Delhi District Court
Siraj Alam vs Reliance General Insurance Company ... on 28 April, 2025
IN THE COURT OF AYUSH SHARMA: CIVIL JUDGE,
EAST DISTRICT, KARKARDOOMA COURTS, DELHI
Date of Institution of Suit: April 20th, 2023
Reserved on: March 1st, 2025
Pronounced on: April 28th, 2025
SUIT NO: 328/23
IN THE MATTER OF: -
1. SIRAJ ALAM
S/O UMAR KHAN @ MOHD. UMAR KHAN
R/O H. NO. 69, GIJHOR, SECTOR 53
NOIDA, GAUTAM BUDDHA NAGAR
UTTAR PRADESH
PRESENTLY AT: C-72, MANDAWALI
UNCHEPAR, SHAKARPUR, EAST
DELHI-110092
2. HITESH SHARMA
S/O SH. DHARAMVEER SHARMA
R/O 5/23, MOHAN GARDEN, NEAR
VIKRANT CHOWK, WEST DELHI
110059 ...PLAINTIFF
Through: Mr. K.K Mavai,
Advocate.
VERSUS
RELIANCE GENERAL INSURANCE
COMPANY LIMITED
REGISTERED OFFICE AT: 19, RELIANCE
CENTRE, WALCHAND HIRACHAND MARG
BALLARD ESTATE, MUMBAI-400001
THROUGH SR. DIVISIONAL MANAGER/
MANAGER
Digitally
signed by
AYUSH
Suit No 328/23 Pg 1 of 15 AYUSH SHARMA
SHARMA Date:
2025.04.28
15:13:46
+0530
CORPORATE OFFICE AT: 570, RECTIFIRE HOUSE
NALGAUM CROSS ROAD NEXT TO ROYAL
INDUSTRIAL ESTATE, WADALA (W)
MUMBAI 400031
ALSO, AT: F-17, UG FLOOR, UNIT ½
PREET VIHAR, DELHI 110092 ...DEFENDANT
Through: Mr. Madhav Anand,
Advocate.
JUDGMENT
1. The present suit has been filed seeking recovery of an amount of Rs. 2,72,000/- (including Rs. 50,000/- as compensation and damages and Rs. 22,000/- as litigation expenses) along with 18 % interest per annum from the date of filing of the suit till the date of realization.
2. The brief facts, as stated in the pleadings, are summarized below:
Case of Plaintiff 2.1 Plaintiff no. 1 is the registered owner of the vehicle bearing registration number UP-16-W-0745, HONDA/CITY/ZX/GXI, Engine No. 164006, Chassis No. 9408931, model 2008, registered on 29.01.2009 in bronze-grey colour. The plaintiff no. 2 purchased the aforementioned vehicle from plaintiff no. 1 through an agreement dated 28.07.2022.
However, the transfer of ownership to plaintiff no. 2 could not be completed and was still in process.
2.2 The vehicle was insured under cover note no. R05082185483 and policy no. 131622123110052120 dated 05.08.2021 with the defendant, with an Insured Declared Value (IDV) of Rs. 2,00,000/-, for the period from 06.08.2021 to 05.08.2022.
2.3 The said vehicle was stolen on 23.07.2022. An e-FIR bearing no. 021753/2022 dated 03.08.2022 under Section 379 IPC was registered at Digitally signed by Suit No 328/23 Pg 2 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:13:50 +0530 PS GTB Enclave, Shahdara, Delhi. All necessary information regarding the theft and FIR registration was promptly communicated to the defendant. The concerned SHO after investigation submitted an 'untrace report',' which was duly accepted by the competent court vide order dated
03.09.2022.
