Allahabad High Court
National Insurence Co. Ltd. vs Smt. Ram Rati & Another on 5 July, 2013
Author: Rajes Kumar
Bench: Rajes Kumar
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR RESERVED First Appeal From Order No. 1265 of 1990 National Insurance Co. Ltd. through its Senior Divisional Manager at Divisional Office, 25, M.G. Marg, Allahabad.........Opposite Party-Appellant. VS. Smt. Ram Rati and others..........................Claimant-respondents. Hon'ble Rajes Kumar, J.
This is an appeal by the insurer of Ambassador Car, bearing registration no. URW-2740 against the order of the Tribunal dated 21.8.1990 passed in M.A.C.P. N0. 76 of 1987 by which a sum of Rs. 67,600/- has been awarded towards compensation.
The brief facts of the case are that on 17.6.1987 at about 10-00 p.m., the deceased Uma Shankar with his friend Sri Ajay Kumar was going on the left hand side of the road at Bilaspur near Naini Service Petrol Pump, when an Ambassador Car, bearing registration no. URW-2740, came from the side of Rampur and dashed against Uma Shankar knocking him down on the side of the road causing fatal injuries to him. The driver of the vehicle intended to run away. However, at the distance of about 100 meters near the culvert, the car was stopped by the police patrolling party. Uma Shankar was taken to the hospital where he died. Sri Ajay Kumar Sharma went to the police station and lodged a FIR about the incident. The claim petition was filed with the allegations that the vehicle was in a high speed and being driven rashly and negligently causing accident in which Uma Shankar sustained grievous injuries and died.
The sole submission of learned counsel for the appellant is that the vehicle was owned by Sri Rohit Kumar Sharma and was transferred to Smt. Rajo Devi, wife of Sri Mahesh Chandra Grupta, on 22.5.1987. The policy was taken by Sri Rohit Kumar Sharma expired on 4.6.1987, thereafter a fresh policy was taken on 5.6.1987 but the same was in the name of Sri Rohit Kumar Sharma. The submission is that the contract to indemnify was with Sri Rohit Kumar Sharma and, therefore, the appellant is not liable to pay the compensation. The Tribunal on the basis of the evidence on record has concluded that on 22.5.1987, the vehicle has been transferred in favour of Smt. Rajo Devi on the basis of record of R.T.O. and on the date of accident she was the owner of the vehicle. On the basis of the insurance policy, the Tribunal also concluded that the insurance of the said vehicle was in force from 5.6.1987 to 4.6.1988 and the policy was issued in the name of Sri Rohit Kumar Sharma. On the facts and circumstances, the Tribunal has held the Insurance Company to indemnify the owner of the vehicle relying upon the decisions of the Rajasthan High Court in the case of New Great Insurance Company of India Limited Vs. Koshalesh Sharma and others, reported in Accident Claims Journal-1989 Page 989, National Insurance Company Vs. Kastoori Devi and others, reported in ACJ-1988 Page 8, Santosh Rani and others Vs. Sheela Devi and others, reported in ACJ 1988 Page 299, New India Insurance Company Ltd. Vs. Avinash and others, reported in ACJ 1988 Page 222 and the Full Bench Decision of the Andhra Pradesh High Court in the case of Madineni Kordiaish Vs. Yasen Fateema, reported in ACJ 1986 Page 1. The Tribunal has also referred the contrary view taken by the Madras High Court in the case of New India Assurance Company Vs. Parvati Ammal and others, reported in ACC-1988 Page 494 and the decision of the Punjab & Haryana High Court in the case of Baldev Raj Vs. Dharmo Rani & others, reported in ACC-1990 Page 255. In all the decisions where the reliance has been placed by the Insurance Company is based on the plea that the intimation of the transfer had not been given under Section 96 (2) and under Section 103 (a) of the Motor Vehicles Act, 1939 (hereinafter referred to as the "Act") to the Insurance Company. The Tribunal, however, relied upon the various decisions referred herein above, has held that the Insurance Company cannot absolve from its liability inasmuch as the vehicle was insured on the date of the accident.
