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2011 DIGILAW 2901 (MAD)

National Insurance Co. v. P. Meena

2011-06-21

ARUNA JAGADEESAN

body2011
JUDGMENT :- 1. Being aggrieved by the order passed by the learned Deputy Commissioner of Labour-II, Workmen's Compensation Court-II, Chennai in W.C.No.266 of 2005 dated 20.03.2006, the appellant/Insurance Company questioning the liability to pay the amount has come forward with this appeal. 2. The respondents/parents of the deceased filed the claim petition seeking compensation of a sum of Rs.9 lakhs. 3. The deceased was working as a driver in a Maxi Cab van bearing registration No.TN-04-K-5785 belonging to the third respondent/Narasingaraj being covered by the insurance policy issued by the appellant/National Insurance company. The third respondent has purchased the vehicle from the fourth respondent Venkata Rao. Though RC book has been transferred in the name of the third respondent, the policy has not been transferred in his name. Therefore, the claimants/parents of the deceased have impleaded both the original owner/fourth respondent herein and the present owner. The deceased met with an accident when he was driving the vehicle from Puducherry to Chennai. Since the deceased suffered fatal injuries in the course of employment under the third respondent/Narasingaraj and as the policy stood in the name of the fourth respondent/the original owner, the claimants have claimed the compensation from both the respondents. 4. Admittedly, the vehicle was insured with the appellant at the time of accident. The Motor Accident Claims Tribunal came to the conclusion that the deceased died in the accident during the course of his employment and further, as the policy was in force at the time of accident insured with the appellant, the Insurance Company was directed to pay the compensation. 5. It was also held that since the policy was valid and in force on the date of accident, the Insurance Company cannot avoid its liability to pay compensation even though the insurance policy was in favour of the fourth respondent despite the transfer of vehicle from previous owner namely, the third respondent herein. In that connection, the learned Deputy Commissioner, Workmen's Compensation has placed reliance on the decision of the Karnataka High Court reported in Veeresh Vs. Siraj Ahmed & Others [ 2005 ACJ 1163 ]. 6. Mr.S.Vadivel, the learned counsel for the appellant/Insurance company contended that as the fourth respondent had transferred the vehicle in favour of the third respondent/Narasingaraj, there was no relationship of employer and the employee between the fourth respondent and the deceased. Siraj Ahmed & Others [ 2005 ACJ 1163 ]. 6. Mr.S.Vadivel, the learned counsel for the appellant/Insurance company contended that as the fourth respondent had transferred the vehicle in favour of the third respondent/Narasingaraj, there was no relationship of employer and the employee between the fourth respondent and the deceased. Since the vehicle was transferred by the fourth respondent in favour of the third respondent without intimating the same to the appellant insurer, the Insurance Company was not liable to pay the compensation as it is opposed to Sec.157(2) of the Motor Vehicle Act. 7. On the other hand, Mr.Velu, the learned counsel for the respondents/claimants contended that as far as the third party is concerned, the insurer is statutorily liable under the provisions of Sec.147 (5) of the Act. He would submit that this provision does not make any distinction between the person or classes of person whose risk is covered by the policy of insurance. The learned counsel for the respondents relied on the unreported judgment of the Division Bench of this Court in CMA.No.426 of 1997 dated 28.06.2005.The Division Bench of this Court, on making a reference to the judgment of the Apex court in Rikhi Ram vs. Sukhania [ 2003 (3) SCC 97 ] has held that whenever a vehicle covered by the insurance policy, transferred to a transferee, the liability of the insurer does not cease so far as the third party/victim is concerned, even if the owner or the purchaser does not give any intimation as required under the provisions of the Act. 8. In yet another decision , a single Judge of this Court in the case of New India Assurance Co. Ltd., Coimbatore Vs. Manimaran and another [2008 (2) TNMAC 137] when a similar question arose for consideration as to whether insurer was liable to compensate a claimant who was only a driver and not owner, observing that he is the third party in so far as the policy is concerned held that he can seek compensation against the insured and the insurer. 9. Manimaran and another [2008 (2) TNMAC 137] when a similar question arose for consideration as to whether insurer was liable to compensate a claimant who was only a driver and not owner, observing that he is the third party in so far as the policy is concerned held that he can seek compensation against the insured and the insurer. 9. From the reading of the provisions of sub-section (1) of section 157 of the Act, it is clear that in the case of transfer of vehicle insured with the insurer on its transfer, 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. No doubt, sub-section (2) of section 157 requires that within fourteen days from the date of such transfer, an intimation is required to be given to the insurer. However, sub-section (2) of section 157 makes it clear that such intimation is required only for the purpose of making necessary changes in the certificate as regard to the transfer. There is no provision which provides for any consequence on failure to issue intimation of transfer. If there is deeming provision of transfer of policy, in law, it is deemed to have been transferred. However, when question arises as regard to the liability, since necessary changes which are required to be made in the policy having not been made for want of intimation, the policy would continue in the name of the original owner. But that does not absolve the insurer from the coverage of risk of third parties. This aspect of the matter has been considered by Hon'ble Supreme Court in G.Govindan's case, 1999 ACJ 781 (SC), wherein the Supreme Court on interpretation on the provision of the Act has held that when the policy of insurance obtained by the original owner of the vehicle is composite one covering the risks for his 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 novation. So far the third party risk is concerned, the proprietary interest in the vehicle is not necessary and public liability continues till the transferor discharges the statutory obligation. 