2.4 Despite filing a claim for the stolen vehicle, the defendant failed to respond or take any action, causing the plaintiffs considerable hardship, mental anguish, and harassment. A legal notice dated 06.09.2022 was sent to the defendant by speed post, but no response was received. The plaintiffs assert that the defendant is liable to pay the insurance claim of Rs. 2,72,000/- along with interest at the rate of 18% per annum from the date of filing of suit. This includes Rs. 50,000/- as compensatory costs and Rs. 22,000/- as litigation expenses. Consequently, the present suit. Case of Defendant 2.5 In the written statement, the defendant submitted that the suit is vague, misconceived, erroneous, improper, and not legally sustainable. The defendant asserted that the suit is liable to be dismissed on the ground that neither of the plaintiffs have the legal standing (locus standi) to file the present claim for recovery of money related to the alleged stolen vehicle.
2.6 It is further stated that the plaintiffs themselves admitted that, at the time of the alleged theft on 23.07.2022, the insurance policy and the registration certificate listed the insured and registered owner as Sh. Siraj Alam, i.e., plaintiff No. 1. The defendant also asserted that the plaintiffs have acknowledged in the plaint that on 25.05.2022, plaintiff No. 2, Hitesh Sharma, purchased the vehicle bearing number UP-16-W-0745 from plaintiff No. 1 for Rs. 1,80,000/- and took possession of the vehicle. Based on this admission, the defendant contended that the suit is not maintainable Digitally signed by AYUSH Suit No 328/23 Pg 3 of 15 AYUSH SHARMA SHARMA Date:
2025.04.28 15:13:55 +0530 in law, as plaintiff No. 1 had no insurable interest in the vehicle after the sale on 25.05.2022. Moreover, the plaintiffs failed to transfer the ownership of the vehicle in plaintiff No. 2's name within the prescribed period of 14 days and did not inform the defendant company about the sale. As a result, there was no insurance contract in effect with plaintiff No. 2 at the time of the alleged incident. The plaintiffs also failed to initiate any process of assignment or transfer of the insurance policy in Plaintiff No. 2's name, as mandated under the Insurance Act, 1938, and the terms of the policy.
2.7 The defendant further placed reliance upon the repudiation letter dated 08.08.2022, wherein it was observed that insured name as per the policy and registration certificate is of plaintiff No.1 and the vehicle is purchased and used by plaintiff No. 2. Since the vehicle in question was sold by plaintiff No.1, he does not have any insurable interest as per the provisions of GR 17 of Indian Motor Tariffs and Section 50 of Motor Vehicle Act, 1988.
2.8 In its para-wise reply on merits, the defendant stated that plaintiff no. 1 had sold the vehicle in question to plaintiff no. 2 on 25.05.2022 for a consideration of Rs. 1,80,000/-, and ever since, plaintiff no. 2 had been in possession and use of the said vehicle as its owner. The defendant contended that neither plaintiff no. 1 nor plaintiff no. 2 informed the Regional Transport Office (RTO) or the defendant insurance company about the transfer of ownership of the vehicle within the stipulated time frame as required under the Insurance Act. It was further pointed out that the alleged date of theft of the vehicle was 23.07.2022, while the sale agreement between the plaintiffs was executed on 28.07.2022. On this basis, the defendant argued that plaintiff no. 1 ceased to have any insurable interest in the vehicle after selling it, and since there was no contractual Digitally signed by Suit No 328/23 Pg 4 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:00 +0530 relationship between the insurance company and plaintiff no. 2, the defendant cannot be held liable.
2.9 Additionally, the defendant claimed that the plaintiffs failed to explain the delay in lodging the FIR regarding the theft. The defendant also stated that the plaintiffs had not submitted essential documents such as the original key of the vehicle, the indemnity form, the subrogation bond, and the registration certificate (RC) extracts. The defendant denied all remaining allegations and refuted any liability to pay any amount to the plaintiffs.
Plaintiffs' Replication 2.10 In the replication, the plaintiff asserted that the vehicle in question was insured with the defendant for the period from 06.08.2021 to 05.08.2022. Since plaintiff no. 1 remained the registered owner of the insured vehicle at the time of the alleged theft on 23.07.2022, he retained the legal right to claim the insurance amount. Therefore, the plaintiff argued that the defendant could not evade its liability to compensate plaintiff no. 1. It was further contended that the defendant is liable to pay the insured amount either to the registered owner (plaintiff no. 1) or to the transferee (plaintiff no. 2). For the remaining contentions, the plaintiff reiterated the averments made in the plaint and denied the claims made in the written statement.
