE 67 : (2006) 4 SCC 404 : (2006) AIRSCW 1822 : (2006) 3 Supreme 332 has held the same principle. It is apt to reproduce paras- 12 and 13 of the said judgment herein:

"12. In Rikhi Ram and Another Vs. Smt. Sukhrania and Others, (2003) 1 ACC 36 : (2003) ACJ 534 : AIR 2003 SC 1446 : (2003) 1 SCALE 732 : (2003) 3 SCC 97 : (2003) 1 SCR 872 : (2003) 1 UJ 526 : (2003) AIRSCW 780 : (2003) 1 Supreme 1000 a Bench of three learned Judges of this Court had occasion to consider Section 103-A of the 1939 Act. This Court reaffirmed the decision in G. Govindan case and added that the liability of an insurer does not cease even if the owner or purchaser fails to give intimation of transfer to the Insurance Company, as the purpose of the legislation was to protect the rights and interests of the third party.

Thus, in our view, the situation in law which arises from the failure of the transferor to notify the insurer of the fact of transfer of ownership of the insured vehicle is no different, whether under Section 103-A of the 1939 Act or under Section 157 of the 1988 Act insofar as the liability towards a third party is concerned. Thus, whether the old Act applies to the facts before us, or the new Act applies, as far as the deceased third party was concerned, the result would not be different. Hence, the contention of the appellant on the second issue must fail, either way, making a decision on the first contention unnecessary, for deciding the second issue. However, it may be necessary to decide which Act applies for deciding the third contention. In our view, it is not the transfer of the vehicle but the accident which furnishes the cause of action for the application before the Tribunal. Undoubtedly, the accident took place after the 1988 Act had come into force. Hence it is the 1988 Act which would govern the situation."

The same principle has been laid down by this Court in FAO No. 7 of 2007, titled as Ashok Kumar and another versus Smt. Kamla Devi and others, decided on 05.09.2014, FAO No. 164 of 2007, titled as Sh. Vipan Kumar versus Naushad Ahmed and another, decided on 28.11.2014, and FAO No. 207 of 2007, titled as National Insurance Company Ltd. versus Smt. Santoshi Devi and others, decided on 13.03.2015.

The mandate of Sections 146, 147 and 149 of the MV Act is to protect the rights of third parties and that is why, compulsory duty has been imposed on the owners to get the vehicles insured, so that, claim of third parties cannot be defeated.

The same question arose before the Apex Court in a case titled as S. Iyyapan Vs. United India Insurance Company Ltd. and Another, (2013) 5 ABR 385 : (2013) 3 ACC 19 : (2013) ACJ 1944 : (2013) 7 AD 202 : AIR 2013 SC 2262 : (2013) 10 JT 85 : (2013) 172 PLR 409 : (2013) 3 RCR(Civil) 654 : (2013) 7 SCALE 637 : (2013) 7 SCC 62 . It is apt to reproduce para 16 of the judgment herein:

"16. The heading "Insurance of Motor Vehicles against Third Party Risks" given in Chapter XI of the Motor Vehicles Act, 1988 (Chapter VIII of 1939 Act) itself shows the intention of the legislature to make third party insurance compulsory and to ensure that the victims of accident arising out of use of motor vehicles would be able to get compensation for the death or injuries suffered. The provision has been inserted in order to protect the persons travelling in vehicles or using the road from the risk attendant upon the user of the motor vehicles on the road. To overcome this ugly situation, the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force."

Viewed thus, the Tribunal has rightly held that the Oriental Insurance Company Limited-appellant herein has to satisfy the award.

Having said so, this appeal deserves to be dismissed and the impugned award is to be upheld. Ordered accordingly.

Registry is directed to release the awarded amount in favour of the claimants strictly as per the terms and conditions contained in the impugned award after proper identification.

Send down the record after placing copy of the judgment on Tribunal''s file.