Rikhi and Another vs Smt. Sukhrania and Others

This Judgment has been overruled by : 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

G.R. Majithia, J.—This judgment disposes of FAO No. 352 of 1987, Cross objection No. 76-C-II of 1989 in F.A.O. No. 352 of 1987 and FAO 611 of 1987.

The facts:-

A reference to relevant facts for adjudicating the question of law raised in these appeals has been made from the pleadings in File No. 15 of 27-8-1984 (F.A.O. No. 352 of 1987). Smt. Sukhrania and Ram Dhan (hereinafter, referred to as the claimants) lost their son Chinku in an accident. Chinku was rickshaw puller by profession and while he was going to the Khokhas opposite to the Cinema Alankar Cinema on March 1, 1984 at about 12 noon to have a change of Rs. 5/- Pawan Kumar and Ashok Kumar were coming from Goniana side on a Motor Cycle bearing registration No. P.U.T. 3504, on the wrong side of the road and were driving the same in a rash and negligent manner and without giving any horn struck against Chinku. The accident was witnessed by Nand Lal son of Durga Parshad, rickshaw puller, Shiv Lal son of Dhannu Ram, rickshaw puller, Ram Sarjiwan, brother of Chinku, Ram Sarup and one Prem Kumar, resident of Bhatinda, Chinku was taken to Civil Hospital Bhatinda by these persons for medical treatment. He was given treatment at Civil Hospital, Bhatinda. His condition worsened and he was referred to C.M.C. Ludhiana, where he was admitted on March 2, 1984 in Unit No. 437522. Appellant No. 1 accompanied Chinku to C.M.C. Ludhiana and had given an undertaking that he would bear all the expenses for the treatment but later on resiled from the same. Chinku died in C.M.C. Ludhiana on May 5, 1984. The hospital authorities did not handover his dead-body to the claimants since they could not pay the medical expenses. The claimants moved a petition u/s 110-A of the Motor Vehicles Act, 1939 (for short, the 1939 Act). The appellants and respondent Nos. 3 to 6 were arrayed as party respondent to the petition.

Pawan Kumar and Rikhi Ram (Appellant No. 1) filed a joint written statement denying the accident and pleaded that the Motor Cycle bearing registration No. PUT -3504 did not belong to them. Rather Azad Engineering Works, Bhatinda was the owner of the vehicle. Azad Engineering Works, Bhatinda was added as a party respondent to the petition the Motor Accident Claims Tribunal by order, dated November 18, 1986 impleaded respondent No. 4 as party respondent to the claim petition. Appellant No. 1 and Azad Engineering Works filed another written statement taking the plea that Rikhi Ram was not the owner of the vehicle in question. Ashok Kumar, respondent No. 6 filed a separate written statement taking identical objections as were taken by the appellants. The New India Assurance Company Limited admitted the factum of the insurance of the motor cycle with it. However, it pleaded that it was got insured by Bhagwan Rai Amrit Lal Commission Agents, Bhucho Mandi and they were the registered owner of the vehicle with it. It further pleaded the purchase of the vehicle in question made by Rikhi Ram and Azad Engineering Works (Appellants) was not intimated to the Insurance Company and as such, the policy had not been transferred in the name of the purchasers. 4. On the pleading of the parties, the following issues were framed:-

Whether Chinku died due to the rash and negligent driving of a motor cycle bearing No. PUT-3504 driven by Pawan Kumar and Ashok Kumar, respondent No. 1 and 1-A ? OPA.

To what amount of compensation, if any, the applicants are entitled and from whom ? OPA.

Relief.

Under Issue No. 1. the Tribunal held that the accident was caused by Ashok Kumar (Respondent No. 6). It further held that the accident took place in front of the Cinema and it was incumbent upon the driver of the vehicle to have driven the vehicle in a careful and cautious manner so that even if any pedestrian comes in front of the vehicle, he could have stopped the same. He applied the doctrine of res ipsa loquitor to the facts of the instant case. Under issue No. 2, it held that the claimants were entitled to Rs. 64,000/- as compensation. It further came to the conclusion that the motor cycle, which was involved in the accident, was purchased by Azad Engineering Works, Bhatinda. Ashok Kumar was an employee of Azad Engineering Works and the owner of the vehicle was vicariously liable for the acts of its servant. Rikhi Ram was the partner of Azad Engineering Works. It further held the intimation of the transfer of the vehicle was not given by the registered owner of the vehicle, who had got the vehicle insured, with the Insurance Company and as such, the Insurance Company was not liable.

Feeling aggrieved against the award, Rikhi Ram, respondent No. 2, and Azad Engineering Works, respondent No. 2-A have preferred this appeal.

Being dis-statisfied with the award on the quantum of compensation, the claimants have also filed cross-objection for enhancement of compensation.