I have considered rival submissions, perused the record and the impugned order.
The admitted facts are that the Ambassador Car, bearing registration no. URW-2740, which was involved in the accident, held on 17.6.1987, initially owned by Sri Rohit Kumar Sharma, was transferred to Smt. Rajo Devi, wife of Sri Mahesh Chandra Grupta on 25.5.1987 as per the record of the R.T.O. Initial insurance policy in the name of Sri Rohit Kumar Sharma expired on 4.6.1987. However, a fresh insurance policy was taken, which was in force for the period 5.6.1987 to 4.6.1988 but the same was in the name of Sri Rohit Kumar Sharma despite the vehicle was transferred in favour of Smt. Rajo Devi. Undoubtedly, on the date of the accident, the vehicle was insured as statutorily provided under Section 95 of the Act. In the pleading before the Tribunal, Sri Rohit Kumar Sharma denied to have signed any application for the renewal of the insurance policy for the subsequent period. The Tribunal found that no intimation has been given by the transferor as required under Section 103 (a) of the Act. The Tribunal, however, held that since the vehicle was insured on the date of the accident to cover third party risk merely because an intimation of the transfer of the vehicle has not been given under Section 103 (a) of the Act, the Insurance Company cannot be absolved from its liability. The question for consideration is that on admitted fact stated above whether the Insurance Company is liable to pay the compensation to third party.
It would be useful to refer Sections 95 and 103 of the Motor Vehicles Act, 1939.
"Section 95. (1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which--
(a) is issued by a person who is an authorised insurer or by a co-operative society allowed under section 108 to transact the business of an insurer, and
(b) insures the person or classes of person specified in the policy to the extent specified in sub-section (2) against any liability which may be incurred by him or them in respect of the death of or bodily injury to any person caused by or arising out of the use of the vehicle in a public place:
Provided that a policy shall not be required--
(i)to cover liability in respect of the death, arising out of and in the course of his employment, of the employee of a person insured by the policy or in respect of bodily injury sustained by such an employee arising out of and in the course of his employment other than a liability arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to, any such employee--
(a) engaged in driving the vehicle, or
(b) if it is a public service vehicle, engaged as a conductor of the vehicle or in examining tickets on the vehicle, or
(c)if it is a goods vehicle, being carried in the vehicle, or
(ii)except where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, to cover liability in respect of the death of or bodily injury to persons being carried in or upon or entering or mounting or alighting from the vehicle at the time of the occurrence of the event out of which a claim arises, or
(iii) to cover any contractual liability.
(2)Subject to the proviso to sub-section (1), a policy of insurance shall cover any liability incurred in respect of any one accident up to the following limits, namely:--
(a) where the vehicle is a goods vehicle, a limit of twenty thousand rupees in all, including the liabilities, if any, arising under the Workmen's Compensation Act, 1923, in respect of the death of, or bodily injury to, employees (other than driver), not exceeding six in number, being carried in the vehicle;
(b) where the vehicle is a vehicle in which passengers are carried for hire or reward or by reason of or in pursuance of a contract of employment, in respect of persons other than passengers carried for hire or reward, a limit of twenty thousand rupees; and in respect of passengers a limit of twenty thousand rupees in all, and four thousand rupees in respect of an individual passenger, if the vehicle is registered to carry not more than six passengers excluding the driver or two thousand rupees in respect of an individual passenger, if the vehicle is registered to carry more than six passengers excluding the driver;
(c)where the vehicle is a vehicle or any other class the amount of the liability incurred.
(4)A policy shall be of no effect for the purposes of this Chapter unless and until there is issued by the insurer in favour of the person by whom the policy is effected a certificate of insurance in the prescribed form and containing the prescribed particulars of any conditions subject to which the policy is issued and of any other prescribed matters; and different forms, particulars and matters may be prescribed in different cases.
