Motor Vehicles Act,1939

[Cites 10, Cited by 0]

Law Commission Report

Motor Vehicles Act,1939

'ONE HUNDRED AND SIXTH HEIGHT

SECTION' 103:1, MOTOR VLIIEICLEIS }lCT,1939;

ia'2*--mrr U." 'nu».;.:.j; .7 W ~. .2:/i'«.-n; VEIIICLII OP: j{P:SU1<.~HC}3

NOVEMBER, 198k.



J|.lBt1CO KoK. Mathew D.0 'No. 1: _2( 7 )//8)'A__',n '

Dated, the Koth Huur. .1984.

My dear Minister,

I am forwarding herewith the One Hundred and
Sixth Report of the Law Commission on "SECTION 103A,
MOTOR VEHICLES ACT, 1939: EFFECT OF TRANSFER CF A
MOTOR VEHICLE ON INSURANCE." The subject was taken

up by the Law Commission on its own.

The Commission is indebted to Shri P.M.Bakshi,

Part-time Member, and Shri A.K.Srin1vasamurthy,

Member-Secretary, for their valuable assistance in

the preparation of the Report.

With regards,

Yours sincerely,

's,

\C' -.»/t//''

kg
( K.K. Mathew)
r' ( X '

Shri Jaganneth Kaushal,
Hon'ble Minister of Law
and Juohice,

New Delhi.

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Importa-
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CHAPTER I
INTRODUCTORY

1'1- Thiﬁ "GP0rt deals with a point which is of direct

relevance to the cause of social Justice. Briefly, the
issue to be dealt with i3 this: when the ownership of a
motor vehicle is transferred, does the transferee also
become vested with ownership of the benefits under the
policy or insurance relating to the motor vehicle or if
not does the law sLiud in need of reform?

1.

2. the subject needs to be considered at some length, because The matter is or some practical importance, and the present law does hut achieve full Justice. The threads ui QJHL1UVuJb, HJVU uumuh0W got entangled; and if one is to have u cLeuP picture of the law on the. subject, one has to bear in mind1severa1 aspects relevant to the transfer of a motor vehiclei By reason of the complicated nature of the legal position, the interests of social justice havn suffered seriously, in the context UL compensation for accidents J caused by motor vcnicieo.

of ef,t'e.<c;ti.\-"u 1.\-a,:=.:"

In view of the importance of the matter, the Law Commission has taken up the subject of its own. 1.3. The Law Commission had prepared and circulated on the' 4 subject a Working Paper for inviting the opinion of interested Points made in the comments on the work- 5 At this stage, persons and bodies.

ing Paper will be referred to, in due course. it may be mentioned that comments have been received from the following :-

1. Chapter 2, igggg;

2. Chapter 3. gﬁﬁgg;

3. see Purugreph 2.14 infra,

4. Law Conmiceion of India, Working Paper on section 105J Motor Vehicle Act, 1939; effect of trane er or a motor Vehiclc on insurance1315t WOY 793":-

5. All comments received upto €2+3b-Hay-198#) the signing oi this Report have been covered.

-\.1 \,I ..~.s.r

- --A1062/"'

1. 180 2;

4.

(a) Govarn$ent of India in the appropriate ldulstry,

(b) The Controller of Insurance, Goveznment 1a of India, Department of Insurance, (C) three State Governments.

(d) five High Courts, and

- 3

(e) ona lawyer': association (Incorporated Law of Sociafylcalcutta) 4 Comments received will be dealt with later.

Law Commission File No.F.2(7)84-L.C; 8.No.3 (ﬁﬂnistxy of Shipping and Transport, Transport Hing).

Law Commission File No.F.2(7)/84 L.C. letter oi the Controller of Insurance dated 28th Augugt, 1984.

Law Commission File No.2(7)/84-L.C. S.No. 6, 8 and 9.

Law Commission File No.F.2(7)/84-L.C. SoN0- 3, #, 10 uni 11 and Law Commission's File No.P'g2(1)8z'"[JC|' SgiV10O1h'O Law Commission File No.F.2(7)/84-L.C., S«N0o

5. Ch ptur &, 5nVra.

onocoaf"

nae.

ItI8'lf H00 0 CHAPTER 2 THE PRESENT LAW 2.1. There are three important chronological stages relevant to the issue now being considered The meat convenient Course would ie to state the present law with reference to each of these three stages. 2.2; The first stage is the transfer of the ownership 01 the motor vehicle from the previous owner to the subsequent owner. This utoge is primarily governed by the sale of Goods Act. As a matter of the law governing tho sale of goods, ownership of the motor vehicle may pass to the purchaser-at the specified time. However, the more Iuui. "K3,:-at '.=~': Li ii-1h'

- ;r:uctiuely achieved for 1 purposes oi the genoxal lad dﬁuq not solve the question now under consideration, which relates to the transfer of insura-- Transfer of property in the vehicle does not, in itself, carry a transfer of inggggggg in favour of the purchaser of the vehicle.

2.5. the uéuuud oi is represented by transfer of the registration certificate of the vehicle in favour of the transferee. This Stage is important from the point of View of the administrative provisions of the Motor Vehicles Act. But, here again, the transfer of registration does not, in itselt, transfer the benefit of insurance of the vehicle to tho transferee. The mere fact that the registration of the Yohiole was transferred to the transferee may not, in itself, justify the conclusion that the policy also stood transferred to the transferee. This, at least, is the View of the Madhya 2 3 Pradesh and the Rajasthun ﬂigh Courﬁi diaaenting from the '.4.

1. Paragraph 1.1, gggggg

2.' G arsilal v. i'gi1§;§% xi A-I-R~ 9 3 '1opI

3. Motor Ownersﬂ insurance Co. V. Khetpal Sigqﬁg A.i.n. 1983 R53. 85 (Hay).

ﬂllﬁlot of ,§.'''' for rials-

On.

otion 31) ~z 4 '-0 Calcutta View on the subject?