Sur-Rejoinder of Defendant 2.11 In response, the defendant filed a sur-rejoinder to the plaintiff's replication. The defendant denied that the plaintiffs had ever provided any intimation either to the insurance company or to the RTO regarding the sale of the vehicle in question.
Issues
3. Vide order dated 07.10.2023, on the basis of the pleadings, Digitally signed by Suit No 328/23 Pg 5 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:05 +0530 following issues were framed viz.:
(i) Whether the plaintiff is entitled for a recovery of Rs.
2,72,000/-, as prayed for? OPP
(ii) If yes, for which period and for what rate of interest? OPP
(iii) Relief
Plaintiff's Evidence
4. In order to substantiate their case, plaintiffs examined themselves as PW1 & PW2. They further examined Sh. Mahender Maurya as PW3 & HC Sh. Amilal as PW4.
5. Plaintiff No.1, being PW1, tendered his evidence by way of affidavit Ex. PW1/A and relied upon the following documents viz. RC of vehicle bearing no. UP-16W-0745 Ex. PW1/1, original Agreement dated 28.07.2022 Ex. PW1/2, Insurance Policy of vehicle bearing no. UP-16W-
0745 Ex. PW1/3, e-FIR no. 021753/22 Ex. PW1/4, copy of order dated 03.09.2022 Mark A, legal notice dated 06.09.2022 along with postal receipts dated 06.09.2022 Ex. PW1/8 (colly), copy of Aadhaar Card Ex. PW1/9 and SPA Ex. PW1/10.
6. Plaintiff No.2, being PW2, tendered his evidence by way of affidavit Ex. PW2/A and relied upon the following document viz. Aadhar Card Ex. PW2/1.
7. PW3 Sh. Mahender Maurya deposed that the untraced report filed in e-FIR no. 021753/22 dated 03.08.2022 u/s 379 IPC, PS GTB Enclave was accepted by the court vide order dated 03.09.2022. He produced the copy of screenshot Mark A.
8. PW4 HC Sh. Amilal produced the copy of e-FIR already Ex. PW1/4.
Defendant's Evidence
9. The defendant did not lead any evidence in support its case and Digitally signed by AYUSH Suit No 328/23 Pg 6 of 15 AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:10 +0530 on 18.01.2025, the defendant's evidence was closed. Submissions
10. Mr. Mavai, Ld. Counsel for the plaintiff, presented the following arguments:
10.1 Plaintiff no. 2 had purchased the vehicle in question from plaintiff no. 1. The said vehicle was insured with the defendant for the period from 06.08.2021 to 05.08.2022. The theft of the vehicle occurred on 23.07.2022, and an e-FIR was registered at PS GTB Enclave. As the vehicle had not been transferred in the name of plaintiff no. 2, plaintiff no. 1 continued to be the registered owner at the time of the theft. Consequently, plaintiff no. 1 retained the legal right to claim the insurance amount. The defendant, therefore, is liable to pay the claim amount to either plaintiff no. 1 or plaintiff no. 2 and cannot evade its responsibility by denying liability toward either.
10.2 The provisions of Section 157 of the Motor Vehicle Act, 1988 are applicable in this case. Accordingly, the insurance certificate and the policy of insurance are deemed to have been transferred in favour of plaintiff no. 2. Furthermore, any failure to notify the insurer/defendant of the vehicle's transfer under Section 157(2) MV Act is only directory and not mandatory. Hence, such non-compliance should not affect the insurer's liability to indemnify the plaintiffs.