(4A) Where a cover note issued by the insurer under the provisions of this Chapter or the rules made thereunder is not followed by a policy of insurance within the prescribed time, the insurer shall, within seven days of the expiry of the period of the validity of the cover note, notify the fact to the registering authority in whose records the vehicle to which the cover note relates has been registered or to such other authority as the State Government may prescribe.
(5)Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be 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 person.
(95A). Where, in pursuance of an arrangement between India and any reciprocating country, any motor vehicle registered in the reciprocating country operates on any route or within any area common to the two countries and there is in force in relation to the use of the vehicle in the reciprocating country, a policy of insurance complying with the requirements of the law of insurance in force in that country, then, notwithstanding anything contained in section 95 but subject to any rules which may be made under section 11, such policy of insurance shall be effective throughout the route or area in respect of which the arrangement has been made, as if the policy of insurance had complied with the requirements of this Chapter.
Section 103. When an insurer has issued a certificate of insurance in respect of a contract of insurance between the insurer and the insured person, then--
(a) if and so long as the policy described in the certificate has not been issued by the insurer to the insured, the insurer shall, as between himself and any other person except the insured be deemed to have issued to the insured person a policy of insurance conforming in all respects with the description and particulars stated in such certificate; and
(b) if the insurer has issued to the insured the policy described in the certificate, but the actual terms of the policy are less favourable to persons claiming under or by virtue of the policy against the insurer either directly or through the insured than the particulars of the policy as stated in the certificate, the policy shall, as between the insurer and any other person except the insured, be deemed to be in terms conforming in all respects with the particulars stated in the said certificate."
The Motor Vehicle Act is a beneficial legislature for the benefit of the claimant who him/herself either injured in the accident or his/her ward died in the accident. The heading of Chapter VIII of the old Act reads as "Insurance of Motor Vehicles Against Third Party Risks." A perusal of the provisions under Chapter VIII makes it clear that the legislature made insurance of motor vehicles compulsory against third party (victim) risks. The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social justice doctrine.
The Apex Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswani, reported in 1958-65 ACJ 559 (SC), after noticing the compulsory nature of insurance against third party risk observed that, once the company had undertaken liability to third parties incurred by the persons specified in the policy, the third parties' right to recover any amount under or by virtue of the provisions of the Act is not affected by any condition in the policy. The Apex Court in the case of G. Govinda V. New India Assurance Co. Ltd. and others, reported in 1999 ACJ 781 has held that under the Old Act and under the New Act, the legislature was anxious to protect the third party (victim) interest. It has been further observed that what was implicit in the provisions of the old Act is now made explicit, presumably in view of the conflicting decisions on this aspect among the various High Courts. The Apex Court has upheld the view taken by the Andhra Pradesh High Court in Madineni Kondaiah v. Yaseen Fatima, reported in 1986 ACJ 1 wherein so far as third party risk is concerned, on the transfer of the vehicle, though insurance policy stood in the name of transferor, the Insurance Company has been held liable. The view taken by the Full Bench of the Delhi High Court in the case of Anand Sarup Sharma v. P.P. Khurana, reported in 1989 ACJ 577 and the Full Bench decision of the Karnataka High Court in National Insurance Co. Ltd. v. Mallikarjun, reported in 1990 ACJ 688 has not been approved. It has been observed that the ratio laid down by the Andhra Pradesh High Court in Madineni Kondaiah's case (supra) as it advances the object of the legislature to protect the third party interest is correct. The Apex Court further observed that we hasten to add that the third party here will not include a transferee whose transferor has not followed procedure for transfer of policy. The Apex Court further observed that a victim or legal representatives of the victim cannot be denied the compensation by the insurer on the ground that the policy was not transferred in the name of transferee.
It will be useful to refer paragraphs-10 and 11 of the Judgement of the Apex Court in the case of G. Govinda V. New India Assurance Co. Ltd. and others (supra).
