United India Insurance Company Ltd. Vs Manu Sharma and Others

Mansoor Ahmad Mir, C.J@mdashAppellant-insurer, i.e. United India Insurance Company Limited has questioned the award dated 23rd May, 2008, made by the Motor Accidents Claims Tribunal, Kullu, (hereinafter referred to as "the Tribunal") in Claim Petition No. 8/07, titled Manu Sharma versus Bhag Singh and others, whereby compensation to the tune of Rs. 80,000/- with interest @ 9% per annum from the date of the award till its realization, came to be awarded in favour of the claimant-respondent No. 1, herein and against the insurer-appellant herein (for short, the "impugned award").

2. I wonder why the insurance company has filed this appeal for such a trivial amount.

3. The claimant has not questioned the adequacy of compensation. Thus, I deem it proper to uphold the same.

4. The owner and driver have not questioned the impugned award, on any count. Thus, it has attained finality, so far as it relates to them.

5. The question to be determined in this appeal is-whether the Tribunal has rightly saddled the insurer with liability?

6. Learned Counsel for the appellant-insurance company argued that the offending vehicle was sold by the owner at the relevant time and the insurer was not liable to satisfy the award.

7. The argument of the learned Counsel is not tenable for the following reasons.

8. Section 157 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."

While going through the aforesaid provision, one comes to an inescapable conclusion that transfer of a vehicle cannot absolve insurer from third party liability and the insurer has to satisfy the award.

9. The insured has not brought into the notice of the insurer that he has sold the vehicle. Thus, the insurance policy was valid and the insurer has to satisfy the award.

10. My this view is fortified by the Apex Court Judgment in case titled as G. Govindan Vs. New India Assurance Co. Ltd. and Others, (1999) 1 ACC 483 : (1999) ACJ 781 : AIR 1999 SC 1398 : (1999) 97 CompCas 443 : (1999) 2 CTC 473 : (1999) 2 JT 622 : (1999) 122 PLR 274 : (1999) 2 SCALE 491 : (1999) 3 SCC 754 : (1999) 2 SCR 476 : (1999) 2 UJ 1121 : (1999) AIRSCW 1077 : (1999) 3 Supreme 506 . It is apt to reproduce paras-10, 13 and 15 of the aforesaid judgment herein:

"10. 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 recognised the view taken in the separate judgment in Kondaiah''s case 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.

11. .....................

12. .....................

13. In our opinion that both under the old Act and under the new Act the Legislature was anxious to protect the third party (victim) interest. It appears 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.

14. .....................

15. As between the two conflicting views of the Full Bench judgments noticed above, we prefer to approve the ratio laid down by the Andhra Pradesh High Court in Madineni Kondaiah and Others Vs. Yaseen Fatima and Others, (1986) 1 ACC 501 : (1986) ACJ 1 : AIR 1986 AP 62 : (1985) 3 APLJ 150 as it advances the object of the Legislature to protect the third party interest. We hasten to add that the third party here will not include a transferee whose transferor has not followed procedure for transfer of policy. In other words in accord with the well-settled rule of interpretation of statutes we are inclined to hold that the view taken by the Andhra Pradesh High Court in Kondaiah''s case is preferable to the contrary views taken by the Karnataka and Delhi High Courts (supra) even assuming that two views are possible on the interpretation of relevant sections as it promotes the object of the Legislature in protecting the third party (victim) interest. The ratio laid down in the judgment of Karnataka and Delhi High Courts National Insurance Co. Ltd. Vs. Mallikarjun and others, (1990) ACJ 688 : AIR 1990 Kar 166 : (1990) 3 KarLJ 154 and Anand Sarup Sharma Vs. P.P. Khurana and others, AIR 1989 Delhi 88 : (1989) 65 CompCas 413 : (1989) 16 DRJ 27 : (1988) RLR 693 differing from Andhra Pradesh High Court is not the correct one."

11. The Apex Court in case titled as Rikhi Ram and Another Vs. Smt. Sukhrania and Others, (2003) 1 ACC 36 : (2003) ACJ 534 : AIR 2003 SC 1446 : (2003) 1 SCALE 732 : (2003) 3 SCC 97 : (2003) 1 SCR 872 : (2003) 1 UJ 526 : (2003) AIRSCW 780 : (2003) 1 Supreme 1000 held that in absence of intimation of transfer to Insurance Company, the liability of Insurance Company does not cease. It is apt to reproduce paras 5, 6 and 7 of the judgment, supra, herein:-

"5. The aforesaid provision shows that it was intended to cover two legal objectives. Firstly, that no one who was not a party to a contract would bring an action on a contract; and secondly, that a person who has no interest in the subject matter of an insurance can claim the benefit of an insurance. Thus, once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 94 does not provide that any person who will use the vehicle shall insure the vehicle in respect of his separate use.

