UNITED INDIA INSURANCE CO. LTD vs Dada Miyan

THE complainant/respondent purchased a vehicle bearing registration No.KA 36/P 5566. The said vehicle, at the time it was purchased, was insured by the petitioner -insurance company by way of a policy which was valid for the period from 28 -09 -2006 to 27 -09 -2007. However, despite purchasing the vehicle and getting it transferred in his name on 31 -10 -2006, the complainant/respondent did not apply to the insurance company to transfer the insurance of the said vehicle in his name. On 28 -01 -2007, the vehicle met with an accident. A claim in this regard was lodged by the complainant with the insurance company. The claim was declined on the ground that the policy did not stand in the name of the complainant.

BEING aggrieved from denial of his claim the complainant/respondent filed a complaint before the Raichur District Consumer Disputes Redressal Forum (for short, the District Forum). The said forum directed the petitioner -insurance company to pay a sum of Rs.1,50,000/ - the same being the insured value, along with compensation amounting to Rs.8,000/ -.

BEING aggrieved from the order of the District Forum the insurance company approached the Karnataka State Consumer Disputes Redressal Commission (for short, the State Commission) by way of an appeal. The said appeal having been dismissed by the State Commission vide its order dated 17 -10 -2008, the insurance company is before us by way of this revision petition. There is no dispute on the facts involved in this case. It is an admitted case that the vehicle in question had been purchased by the complainant and got transferred in his name by 31 -10 -2006. It is also not in dispute that the complainant did not apply to the insurance company, at any time prior to 28 -01 -2007 for transfer of the insurance policy, which the previous owner of the vehicle had obtained, in his name. Thus, on the date the vehicle met with an accident, there was no insurance cover in respect of the vehicle in the name of the complainant though there was an insurance cover issued in the name of the previous owner of the vehicle.

SECTION 157 of the Motor Vehicle Act which provides for deemed transfer of the certificate of insurance 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 with effect from the date of its transfer. ''''

The above referred Section came up for consideration before the Apex Court in Complete Insulations Pvt. Ltd. Vs. New India Assurance Co. Ltd., (1996) 1 SCC 221 and the following view was taken; ''''There can be no doubt that the said chapter provides for compulsory insurance of vehicles to cover third party risks. Section 146 forbids the use of a vehicle in a public place unless there is in force in relation to the use of that vehicle a policy of insurance complying with the requirements of that chapter. Any breach of this provision may attract penal action. In the case of property, the coverage extends to property of a third party i.e. a person other than the insured. This is clear from Section 147 (1)(b)(i) which clearly refers to ''''damage to any property of a third party '''' and not damage to the property of the ''insured '' himself. And the limit of liability fixed for damage to property of a third party is Rupees Six Thousand only as pointed out earlier. That is why even the Claims Tribunal constituted under Section 165 is invested with jurisdiction to adjudicate upon claims for compensation in respect of accidents involving death of or bodily injury to persons arising out of the use of motor vehicles or damage to any property of a third property so arising, or both. Here also it is restricted to damage to third party property and not the property of the insured. 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 risks 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 certificate of insurance to be issued in the prescribed form must, therefore, relate to third party risks. Since the provisions under the New Act and the Old Act in this behalf are substantially the same in relation to liability in regard to third parties, the National Consumer Disputes Redressal Commission was right in the view it took based on the decision in Kondaiah case because the transferee -insured could not be said to be a third party qua the vehicle in question. It is only in respect of third party risks that Section 157 of the New Act provides that the certificate of insurance together with the policy of insurance described therein ''''shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred ''''. If the policy of insurance 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 present case, since there was no such agreement and since the insurer had not transferred the policy of insurance in relation thereto to the transferee, the insurer was not liable to make good the damage to the vehicle. The view taken by the National Commission is, therefore, correct. ''''