10. So far the third party risk is concerned, the proprietary interest in the vehicle is not necessary and public liability continues till the transferor discharges the statutory obligation. 10. The coverage of risk of the third party by the insurer does not depend on the effective changes to be made in the certificate of insurance and the policy, as the transferee may be the third party to the contract, the transferee may not be entitled to secure any personal benefit under the policy unless there is a novation, i.e., the insurance company, the transferor of the vehicle and the transferee must agree that policy must be assigned to the transferee so that the benefit derivable or derived under the policy by the original owner of the vehicle is transferred to the transferee. 11.The requirement of law is clear that if the transferee, either for his personal benefit or the property (vehicle) wants to make a claim, he can do so only if there is an effective transfer by necessary changes made in the policy. To this extent, the transferee may not be able to get the benefit of any claim for his personal or property loss. But as far as third party is concerned, irrespective of transfer of policy, the insurer is liable to indemnify the risk of third party. It is not dependent on the compliance of the requirement under section 157(2) of the Act and there is also no provision which restricts the liability of the insurer for want of necessary intimation insofar as third party is concerned nor any provision which indicates that in case of failure of giving intimation of transfer of vehicle to the insurer would result in absolving the insurer of the coverage of the risk. If there are no consequences flowing from non-compliance of the provisions, it cannot be said to be mandatory on the part of the transferee to make an intimation to cover the risk of the third party. What is statutorily fixed and what is statutorily made liable could not be dependent on the inaction on the part of transferee in giving the intimation. 12. What is statutorily fixed and what is statutorily made liable could not be dependent on the inaction on the part of transferee in giving the intimation. 12. In similar circumstances, the Division Bench of this Court in the unreported judgment in CMA No.426 of 1997, placing reliance on the three-judges Bench of the Hon'ble Supreme Court in Rikhi Ram vs. Sukhania [ 2003 (3) SCC 97 ] held that whenever a vehicle, which is covered by the insurance policy is transferred to the transferee, the liability of the insurer does not cease so far as third party is concerned, even if the owner or the purchaser does not give intimation as required by the provision of the Act and therefore, the Insurance Company cannot escape its liability from paying the compensation. It is not in dispute that the vehicle belonging to the third respondent is insured with the appellant and it is also not in dispute that the fourth respondent has transferred the vehicle in favour of the third respondent, however, there is no material to show that intimation of the transfer was given to the insurer. 13. Sec.147 o f the Motor Vehicle Act deals with requirements of policy and limits of liability. What is disputed is that there is a transfer of vehicle from the fourth respondent to the third respondent and as such, there is no relationship of employer and employee between the fourth respondent and the deceased. If the deceased being the third party to the contract, in case of a claim of the third party, Sec.147(5) of the Act statutorily fixes the liability on the insurer issuing a policy to indemnify the person or classes of person specified in the policy. In this case, as regard to the coverage of the deceased as an employee, he being the driver of the vehicle the insurer has collected premium and that is not in dispute. Notwithstanding anything contained in any law for the time being in force, an insurer is liable to indemnify the person or classes of person specified in the policy, in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. 14. Notwithstanding anything contained in any law for the time being in force, an insurer is liable to indemnify the person or classes of person specified in the policy, in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. 14. In view of the provisions of Sec.157 read with Sec.147(5) of the Act and the decisions of the Hon'ble Supreme Court and this Court stated supra, I am of the opinion that the insurer is liable to pay the compensation to third parties even in the absence of intimation of transfer of vehicle by the transferee to the insurer. Accordingly, the Civil Miscellaneous Appeal fails and the same is dismissed. The compensation awarded by the Deputy Commissioner of Labour-II, for Workmen's Compensation is hereby confirmed. The claimants are entitled to a sum of Rs.4,36,571/-with proportionate interest. The appellant/Insurance Company is directed to deposit the balance amount if any less the amount already deposited by them. On such deposit being made, the claimants are permitted to withdraw the award amount with proportionate interest after giving credit to the amount already withdrawn by him if any. Consequently, connected Miscellaneous Petition is also closed. There shall be no orders as to costs.