2'4' C°"5tFU1n8 Bﬂction 31 gr the Motor Vehicles Act: 1939, the Urissa High Court has held as under 3- (8) The pzovioionn of the Act have nothing to do with the ownership of a motor vehicle. They Provide only for regulation of the use of the motor vehicles in public places.

(b) The certificate of registration is not a docu-

NUUL UL title, but it is a piece of evidence to show the owner of the vehicle, who is liublu to pay taxes and to perform the duties and obligations under the Act. There is nothing in i_,iL_-- .'.~/L Lu J_..L}.iv'(ite Lfimt it .13 the T6315- tered Owner who shall be liable to pay compen- V sation.

2.5.' Conversely, a change of registration under oection 31 of the Motor Vehicles Act is not a condition orecedont to ite transfer of ownership of the vehicle. Section 31 Wﬂip', imposes, both on the transferor and on the trausxzree, tho obligation to notiiy the transfer. Nou~cvmp1ianoe with it would not, however, invalidate the transfer as such, which has already taken place.

2.6;

the issue under discussion is the formal transfer of The third chronological stage relevant to the insurance benefit to the transferee. It is only when such a transfer is effected that the transferee of the motor vehicle gets the benefit of insurance.

Consequentially, for any injury caused by any accident 1, Biggggggg v. Hashi Rashi Danerjgﬁg A.I.R. 1955 E31. 5553.

2. Panda v. Premlata Choudhunxn A-I-R- 1980 Orlﬁsa 1b2f"xc71ou ng Orissa 166.

o..' 41010005/~ in the course of the driving of th. vghgglg by th. transferee or his servant, the injurud pgrggn ¢.nn¢g make any claim against the insurer Eororo the insurance policy is formally transferred as above;

3-7» Vhiu uuuiuiuu Uliuud because the majority of High Courts have taken the view that upon the transfer of ownership of a vehicle, the insurance policy comes to an end, and, in the absence of $ stipulation to 'ﬁtlza contrary, the benefit of the policy is not availa- hie to the trarxsferee without an express agreement with the insurance cumpazly. Of the numerous rulings tak- ing this view, some are referred to in the rootxxozea. 2.8. The Andhra Pradesh High Court is the only one that takes a different view on the subject;

1; Oriental Fire & General Inaurancn Cg, v. 1;gg;_ﬂg;.

0 0 o C 2' Uni ed Indi Fire & Genar Insuranc Ca V ' g&am*7.a"'%'i . 92 r

3. Ngtional Insurance Co. v. T e 11 Ra an, 0 Q Q 3 | 9;

4; Gx%r§i;2; V- £%ﬂQ$%E§£E£E§§EEL£MD2Ia A0 0R9 1965 M0 0 1 O

5.' (a) M, Bhoogathx V. M.B V1 a akshm 9 . Q 3 U ladﬂ C bll R,'mi.K.MVPa.nan1 ' 'x%1m%n:-3-?s~:erém:d"17rw+9aa--w€-r. . . .'«e2>

(d) south India Insurange Co. V. §£§.L§.._..o A.I.R. @971 Had. 3R7.

6. P.K. Pandg v. Pr malat Choudhu , A.IgR§ 980 Orissa 020

7. (a) Automobiles Trans 0 R asthan Pvt L v- __e_*~.~:r_z»,:--3..» - - - - °' (13) P£1Lh:XU(3f;\fAj_ V. Gurbaksh 5111?}, A-oIoR- 1973 R33. 31'! its apparen y no good 18"! HW-

(c) Motor Owners' Insur ca Co. V. Khetnal Si: 119 """f"A_ f1'.""19 3 a . 3 day review cases . See also paragraphs 2.9. to 2.139 .5.-ll§1..'§.:.

3, 11;.__~',§; 'E;19tsuux' Gama, CCIOIICB/1

-88:-

2-9. ;L is not as if the Ibtor Vehicles Act is totally silent on the subject, In 1959' the Act was amended by inserting, in the Act, section 103A which 13 1ntended to deal with the procedure to be followed for thg transfer of an insurance certificate and toe policy or insurance; The gist of the section may thus stated :-

(i) The transteror of a motor vehicle must apply in the prescribed form to the insurer for the transfer or the certificate or insurance and of the policy, in favour of the transferee.

(11) Within fifteen days, the insurer must intimate to the transferor and the transferee the refusal, if any, to the transfer the certificatelthe pclicy.

(iii) If no such intimation of refusal is given to both such persons within fifteen days, 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 Lug date of the transfer.

(iv) On reiusal by the insurer, the insurer is bound to refund to the transferee the amount, if any, which, under the term of the policy, he would have had to refumi 1.,» k.Eu_. jur1»m:=I, 1.8. km: 'tI'aJ1:3£"::rCsI', for U13 unexpired term of the policy.

2.10; However, sgction 103A of the Motor Vehicles Act summarised above, is not comprohonsivc enough on the subject of effect of transfer or vehicle on the policy. For examyic, it leaves out cases where no

1. Paragraph 2.9, sugra, '-I73...

intimation of transfer is given to the insurer. The h3rd3h1P reﬁulting from the present state of the Law is apparent from the state of the cues 12w. It has been specifically pointed out in a Kerala cage, to which we shall have occasion to revert later.

2.11. It has been specifically held in Kurnataka that the insurer can raise the objection that the policy of insurance lapses on the transfer of a vehicle without notifying the insurer in the prosoribzd form under section 103A of the motor Vehicles Act:

2.12. It would, them, seem, that according to the View or most High Courts, the policy of insurance is effe-

ctively transferred to the transferee of a motor vehicle only on compliance with the formalitigs prescribed by section 103A oi' the isotul' Vehicles Act.

