Punjab-Haryana High Court
Reliance General Insurance Co. Ltd vs Permanent Lok Adalat (P.U.S.) on 20 September, 2010
Author: Permod Kohli
Bench: Permod Kohli
IN THE HIGH COURT OF PUNJAB & HARYANA AT
CHANDIGARH
CWP. No. 21447 of 2008
Date of Decision: 20.9.2010.
Reliance General Insurance Co. Ltd. --Petitioner
Versus
Permanent Lok Adalat (P.U.S.), Gurgaon & another --Respondents
CORAM:- HON'BLE MR.JUSTICE PERMOD KOHLI.
Present:- Mr. P.M. Goyal, Advocate for the petitioner.
None for respondents.
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PERMOD KOHLI.J (ORAL) This petition has been preferred by the Insurance Company against the order dated 3.7.2008 passed by the Permanent Lok Adalat (P.U.S.), Gurgaon allowing the claim of respondent no.2 for damage to the car with interest @ 12%.
Briefly stated, the facts of the case are noticed hereunder:-
Respondent no.2 was owner of the vehicle bearing registration No. DL 4CP-5150 model Skoda. He secured an insurance policy no. 1306372311115356 in respect to the aforesaid vehicle on 4.8.2007 for a sum of Rs. 4,70,000/-. The policy was valid for a period of one year i.e up to 3.8.2008. Respondent no.2 sold the vehicle to one Pankaj Grover of Hira Nagar, Gurgaon on 23.6.2007 i.e during the currency of the policy. Unfortunately, the vehicle met with an accident on 23.6.2007. Respondent no.2 had lodged the claim for damage to the car on 8.11.2007. At the time of accident vehicle was being driven by Pankaj Grover, the purchaser of the car. The petitioner-company appointed a Surveyor and loss assessor M/s Suraksha Agencies. The said company after investigation submitted its CWP. No. 21447 of 2008 -2- survey report on 19.11.2007. The Surveyor reported that the respondent no.2 had transferred the vehicle prior to the date of accident. On receipt of the report the Insurance Company repudiated the claim vide letter dated 3.12.2007 on the ground that the insurer having sold the vehicle ceases to have any insurable interest in the vehicle and the sale of the vehicle in favour of Pankaj Grover without a transfer having been effected with the registering authority and without any intimation to the insurance company is impermissible. Respondent no.2, however, approached the Permanent Lok Adalat i.e. Respondent no.1. Despite the objections by the petitioner-
insurance company regarding the jurisdiction of the Permanent Lok Adalat in view of repudiation of the claim, the Permanent Lok Adalat in summary proceedings passed the impugned award dated 3.7.2008 allowing the claim of respondent no.2 for an amount of Rs. 3,54,000/- along with the interest @ 12% from the date of the order till the date of payment.
It is specific stand of the petitioner-company that the contract/claim stands repudiated for non-compliance of G.R.-17 of the Indian Motor Tariff Regulations issued under the Insurance Act which binds the parties.
The controversy in the present case is squarely covered by a judgement of this Court dated 14.9.2010 passed in CWP No. 15037 of 2008, wherein following observations have been made:-
" The only ground of challenge to the order is that the insurance policy in the name of the erstwhile owner (insured) having not been transferred in the name of respondent no.2, no claim towards the damage to the vehicle is payable under the insurance policy or even under CWP. No. 21447 of 2008 -3- Section 157 of the Motor Vehicle Act.
In support of the contentions raised, the petitioner-company has relied upon a case reported as AIR 1996 SC 586 titled as M/s Complete Insulations (P) Ltd. Vs. New India Assurance Company Ltd., wherein the Hon'ble Supreme Court held as under:-
" 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 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 CWP. No. 21447 of 2008 -4- 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 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."
XXX XXX XXX To the contrary, it has been contended and argued on behalf of respondent no.2 that the petitioner is guilty of concealment of the facts. CWP. No. 21447 of 2008 -5- According to respondent no.2, petitioner has not disclosed the 1994 circular issued by General Insurance Company Ltd. with regard to the transfer of vehicles. The said circular is part of the Indian Motor Tariff Regulations.
