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1997 DIGILAW 722 (KAR)

S. M. YAHAYA v. PUSHPA BAI

1997-12-11

CHANDRASHEKARAIAH

body1997
CHANDRASHEKARAIAH, J. ( 1 ) THE legal representatives of one late Sri Shanthilal, filed a claim petition claiming compensation for the death of late shantilal before the motor accident claims tribunal. The tribunal on assessment of the evidence has awarded a sum of Rs. 1,85,000/- together with interest at the rate of 6% per annum as compensation. The tribunal after quantifying the compensation absolved the liability of the insurance company of satisfying the award holding that the insurer is entitled to avoid the liability against third party risk on the ground that the insured has sold the vehicle covered by the insurance policy before the date of the accident. Aggrieved by the order and award passed by the tribunal, the original owner Sri S. M. Yahaya has filed this appeal. ( 2 ) THE appellant has raised several contentions in the appeal. But at the time of arguments, learned counsel for the appellant restricted his a rgument only to one point, that is,"whether the insurer is entitled to avoid its liability against the third party risk on the plea that the insured had sold the vehicle covered by the insurance policy before the date of accident"? ( 3 ) SRI B. V. Acharya, learned senior counsel submitted that on transfer, the policy will not lapse and consequently the composite policy covering the risk of third party continues till the transferor discharges the statutory obligation as provided under the Motor Vehicles Act, 1939 (for short, 'the act of 1939' ). ( 4 ) IN reply to the said contention, Sri O. Mahesh, learned counsel for the insurance company submitted that under section 103-a of the Act, 1939, the insurer could refuse to transfer the policy and the transfer was not automatic and therefore in the absence of the transfer of policy to the transferee of the vehicle, the insurer is entitled to avoid the liability against third party risk. ( 5 ) IN order to appreciate the above said contentions, it is necessary to refer to the facts of the case. Maruti car bearing No. Cax 6286 was insured with the new India insurance company limited by the 6th respondent for the period from 10-9-1987 to 9-9-1988. The said vehicle was sold by the 6th respondent to the appellant on 25-5-1988 for a sum of Rs. 55,000/- and delivered the ear to him on the same day. Maruti car bearing No. Cax 6286 was insured with the new India insurance company limited by the 6th respondent for the period from 10-9-1987 to 9-9-1988. The said vehicle was sold by the 6th respondent to the appellant on 25-5-1988 for a sum of Rs. 55,000/- and delivered the ear to him on the same day. The accident occurred on 27-5-1988. The policy is a composite policy covering the risk of third parties. On these fact, the question that arises for consideration is. Whether the insurer could avoid its liability on the ground that there was no transfer of policy from the transferor to the transferee of the vehicle on the date of the accident? ( 6 ) THE accident which gave rise to the cause of action to claim compensation, occurred prior to the Motor Vehicles Act, 1988 (for short 'the act of 1988' ). Chapter-vii of the act of 1939 provides for insurance of motor vehicles against third party risk. Section 103-a of the Act, of 1939 provides, that where a person in whose favour certificate of insurance has been issued proposes to transfer to another person, the ownership of t he motor vehicle in respect of which insurance was taken together with the policy of insurance relating thereto, he may apply to the insurer for the transfer of certificate of insurance in favour of the person to whom the vehicle is proposed to be transferred and if within 15 days of the receipt of the application by the insurer, the insurer has not intimated the insured and such other person his refusal to transfer the certificate and the policy to other person, the certificate of insurance 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. ( 7 ) SECTION 157 of the act of 1988 is also analogous to Section 103-a of the old act. The only difference between Section 103-a of the old act and Section 157 of the new Act, is that under the old Act, the insurer may refuse to transfer the policy on the grounds specified under sub-section (2) of Section 103-a of the Act, 1939 whereas, in the act of 1988 no right is conferred on the insured to refuse transfer of the policy in favour of the transferee. ( 8 ) SECTION 103-a of the Act, 1939 requires an intimation to the concerned authority even before proposing to transfer, i. e. , even before the transfer is effected. But this itself will not take away the liability of the insurance company in respect of third party is concerned just because no intimation is given as required under Section 103-a of the Act, considering sections 29-a, 31 and 94 of the Act, 1939. ( 9 ) THIS point has been elaborately considered by the full bench of the Andhra Pradesh high court in the case of Madineni Kondaiah and others v Yaseen Fatima and others. The full bench of the Andhra