2.13. This is also the English law, as staged b) Goodard J. and confirmed by the Court of Appeal. In fact, in one 01 the decisions of the House of Lords reported in 3.1. -J'_ ,}:t!L.,'1;.1:;.h.,1-. .i._.;1 i,,'.;«- xi»-£3Cd h1{3.'.3€:lf L1l11»'J3 "Lo us this policy dcpuudﬂ upon the hypothesis that there is, in fact, an insured car. When once the car, which is subject of this policy, is sold, the owner's rights in respect of it cease and the policy so for as the car is concerned is a an end."

1. Chapter Paragraphs 2.14 and 2.15,;g§§§;

2. ﬂgtiouu; Insurggcg_ggl'LtdL V. Thekke 11 Ra an

3. Earaurﬁvh 3-": lﬂ£§§;

4, Unite; gydia rizo Q General Insurance Cc.Ltd. V-

Chennanima, A:I.R:'1982 Kur 1.

5. For the gist of section 105A, see paragraph 2.9. supra,

6. Peters v. General Accident & Life Assurance Cor n """'1j{ﬁ , (1g3'a")"2' 5'11" If ', ﬁ,'''2'6'7 ;' aw mes . A. ) .1 7: Ho erson vs Scottish Automobiles gtcg Insurance Co, I " ' ' ooc_' (1931) All E.R. Rep. 006 (K.L.).

ouonoocal' ~: 8 z-.

2°74- 19: Lwillivu Li stated ubove may be technically correct in law, but it causes serious practical anoma- liea, and even injustice. Take the case of ;tha trans~ three of the motor vehicle. Until the formalities Prﬁﬂcribed by section 103A of the Motor Vehicles Act are completed, the transferee has no protection in the nature of inouruuce. lhc premium towards the policy may have been paid in iull L; the irunsferor (for the relevant period), but its benefit does not travel to the transferee. Vested with the ownership of the vehicle, and acquiring use of the vehicle and control over it, the transferee becomes subject to all the rinks that such ownership, use and control usually involve. This includes the risk of an accident, for which the transfe- ree must pay compensation if someone is injured or killed. And yet, the transferee can recover nothing from the insurer, even though the policy covers third party liability, and is a subsisting one. This is anomaloua.

2.15. The anomalies caused by the present position regarding the effect of trunurer of a motor vehicle with- out transfer of the policy become apparent when one takes actual cases. In a Punjab casi, the trensreror, who had transferred the motor vehicle, did not make any application for transfer of the insurance certificate. Tho transferee applied for transfer of the certificate on the 31st January, 1970, but, before that data; an accident took place on the Zhth January of the same year. The accident took place after the transfer of ownership, but before the transfer of insurance. It W85 held that W _ _ , »u¥§n. ...... -

.~ 1-' ,1 - ~..... ..

1| -' *' ,.' 4." - r .;....A..!.....:.

2 U:-.ic.~:«;. _;;.3-;.1....e9.SuranCe V- ' :3i,1'tw{Q.£. .1, '.H. 1981 P & H 153- ........9/-

no the transferee was not éntitled to indemnity from the insurance company in respect of the accident Thus . . , the transferee, even thmnvh he may incur liability towards third parties. does not [-91, the benefit of the policy.

This seems highly anomalnus. It is true that the transferee has not paid the premium, and therefore °«'-'JlWt fwl <'...1~ieve<i1. but it is to be remembered that at luusi; :;u..~;: 3,~::3';5o11 (the transferor) has paid the pre- mium. LQACJVLL, it is qwlte likely that the parties would hJV¢ f'H¢n the plrmium into account in fixing the consideratiuu.

2.16. brow the yoint uf View or the victim of an acci- dent caused by 9 motor vehicle, again the present po:1't:~ ion causes serious hardship. Under the Motor Vehicles Act, th; visiim can CNfwlCQ the liability arising from such accident, not only LQJj4aL LH3 driver of the vehicle, but also against the insurer who has accepted third party risk. But 'this beneficial zschame may come tcffmstratad if the ecc3'.c!:>r29; r.»r:c;-.n.~---. n1't,.:z- Lhe Lr»:msi'e~.r of the oxmex'- :5}-11> of. L,-;;, ,. 1 J ., -.,..,«.,.3.:'.'''..-&» of the .{'un:2;;- litieb pf€LULih-d L; . *3 4 xwjk or the Rotor Vehicles Act. This has been nohicgd in u Hajasthan case, to which we shall refer later.

" 1° " CHAPTER} NEED FOR REFORM

3.1; In the light of the last Chapter, thg prggtnt position does not appear to be satisfactory. It cauﬂes 1ﬂJU3tice and QUUiU51;u lg phu trqnsferor, as well as *he 1 2 4 transferee L111-.1, - uiL3;3L ui ='.»_Ll., -- to the victim of a motor vehicle accident who seeks compensation against the insurer.

3.2; In fact, the present position has not tailed to brovoko comments tor law reform Iron tho High Courts;

Thu latest hint on the subject comes from the Rajaathan High Cougt. In the Rajasthan case, it was held (follow- ing a long line of decisions or various High Courts), that if, after the transfer of a motor vehicle to a third person, the 1nsur--?nggmpany is sought to be made liable to a third party in terms of sections 95(5) and 96 of the Uotor Vehicles Act, 1939. the mere fact that the registration of the vehicle had been transferred was not enough; it must be shown that the fact of transfer was conveyed to the inhur;uce company and accepted by it. This is because tru contract of insurance is a contra- st of personal indemnity, which comes to an and when the vthicle is transferred to another person or when the insured person dies or becomes bankrupt. For this reason, tha benefit of the polity uf insurance could not after the transfer of the motor vehicle, be pursued against the insurance company. In view or the almost unanimous trend 1 . 1 K' ' » }j*i< /'.'P7 : .:' f?;'3'* ﬁI!r:r'a .

