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41. Once the title is passed to transferee, the transferor ceases to be the owner and consequential his insurable interest in the vehicle also ceases. Hence the decided cases laid emphasis on the point that the moment transfer took place, the insurable interest of the owner, the policy holder ceases and the policy lapses. Then the question is what is insurable interest Fench, J., in Stockdah v. Dunlop (1840) 6 M and W 224, has observed thus:

If there be a right in or against the property which some Court will enforce...a right so closely connected with and so much dependent for value upon the continued existence of it alone, as that a loss of the property will cause pecuniary damage to the holder of the right against it, he has an insurable interest.

43. This definition generally takes into account interest in the property. Macgillivray on Insurance Law observes very rightly:

In considering the question of insurable interest it is necessary at the outset of the inquiry to distinguish between the ink rest which the law requires the assured to have in the subject matter of insurance and the interest which is required by the terms of the particular contract under consideration.

It is also observed by the learned author that it is the duty of the Court to lean in favour of insurable interest if possible. In the present case the insurable interest so far the third party risk is concerned, is not the proprietary interest in the vehicle that is required. It is a public liability imposed by the Statute on person using the vehicle in a public place. Hence, it is clear that the basis of this public liability insurance is the user of the vehicle either by the owner or by any other person and hence the proprietary interest in the vehicle is not decissive. In fact the courts have ruled that the vendor can retain insurable interest, even if he undertakes to the purchaser to be responsible for the safety in the subject matter. Vide Martmeau v. Ritching (1872) 7 QB 436 Para 647 Halsbury's Laws of England, Fourth Edition. Section 94 enjoins on the person not to cause or allow any other person to use the vehicle in a public place without the necessary insurance to the vehicle. It is indisputable that in case where a lessee or a licensee or any other person who uses the vehicle with the permission of the owner, are covered by the protection under the policy. The present Section 94 is analogous to Section 35 of the Road Traffic Act, 1930 and the successive Acts in England that embody this provision are the Road Traffic Act, 1960 and the Road Traffic Act, 1972. It may be useful to extract Section 143 of Road Traffic Act, 1972.

47. It is incorrect 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 re-port the fact of transfer to the registering authority within whose jurisdiction the transfer is to be 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 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 there 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 the transferee for re-imbursement. In fact it was ruled in Northern India General Insurance Company Ltd. v. Kanwarjit Singh 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 be 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 vehicles 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 secures 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 cession of proprietary interest, the insurable interest which is the foundation for the continuance of the operation of the policy stands.

The conclusion of the justices was based on the fact that, once the Triumph motor cycle was sold, the appellant Boss had no insurable interest in it. That being so, they were of opinion, following the reasoning in Rogerson v. Scottish Automobile and General Insurance Co. Ltd. 1931 All ER (Reprint) 606 and Tattersall v. Drysdale case (supra), that the whole policy lapsed, including the further cover provided in respect of other cycles not owned by or under hire to the assured. It is to be observed, however, that, in the present case, unlike the cases referred to, the policy is in respect of third party risks only and, accordingly, that there is no necessity for the assured to have any insurable interest in the vehicle. He could in law at any rate, and possibly in practice, be able to get cover against damage caused by his driving of any vehicles whether or not he had any insurable interest in them. Accordingly, as it seems to me, those cases are not, at any rate directly, relevant and the justices' reasoning was wrong.