11. Mr. Anand, Ld. Counsel for the defendant, made the following submissions:
11.1 As per the Sales of Goods Act, a sale is considered complete upon the payment of consideration or delivery of the vehicle, irrespective of whether the registration has been transferred in the name of the purchaser. In the present case, plaintiff no. 1 sold the vehicle on 25.05.2022 and, therefore, had no insurable interest in the vehicle at the time of the alleged Digitally signed by Suit No 328/23 Pg 7 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:15 +0530 theft.
11.2 Furthermore, during cross-examination, plaintiff no. 1 (as PW1) admitted that he sold the vehicle to plaintiff no. 2 on 25.05.2022 and delivered its possession along with the relevant documents. He also conceded that neither the RTO nor the defendant company was informed about the sale. Plaintiff no. 1 further acknowledged that he had no interest in the vehicle at the time of its alleged theft on 23.07.2022 and did not want any compensation for the same, clarifying that any compensation should be paid to plaintiff no. 2. In light of these admissions, it is evident that plaintiff no. 1 lacked any insurable interest in the vehicle at the relevant time, and therefore, the defendant cannot be held liable to him. 11.3 With regard to plaintiff no. 2, the defendant contended that there was no privity of contract between the defendant and plaintiff no. 2.
Consequently, plaintiff no. 2 is also not entitled to any claim. Being the transferee, plaintiff no. 2 was required to inform the insurer of the vehicle transfer within 14 days, as mandated under GR17 of the Indian Motor Tariff. Both PW1 and PW2 admitted during cross-examination that no such intimation was ever given. As a result, the insurance policy was never endorsed in the name of plaintiff no. 2, and therefore, there existed no contractual relationship between plaintiff no. 2 and the defendant. Accordingly, the defendant bears no liability for the alleged theft. Reliance was placed upon the order dated 31.05.2024, of Hon'ble NCDRC in M/s WMW Metal Fabrics Ltd. & Anr. v. Oriental Insurance Co. Ltd. & Anr.1 and Balwant Singh & Sons v. National Insurance Company Ltd. & Anr.2 Analysis
12. I have heard the submissions and perused the record. Given that both 1 First Appeal No. 215 of 2017 2 (2020) 11 SCC 745 Digitally signed by Suit No 328/23 Pg 8 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:19 +0530 issues are closely linked and involve overlapping questions of law and fact, they are being analysed together. The material facts emerging from the record are as follows: plaintiff no. 1 sold the vehicle to plaintiff no. 2 on 25.05.2022 and handed over its possession. Subsequently, on 23.07.2022, the vehicle was stolen and an e-FIR was registered at PS GTB Enclave.
Thereafter, on 28.07.2022, a formal agreement to sell was executed between the two plaintiffs. The defendant, however, has denied the claim raised by the plaintiffs, arguing that once the vehicle was sold, plaintiff no. 1 ceased to have any insurable interest in it. The defendant further contends that plaintiff no. 2 is also not entitled to the claim as no intimation of the transfer was provided and there was no contractual relationship between him and the defendant.
13. Before adverting to the law on the subject, it is pertinent to review the plaintiffs' evidence. A brief overview of the plaintiffs' evidence is outlined hereinbelow:
13.1 Plaintiff no. 1 (PW1), during cross-examination, admitted that he sold the vehicle to plaintiff no. 2 on 25.05.2022 and delivered possession of the vehicle along with its documents. He also confirmed that neither the defendant insurance company nor the RTO was informed of the sale. He further clarified that he had no interest in the vehicle at the time of the alleged theft and hence did not lodge any FIR. He explicitly stated that he does not require any compensation and that it may be awarded to plaintiff no. 2.
13.2 Plaintiff no. 2 (PW2), during his cross-examination, also confirmed that he had purchased the vehicle on 25.05.2022 and had been in possession of it since that date. He admitted that he had not paid any insurance premium for the said vehicle and had not submitted any application for transfer of the insurance policy to the defendant. He further Digitally signed by Suit No 328/23 Pg 9 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:24 +0530 acknowledged that he was not named as an insured party under the existing insurance policy for the vehicle in question.