2. 1.4.1, o g .v.'-.q,>'.1 3,. 'e ,1, _;:;:r\:_{__§.L'i'.1'_.,_

3. Motor Owneraj Insurance CQ3 Ltd, v. Khetpﬁl Singhu A.I.R. 1983, Haj. 33. 90, para 25 (May).

See further paragraph 3.3. infra.

an-¢no11/"' of judicial authority, the High Court had to come to thin' cr.m::'!n:;1on. Hm/ever, this conclusion was, arrived 4-! .u':1>_y 1;-11;:-.!:a11t3'/o

3.). 'L, Jullunio; HUSufVdLi0H made by bw.Juat1ce Dwurn4 ixusul, 3355M: Chiei Justice, in his Judg-- ment in the Hajasthan case referred to abuve, are 2 pertinent as to the need for reform or the law :-

"The claim mud? by the injured against the jhhHVuhC3 uum,¢ny fails and hence the same is dismisuud us against the insurance company. IL uust be said that I have to come to the aforesaid conclusion with much regret, as in spite of the existence of the statutory provisions for com ulsory insurance, persons injured in motor accidents are left with meagre y;0Spcct3 of obtaining compen- Wr'?uu; witL~bt may fault of their own. The 3 - . . 7 'u _; rzmi '..'¥_tll r'eu.~;on iv -* tic; mg, 1- V..';'L,EUls/.2 +.«.:i:. ~¢u;.u1';:: ta» 'u12u.~:2 I. L 'E 5' ;,; Why nlgiurtuae of being injur¥d hjxé JriVuy'A negligence. fhey would aL least get CUmpauS¢tiOU for the injury received or their dependants would get rea3ouab1u compensation, if a persog is killed in such an accident, knowing little about the pitfalls."

5.A. Earlier, 1h~ Kerala High Court had, while noldin, L»:L u ,~: - 105A of the Motor Vehicles Acz, 15;} did M; 'LUuJLji_]]y transfer the 1nsu~ rauce golioy to in: irausieree of the motor vehicle, made the following observabians fer an amendment of the law :--

1. chapter 2, ggggg;

2. motor Owner§:_Insurance Co Ltd V. Khetgal __':§_W___ Y{","K'."'I.n. T9'"a3"ﬁ'a"-I", . §'3'," 90 H4831)-

3. National In5urance_Co Ltd. V. Thgkkevi1_ﬂajan A.I.R. 1392 Ker. 35h,.Paragraph~33 Iﬂecembcl .' can-on¢~l2X"' J C

-3 12 :-

=r' - , »'\ }§'f~wf}nu Lg be pointed out that section i{v__'$:'. d._,.:, .'-U: 1. ,_;,u the whole way. No dcub-t under that buLL1CM, there is a fictional " transfer of the certificate of insurance and the Iwlicy described in the certificate Eakenfby the transferor of a vehicle to the 'rans eree thereof b the insurer gives int{m§§3:§§§§n§e§3§§1un1°3S to transfer the certifioatn or insurance and the policy mentioned therein to the transferee Within 15 days of receipt of the avplication for transfer of the cam: in favour of the transferee, the same shall be deamnd to have been transferred to the transferee with effect from the date of the transfer of the motor vehicle. However, gag statut does not provide as to W 2 - - .F lgsurance po- cy an; Ce ' c .e. . s atu 6 also does not provide for coverage by the insurer or 3rd party risk arising out of an accident that ggpgens within the 1§ dgxs stated ggwthe sectio -- 18 urer can very we n such an even? refuse to transfer the certi- Licate of insurance and the policy and avaid

1.'E.n'..7J.1itv - "

Erruln juﬂwmcut guns on to observe as under :--

"In vicn Mi Lhe large use of motor Vehicles ()1! Hit} 1* 1.3; ;;.p1>;,'a:1':S 'to us that it is xv. % ; t> §.?'«.%.53....,é..:'é.e£sL§l.£1i7.B.13.%...*2.€3.§_£..5l1%i-.i.t§ attention an these aspects and provide for such eventualities as are mentioned above. Fbrhaps the same could be achieved by pro- viding for a Lstatutory fictional transfer of the uerL1£icate of insurance and the yulicy nsntioned therein automatically with the trQUUELV cf the vehicle, with the further prUUiuiDR that till the insurer rupudiuies the insurance and cancels the same with notice to the concerned authori- ties under the Motor Vehic1e3.Aot, the insurance yulicy shall he in force and that (be same would nut lapse on mere

3.:h»;- vehicle in x*e2.;uect. of ..L .'..z-'J" H...

' - V'? J' it-::fL:1l t..;':',}'.'.']'.~lo"

onoonoo15l"

--2 13 g..

EEEKHHL4 j§gggg{gg_uuumsvun on THE .lLﬁ¥£H§~Pﬂl$B /4.1. As the law on the sub'-j9c1; Drima 13,313 apucnrud in need of rnform, the Law Cnmmission,1 in Lug Luthiu, B(per circulated on the subject, gnu £Jf'g,.I1 t..w_. .'-J'.a')-:';i~3.1'Jix.» as to z'e1'u1-an of the law I xUJ WUNn:J?~v tn thu flraf u7teruutive, it was pz':'»;;ost--;-cfi that where 't.'x'an.<.:E'er of 3 motor vehicle in favour of the transferee f° Thu virl hi the competent authority on fwc «¢4LgLr Linn certificate, the insurance policy (or policies, if there be M312 !s»n one} shaLl atnnd transferred to the z,» -», .- w-rm "rﬂkh-.v.lC Lhc I191.-:1 of :1 fre-:m I n. 5.«..=»;Lz..; in' am 'Jw\ .u;HL u: uthur ioxmulity. it can aiso be expressly provided that the transfer of a vehicle does not cause {g{ ;g15gy tu lapse. The provisions s . c%i;a 1Hj& of the Motor Vehicles Vi ; /1 ,uuiJ, of course, need U41;-.1' ('K 1 2L--. \':-'5.4..-£1«I.w:~.;.1L fut' LNG pkllj-~2;»':'o 1;) ;7.<;.:-..r.~.1;'.,>; to the S!3COI'ld sdtemzitive, the prupasal was that on the very transfer of ownership of a motor vehicle:

the policy of insurance shall stand transferred to the transferee. This Would mean that even the transfer of registration v

