Motor Vehicles Act, 1988:
ss. 2(30) and 157 – Damage to the insured vehicle in road accident – FIR lodged regarding the accident – Spot survey by C Surveyor and Loss Assessor appointed by insurer – Insurance claim – Repudiated by insurer on the ground that the insured vehicle was already sold to someone else and that there was delay in filing police complaint and reporting the accident to the insurer – Case of the claimant was that though Sale agreement was entered into but the vehicle was not transferred to the transferee as the financier Bank had not issued ‘No Objection’ to the claimant for transfer – District consumer Forum as well as State Commission allowed the claim of the insured – National Consumer Commission disallowed the insurance claim – Appeal to Supreme Court – Held: National Commission erred in reversing the concurrent factual findings E ignoring the admitted facts that the registration of the insured vehicle and permit was in the name of the claimant on the date of accident; that claimant was paying insurance premium; that insurance policy was in the name of the claimant and that the financer Bank had not issued ‘No Objection’ for transfer of the insured vehicle – National Commission also overlooked the definition of ‘owner’ in s. 2(30) and provision for transferability of a policy of insurance u/s. 157. Words and Phrases:
“Owner” – Meaning of, in the context of s. 2(30) of Motor Vehicles Act, 1988.
Allowing the appeal, the Court
HELD: 1. There can be no doubt that property in a specific movable property is transferred to the buyer at such time as parties to the contract intend it to be transferred, provided such immovable property is free to be transferred, and/or in other words capable of being transferred. If there is an impediment to the transfer, as in the instant case, where ‘No Objection’ of the financier bank was imperative for transfer of the said truck, there could be no question of transfer of title until the impediment were removed, for otherwise the contract for transfer would be injurious to the financier bank, immoral, unlawful and void under Section 10 read with Sections 23 and 24 of the Contract Act, 1872. It was thus, an implicit condition of the agreement for transfer of the said truck, that the transfer would be complete only upon issuance of ‘No Objection” by the financier bank and upon compliance with the statutory requirements for transfer of a motor vehicle. The contract in the present case, could not possibly have been an unconditional contract of transfer of movable property in deliverable state, but a contract to transfer, contingent upon ‘No Objection” from financier Bank, and compliance with the statutory provisions of the Motor Vehicles Act, 1988 and the Rules framed thereunder. Sections 19 and 20 of the Sale of Goods Act are not attracted. [Paras 31-34][53-G-H; 54-A-C]
2. The National Commission overlooked the definition of ‘owner’ in Section 2(30) of the Motor Vehicle Act, 1988. In Section 2(30) ‘owner’ has been defined to mean “a person in whose name a motor vehicle stands registered and, where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire purchase agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement”. Even assuming that the purchaser was in possession of the said truck at the time of the accident, such possession was not under any agreement of lease, hire purchase or hypothecation with the financier Bank. The definition of owner under the old Motor Vehicles Act, 1939 has undergone a change. Legislature has consciously changed the definition of ‘owner’ to mean the person in whose name the motor vehicle stands. [Paras 35 and 36] [54-D-G]
3. The National Commission also overlooked other applicable provisions of the Motor Vehicle Act 1988, particularly Sections 39 to 41, 50, 51, 66, 69, 82, 84(g), 86(c), 146, 157, 177 and 192A. The National Commission patently erred in holding that the appellant had been paid the consideration without even examining if the purchaser had paid any instalments to the financier Bank. [Paras 37 & 39][54-G; 59-B]
4. The finding of the National Commission that the fact of registration of the said truck in the name of the appellant was inconsequential is also not sustainable in law. Section 2(30) of the Motor Vehicles Act, 1988 defines ‘owner’ to mean the person in whose name the motor vehicle stands registered. The definition of ‘owner’ has been overlooked and ignored by the National Commission. Had ownership of the said truck intended to be transferred forthwith, the registration would have been transferred in the name of the transferee, as also the permit to operate the said truck for carriage of goods. [Para 40][59-B-C]
5. It is difficult to accept that a person who has transferred the ownership of a goods carriage vehicle on receipt of consideration, would not report the transfer or apply for transfer of registration, and thereby continue to incur the risks and liabilities of ownership of the vehicle under the provisions of law including in particular, under the Motor Vehicles Act, 1988 and other criminal/penal laws. It does not also stand to reason why a person who has transferred the ownership of the vehicle should, for over three years, benevolently go on repaying the loan for purchase of the vehicle, take out insurance policies to cover the vehicle or otherwise discharge obligations of ownership. It is equally incredible that an owner of a vehicle who has paid consideration to acquire the vehicle would not insist on transfer of the permit and thereby expose himself to the penal consequence of operating a goods vehicle without a valid permit. [Paras 41-42][59-D-F]