14. The counsel for the plaintiffs argued that under Section 157 of the Motor Vehicles Act, 1988, the insurance policy should be deemed to have been transferred to Plaintiff No. 2 upon the sale of the vehicle. Accordingly, the defendant, being the insurer, is liable to honour the insurance claim. In the alternative, it was contended that since the RC was never transferred in the name of Plaintiff No. 2, Plaintiff No. 1 continued to be the registered owner and, having held a valid policy with the defendant, remains entitled to claim the insurance amount. However, this argument is legally untenable.
15. Section 157 of the Motor Vehicles Act, 1988 provides that when a motor vehicle is transferred to another person, the certificate of insurance and the policy are deemed to have been transferred in favour of the transferee. However, this provision applies only in cases involving third- party claims. The Hon'ble Supreme Court in Complete Insulations (P) Ltd. v. New India Assurance Co. Ltd.3 clarified that the deeming provision under Section 157 applies exclusively to third-party liability and does not extend to own damage claims. The court held:
"11. There can be no doubt that the said chapter provides for compulsory insurance of vehicles to cover third party risks. Section 146 forbids the use of a vehicle in a public place unless there is in force in relation to the use of that vehicle a policy of insurance complying with the requirements of that chapter. Any breach of this provision may attract penal action. In the case of property, the coverage extends to property of a third party i.e. a person other than the insured. This is clear from Section 147(1)(b)(i) which clearly refers to 'damage to any property of a third party' and not damage to the property of 3 (1996) 1 SCC 221 Digitally signed by Suit No 328/23 Pg 10 of 15 AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:29 +0530 the 'insured' himself. And the limit of liability fixed for damage to property of a third party is rupees six thousand only as pointed out earlier. That is why even the claims Tribunal constituted under Section 165 is invested with jurisdiction to adjudicate upon claims for compensation in respect of accidents involving death of or bodily injury to persons arising out of the use of motor vehicles, or damage to any property of a third party so arising, or both. Here also it is restricted to damage to third party property and not the property of the insured.
Thus, 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 issued 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 Kondaih'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 Digitally signed by AYUSH Suit No 328/23 Pg 11 of 15 AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:34 +0530 between the insurer and the transferee, the former undertaking to cover the risk or damage to the vehicle. In the present case since there was no such agreement and since the insurer had not transferred the policy of insurance in relation thereto to the transferee, the insurer was not liable to make good the damage to the vehicle. The view taken by the National Commission is therefore correct."
16. Likewise, the Hon'ble Kerala High Court in Reliance General Insurance Co. Ltd. v. Annama Raju @ Bincy,4 reiterated that the deeming fiction under Section 157 does not apply in cases involving own damage claims. The court held:
"16. The next question that arises is whether, such transfer would include the transfer of the obligations of the Insurance company towards a pillion rider, whose risk is not covered under statutory coverage under section 147(1) (b) of the Motor Vehicles Act. It is true that, in Complete Insulations' case (supra), after referring to the stipulations in Section 157 of the Motor Vehicles Act, it was held by the Hon'ble Supreme Court that, the deemed transfer contemplated under Section 157 of the Motor Vehicles Act may not be applicable in respect of own damage claims. As rightly pointed out by the learned counsel for the petitioners, there is a clear distinction between the factual situation in which the decision in Complete Insulations' case (supra) was passed and the facts in this case. The subject matter of the decision rendered by the Hon'ble Supreme Court was the 'own damage' claims of the insured, whose name is mentioned in the certificate of insurance. When the transfer of the vehicle is made and the same is not intimated to the Insurance Company, the person who transfers the vehicle would cease to have any insurable interest in the property so as to make any claim in respect of the vehicle, which he already transferred. Therefore, the liability of the 4 MACA No. 2585/2016 Digitally Suit No 328/23 Pg 12 of 15 signed by AYUSH AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:39 +0530 Insurance Company, as far as the own damage of the insured is concerned, will cease to have any effect, when the vehicle is transferred to another person and he fails to intimate such transfer in the manner prescribed. The aforesaid termination of the contractual liability of the Insurance Company is on account of the fact that, the transferee is not a party to the contract of insurance. Therefore, the deemed transfer as contemplated under Section 157 of the Motor Vehicles Act cannot be made applicable in the case of own damage since the claim of own damage is something between the insurance company and the insured, who are parties to the contract of insurance."