"In Complete Insulations (P) Ltd. v. New India Assurance Co. Ltd., reported in 1996 ACJ 65 (SC), a three Judge Bench of this Court had considered the scope of section 103-A and Sections 94 and 95 of the 1939 Act and compared the same with sections 157 and 146, 147 and 156 of the Motor Vehicles Act, 1988. In that case the transferee of the vehicle contended, inter alia, that he was entitled to get the compensation for the damage caused to the vehicle in an accident that took place after the transfer notwithstanding the fact that the insurance policy was not transferred in his name. The Consumer Disputes Redressal Commission, Chandigarh directed the insurer to pay a total sum of Rs.83,000/-, i.e., the insured value of the vehicle. The insurer preferred an appeal to the National Consumer Disputes Redressal Commission which set aside the order of the Commission at Chandigarh and dismissed the claim of the transferee. The National Commission after referring to the Full Bench judgment in particular the separate concurring judgment of Kodandaramayya, J. of Andhra Pradesh High Court applied the ratio in that judgment in support of its decision. The transferee then preferred an appeal to this court by special leave. This Court after referring to the separate judgment of Kodandaramayya, J. approved the principle laid down therein, applied the same and upheld the decision of the National Commission.
This Court in the said judgment held that the provisions under the new Act and the old Act are substantially the same in relation to liability in regard to third party. This court also recognized the view taken in the separate judgment in Madineni Kondaiah's case, 1986 ACJ 1 (AP), that the transferee-insured could not be said to be a third party qua the vehicle in question. In other words, a victim or the legal representatives of the victim cannot be denied the compensation by the insurer on the ground that the policy was not transferred in the name of the transferee."
It may also be useful to refer the relevant paragraph of the Full Bench decision of the Andhra Pradesh Hingh Court, which has been approved by the Apex Court.
"In Madineni Kondaiah v. Yaseen Fatima, 1986 ACJ 1 (AP), a Full Bench of the Andhra Pradesh High Court had occasion to consider an identical question. The leading judgment was by Raghuvir, J. Kodandaramayya, J., in his separate concurring judgment, had also analysed the relevant provisions of the Act, compared the provisions of the Act with the provisions in English Act and after noticing the judgements of the courts in India and England, held as follows :
"A perusal of section 94 clearly discloses that the statute intended to give protection to a third party in respect of death or bodily injury or damage to its property while issuing the vehicle in a public place. Hence the insurance of the vehicle under section 94 read with section 95 is made compulsory. Those two provisions do not extend the compulsory insurance to the vehicle or to the owner. In fact, these two provisions made exception to protect the life or limb of the driver of the vehicle or the passenger in the vehicle except public service vehicle. Thus, it is seen that the compulsory insurance is for the benefit of third parties. Hence, it is clear that the insurance policy covering three kinds of risks, i.e., person (owner), property (vehicles) and third parties is clearly in the nature of composite one. The public liability (third party liability) alone is compulsory. While considering whether the transfer of the vehicle would put an end to the policy, we must see whether such a composite policy will lapse putting an end to all the three kinds of risks undertaken by the insurance company. For this purpose section 95 (5) must be looked into :
'Notwithstanding anything elsewhere contained in any law, the person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons 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.' This section is clearly based upon provision of English statute. This section is analogous to the provision in England where the Third Party's Rights Against Insurers Act, 1930 was enacted to confer on third parties rights against the insurer of the third party risks. The present Act made a specific provision in case where the insurer becomes insolvent or dies (vide sections 101 and 102 of the Act) to obviate any doubt or dispute in respect of such events. Section 95 (5) intended to cover two legal objections, firstly, that no one who was not a party to a contract could bring an action on a contract; secondly, that a person who has no interest in the subject-matter of an insurance can claim the benefit of insurance. Thus, this provision puts beyond doubt removing these two objections and making an exception to the general law of contracts. Now the question is whether such rights secured to the third party by insuring the vehicle can be defeated by transferring the vehicle during the period when the policy is in force. It is significant to note that section 94 requires the insurance of the vehicle. Once the vehicle is covered by the insurance not only the owner but any person can use the vehicle with his permission. Section 94 does not require that every person that uses the vehicle shall insure in respect of their separate use. The decided cases now hold that on transfer the policy will lapse and a third party cannot enforce the policy against the insurance company. We must make it clear that there are two third parties when such transfer took place. One is a transferee who is a third party to the contract and the other for whose risk the vehicle is insured. We have no hesitation to hold that the transferee who is a third party to the contract cannot secure any personal benefit under the policy unless there is a novation, i.e., the insurance company, the transfer of the vehicle, and the transferee must agree that the policy must be assigned to the transferee so that the benefit derivable, or derived under the policy by the original owner of the vehicle, the policyholder, can be secured by the transferee. Thus, it is clear under a composite policy, covering the risk of property, person, third party risks, the transferee cannot enforce the policy without the assignment in his favour so far the policy covers the risk of the person and property. He has no remedy against the insurance company.
