Kerala High Court
United India Insurance Co. Ltd. vs Smt. O. Jameela Beevi And Ors. on 11 March, 1991
Equivalent citations: II(1991)ACC482, 1991ACJ820, AIR1991KER380, AIR 1991 KERALA 380, (1991) 1 KER LT 832, (1991) ILR(KER) 2 KER 925, (1991) 1 KER LJ 663, (1991) 2 ACC 482, (1991) 1 TAC 700, (1991) 2 ACJ 820
JUDGMENT G.H. Guttal, J.
1. The insurer, United India Insurance Co. Ltd., Ernakulam has preferred this appeal against the award of the Motor Accidents Claims Tribunal, Kozhikode in M.A.C. No, 220 of 1981 by which a sum of Rs. 55,000/- was awarded to respondent Nos. 1 to 7, the heirs of deceased P. Kassim. The respondent No. 8, who is alleged to have been driving the vehicle at the time of the accident, disputes that he was driving the vehicle. The respondent No. 9, the insured, claims to have transferred the vehicle to respondent No. 8 before the occurrence of the accident. Therefore, he claims that he was not the owner of the vehicle at the relevant time. The respondents 1 to 7 are hereinafter referred to as the claimants,
2. The facts giving rise to this appeal are briefly these: The deceased, P. Kassim, standing in front of a shop at Thottilpalam road junction, Kuttiadi, was knocked down by the jeep bearing Reg. No. KLR 7519, driven by the respondent No. 8. This was on 23-10-82 at about 2 p.m, The insurance policy, which constitutes the contract between the appellant and the insured (respondent No. 9) who was admittedly the registered owner. The vehicle was agreed to be sold to respondent No. 8 Raghavan by the document Ext. R4. But, he was never registered as the owner of the vehicle. According to the appellant, the respondent No, 8, who was driving the vehicle, did not hold a valid driving licence. The Tribunal made these findings:
(a) The driver caused the death of P. Kassim by rash and negligent driving;
(b) The vehicle was driven by the respondent No. 10 K. Mohammed and not by respondent No. 8;
(c)Ext. R4 which is the agreement whereunder respondent No. 9 claims to have sold the vehicle to respondent No. 8, represents a mere agreement to sell the vehicle and, therefore, respondent No. 9, who was covered by the insurance policy, continued to be the owner of the vehicle; and
(d) Consequently, the appellant was liable to indemnify the claim under the insurance policy.
3. Respondents 1 to 7 have filed cross-objection to the appeal.
4. Learned counsel for the appellant urged that his client, the insurer, is not liable to pay compensation. He bases his case on the following submissions:
(i) The document, Ext. R4, though styled as an agreement, effects the transfer of ownership of the vehicle to respondent No. 6. The respondent No. 8 was, at the relevant time, the owner of the vehicle by virtue of this transaction. The contract of insurance was between the appellant and respondent No. 9. Respondent No. 8 was not covered by the insurance policy. Therefore, the appellant is not liable to pay compensation.
(ii)The respondent No, 8 or whoever was driving the vehicle, had no valid licence to drive a motor vehicle. The accident was caused by a person who had no valid licence to drive. This constitutes breach of the terms of the policy.
5. The first question urged by learned counsel for the appellant necessarily demands consideration of the provisions of law in regard to transfer of movable property because a motor vehicle is a movable property. The law in regard to transfer of such property is embodied in the sale of Goods Act. A distinction between sale and agreement to sell is clearly conceived and laid down in the Act. A contract of sale is a contract whereby the seller transfers or agrees to transfer the property in the goods to the buyer, for a price, such contract of sale may be absolute or conditional. Where, under any contract of sale "the property in the goods" is transferred the contract is called sale. But where the transfer of the property in the goods in not immediate but is to take place "subject to some conditions thereafter to be fulfilled" the contract is called an agreement to sell and not a sale. Thus, an agreement of sale of goods becomes a sale "when............. the conditions are fulfilled subject to which the property in the goods is to be transferred". In other words, where the parties are agreed that certain movable property shall be transferred upon fulfillment of a condition, the transfer of property in the goods is not complete until the condition is fulfilled. In the case of a contract for the sale of specific or a certain property the general rule enacted by law is that the property in such goods is transferred to the buyer at such time as the parties to the contract intend it to be transferred. Therefore, in case of dispute about the transfer of such property the primary task is to ascertain the intention of the parties.