6. On an analysis of Ss. 94 and 95, we further find that there are two third parties when a vehicle is transferred by the owner to a purchaser. The purchaser 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. For the aforesaid reasons, we hold that whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of insurer does not ceases so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation as required under the provisions of the Act."

12. The Apex Court in latest judgment titled as United India Insurance Co. Ltd., Shimla Vs. Tilak Singh and Others, (2006) 2 ACC 1 : (2006) ACJ 1441 : AIR 2006 SC 1576 : (2006) 131 CompCas 163 : (2006) 2 CTC 661 : (2006) 4 JT 280 : (2006) 143 PLR 297 : (2006) 4 SCALE 67 : (2006) 4 SCC 404 : (2006) AIRSCW 1822 : (2006) 3 Supreme 332 has held the same principle. It is apt to reproduce paras-12 and 13 of the said judgment herein:

"12. In Rikhi Ram and Another Vs. Smt. Sukhrania and Others, (2003) 1 ACC 36 : (2003) ACJ 534 : AIR 2003 SC 1446 : (2003) 1 SCALE 732 : (2003) 3 SCC 97 : (2003) 1 SCR 872 : (2003) 1 UJ 526 : (2003) AIRSCW 780 : (2003) 1 Supreme 1000 a Bench of three learned Judges of this Court had occasion to consider Section 103-A of the 1939 Act. This Court reaffirmed the decision in G. Govindan case and added that the liability of an insurer does not cease even if the owner or purchaser fails to give intimation of transfer to the Insurance Company, as the purpose of the legislation was to protect the rights and interests of the third party.

13. Thus, in our view, the situation in law which arises from the failure of the transferor to notify the insurer of the fact of transfer of ownership of the insured vehicle is no different, whether under Section 103-A of the 1939 Act or under Section 157 of the 1988 Act insofar as the liability towards a third party is concerned. Thus, whether the old Act applies to the facts before us, or the new Act applies, as far as the deceased third party was concerned, the result would not be different. Hence, the contention of the appellant on the second issue must fail, either way, making a decision on the first contention unnecessary, for deciding the second issue. However, it may be necessary to decide which Act applies for deciding the third contention. In our view, it is not the transfer of the vehicle but the accident which furnishes the cause of action for the application before the Tribunal. Undoubtedly, the accident took place after the 1988 Act had come into force. Hence it is the 1988 Act which would govern the situation."

13. Having said so, the Tribunal has rightly saddled the insurance company with the liability.

14. Now coming to the second point, the insurer has not led any evidence to prove that the driver of the offending vehicle was not having a valid and effective driving licence at the relevant point. However, driver Bhuvneshwar Singh has examined Smt. Sarla Devi as RW-6 in his favour, who has stated that Bhuvneshwar Singh is also known by the name of Bhupinder Singh.

15. It is apt to reproduce para-21 of the impugned award herein:

"21. A dispute has been raised regarding the name of respondent No. 2. The claim petition has been filed in the name of Bhuvneshwar. The documents of the vehicle have also been released in his favour. However, the driving license, which has been produced shows his name as Bhupinder Singh. The respondent No. 2 has stated that he is also known by the name of Bhupinder Singh and in fact this license has been issued to him and was valid on the date of accident. In support of his allegation, he has examined Smt. Sarla Devi, who is the Pradhan of Gram Panchayat Peej. He has supported the version of respondent No. 2 that Bhuvneshwar is also known as Bhupinder and has issued certificate Ext. PW-6/A. She has mentioned in the cross-examination that this certificate has been issued by her on the basis of her personal knowledge and not on the basis of any record available in the Panchayat. The driving license which has been produced also has a photograph of the holder of the driving license. It has not been pointed out in the cross-examination of respondent No. 2 that photograph is not of respondent No. 2 as no such suggestion has been given to him. Therefore, in view of the statement of respondent No. 2 himself, and the statement of Sarla Devi, it is established that Bhupinder Singh and Bhuvneshwar are one and the same person and in fact the license has been issued to respondent No. 2 by the Licensing Authority, which license was valid on the date of accident. Some contradictions have been pointed out regarding the address of Bhupinder Singh on the driving license, however, these contradictions are not material. No question has been put to the Licensing Authority or to the respondent No. 2 that this license which has been issued in the name of Bhupinder Singh is in fact a different person and not respondent No. 2. Therefore, I hold that driving license of respondent No. 2 was valid and effective on the date of accident."

16. Having said so, I am of the considered view that the Tribunal has rightly made discussion in para-21 of the impugned award.

17. Accordingly, the impugned award is upheld and the appeal is dismissed.

18. The Registry is directed to release the awarded amount in favour of the claimant, strictly as per the terms and conditions contained in the impugned award.

19. Send down the records after placing a copy of the judgment on the Tribunal''s file.