National Consumer Disputes Redressal
New India Assurance Co. Ltd vs Shaik Dawood on 21 February, 2013
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CIRCUIT BENCH AT HYDERABAD ANDHRA PRADESH REVISION PETITION No. 3502 of 2009 (From the Order dated 01.06.2009 in Appeal No. 1261/2006 of the State Consumer Disputes Redressal Commission, Andrhar Pradesh) New India Assurance Co. Ltd. Through its duly constituted Attorney, Manager, Regional Office I RO-1, Level-5, Tower II Jeevan Bharti, 124, Connaught Circus, New Delhi-110001 .. Petitioner VERSUS Shaik Dawood, S/O Shri Razok Saheb, R/O Macleans Road, Kotamitta, Nellore, Andhra Pradesh .. Respondent BEFORE: - HONBLE MR. JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER For the Petitioner : Mrs. M. Seetha Devi, Advocate For the Respondent : Mr. C. Krishnareddy, Advocate PRONOUNCED ON: 21.02.2013 O R D E R
ASHOK BHAN, J., PRESIDENT Petitioner Insurance Company which was the Opposite Party before the District Forum has filed this Revision Petition against the order and judgment dated 01.06.09 passed by the State Consumer Disputes Redressal Commission, Andhra Pradesh (in short, the State Commission) in appeal No.1261/06 whereby the State Commission reversing the order of the District Forum dismissing the complaint has allowed the appeal and directed the Petitioner to settle the claim of the insurance covered under EX. A1 policy bearing No.612701/31/03/01454 in respect of the Maruti Zen bearing No.TN 2 H 4230 purchased and owned by the Complainant along with insurance claim with interest @ 9% p.a. thereon from the date of claim till realization. Rs.5,000/- were awarded towards compensation for mental agony and Rs.2,000/- for legal expenses.
FACTS:-
Complainant/Respondent herein purchased a second-hand Maruti Zen car bearing No. TN-2H-4230 from one, T. Sundhakar Reddy. The vehicle was insured with the Petitioner Insurance Company under policy bearing No. 612701/31/03/01454 for the period from 16.09.03 to 15.09.04. Respondent got the vehicle transferred in his name on 18.02.04.
On 3.06.04, the vehicle met with an accident and was badly damaged. On receiving the intimation, Petitioner appointed the Surveyor, A.C. Reddy to conduct the survey and assess the loss. Surveyor submitted his report on 13.08.04 assessing the loss at Rs.1,60,000/- on market value. Later, the vehicle was taken to Maruti Service Station at Nellore for its repairs. Respondent spent a sum of Rs.2,80,000/- towards repairs and Rs.20,000/- towards conveyance charges. In spite of repeated requests made by the Respondent, Petitioner did not settle the claim. Ultimately, vide letter dated 20.01.05, Petitioner repudiated the claim on the ground that the policy stood in the name of third party and there was no intimation to them about the transfer of the vehicle. Complainant/Respondent, being aggrieved, filed the complaint before the District Forum.
Petitioner on service put in appearance and filed its written statement resisting the complaint on the grounds; that the Maruti Car was insured by T. Sudhakar Reddy and he did not give any intimation about the transfer of the vehicle; that the policy was issued in the name of T. Sudhakar Reddy and it was not transferred in the name of the Respondent and, therefore, the complaint was not maintainable; that in the absence of transfer of policy, the Petitioner was not liable to indemnify the loss suffered by the Respondent; that there was violation of the provisions of Section 151 of M.V. Act and GR-17 of the Indian Motor Tariff;
District Forum dismissed the complaint and referring to certain judgments observed that the insured T. Sudhakar Reddy shall file the claim before the OP, New India Assurance Company as per the policy within the period of six weeks from the date of order of the District Forum and the OP Insurance Company shall consider the same sympathetically basing on the report of the Surveyor and settle the claim as per terms of the policy.