1. Working Paper circulated 31st May, 1984.

i» Nut L» i: Icqnired. IL was uLgtcd in the .o1'!'.i1)g_§ Iaper that this might Dussihly raise some questions of proof.

wuh it Mmnli be u simpler course than '~"'- ~ ~ W .v'ii':"'T 'Uie'.'I.E; 0:1 1;)', ,«_,y...',' git.' 'U L}: ::}~ r.:,! i iv 1'nm<<- U1. 1 Ute question uJ.<;t;)u1' U1;L'c." ¥&W?IHv" 'W fI2~+ ih AHL r VcLicle5 Act, 1959; an the lines indicated above, and if so, which of the two al'te1n:_1l;3'vr3:; put fo~--rt11 above should be adopted.

Mé give below the gist of the comments 1 1"eceived. on the '.;o1'k1n;>.; Paper.

/:.3. M: Hm ')LH'..".»'?7, 1?: may he s"ta'te«.i izhut, eleven; .i11dg;us '3 of 0:3 ll.*'.,I;h iT<)V1rl. }w~.u- 91') <~:,~:a.=u»nt:s to O['x'L'J.'. .'>cs.ee ~J1J-"mes .9"

of z:m0t;h.r21" i'15g1}1 (Tom't', hz"./€-- alsr: no conuz1ent:s to <.»iIf(-.~I'. 1+ 4.5. /lturnativa (a) put forth in the Working VPPGV }_;.»: H: ;-1'1'r:I w, Li;-V.) x;ovurnmen't; of iiilckirn (1.l1oug;h I-

) tug: ;L»1,.- \., ,w.,)§;_~; . (me,»;»_; not apply i_n iiikkim), and E;

by ti». "x!«_(xx;.:(.' x.- * .« '-uci_e'L.y, Calcutta. The ".atté:I"

.w;:: 1-.11' . ;. ~ 'kkvlfi 5_.::,-kt. use p1'C>vi.:;:J'm1 '--:=.;cm,'<1 1>~..;-

pl:z'9..~:ed 2.1:: |£LnLiL_'l.' :~-

"Uyou the 1eWisLrution of the transfer or owner- wig,» «.;Jf 4 .«~»iu.L vehicle, the exi:.'L111g policy of .3u;m,Ln.11~.. m '_:;:!m,-.\, iw.1L2x"eol" t=h:1ll be deems.-<1 to 'lo §:":':':'.'Lf'>? llk i' i'\i<:"]1 {'li'§_-_,' ;-"Ct';'bCI>'!1()'!5!* llluxie a. , .=. w». ..x.b'.Ei('I'}U3'1-5- "»-"')-'J- 3: ..5.'..[ K.'-<JL.x'-1.i,.~. :L«~§ JqJ"o2('/.)I~"'/"mI"C':;'HO'1/'.

4. 1nrag"aph H.1(G), §ﬂHF9-

5. Law (3o:.uz11:5.«5ion File No.F.2(7)/8'+~1«C 3-150-5-

6. Law Co!m1'si:;:aiox1 1-ile No.F.2(7)/81+-LD. .'%.No.b.

1.')

-:wm:1:=Is.>r'9».> of the? motor- vehicjje with 1 '.€u~3L Jmtz t"'LE <.i:n.<3 of tI"1n<*'eI' of the .71,? 3 IL,"

Jn_:;m'a11ce, -'.£o'«.re:'uuu';:hI of A1m31d (.z'?~': II 2 z"I.:»~?:1 L ""5 """""~"='C='?.)a H'-~"\'~> fzw<)L11':; the 1"i1';:t; (l'j.'-'-,2'l. ' "r~ . ._ I r/In L. V0. 110 4.1., 1a1.,,ed the point that the police wj..H. jssmlo :mu;~:r.m:: on..':,' tn the :r'e1;,'1=1te'r'ed owner and :2 tI'We).'"e*'Ki»r'<'. ;.«.1'_r,er'r.:;'.'.3',ve> at (a) 1:: prefewzble.

('-5- /%1C0l"U§1i5--'v%? (b) put forth in the working Paper 5 Of hm: Jum «'.'unm.1.:::.t..m Imn igum) .:":.\vou1'e«l by the r.ove.1'm:n-.nt; 1;

of lmiia. (I':,inist.1*y mi ;5h.im~j_n;_g emd'Lre.u1sport), and 1-') also by two L»'L;1i,:2 1<.;v:,-1-hnmeuL:s. 'ihi:s all. LI.»m1'.1:.1.ve hm; ' 6 hmm 3."z\v<)m.e<I by a,lvz'~¢- y:i;g'u C<m1"t£3 also. Tue Jmlgm;