The learned counsel for the appellants very fairly did not dispute the accident and the manner in which it had taken place. He also did not dispute the correctness of the findings regarding the quantum of compensation. The learned counsel for the claimants could not raise any meaningful argument for enhancement of the compensation. The only dispute is whether the Insurance Company can be held liable for the payment of the compensation amount. The accident took place on March 1, 1984 when the 1939 Act was in force. The 1939 Act was repealed by the Motor Vehicles Act 1988 (for short, the Act), the Act came into force with effect from July 1, 1989. The dispute in the accident has to be decided under the provisions of the 1939 Act. Section 103 of the 1939 Act envisages that an insurer issues a certificate of Insurance in respect of a contract of insurance between it and the insured person. Section 103-A of the 1939 Act further says that where a person in whose favour the certificate of insurance has been issued in accordance with the provisions contained in Chapter VII proposes to transfer 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, he may apply in the prescribed form to the insurer for the transfer of the certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle is proposed to be transferred, and if within fifteen days of the receipt of such application by the insurer, the insurer has not intimated the insured and such other person his refusal to transfer the certificate and policy to the other person, 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. The liability of the insurer would be fastened if an intimation was given to it by the insured that the vehicle insured with the former had been transferred to the third person. In the instant case, the Tribunal had given a positive finding that there is no evidence on record that the insured had intimated the insurer regarding the factum of transfer by him to appellant No.2. Since the intimation was not given in terms of the provisions of Section 103-A of the 1939 Act, the insurer cannot be held liable. The privity of contract which flows form the contract of insurance is between the insured and the insurer. The insurer can transfer the certificate of insurance alongwith transfer of the vehicle if he complied with the provisions of Section 103-A of the 1939 Act. On the proved facts, there is no escape from the conclusion that the Insurance Company is not liable. This was the view, which has been consistently taken by this Court in The New India Assurance Co. Ltd. v. Jolly Engineers and Contractors (P) Ltd., (1985)87 P.L.R. 187, wherein it was held thus:-

" The over whelming weight of judicial precedent, however, points to the contrary view, namely, that the change of ownership of a vehicle puts an end to the polity of insurance even if the original policy-holder continues to be shown as the registered owner of the vehicle concerned. The rationale behind this being that a policy of insurance is a contract of personal indemnity and the insurer cannot, therefore, be compelled to accept responsibility in respect of a third party, who may be quite unknown to him."

This view was reiterated in Labh Singh v. Smt. Sunehri Devi and Ors. 1987102 P.L.R. 213. I sitting singly in Baldev Raj v. Smt. Dharmo Rani etc. 1989 96 P.L.R. 482 held thus:-

"The intimation regarding purchase had to be given by the original owner as provided u/s 102A of the Act. If the , intimation had been sent and no response had been received thereto from the Insurance Company within 15 days , the transfer of the insurance certificate in favour of the transferee would have been effected from the date of the transfer of the vehicle in his favour. The principle underlying the aforesaid provision is that the insurance cannot be allowed to ward off his liability by simply delaying the transfer of the certificate of insurance in favour of the purchaser of the vehicle. If an accident takes place liability is incurred by the purchaser during the period between the date of the transfer of the vehicle and the date of the actual transfer of the certificate of insurance by the insurer, the insurer has to discharge it."

The identical view has been taken by the King''s Bench Division in Peters v. General Accident and Life Assurance Corpn. Ltd. (1937)4 All. E.R. 628 and other High Courts in Insurance Company Limited Vs. Vimal Rai and Others, ; Roshan Lal Bhalla and Anr. v. Sudesh Kumar and Ors. AIR 1968 J&K 2; Oriental Fire & General Insurance Co. Ltd. v. Meena Sharma and Ors., (1975)77 P.L.R. 522; Balwant Singh v. Jhannubai and Ors. 1980 A.C.J 126; United India Fire and General Insurance Co. Ltd. and etc. Vs. Chennamma and Others, ; Calcutta Insurance, Madras, now known as National Insurance Co. Ltd. v. Thirumalai Ammal and Ors. A.I.R 1982 Mad 83 ; National Insurance Co. Ltd. Vs. Thekkeyil Rajan and Others, , P.K. Panda Vs. Smt. Premalata Choudhury and Others, ; Motor Owners Insurance Co. Ltd. Vs. Khet Pal Singh and Others, ; Shantilal Mohan Lal and Anr. v. Aher Bawanji Malde and Ors. 1985 A.C.J. 505, Oriental Fire & General. Ins. Co. Ltd. Kolhapur v. Ratnabai Balu Kadam and Ors. 1986 A.C.J. 729 and Anand Sarup Sharma v. P.P. Khurana and Ors. 1989 A.C.J. 577 . The contrary view taken in Madineni Kondaiah and Others Vs. Yaseen Fatima and Others, , with respect to the Hon''ble Judges, cannot be taken to be correct in view of the overwhelming contrary view taken almost by majority of the High Courts.

The Tribunal rightly came to the conclusion that the transferee of the vehicle and the driver of the vehicle are jointly and severally liable to pay the compensation amount.

For the reasons stated above, the appeals and the cross-objection are dismissed. However, in view of the very fair stand of Mr. Anupam Gupta, learned counsel for the appellants, the parties are left to bear their own costs.