6. It is undisputed that Ext. R4 was executed between respondent No. 8 and respondent No. 9. But, since the transfer of the property in the vehicle is disputed it is necessary to examine whether the contents of Ext, R4 and the surrounding circumstances spell out such transfer. If the circumstances show that a condition was stipulated and it remained unfulfilled, it is reasonable to hold that transfer of property in the motor vehicle had not taken place on the date of the accident. It is well-settled that a contract of insurance evidenced by a policy of insurance lapses upon the transfer of the vehicle unless the transferee has a contract with the insurer, 8. Swarriinathan v. Jayalakshmi Amma (1987 (2) KLT 292. It is this legal proposition that the appellant relies upon.
7. The document, which is written in Malayalam language, has been read out and translated to us into English. In understanding the intention of the parties to Ext. R4, the label "agreement" attached to the document is not of significance. The document, though styled as an agreement, has to be read as a whole and its real nature determined. The effect of the description of Ext. R4 as "agreement" is neutralised by the fact that the parties themselves have used the word "sale" at one place. Since two inconsistent expressions have been chosen by the parties themselves, it is not possible to conclude the intention of the parties from such choice alone. The parties themselves have, by such words, suggested that these words, "agreement "or "sale", were not intended by them to be determinative of their intent. On the other hand, the document furnishes intrinsic and determinative evidence of the real intention of the parties. Firstly, the agreement stipulates Rs. 10,000/- as the price of the vehicle out of which only a sum of Rs. 2,000/- has been. paid by the buyer. Secondly, the document required the parties to have the vehicle registered in the name of the buyer after the payment of the balance of Rs. 8,000/-. Thus, the agreement, Ext. R4, stipulates two conditions; (i) unless the entire price is paid, the ownership in the vehicle shall not pass to the buyer and (ii) the seller was to execute the requisite papers after receiving the balance of the price. These are the conditions "thereafter to be fulfilled "contemplated by Section 4(3) of the Sale of Goods Act and subject to which the transfer was intended to be effected. We have no doubt that the parties intended that the ownership of the vehicle did not pass to the respondent No. 8 until the entire amount was paid and thereupon the seller executed the requisite documents. Besides, it is plain com-mensense that a seller would not divest himself of his ownership in property without realising the entire amount of consideration.
8. In our opinion, therefore, the property in the vehicle did not pass to respondent No. 8. Consequently, therefore, we hold that respondent No. 9 was the owner of the vehicle on the date on which the accident occurred and deceased died.
9. Incidentally the effect of the registration certificate of the motor vehicle may also be noted. In Aliyar Kunju's, Aliyar Kunju v. Subair Khan (1984 KLT 268) case the effect of the certificate of registration was put in perspective by one of us Bhat, J. in these words:
".......it can be seen that it is not the registration certificate of a motor vehicle which confers ownership on the owner. On the other hand, the registration certificate follows the ownership and not vice versa. The transfer of ownership of a vehicle is a matter governed not by the provisions of the Motor Vehicle Act but by the provisions of the Sale of Goods Act."
Delhi High Court too has held that a transfer made in accordance with the Sale of Goods Act must precede registration certificate and that such certificate is not a document of title, The Oriental Fire & General Ins. Co. Ltd. v. Vimal Rai and others (AIR 1973 Delhi 115). It follows, therefore, that what is of the essence is the actual transfer of the property in the vehicle and not the certificate of registration. The Madhya Pradesh High Court, United India Fire and General Insurance Co. Ltd. v. Kanchanbai (1981 ACJ 554) : AIR 181 MP 225 has also held that notwithstanding the delivery of possession of the vehicle and in the absence of payment of full price, the transferor continues to be the owner and the insurer is liable to pay compensation. In J. C. Channarayudu, J. C. Chennarayudu v. N. Lakshmamma (AIR T980 Andhra Pradesh 143) the Andhra Pradesh High Court dealt with a case where the "transferor" had taken the further step of signing the transfer application and had handed it over to the "transferee". Notwithstanding this fact, it was held that the ownership of the vehicle vested in the "transferror".