It is correct to assume that the moment the title of the vehicle passes to the transferee the statutory obligation under section 94 ceases and the original owner is no longer guilty of causing or allowing the purchaser to use the vehicle. The question is when does the statutory liability cease? The mere passing of title in the vehicle to the transferee will not put an end to this liability. For this purpose we must examine two more provisions of the Act. Under Section 31, the transferor shall within 14 days of the transfer report the fact of transfer to the registering authority within whose jurisdiction the transfer is to be made effected and shall simultaneously send a copy of the said report to the transferee and within forty-five days of the transfer forward to the registering authority no objection certificate obtained by him under section 29-A. Section 29-A contemplates issuing of no objection certificate both on the occasion of assignment of a new registration mark and also while transferring the motor vehicle. The registering authority is enjoined to issue a certificate within a period of thirty days and if no orders are passed the registering authority shall be deemed to have granted the no objection certificate. The failure to comply with section 31 is made punishable under section 112. However, as an alternative measure it is also provided under section 31 (1-A) that if the transferor or transferee fails to comply with the requirements of section 31 they have to pay a fine of Rs.100/- or the prescribed amount considering the period of delay on their part by way of penalty. It is pertinent to note that section 31 was amended by Act 100 of 1956. Under section 31 as it stood prior to this amendment in 1956 only the transferee was required to report the transfer of the ownership and was expected to forward a certificate of registration to the registering authorities within thirty days of the transfer. Prior to this amendment thre was no statutory obligation on the transferor as is now provided in sub clause (a) of sub-section (1) of section 31 to notify the transfer to the registering authority within whose jurisdiction the transfer is effected. Thus we see till the transferor fulfils the statutory obligation under section 31 his liability continues. Further he is the ostensible owner of the vehicle so long the registration is not changed. The liability to pay tax continues irrespective of his rights against transferee for reimbursement. In fact it was ruled in Northern India Genl. Ins. Co. Ltd. v. Kanwarjit Singh, 1973 ACJ 119 (Allahabad), that a registered owner would have sufficient interest to effect insurance because he is the ostensible owner. The question raised in that case was whether the registration in favour of benamidar is valid when the registered owner of the vehicle is only benamidar when the real owner never obtained the insurance. It was held that the registered owner has sufficient interest to effect insurance because he is the ostensible owner and there is nothing in section 94 which could be interpreted to mean that it is only the real owner who could effect the insurance. Any person who uses the vehicle or allows any other person to use the vehicle could also get the insurance effected. Thus, it is seen the public liability to notify the transfer and securing no objection certificate under section 31 read with section 94, would make the original owner retain the insurable interest. The insurable interest in this case is not the proprietary interest but the public liability, not to run the vehicle or cause or allow any person to run the vehicle without insurance and also to notify the transfer of such vehicle to the registering authority. So long such obligation continues notwithstanding the cessation of proprietary interest, the insurable interest which is the foundation for the continuance of the operation of the policy stands.