ANALYZING the provisions of the Section 157 of the Motor Vehicle Act in the light of the above referred decision, this Bench in Revision Petition No.3001 of 2008, United India Insurance Co. Ltd. & Ors. Vs. Deepak Mathur & Anr., decided on 22 -07 -2014 inter alia held as under: ''''8. It would, thus, be seen that as far as the provisions of Section 157 of the Motor Vehicles Act are concerned, the same would apply only in relation to the liability of the insurance in relation to a third party. As far as liability of the insurance company to the insured is concerned the same would continue to be covered by the contract of policy between the insurer and the insured. This legal position was made quite clear by the Apex Court when it said that ''''If the policy of insurance 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 our opinion, since the insurance policy is nothing but a contract between the insurer and the insured, the insurance company, in a case of theft or damage to the vehicle, which does not involve a third party right, would be liable to pay only to the insured and not to the transferee of the vehicle in a case where the transferor did have an insurable interest in the vehicle at the time the insurance policy was taken as well as at the time the loss took place. If, however, the insured did not have such an interest in the vehicle at the time the policy was taken as well as at the time the loss occurred, he would not be entitled to any payment from the insurance company. In that case, the transferee would have a right qua the insurance company provided he had got the insurance transferred in his name or had at least applied for such transfer or he has executed an independent contract of insurance with the insurance company. If the transferor chooses to obtain insurance, despite having no insurance interest in the vehicle subject matter of the policy, he has to blame only himself since he cannot be a proxy for the owner of the vehicle in the matter of obtaining an insurance policy. The transferee, when he becomes the owner of the vehicle must necessarily apply to the insurance company to transfer the insurance policy in his name. In the alternative, he can take his own independent insurance policy form the same or some other insurance company. But, if the insured had an insurable interest in the vehicle, at the time the policy is taken as well as at the time the vehicle gets stolen or damaged, he would be entitled to have a claim against the insurance company. ''''

THIS issue also came to be considered by another Bench of this Commission in Revision Petition No.3597 of 2008, The New India Assurance Co. Ltd. & Anr. Vs. Akbar, decided on 16 -01 -2014. In the aforesaid case, the vehicle in question was purchased by the complainant on 16 -01 -2006. He requested the insurance company to change the policy in his name for the period of one year from 18 -06 -2005 to 17 -06 -2006. The vehicle, however, was stolen in the night intervening 5/6 -02 -2006. The claim having been declined by the insurance company, the matter was taken to the concerned forum and ultimately reached this Commission by way of the above referred revision petition. Relying upon the decision of the Hon ''ble Supreme Court in Complete Insulation (P) Ltd. (supra) it was held that the insurance company was not liable to pay to the complainant. During course of the hearing the learned counsel for the complainant referred to an earlier decision of this Commission in Narain Singh ''s case reported in 2008 (1) CLT 46 (NC) holding therein that in view of the India Motor Tariff Regulations the benefits under the policy automatically accrues to the new owner on transfer of the vehicle. It was noticed by this Commission that the aforesaid regulations were applicable only upto 30 -06 -2002, new Regulations had come into force from 01 -07 -2002 and under the new Regulations the complainant was not entitled to indemnification from the insurance company. Reliance in this regard was placed upon another decision of this Commission in Madan Singh Vs. United India Insurance Co. Ltd., (2009) CPJ 158 (NC). A similar view was taken by this Commission in Revision Petition No.2355 of 2012, Sandeep Gupta Vs. United India Insurance Co. Ltd. & Anr., decided on 14 -02 -2014.

IN the case before us, though in view of the mandate of Section 157 (2) of the Motor Vehicle Act, the complainant was required to apply to the insurance company within 14 days of purchase of the vehicle, for transfer of the certificate of insurance in his name, admittedly, no such application was made within the aforesaid period. Consequently, there was no policy of insurance in respect of the aforesaid vehicle in the name of the complainant, on the date the vehicle was stolen.

A policy of insurance is nothing but a contract between the insurer and the insured whereby the insurer, in consideration of the premium received from the insured, undertakes to indemnify the insured in case of loss of or damage to the vehicle subject matter of the insurance policy. In the absence of such a contract, the insurance company cannot be held liable to indemnify the owner of the vehicle which is lost or gets damaged. Considering that under Sub -Section (2) of Section 157 the transferee can apply for change of the insurance policy in his name within 14 days of the purchase of the vehicle, the insurance company in our view would be entitled to indemnify the transferee of the vehicle, in a case where the loss/damage takes place within 14 days of the purchase of the vehicle by him. This view is premised on the statutory provision which gives 14 days '' time to the transferee to seek transfer of the insurance in his name, considering that it may not be possible for him to seek such a transfer immediately on purchase of the vehicle. However, in the case before us since the complainant did not apply for transfer of the insurance policy in his name at any point of time within 14 days from the purchase of the vehicle, no benefit from the aforesaid interpretation accrues to him.

FOR the reasons stated herein above the revision petition is allowed and the impugned order dated 17 -10 -2008 of the State Commission and the order dated 26 -04 -2008 of the District Forum are set aside. No order as to costs. The amount which the petitioner -company had deposited in compliance of the interim order of this Commission is directed to be refunded to the petitioner along with interest, if any, which may have accrued on it.