of one iaigxh f.)<;u1'1, who have Javoured alTt.e1"native (b) '7 }:;.:_\« :.- gm. .;;».._;x; i_ V}!-%'».) 'Lh;»., this aJ.'t,e::-11'1t;Jve would be tum» :1w:;«' ia::»1~.'.:;-. :1,-: g have ,iLu"the1' z~n;:<.ie the ::12;§y,est5.011 th .. 'IL, ::.h_b3 :_1.::=,.. :-.A ,>~.;v§.~.l--_ai, as :1 1'e<1uL1'exue:11, 1.01' e\/':31; ?..1.':\1L3.1't:.1' «)1 p. :u 1:5h'_i.p of '(.1 motuur Vi_~!1i,t;l.e, t11e1'L "the l;K';'.u;'.fe1"OI' ."a;1..1 T1.1'anst'e1ee (Should: inl;j.maLe the in:;1uu=;1' e{.,.n1t s2.u:_- '\;xzm;.;fe1* as 'in section 51, deeming 551191; _%,1!_V_i;,,.,L:_;i.~,;,- K , _;1,_.,.l..ir>,;1Li()11 for the tramsier of i11f,3?.¢;'_i)}L;-£.."' ':;1'_: _,.t-,~._- \;'1'/\'X'r.l'L.'- .5-rd tin.) oplniun thnl. if these ;,1'_wi;;io;1:; Au' <2r.;.xcL~.nl, Lhe lactxrm pointed out in "cm £1«;:12:11a c1£2;;?.;'I.m'1 x.r1'.}1 yr'.»'..a'u.1y Lo e;-f':?r:>a;t.ive1y ? "(ml '1. 1,=.r..¥ *\,'L:«;.x1.:_?:'.:;Lv»:1 I'l...'\: ..u,v.L-'.2.'{'r'N310'-1»~Uo ':"'1""'e'"3 01' {mg ::('y)l1;AI'(.)1-.K(.-E1' of i:1SL!l'Z1l1Ce, dated 2:3Lh /;ug.UhLa"'f- ~

2. Sen: I'u1'-they puraggraph 5.1+. _J;_IggLl'_€_1_-

3. la1'ug;;r:.;;.l1 /+.1(\3)u _S_'gE'J_£'_i.i.-

l+. }..'_~_\».' Cr.3m;h.,1,::-:i.'1.11 I-'ile N<).F.2(7)/53[+"LC-3-H0-7 5 1'; luv '.1-,i:t1 Iiille IZ;>.F.2(7')/8l+---I.'.'. ."3.iJo:.s.9 and 'IU.

; _. _ . ;.o.:v.2<'7)/a!»~I.c :=.N~-.=s.3.1s.1<>-H 4..

7. 2 , . L h 4 L-W1.» II\).i7.2(7.)/551*'L:5 i5~~«'v-'*- 2 ssew.-s to be to .?.%.;.\.tv.1_9.ua.1. 1.-''_.1.1.'3.I'.é2$1s.-?.<2.

k.'().'U ('.1 'N; '7. [.}U 1(.;'H-2 i':C1'o 559"

t 4.6. The State Government of Uaharuqhtra, in its cumment mﬁnt 0" the Msrklng Paper issuad by the Law Commission, has made Shtrao' fﬂﬁﬂﬁstiﬂu that the ﬁr-usferor must make to the insurer '-31 .'-'j'i.'}.5_L}:fZt'j!Ul ,$f:)'.r." L: -:.';_'._1_' (yf L}!.'E' <'.ert'if1cat.3 of 1135111-auce ~NW ﬁh: y 1iu,, ::l -- « the insurer's refusal, the transferee shuuld not urrqe the vehicle in a public place ',,I5U?()11§ t?;'1'i.lA;;' nut w i''-. 3»: In.<5<l.!'.ume. 'J.'he:31;at:e [11Q)V¢:]__'_})[Hcl}'t fwrther Sﬂﬂﬁudtﬁ yenuligutiun of ﬁne failure to make an application for transfer of certificate of insurance and policy, and even suggests minimum sentence by amending section 195 of the Motor Vehicles Act, 1939. We have find ourselves unable to agree with the suggestion. It would hardly meet the demands of social Justice and would nut achieve the objectives underlying the proposal for y reform as put forth in the Mbrking Paper. Such a cumbersnme hruuzdnfe »~ in euvlsnﬂzd in the comment would leave 4eLi»Ln ;n&,;n»tIa11y as they are. In practice, it is bound to rvisu Jufj-Q; 1mUtU&1 cuntrOVefS16S as to when the Hpp]}U¢[iuH fur bx .hf¢r ( as envisageﬂ was made, when it ";:':; 1'c1'u:;.J., vi'-»,'-fl the ],:st;ter of refusal was received by the transferee. We see no need for ke8P1"8 the law encmnbgred with such controversies.

a ' v" : é = - 1"; »i73a1«L.U; letter of the '._5-._=m_ ;§,.,- e 3 9. , ~ ' '£13113? r. x, u.,=§r.s:I'tJ:1cl)t, Hah:11':L:;l1tI':1, Ho, LEG l.O<'§'l/<3i.3t3('«".'?) d>1t:3ul Hist Hep temhal', 1984.

L? n gt}: w';_1,g_g L', 1QL£mumB2l£££L

5.. Q \'-r: '* ,\ '1 1 Having Lahcn 1rJ4; dggount the present state of the 13w, and the hardship caused thereby, and having considered 1 the Various shades of zygw expressed in the comments received 0" the Working Papér, the Law Commission has come to the cﬁncluslon that _ ('*9 an emeilduzasut of the Law is badly needed; and

(b) the umeﬂdmcub uhould proceed on the basis that on the trauurur of ownership of a motor vehicle, the policy of insurance shall stand transferred to the tL usferae from the date of transfer of <2-u.«.L.3L':;'hi¢ .

in ulher wards, Lu: Commission favours the second ulteruutivc out U; L:: Lu¢ gltcruatives -- (u) and (b) - which were put furth in tho Uurhing Paper; A point Conculwihg' £3 Hztice will be dealt with in the detailed recommendation.

5.2. Tue &!ﬂw.g3Lj ~ Iuvuurud by us -- automatic transfer of insurance bauwrlb nu Lransfuf of the vehicle -- appears to be badly needed, in order to eliminate the serious anomaliea that arise under the present law.

1 - Chap tar 2.', :;wL;a..

2. Chapter 3, ayygg$

3. Chapter 4, agpgg,

4. Paragraph 1.](h), gnggﬁ, 1"z.:i'7..t*I':'; 3' -'M337. " 'z' 3-

- JR ..