In so far the contention of the respondents regarding the circular is concerned, though, no details of any such circular have been given in the reply, however, reliance is placed upon a judgement of the National Consumer Disputes Redressal Commission, New Delhi passed in Revision Petition No. 556 of 2002 titled as Shri Narayan Singh Vs. New Indian Assurance Company Ltd.
In the aforesaid judgement the Commission relying upon the G.R. 10 of the India Motor Tariff Regulations held and ruled that the transferee is also entitled to the claim notwithstanding that the insurance policy was not transferred in the name of the transferee of a vehicle. However, learned counsel for the petitioner has brought to my notice the revised India Motor Tariff which supersedes the earlier tariff which was in existence up to 30.6.2002. Under the revised Indian Motor Tariff issued under the provisions of the Insurance Act, 1938, G.R. 17 deals with the transfer. The new transfer provisions, thus, read as under:-
" G.R. 17. Transfers.
On transfer of ownership, the Liability Only cover, either under a Liability Only policy or under a Package policy, is deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of transfer.
The transferee shall apply within fourteen days from the date of transfer in writing under recorded delivery to the insurer who has CWP. No. 21447 of 2008 -6- insured the vehicle, with the details of the registration of the vehicle, the date of transfer of the vehicle, the previous owner of the vehicle and the number and date of the insurance policy so that the insurer may make the necessary changes in his record and issue fresh Certificate of Insurance.
In case of Package Policies, transfer of the "Own Damage"
section of the policy in favour of the transferee, shall be made by the insurer only on receipt of a specific request from the transferee along with consent of the transferor. If the transferee is not entitled to the benefit of the No Claim Bonus (NCB) shown on the policy, or is entitled to a lesser percentage of NCB than that existing in the policy, recovery of the difference between the transferee's entitlement, if any, and that shown on the policy shall be made before effecting the transfer.
A fresh Proposal Form duly completed is to be obtained from the transferee in respect of both Liability Only and Package Policies.
Transfer of Package Policy in the name of the transferee can be done only on getting acceptable evidence of sale and a fresh proposal form duly filled and signed. The old Certificate of Insurance for the vehicle, is required to be surrendered and a fee of Rs.50/- is to be collected for issue of fresh Certificate in the name of the transferee. If for any reason, the old Certificate of Insurance cannot be surrendered, a proper declaration to that effect is to be taken from the transferee before a new Certificate of Insurance is issued."
XXX XXX XXX The National Commission's judgement relied upon was on the basis of the earlier transfer provisions G.R. 10 which were in force up to 30.6.2002 and thereafter the above mentioned transfer provisions have CWP. No. 21447 of 2008 -7- been incorporated. The aforementioned G.R. 17 makes it absolutely obligatory for a transferee to apply within a period of 14 days from the date of transfer in writing to the insurer of the vehicle giving the details of the registration of the vehicle, the date of transfer of the vehilce, the previous owner, the details of the policy as also the evidence of sale and fresh proposal form duly filled and signed. He is also required to surrender the old certificate and to pay a fee of Rs. 50/- for issue of the fresh certificate in the name of the transferee. Thus, there is no automatic transfer in favour of the transferee to enable him to take the benefit of damage to the vehicle in the hands of transferee although the insurance is liable to 3rd party under Section 157 of the Motor Vehicle Act, 1988. In so far the liability towards the 3rd party is concerned, Hon'ble Supreme Court has clarified this position in a case reported as AIR 1999 SC 1398 titled as G. Govindan Vs. New India Assurance Co. Ltd. & Ors., wherein it has been ruled that where the accident is caused by a vehicle in the hands of a transferee without the insurance policy being transferred, the insurer is liable to compensate the victim irrespective of non-communication of the transfer to the insurance company.
In view of the above legal position, this petition is allowed. Impugned order passed by the Permanent Lok Adalat is hereby set aside and the claim petition of respondent no.2 is dismissed. In the facts and circumstances of the case without any order as to costs."
In view of the above, this petition is allowed. The impugned order dated 3.7.2008 is hereby set aside, however, respondent no.2 is at liberty to approach the civil court for appropriate relief.
(PERMOD KOHLI) JUDGE 20.9.2010.
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