Thus, we are clearly fortified in our view that the insurable interest in the property is not necessary in the case of public liability insurance. The test is whether the liability under the statute ceased or not notwithstanding the passing of title and hence we respectfully dissent with the view expressed by the various High Courts that on the sale of the vehicle the insurable interest ceases and the policy lapses. We agree that any claim of the transferee in respect of his property and his person cannot be enforced against the insurance company. He being a stranger he cannot have any claim against the insurance company. But where the third party risk is concerned so long the obligations under the statute are not fulfilled, as contemplated under section 31 read with section 94, he continues to have the insurable interest till such obligations are fulfilled. Any prudent purchaser should take steps to get the policy transferred to him under section 103. The insurer is bound to accept the transfer and can only refuse to consent on specified grounds. It is clearly an impracticable view to take that on passing of property in the vehicle, the policy lapses and the obligation under section 94 of the Act ceases. In fact as observed by Supreme Court the policy is to the vehicle and hence normally it should run with the vehicle. It is just to expect a reasonable time for the transferor to make the necessary arrangement to notify the transfer under section 31 and secure the certificate under section 29-A within the time mentioned in those provisions. If this is not allowed, the moment the vendor receives the money and puts the vehicle in possession of the transferee, the latter is not in a position to use the vehicle in view of section 94 till a fresh policy is obtained. He cannot take the vehicle to his house passing through any public place. When the transfer is liable to pay penalty under section 31 and also liable to be prosecuted under section 112 for not notifying the transfer, we are clearly of the opinion such statutory liability makes him to retain the insurable interest as the liability subsists till he discharges the statutory obligations. We disagree with the view expressed in N. Kanakalakshmi v. R.V. Subba Rao, 1972 (1) APLJ 249.
The registration of the vehicle in the name of the transferee is not necessary to pass title in the vehicle. Payment of price and delivery of the vehicle makes the transaction complete and the title will pass to the purchaser. When the policy of insurance obtained by the original owner of the vehicle is composite are 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 a novation. So far the third party risk is concerned the proprietary interest in the vehicle is not necessary and the public liability continues till the transferor discharges the statutory obligation under sections 29-A and 31 read with section 94 of the Act. Till he complies with the requirement of section 31 of the Act the public liability will not cease and that constitutes the insurable interest to keep the policy alive in respect of the third party risks concerned. It must be deemed that the transferor allowed the purchaser to use the vehicle in a public place in the said transitional period and accordingly till the compliance of section 31, the liability of the transferor subsists and the policy is in operation so far it relates to the third party risks. We answer the second question accordingly."
In view of the decisions of the Apex Court, referred herein-above, it would not be useful to refer the decisions of the various High Courts.
In the case of Uttar Pradesh State Road Transport Corporation vs. Kulsum and others, reported in (2011) 8 Supreme Court Cases 142, the Apex Court has held as follows:
"Thus, for all practical purposes, for the relevant period, the Corporation had become the owner of the vehicle for the specific period. If the Corporation had become the owner even for the specific period and the vehicle having been insured at the instance of original owner, it will be deemed that the vehicle was transferred along with the insurance policy in existence to the Corporation and thus the Insurance Company would not be able to escape its liability to pay the amount of compensation.
The liability to pay compensation is based on a statutory provision. Compulsory insurance of the vehicle is meant for the benefit of the third parties. The liability of the owner to have compulsory insurance is only in regard to third party and not to the property. Once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 146 of the act does not provide that any person who uses the vehicle independently, a separate insurance policy should be taken. The purpose of compulsory insurance in the Act has been enacted with an object to advance social justice.
Third-party rights have been considered by this Court in several judgements and the law on the said point is now fairly well settled.
The Apex Court in Guru Govekar Vs. Filomena. F. Lobo, reported in (1988) 3 SCC 1 has held that :
"8.....Thus if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place. The liability to pay compensation in respect of death of or injury caused to the person or property of a third party undoubtedly arises when such injury is caused when the insured is using the vehicle in a public place. It also arises when the insured has caused or allowed any other person (including an independent contractor) to use his vehicle in a public place and the death of or injury to the person or property of a third party is caused on account of the use of the said vehicle during such period, unless such other person has himself taken out a policy of insurance to cover the liability arising out of such an accident.