Pradesh high court has held as follows: (paras 47 and 50)"47. Any prudent purchaser should take steps to get the policy transferred to him under Section 103. The insurer is bound to accept the transfer and can only refuse to consent on specified grounds. It is clearly an impracticable view to take that on passing of property in the vehicle, the policy lapses and the obligation under Section 94 of the act ceases. In fact as observed by Supreme Court the policy is to the vehicle and hence normally it should run with the vehicle. It is just to expect a reasonable time for the transferor to make the necessary arrangement to notify the transfer under Section 31 and secure the certificate under Section 29-a within the time mentioned in those Provisions. If this is not allowed, the moment the vendor receives the money and puts the vehicle in possession of the transferee, the latter is not in a position to use the vehicle in view of Section 94 till a fresh policy is obtained. He cannot take the vehicle to his house passing through any public place. When the transferor is liable to pay penalty under Section 31 and also liable to be prosecuted under Section 112 for not notifying the transfer, we are clearly of the opinion such statutory liability makes him to retain the insurable interest as the liability subsists till he discharges the statutory obligations. We disagree with the view expressed in 1972 (1) aplj 249 ". "50. The registration of the vehicle in the name of the transferee is not necessary to pass title in the vehicle. We disagree with the view expressed in 1972 (1) aplj 249 ". "50. The registration of the vehicle in the name of the transferee is not necessary to pass title in the vehicle. Payment of price and delivery of the vehicle makes the transaction complete and the title will pass to the purchaser. When the policy of insurance obtained by the original owner of the vehicle is composite one covering the risks for the person, property (vehicle) and the third party claim, on passing of title the transferee cannot enforce his claim in respect of any loss or damage to his person and vehicle unless there is a novation. So far the third party risk is concerned the proprietary interest in the vehicle is not necessary and the public liability continues till the transferor discharges the statutory obligation under sections 29-a and 31 read with Section 94 of the act. Till he complies with the requirement of Section 31 of the Act, the public liability will not cease and that constitutes the insurable interest to keep the policy alive in respect of the third party risks are concerned. It must be deemed that the transferor allowed the purchaser to use the vehicle in a public place in the said transitional period and accordingly till the compliance of Section 31, the liability of the transferor subsists and the policy is in operation so far it relates to the third party risks. We answer the second question accordingly". (emphasis supplied) ( 10 ) THE view expressed by the Andhra Pradesh high court in the above said decision was approved by the Supreme Court in the case of M/s. Complete Insulations (Private) limited v New India Assurance Company Limited. ( 11 ) THIS court in its unreported judgment in the case of New India Assurance Company Limited v Parvathamma and others, has followed the judgment of the Supreme Court and held thus. ( 11 ) THIS court in its unreported judgment in the case of New India Assurance Company Limited v Parvathamma and others, has followed the judgment of the Supreme Court and held thus. Even though there was transfer of the vehicle and the insurance policy is not transferred to the vendee, the liability of the transferor so far as third party risk is concerned continues till he discharges statutory obligations under sections 29-a and 31 read with Section 94 of the Act, policy would not lapse on transfer so far as third party risk is concerned and therefore, the insurance company is certainly liable so far as such risk is concerned though not in case the policy may have lapsed so far as the owner of the vehicle is concerned or any damages arising to the vehicle itself. ( 12 ) THE law laid down in the above said decisions is clearly applicable to the facts of this case. In the case on hand also though the vehicle was transferred on 25-5-1988, in favour of the appellant, the liability of the insurance company continued to subsist till the transferor discharges the statutory obligation under sections 29-a, 31 read with Section 94 of the act so far as the third party risk is concerned, as the policy would not lapse on transfer and therefore the insurance company is not entitled to avoid its liability. ( 13 ) FOR the reasons stated above, I pass the following order: the order passed by the tribunal is modified as follows. Respondent 8-new India insurance company shall satisfy the award passed by the claims tribunal. Since I have held that the insurance company is liable to satisfy the award, the amount deposited by the appellant in this court shall be refunded to the appellant. The appeal is accordingly disposed of no costs. --- *** --- .