Madhya Pradesh High Court
United India Insurance Co. Ltd. vs Shamsuddin And Ors. on 2 March, 1998
Equivalent citations: 1999ACJ838
JUDGMENT S.K. Dubey, J.
1. United India Insurance Co. Ltd. has filed this appeal aggrieved of the award dated 20.4.1989 passed in M.V. Case No. 56 of 1985 by Motor Accidents Claims Tribunal, Seoni.
2. The manner and circumstances in which the accident occurred on 31.3.1985 on Nagpur-Jabalpur road by use of truck bearing registration No. MPA 5181 driven by respondent No. 3, Abid Khan, which hit Mangal Prasad who was going on his Luna, causing severe injuries, resulting in his death are not in dispute. It is also not in dispute that the truck was insured with the appellant of which the insured was the registered owner, the respondent No. 2, who gave its possession to respondent Nos. 1 and 4, under an agreement of sale.
3. The Tribunal, on the evidence adduced, held that accident occurred due to sole negligence of the truck driver, hence awarded compensation of Rs. 96,300 with interest thereon at the rate of 12 per cent per annum from the date of application, that is, 11.9.1985 till realisation to the legal representatives of the deceased, the respondent Nos. 5 to 12, which was ordered to be paid by the appellant and respondent Nos. 1 to 4 jointly or severally.
4. The appellant company in the appeal has not challenged the award of compensation but has challenged its liability as an insurer to indemnify the owner or to pay compensation to satisfy the award on the ground that respondent No. 2, the registered owner transferred the possession of the truck to respondent Nos. 1 and 4, on receipt of payment of Rs. 21,100, who were plying the truck. Therefore, on transfer of the vehicle, the policy of insurance lapsed, hence the appellant could not have been made liable to pay compensation.
5: Mr, H.B. Agrawal, learned Counsel for the appellant, in support of his contention, placed reliance on a single Bench decision of this Court in National Insurance Co. Ltd. v. Purshotamdas Mahesh-wari, 1987 ACJ 209 (MP).
6. Mr. P.R. Bhave, learned Counsel for the respondent Nos. 5 to 12 submitted that transfer was not effected as the Tribunal has recorded a categorical finding that the contract was not concluded. Respondent No. 2 continued to be the owner as defined under Section 2(30) of the Motor Vehicles Act, 1939 (for short 'the Act'), therefore, the appellant company cannot escape its liability to indemnify or to pay compensation to the claimants.
7. From the evidence on record, it is amply established that the contract of transfer was not concluded as the whole of the consideration was not paid and that there was a clause in the agreement to take back the possession in the event of default of payment of consideration within the stipulated time. For a concluded contract passing of the consideration as agreed is an essential element in a transaction of sale. If no consideration is passed or part of the consideration is paid, the sale is not complete as to transfer the title or interest.
8. Besides, in this case the transfer is not complete as the registered owner has not intimated the transfer of vehicle or has not taken any steps as provided under Section 31 of the Act. In the circumstances, it shall be deemed that there is no transfer of the vehicle in law. Inter-parties transactions may exist; but if they are not in accordance with law, they cannot be recognised. Therefore, when an accident takes place the registered owner on that date is liable to pay damages to the victim of the accident. The insurance company, in such circumstances, cannot set up the defence that there was sale of the vehicle during the period of cover and the policy had lapsed. Besides, this defence is not available to the insurer as against the third party claim, under Section 96 (2) of the Act, so as to deny its liability to the third party. In case, where such a transfer is made of the vehicle, without following the provisions by the party of Section 103-A of the Act, in such situation it would be open to insurance company to proceed against the registered owner for reimbursement of the compensation, which was required to be paid under the cover of the policy to the third party, by independent proceedings against the insured based on the policy conditions of insurance. [See Sonaram v. Jaiprakash, AIR 1986 MP 21; Ghisalal v. Nihalsingh, 1992 ACJ 181 (MP); Harcharan Singh v. Tuna Bai, 1995 ACJ 423 (MP), a Full Bench decision of Andhra Pradesh High Court in Madineni Kondaiah v. Yaseen Fatima, 1986 ACJ 1 (AP), a Division Bench decision of the Madras High Court in Dharman v. N.C. Srinivasan, 1990 ACJ 27 (Madras) and also a decision of the Rajasthan High Court in Maina v. Niranjan Singh, 1976 ACJ 1 (Rajasthan)].
9. The single Bench decision of this Court in National Insurance Co. Ltd. v. Purshotamdas Masheshwari, 1987 ACJ 209 (MP), relied by the appellant is of no help to the appellant which is distinguishable, as in that case contract was concluded and (sic.) that effect of Section 31 of the Act and non-availability of the defence to the insurance company under Section 96 (2) of the Act.
10. As a result of the above discussion, we are of the view that the appellant insurer cannot escape its liability to pay the compensation under the cover of the policy. Therefore, we direct the appellant company to deposit the amount of compensation, awarded by the Tribunal, with its accrued interest, less the amount already deposited by it, within a period of two months from the date of supply of certified copy of the order, failing which, the amount shall carry interest at the rate of 15 per cent per annum. On deposit, the amount shall be disbursed by the Tribunal, keeping in mind the well settled guidelines.
11. In the result, the appeal fails and is dismissed with costs. Counsel's fee Rs. 1,000, if pre-certified.
C.C. as per rules.