13......This meant that once the insurer had issued a certificate of insurance in accordance with sub-section (4) of Section 95 of the Act the insurer had to satisfy any decree which a person receiving injuries from the use of the vehicle insured had obtained against any person insured by the policy. He was liable to satisfy the decree when he had been served with a notice under sub-section (2) of Section 96 of the Act about the proceedings in which the judgment was delivered.
14.....Any other view will expose innocent third parties to go without compensation when they suffer injury on account of such motor accidents and will defeat the very object of introducing the necessity for taking out insurance policy under the Act."
In a recent judgment of this Court, in United India Insurance Co. Ltd. v. Santro Devi, reported in (2009) 1 SCC, 558 it has been held as under under: (SCC pp 564-65, paras 16-17).
"16. The provisions of compulsory insurance have been framed to advance a social object. It is in a way part of the social justice doctrine. When a certificate of insurance is issued, in law, the insurance company is bound to reimburse the owner. There cannot be any doubt whatsoever that a contract of insurance must fulfil the statutory requirements of formation of a valid contract but in case of a third-party risk, the question has to be considered from a different angle.
17. Section 146 provides for statutory insurance. An insurance is mandatorily required to be obtained by the person in charge of or in possession of the vehicle. There is no provision in the Motor Vehicles Act that unless the name(s) of the heirs of the owner of a vehicle is/are substituted on the certificate of registration in place of the original owner (since deceased), the motor vehicle can not be allowed to be used in a public place. Thus, in a case where the owner of a motor vehicle has expired, although there does not exist any statutory interdict for the person in possession of the vehicle to ply the same on road; but there being a statutory injunction that the same cannot be plied unless a policy of insurance is obtained, we are of the opinion that the contract of insurance would be enforceable. It would be so in a case of this nature as for the purpose of renewal of insurance policy only the premium is to be paid. It is not in dispute that quantum of premium paid for renewal of the policy is in terms of the provisions of the Insurance Act, 1938."
Perusal of the ratio of aforesaid judgements of this Court shows that Section 146 of the Act gives complete protection to the third party in respect of death or bodily injury or damage to be property while using the vehicle in public place. For that purpose, insurance of the vehicle has been made compulsory to the vehicles or to the owners. This would further reflect that compulsory insurance is obviously for the benefit of third parties."
In the aforesaid case, the fact was that the bus was owned by Kulsum and others. There was a statutory policy under Section 147 (Section 95 of the Old Act) to cover the third party risk in the name of the actual owner. Under the terms and conditions, the said vehicle was leased out to the U.P. S.R.T.C. for plying the same on the road. The accident has been caused by the said bus. The Insurance Company disputed the payment of the compensation against insurance policy covering third party risk on the ground that the insurance policy stood in the name of Kulsum and others while under the Motor Vehicles Act, since the vehicle has been plied by the U.P.S.R.T.C. under the definition "owner", the U.P.S.R.T.C. was the owner and was liable to pay the compensation and under the terms and conditions of the policy, the Insurance Company was not liable to indemnify the U.P.S.R.T.C. The Apex Court repelled the argument of the Insurance Company on the principle laid down herein-above and held that the Insurance Company cannot escape from its liability to pay the compensation to third party unless a case of violation of any terms and conditions of policy or provisions of the Act is made out.
In view of the aforesaid principle laid down by the Apex Court, I am of the view that the Insurance Company cannot dispute its liability to pay the compensation to the claimant against insurance policy covering third party risk merely on the ground that the insurance policy stood in the name of earlier owner and the intimation of the transfer has not been given under Section 103 (a) of the Act.
The appeal accordingly fails and dismissed.
Dated: 5th July, 2013 OP