If Lin-. .".' '_._, 'U U 1~L dlLnLLmL54; ~ i.u. waiting for transfer of reglgtrution " 15 ""-'-"*"-'ted! t"°1'@ will result cuushl-'.4b'1e ' " . ~ \:.I.' delay 'M tn? "ffe°t'**'*3 ti'-'311SfE'»1' Cf iDSU.I'aI1(:a bexlafits.

If 51 L5: .- ',. 4,

1.,» :_i m...n t mt \l:.r.,1l1;, cm illtel'-I'9£mm: (1.63. during:

~"' M will Lr;:<I-;f.3[-

'~" ' Y - ' 4 I. ,1 ;=*.:'!,-,«, '1' THU";";_';.L}_:s1;}., (R) the vehivia uquld have been transferred (Physically and legally) to the transferee, who (or Hvzrxr:-_a emp"loyaes) might be ope1'n'!.'lng 11;;

{") and ydi, u vi:tim of an accident caused by i.h~: 1-_v . 5:5. ~..~ cf' the vehi cle bf.' the t['¢.iisfu]_'ee, .2-W1 eui-'1H:;J in ].:.1' to be cmripunxsuted, cannot v:r1fo1'ce Hszg» liabiﬂty against the in5u1'c1', since LL; j.I1.E3LLI'u1' cam. take the plea that the transferee uf the vehicle does not automatically become entitled to the benefit of the insurance;

(6) the transferee of the Vehicle himself would 1'ez:min "£l!.3QVBI'(3d by insurance against: the risks usually covered by policies of insurance of motor vehicles;

(rt) thg tI.;Lz:si's31'or rnay, in theory, be entitled L» thc hwwvfit of the insurance, but, as rr,-;r,uI'<i.s him, it is only a r1 gght of academic 1ubcrc5L, L4cau5e, having parted with the owner:-.h1.;> .,.i' the vehicle, he does not need any protection.

u IO Q' ~o u I. Simpler r v ' ). J'. ' ' g - ¢~ , gchemq - F0! '11 these reasons, we prefer the }.-t~c!'e1.; 14%. _.'.i,_,, )1". S ,} . I I c, J(:fm.. or anLr,.n.1t1c transfer of jnsmncmce Flhhts on transfer of ownership of the Vehicle

1.', Z. _ r' ' { " '1r93dY Rtﬁted, a point concerning notice will 7'>r:- ria'-lot with, in the detailed recommendation that

-11' "P M ﬂu 'n due course.

W» 4'

-ne . , In H uomnent received on the Woyking (glief;'t5..<-r1 ' of irw .-= -1 ,. . m ~ ., _- , "F " ~s!.3 110m in. L ntrollex of Insurance, the point E."/._':.r'.' .\ .._ . . , , . . .

bmrfn hub Lech 1ui;~d Lhot Lhe alternative (a) of the "0*k3"K Rape; should he preferred, as the police will always issue summons to the owner of the Uﬂhivlx as if istered, and therefore the benefit of insurance uhuuld be Lransferred to the transferee only from the date of registration, we do not, houcvuyﬁ thﬁrk ihit this, in itself, can constitute E' ?-.'f1'ns1 -"J" Hie :=.a.¢.:un«l * 54. ' -.5 ,- 5 :. n», 41, 1 "nc:nef.1t oi it'=snz':'n<:e on iIl'»'.!'xi.3_1,L;l' of <e~..:ner':;}1J_p). The issue of SUIIIMUIIS at the instance of the police is a matter concerned with criminal pPUCE8diHgS, end can arise only if ibsrv is w a -age of an offence, either under the I-ivW'7 E . ; ;»+er the Motor Vehicles ACL. If 8 pexuux;, we» « 1; vj1n; Lronsferred (nn1ershi1> of the vehicle, still continues to operate the vehicle and pxtx iHV4LVLd in an accident attracting criminal liability, he has himself to blame. In any 0388:

the policy of insurance has nothing to do with his criminal liability , and questions as to its effective date of transfer have therefore no direct relevgnce to criminal proceedings or investi- gJt1OH into offences.

1. See Paragraph 5.8, infra.

7. Paragraph A.h, supng (Controller of Insurance).

3: Paragraph h.1 (a), gugra.

Para

5.h.

contd.

Questions of proof.

"~" "'->'""'*' "I9 9._1_.v13. liability to pay compensation for harm caused by an accident: after transfer of ownership and °°nt'°1 °f the Owneru 9 Person cannot be held liable for En accident caused by the car if he ( or his employee) wee not driving the vehicle at the time of the driving, 5.5. Before coming to a ﬁlym conclusion on the subject as jndicated abole, we have uiUkH some thought to the question of proof. 5w ! Hf, iv 1H9 Working Papei, we had made 4 ;, gilio reference to this aspect -- without, of course, c pressing any final View on the puinL. However, looking to the enthusiasm shown in favour of adopting this particular elternative in the comments received bu the Working Paper, v3 1L§uk {L L no serious practical difficulties should aria; on this score. The views expressed in the comments regard this alternative as the more practicable. Apart from the niw, x- nvxzaives have fried to explore .J_miLi- tiifjuuliics of proof, and we have ummc to the conclusion that there should be none. Incidentally, the transferee of ownership would normally be in possession of the vehicle, uni that itself is ggigg gggig evidence of 5 0;w:V$hip.

1. EBragr~ph 5.3; EEEEE.

2, Earagraph h.1(b), sugra,

3. Chapter &, §gg§_.

4. Law Commission File No. F.2(7)/34'L-C- S.No.h.

5. Section' 110, Indian Evidence Act, 1872. 9:

v0 5 \ .\.

-do no In 'rw ~~ "J2. w" *:>- "

.(TiOU3 111 =}'Y9 be many baseless ;ui?i i . ,, - .