Complainant, being aggrieved, filed the appeal before the State Commission.
State Commission, after considering the material available on record and the evidence led by the parties, came to the conclusion that the Insurance Company was not justified in repudiating the claim and allowing the appeal directed the Petitioner to settle the claim of the insurance covered under EX. A1 policy bearing No.612701/31/03/01454 in respect of the Maruti Zen bearing No.TN 2 H 4230 purchased and owned by the Complainant along with insurance claim with interest @ 9% p.a. thereon from the date of claim till realization. Rs.5,000/- were awarded towards compensation for mental agony and Rs.2,000/- for legal expenses.
State Commission observed as under:-
The Honble National Commission in C. Narayana Singh Vs. New India Assurance Co. Ltd. IV (2007) CPJ 289 (NC) made it clear that the insurer cannot take undue advantage of the ignorance of the consumers. In 1994, a circular has been issued by the General Insurance Company with regard to the transfer of the vehicles and the transfer of the insurance benefits automatically in favour of the transferee. The said regulation is part of the Indian Motor Tariff Regulation and the said regulation reads as follow:-
Transfers On transfer of a vehicle the benefits under the policy in force will automatically accrue to the new owner.
The bonus/malus already applicable for the policy would continue until expiry of the policy. On expiry or cancellation of the policy, bonus/malus will apply as per the new owners entitlement.
If the transferee wants to change the policy in his name, it may be done on getting evidence of sales and a proposal form duly completed. The old certificate of insurance must be surrendered to the insurance company and a new certificate of insurance can be issued by collecting a fee of Rs.15. If the old certificate is not surrendered, a declaration is to be taken from the new owner before issuing a new certificate.
In similar facts of the case, Chattisgarh State Commission in Ajmuddin Vs. The New India Insurance Co. Ltd. in 2006 (2) CPR 124 had made it clear that GIC having issued circular for settlement of the claim irrespective of policy being not transferred, the repudiation by the insurance company is not justified.
In the light of the above decision of the National Commission, the defense taken by the opposite party is not sustainable and the opposite party ought to have settled the claim without resorting the appellant/complainant to make a complaint before the District Forum in spite of clear cut circular and regulations which were issued long ago. The delay on the part of the complainant amounts to deficiency in service.
Petitioner, being aggrieved, has filed the present Revision Petition.
We have heard the Ld. Counsel for the parties at length.
The facts are not in dispute before us.
Respondent purchased a second-hand Maruti Zen car bearing No. TN-2H-4230 from one, T. Sundhakar Reddy. The vehicle was insured with the Petitioner Insurance Company under policy bearing No. 612701/31/03/01454 for the period from 16.09.03 to 15.09.04. Respondent got the vehicle transferred in his name on 18.02.04. On 3.06.04, the vehicle met with an accident and was badly damaged. Respondent neither got the policy transferred in his name nor informed the Petitioner about transfer of the ownership of the vehicle. Under GR-10 issued by the Tariff Advisory Committee applicable for the period from 1.4.90 to 30.06.02, on transfer of a vehicle the benefits under the policy in force on the date of transfer automatically accrued to the new owner. GR-10 reads as under
10. Transfers On transfer of a vehicle the benefits under the policy in force on the date of transfer shall automatically accrue to the new owner.
If the transferee is not entitled to the benefit of the bonus or subjected to malus already shown on the policy, the recovery of the differences between his entitlement (if any) and that shown on the policy shall be waived till the expiry of the policy. However, on expiry and/or termination of the existing Policy the transferee will be eligible for Bonus or subjected to malus as per his own entitlement GR-10 was replaced by GR 17 under which the transferee has to apply for transfer of insurance policy in his name within 14 days of the transfer of the registration certificate in his name. Under GR 17, in the case of third partys interest, the transfer is considered to be automatically. However, in the case of own damage, the transferee has to apply for transfer of insurance policy in his name. GR 17 came into force w.e.f. 1.7.02 and the same reads as under:
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 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.