10. The second submission advanced by learned counsel for the appellant raises a mixed question of law and fact. The question of fact is whether the respondent No. 8 was driving the vehicle without a license. There is a controversy as to whether respondent No. 8 or respondent No. 10 was driving the vehicle. In the view about the burden of proof which we propose to take, this controversy is irrelevant. The pleadings do not show that the existence of a valid license by whoever drove the vehicle, was thrown in issue. Nor is there any evidence to prove that the driver did not hold a valid driving licence. In the circumstances, it cannot be held that the vehicle was driven by an unlicensed driver.
11. That brings us to the question of burden of proof of a fact which excludes the liability of the insurer. The substance of the appellant's case is that there is a breach of a term of the contract of insurance in as much as the vehicle was driven by an unlicensed driver. The law grants immunity to the insurer from liability to indemnify if the breach of the terms of policy is committed. A breach is the infringement or violation of a promise or obligation on the part of the insured. In this case, the promise was that the vehicle shall be driven by a licenced driver. It is not enough to allege and prove the fact that a breach has occurred. The Supreme Court has explained the concept of breach of promise in the case of Skandia Insurance Co. Ltd. Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan (AIR 1987 SC 1184) in these words (at page SC 1190; AIR 1987) :--
"The very concept of infringement or violation of the promise that the expression 'breach' carried within itself induces an inference that the violation or infringement on the part of the promisor must be a wilful infringement or violation. It is only when the insured himself places the vehicle in charge of a person who does not hold a driving licence, that it can be said that he is 'guilty' of the breach of the promise that the vehicle will be driven by a licenced driver. Unless the insured is at fault and guilty of a breach the insurer cannot escape from the obligation to indemnify the insured and successfully contend that he is exonerated having regard to the fact that the promisor (the insured) committed a breach of his promise".
The legal position, therefore, is that there must not only be a breach or violation of promise but must be wilfully committed by the promisor.
12. The conceptual analysis of the breach of promise leads to the inevitable question : who shall prove such wilfull breach? In other words, on whom does the onus of proof He? In this case, the appellant, insurer, desires the Court to give judgment that it is exonerated from the obligation to indemnify the insured. The insurer's right depends upon the existence of a fact, namely, driving by an un-licenced driver. It is necessary to examine the provision of law in regard to burden of proof.
13. It is an elementary rule of evidence that if the insurer desires the court to give judgment as to his legal right to be exaone-rated from the liability to indemnify the insured, he must prove the existence of facts upon which such legal right depends. On the basis of pleadings and evidence in this case, it is clear that the insurer fails if no evidence of the fact on which his legal right depends, is not led. Since, as we have pointed out in para 10 above, no evidence of the fact that the vehicle was driven by an unlicenced driver has been led, the burden of proof lies on the insured who would fail if no evidence at all were given on either side. The insurer seeks to wriggle out of its obligation by asserting exclusion of its liability by reason of a fact about which it has led no evidence. Illustration (b) of Section 102 of the Evidence Act illustrates how, if no evidence is given by the insurer of the fact excluding its liability, the burden of proof of such a fact lies on the insurer.
14. On an overall view of the law, it is clear that the party who comes to the court to claim compensation must generally prove the whole of the facts he alleges, to entitle him to a judgment. In the circumstances of this case, the claimants who initiated the proceedings have to prove the whole of the facts, namely, the rash and negligent driving, that such driving caused the death of P. Kassim and that the insured, respondent No. 9, was covered by the policy of insurance. Upon proof of these facts they are entitled to a judgment in their favour. But, if the insured asserts one particular fact which if proved, exonerates him from the obligation to pay compensation, the onus of proof of such fact is on the insurer. The reason is that upon proof by the claimants of the three facts set out above and in the absence of any evidence proving the fact that the vehicle was driven by an unlicenced driver, the claimants must succeed and the insurer must fail.
15. For all these reasons, we have no doubt that the burden of proving the fact which excludes the liability of the insurer to pay compensation lies on the insurer alone and no one else. In our opinion the insurer has failed to discharge this burden.
16. The claimants have filed cross objects to this appeal. The appellant, insurer, merely indemnifies the insured with whom he has contract of insurance. The claimants are not entitled to maintain cross objections in such an appeal by a party who is a mere indemni-fier. In our opinion, the cross objections by the claimants are incompetent.
For all these reasons, the appeal is dismissed with costs. The cross objection too is dismissed, but there shall be no order as to costs.