' ~14 Jvsur"n , ' -- ~ liiy 01 x u ce beneiit, 11 baseless the mﬂxe transfby Uf Ownership is ta

1.' ' » ' 3 , ' ., * . , .' _ J IF the {jfact of tzansfer of the benefit f-'is 1:x'c)1>u:::::e.?)? he do not think 80. Host claims against the insurer, in practice, are for re-imbursement in respect of --

(5.) total loss of the vehicle (e.g. by theft or fire); 01 (11) damage caused to the vehicle by accident caused by another vehicle; or

(iii) third party claims.

A person whb has not acquired phy3JC=7 possession of the vehicle as 8 Lrunuixr-e will hardly, if ever, make such a claim. In general, he would put in a claim for total loss of, or parL1a1 d:tm"+:":-_. 'S::.: the vzﬁricle, only! if he he/id ;"'.~: . "'11 an" {Em .«';'.;Ejt}.C"o 5jMil:Liy, bururc he claims re--imbursement for third party claims, he will have to subst ntiate that he ( or his employee) was nctuVJ1v nnerating the vehicle. These u:5 . rtunli be enough to rule out {_-§xI_,' év .1('<"5 5-? ?':.';.7. EH . ". 1' _. ' ' ' _ ' mnfgr " (" "LL "["" LL1'L 15 N*Cd5sury that intimation : to ha or tr nf" V . . Q%| :(:'d1t1(*1 an- PI tl() Lhtﬂ 1!1,'.1{1 I Should be it Cnndltiun term.-nt :1; ._ ,1" ' ,., . , ,. _ trﬂnyrvr I "P" ""t~ In ;I~¢tﬁC~s such an intimation will be "18M3- EIVGT? in most cases, :--:inc:9 the transferee wou1d 111", t0 Ensure that the renewal notice comes to his address.

""3 H" d0 "Gt think that such an intimation should be *"W"° ﬁ.§9u§L§i9u,123:::k:1§ for trﬁnsferrine, to the ,""'""'""'-'-"7: '-'-5"?' 'W'rH'Tii aw?' 11~'.H1"u=1'.'('!. 'P? ::?e z.».dVe2't;:1nzI Ed thin nn;eng' h5C." , A") VG ;rHt Taﬁejvci C" thy ':UTk1"F }"?°' 135"0ﬁ by an wwk€s gnu?-u su gestjon_

-{H ';?.-«i; :1';-7 x.'vm]zi »~g¢{,.,,p,..m; 15' 51,35 if notice of *4 ?V"7*'«ﬁ'?"w nnlnr V héclv haw not been given by the t1':-.n::f".f:ar_' «.11 ?h:r m. .r. 0:: -.2 L~.;;".;x-ze tire 3.n;;tit.ut1on of z-. suit in Hz? «..z;. !\"V'!(';:'7(' mi' i_nsuI'anc6-, the court L 2' Y. ' 7:;-::«,vm'p In aw.~.rdin[; costs in ,_- ~wenda-- 5.9. In th@ light of uhut we have Stated above, we H071 to revise ae<.'*.*.r.*.1 I.!T.rf'"., l'£=:z:ornz1r2rH Lhhf, rm,-r-< ?<~;.= r»§,_, Motor Vehicles Act, 1939, ﬂntur Vehiclcn 9 ;ﬁ('t, ::n«i fru' !W!o'{1d Fv' T"rw?'u:H 1;? {J c f¢0!I::Q.;lR€11tf_:_i,I, A 1 _ch;:r'.;r,en. The p;is7'h 01 »_-mt. «:»;= c in min»? 1'e:g.'a11'd1Ug sccﬁion 103" 3

1in~5 indicated in this chaéter.

1:: :18 !..UI(f-AI':

5'/-N, Hrrx" !;,'r: trazn:_:1"z-,-r of owner:-thip in m-H3C1~.~., L'ma ;.<j:1i('.'.' Of Lhxxvnf shxii sthnl 2 ' .».«» -

_g'; .' :1 (pi.

Lg' :;,';r"ri:'c 123:1 in 1.'.v2;a t1n;.r:::1'er~cc with effect from Lhu date of such tr&HST¢r of 0\.rnczrship.

;;,"\_;; .;.,.,;;;;;;:m»t;§ z.) c-'n:m;:cs as 1n:.x.Y U3 "EC"/*"531'Y 1"

p 1-_h:5 2-'CL, mud in the rules issued undcl. WY.'>,z", :;§; 1 ,!3,; §,-' (Z4:I"T.I.'5F1 Oilt. 1, 1':,ur'::;;;1'.i«.;h H53, _:¥}_¥L;!i1~' Y, __ Q 1~*;'?~*_y>-,3; 'H5 5,'. (1 MEN? ,7- /9 3 Tm,. ,,,,f -. xi:-:f'¥j, u.::rr:11:i"s3Ht- . ~ . ..> A.' - ' *

- 23 _

(b) If notice of transfer of the motor veh1c1c hum not been given by the transfaror or the trnnnfcree, hofore the institution by the transforee of a suit against the in urer based on the policy of insurance, the court mny tnﬁe that fact into account in awarding vu;&' in such u suit.

jg ' ' //1 .

OL (' U .

(K.K. MATHEW) ,,./ CHAIRMAN ' , " ' »1 \ (J,P. CIMIURVEDI) (1 u} [a «'1 '~' '' li"p1Iii3'EJ\ {Z .4) (ma. 11.5. mm) W I (p.24. Bsaxzslll) \ ' «,8

1.'.-'x.'I".'£'..',Y."}':l'L'4' IZENUK-.'{{ ' (van P. sA1m'ru1) mvr-T1ME ML-mmm /13 , ﬁx (,-._1~. :,n1axLVn£m:r£JI1'i'HI) 1 :; .,-1-.n...:;'»_';<%'tm1'1'dl'I DATED: 370 W Mo\,,3.I_ mfdr

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Law Commission Report

Motor Vehicles Act,1939