Since the vehicle purchased by the respondent was got transferred in his name on 18.03.04 after coming into force of GR-17, the provisions of GR 17 would be applicable in the present case. As per GR 17, on transfer of ownership, transferee is required to apply within 14 days from the date of transfer in writing under recorded delivery to the insurer who had insured the vehicle, with the details of registration of vehicle, date of transfer of the vehicle, previous owner of the vehicle and the date and number of the policy so that the insurer may make necessary changes in the record and issue fresh Certificate of Insurance. Unless the aforesaid procedure of transfer of vehicle is followed and complied, the transferee has no insurable interest. It would be seen that on receipt of the information from the transferee the Insurance Company is required to make changes in its record and issue a fresh Certificate of Insurance. In the present case, admittedly as pointed out earlier the transferee, i.e., respondent did not intimate the Petitioner Insurance Company about the transfer of ownership of the vehicle within 14 days of the registration in his name to enable the petitioner to make necessary changes in its record and issue a fresh Certificate of Insurance. The transferee did not get any novation of contract of insurance in respect of the person or property and therefore, respondent did not have any insurable interest on the date on which the vehicle met with an accident.
Section 157 of the Motor Vehicles Act is applicable to third party rights only and not to own damage case. This Section of the Act reads as under.
Transfer of Certificate of Insurance: (1) Where a person in whose favour the certificate of insurance has been issued in accordance with the provisions of this Chapter transfers to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, the certificate of insurance and the policy described in the certificate shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of its transfer.
[Explanation.-For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.] (2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance.
This provision came up for interpretation before the Supreme Court of India in the case of Complete Insulation Pvt. Ltd. vs. New India Assurance Co. Ltd. - (1996) 1 SCC 221 wherein it was held:
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.
Similarly, in Rikhi Ram & Anr. vs. Sukhrania & Ors. -
(2003) 3 SCC 97, the Supreme Court while interpreting the provisions of Section 157 held that although with the transfer of vehicle the Insurance Company remains liable towards third party claims but the transferee cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. It was further held that the Insurance Company would remain liable to third parties, but it would be open to the Insurance Company to recover the said amount either from the insured or from the transferee of the vehicle. It was observed:
6. On an analysis of Sections 94 and 95, we further find that there are two third parties when a vehicle is transferred by the owner to a purchase. The purchase is one of the third parties to the contract and other third party is for whose benefit the vehicle was insured. So far, the transferee who is the third party in the contract, cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer.
7.
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8. For the aforesaid reasons, the appeal, is allowed. We set aside the order and judgment under challenge. It is hereby directed that the insurer shall pay compensation to the victims within eight weeks along with the interest @ 11% p.a. from the date of incident and it will be open to the insurer to recover the said amount either from the insured or from the transferee of the vehicle. However, there shall be no order as to the costs.
Similarly, three members Bench of this Commission in the case of Madan Singh Vs. United India Insurance Co. Ltd. & Anr. 1 (2009) CPJ 158 (NC), after considering the entire facts of the case, has held that in the case of own damage, unless and until the policy is transferred in the name of new owner, insurance company is not liable to indemnify the loss.
In view of the provisions of the Motor Vehicles Act and the Tariff Regulations and the decisions of the Supreme Court, if the transferee fails to inform the Insurance Company about transfer of the Registration Certificate in his name and the policy is not transferred in the name of the transferee, then the Insurance Company cannot be held liable to pay the claim in the case of own damage of vehicle. Petitioner Insurance Company was justified in repudiating the claim.
For the reasons stated above, we set aside the orders passed by the fora below and the complaint is ordered to be dismissed.
Accordingly, the Revision Petition is allowed and the parties are left to bear their own costs.
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(ASHOK BHAN J.) PRESIDENT . . . . . . . . . . . . . . . .
(VINEETA RAI) MEMBER YD/*