17. In the present case, the plaintiffs are seeking an own damage claim. Therefore, the statutory fiction under Section 157 does not apply. The insurance policy cannot be treated as automatically transferred to Plaintiff No. 2 in such a context.
18. The record clearly shows that plaintiff No. 1 sold the vehicle to plaintiff No. 2 on 25.05.2022 and delivered its possession along with relevant documents. While the RC was not transferred, this does not affect the fact of sale under law. As per the Sale of Goods Act, a sale is deemed to be complete upon payment of consideration and delivery of the goods, irrespective of the transfer of registration in official records. This position is also upheld in Madineni Kondaiah v. Yaseen Fatima & Ors.5 [relied upon in Complete Insulations (supra)].
19. Moreover, Plaintiff No. 1 (PW1) himself admitted during cross- examination that he had no interest in the vehicle at the time of its theft on 23.07.2022 and did not wish to claim any compensation. He explicitly stated that the compensation, if any, may be given to Plaintiff No. 2. Thus, 5 AIR 1986 AP 62 Digitally signed by AYUSH Suit No 328/23 Pg 13 of 15 AYUSH SHARMA SHARMA Date:
2025.04.28 15:14:43 +0530 once the sale was completed, Plaintiff No. 1 no longer had any insurable interest in the vehicle. Accordingly, the rejection of the claim of plaintiff no.1 by defendant is justified.
20. As far as Plaintiff No. 2 is concerned, his claim is also unsustainable in law. As already stated earlier, the insurance policy does not automatically transfer to plaintiff no.2 under the deeming fiction under section 157 for own damage claim. Furthermore, under GR 17 of the Indian Motor Tariff, the transferee of a vehicle is required to apply for the transfer of the insurance policy within 14 days from the date of transfer.
This application must be made in writing and sent by recorded delivery to the insurer, containing necessary details such as registration number, date of transfer, name of the previous owner, and number and date of the insurance policy.
21. In the present case, there is no evidence that any such intimation was ever sent to the defendant insurance company. In fact, both plaintiffs, during their cross-examination, admitted that no communication or intimation was made to the insurer/defendant regarding the transfer of the vehicle. Due to this failure, the insurance policy was never endorsed in favour of plaintiff No. 2, and no novation of contract took place. As a result, plaintiff No. 2 also lacked any contractual relationship with the defendant and had no insurable interest on the date of the alleged theft. The same has also been clarified in the order of Hon'ble NCDRC in M/s WMW Metal Fabrics (supra).
22. Since neither Plaintiff No. 1 nor Plaintiff No. 2 had a valid insurable interest in the vehicle at the time of its theft, and the mandatory procedures for transfer of the insurance policy were not followed, the defendant insurance company cannot be held liable to pay the claim arising out of the theft of the vehicle. Both the issues are decided against the plaintiffs.
Digitally
signed by
AYUSH
Suit No 328/23 Pg 14 of 15 AYUSH SHARMA
SHARMA Date:
2025.04.28
15:14:47
+0530
Relief
23. The suit of the plaintiffs, thus, stand dismissed. Decree sheet be drawn. Parties shall bear their respective costs of litigation. File be consigned to record room after due compliance.
Digitally signed
AYUSH by AYUSH
SHARMA
Pronounced in open court SHARMA Date: 2025.04.28
15:14:50 +0530
On April 28th 2025 (AYUSH SHARMA)
CJ/EAST/KARKARDOOMA
DELHI/28.04.2025
This judgment contains 15 pages and each page has been signed by me.
Suit No 328/23 Pg 15 of 15