United India Insurance Co. Ltd. vs RAMESH CHAND KHATRI

THIS appeal is directed against the order of the learned District Forum, Bharatpur dated 9.3.1995 in Complaint Case No. 404/1994 whereby the complaint filed by the respondent has been decreed. The appellants have been directed to pay a total amount of Rs. 46,106.37 along with interest @ 18% p.a. with effect from 23.6.1994 till payment and also to pay Rs. 500/- as cost of litigation to the respondent.

FACTS relevant for disposal of this appeal in brief are that Truck No. RRD 9606 was owned by one Shri Zakir Hussain who has got it comprehensively insured with the appellant Insurance Company for the period from 6.6.1991 to 5.6.19922. The said truck met with an accident on 24.3.1992 about which an FIR was lodged with Police Station, Shahpura whereby FIR No. 112/1992 was registered with Police Station, Shahpura. The respondent-complainant ap-proached the learned District Forum with a case that he had purchased the aforesaid vehicle from its owner Shri Zakir Hussain on 26.3.1992 and earlier to it, he was an attorney holder of Shri Zakir Hussain. On the basis of the accident which occurred on 24.3.1992 a survey was conducted by the Insurance Company and the Surveyor gave his report on 27.3.1992. The respondent-complainant after the survey; got the damaged vehicle repaired spending an amount of Rs. 65,000/- and presented a claim before the appellant Insurance Company under the policy. The appellant repudiated the claim and hence the present respondent and earlier owner Shri Zakir Hussain filed a joint complaint bearing No. 436/1993 before the learned District Forum, Bharatpur. The District Forum dismissed the complaint holding it as premature by observing that the respondent had no right to maintain the claim as on the date of the accident i.e. 24.3.1992, Shri Zakir Hussain was the owner of the truck. It appears that thereafter on the basis of purchase of vehicle by the respondent from Shri Zakir Hussain, the appellant Insurance Company finding that registration of the vehicle has been changed in favour of the respondent, Shri Ramesh Chand Khatri as requested by the original owner and the buyer i.e. present respondent; changed the policy in question in favour of the respondent, Shri Ramesh Chand Khatri after accepting the transfer fee of Rs. 150/- vide Receipt No. 229784 dated 13.5.1992.

The respondent-complainant thereafter filed the present complaint before the District Forum on 23.6.1994 which was contested by the appellant by filing a written version but was decreed as stated earlier.

WE heard the learned Counsel for the respective parties at great length and examined the material available on record carefully. From the facts as evident from the record it is not in dispute that the vehicle in question met with an accident on 24.3.1992 during the currency of the policy in favour of the earlier owner Shri Zakir Hussain. There is no material on record that the vehicle in question was sold to the present respondent, Shri Ramesh Chand Khatri before 24.3.1992 i.e. the date of accident. In fact it was sold on 26.3.1992 i.e. 2 days after the accident in favour of the respondent. On the basis of these facts, it has been vehemently argued by the learned Counsel for the appellant relying upon the decision of Hon''ble the National Commission in K. Rajagopal v. National Insurance Co. Ltd. & Anr., I (1995) CPJ 239 (NC), and the decision of Hon''ble the Supreme Court in the case of M/s. Complete Insulations (P) Ltd. v. New India Assurance Co. Ltd., (1999) NCJ (SC) 325, that the respondent had no insurable interest in the vehicle on the date of the accident i.e. 24.3.1992 and hence the learned District Forum has committed an error in decreeing the claim in favour of the respondent. It has, therefore, been urged that the impugned order be quashed and appeal be allowed. As against it, the learned Counsel for the respondent has supported the findings arrived at by the learned District Forum. We have given our thoughtful consideration to the controversy raised in this appeal. The sole question to be determined in this appeal is whether respondent-complainant, Shri Ramesh Chand Khatri had an insurable interest in the vehicle in question on the date of the accident i.e. 24.3.1992 ?

AS has been pointed out in the beginning, the vehicle in question met with an accident on 24.3.1992 and it was sold by the previous owner in favour of the respondent, Shri Ramesh Chand Khatri on 26.3.1992 i.e. 2 days after the accident. Hon''ble the Supreme Court while examining the implications of Sections 94, 95 and 103-A of the Motor Vehicles Act, 1939 (old Act) and Section 157 under Chapter XI entitled ''Insurance of Motor Vehicles against the III Party Risk'' comprising Sections 155 to 164 specifically referring to Section 157 of the New Act observed that : "When the order of the vehicle in relation whereto a certificate of insurance is issued transfers to another person the ownership of the motor vehicle, the certificate of insurance together with the policy described therein shall be deemed to have been transferred in favour of the new owner of the vehicle with effect from the date of transfer."

Further, Hon''ble the Supreme Court while referring to the decision of Hon''ble the High Court of Andhra Pradesh in Madinani Kondaiah & Ors. etc. v. Yassen Fatima & Ors. etc., AIR 1986 Andhra Pradesh 62, and relied upon by the National Commission held that : "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 used in the prescribed form (See form 51 prescribed under Rule 141 of the Central Motor Vehicles Rules, 1989) 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''s 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."

The aforesaid elucidation of law by Hon''ble the Supreme Court leaves no doubt whatsoever in coming to the conclusion that in the present appeal, the respondent, Shri Ramesh Chand Khatri had no insurable interest in the policy more particularly in respect of damage caused to the vehicle in the accident which took place only on 24.3.1992 i.e. before the vehicle was purchased by him from the previous owner. Further, there has been no agreement between the insurer and transferee to claim other risk as well e.g. damage caused to the vehicle of the insured himself, since that would have been a matter falling outside Chapter XI of the Motor Vehicles Act, 1988 (New Act). In any view of the matter, since the insurer i.e. the appellant Insurance Company had not transferred the policy of insurance in relation to the damage caused to the vehicle of the insured himself; the appellant Insurance Company is not liable to make good any damage to the vehicle consequent upon the accident which took place on 24.3.1992 i.e. before 2 days of purchase of the vehicle by the present respondent as also on account of the transfer of policy in his favour on 13.5.1992; i.e. after the accident.

IN view of above, our answer to the question posed above is in the negative and it is held that the respondent, Shri Ramesh Chand Khatri had no insurable interest in the vehicle in question which met with an accident on 24.3.1992 i.e. before he became its owner. Accordingly, the appellant INsurance Company is not liable for any loss whatsoever caused to the vehicle in question which met with an accident on 24.3.1992. The conclusion of the learned District Forum, therefore, has been erroneous and it has to be set aside.

CONSEQUENTLY, the appeal succeeds and the order of the learned District Forum, Bharatpur dated 9.3.1995 is hereby quashed with no order as to costs. Appeal allowed.