6. The National Commission also failed to appreciate that Section 157 of the Motor Vehicles Act, 1988 provides that where a person, in whose favour the certificate of insurance has been issued in accordance with the provisions of Chapter XI of the Motor Vehicles Act, 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 are to 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. [Para 43][59-G-H; 60-A]
7. The explanation to Section 157 clarifies, for the removal of all doubts, that such deemed transfer would include transfer of rights and liabilities of the said certificate of insurance and policy of insurance. The transferee might, within 14 days from the date of transfer, apply to the Insurer in the prescribed form, for making requisite changes in the certificate of insurance and the policy of insurance with regard to the factum of transfer of insurance. There could be no reason for a transferee of an insured motor vehicle, to refrain from applying for endorsement of the transfer in the Insurance Policy Certificate when insurance covering third party risk is mandatory for using a vehicle. [Para 44][60-B-C]
8. In any case, there could be no reason for the Appellant to take out an insurance cover in his own name as late as on 31.5.2011, covering the period from 2.6.2011 till 1.6.2012, if the Appellant had transferred ownership of the vehicle in April 2008. It is incredible that the transferee would take the risk of operating a vehicle, owned by him, without taking out a policy of Insurance in his own name, inter alia, covering third party risks, notwithstanding the mandate of Section 146 of the Motor Vehicles Act, 1988 prohibiting the use of a motor vehicle without third party insurance. [Para 45][60-D]
9. The policy of insurance in the present case, was apparently a comprehensive policy of Insurance which covered third party risk as well. The Insurer could not have repudiated only one part of the contract of insurance to reimburse the owner for losses, when it could not have evaded its liability to third parties under the same contract of Insurance in case of death, injury, loss or damage by reason of an accident. [Para 50][61-G; 62-A]
10. The FIR was lodged within three days of the accident. In the case of a major accident of the kind as in this case, where the said truck had turned turtle and fallen into a river, slight delay if any, on the part of the traumatized driver to lodge an FIR, cannot defeat the legitimate claim of the Insured. In case of a serious accident in course of inter-state transportation of goods, delay of
20 days in lodging a claim is also no delay at all. It is nobody’s case that the claim application filed by the Appellant was time barred. Moreover, the Insurer had, in any case, duly sent its Surveyors/Assessors to assess the loss. The claim of the Appellant could not have, in this case, been resisted, either on the ground of delay in lodging the FIR, or on the ground of delay in lodging an Accident Information Report, or on the ground of delay in making a claim. [Para 51][62-B-C]
11. The National Commission erred in law in reversing the concurrent factual findings of the District Forum and the State Commission ignoring vital admitted facts including registration of the said truck being in the name of the Appellant, even as on the date of the accident, over three years after the alleged transfer, payment by the Appellant of the premium for the Insurance Policy, issuance of Insurance Policy in the name of the Appellant, permit in the name of the Appellant even after three years and seven months, absence of ‘No Objection’ from the financier bank etc. and also overlooking the definition of owner in Section 2(30) of the Motor Vehicles Act, as also other relevant provisions of the Motor Vehicles Act and the Rules framed thereunder, including in particular the transferability of a policy of insurance under Section 157. [Para 53][62-E-G]
12. There was no material evidence at all before the National Commission, on the basis of which the National Commission could have reversed the concurrent factual findings of the District Forum and the State Commission which unerringly led to the conclusion that ownership of the said truck never stood transferred to the transferee. [Para 29][52-D-E]
13. The impugned order of the National Commission under appeal is set aside and the order of the District Forum is restored. The Insurer shall pay to the Appellant a sum of Rs.4,93,500/- as directed by the District Forum with interest as enhanced by this Court to 9% per annum from the date of claim till the date of payment. The sum of Rs. 5,000/- awarded by the District Forum towards compensation for mental agony and Rs. 2,000/- awarded towards the cost of litigation are grossly inadequate. The Insurer shall pay a composite sum of Rs. 1,00,000/- to the Appellant towards costs and compensation for the agony caused to the Appellant by withholding his legitimate dues. [Para 57][63-D-F]
Pushpa @ Leela and Others v. Shakuntala and Others (2011) 2 SCC 240 : [2011] 1 SCR 334; Naveen Kumar v. Vijay Kumar and Others (2018) 3 SCC 1 : [2018] 2 SCR 572; Om Prakash v. Reliance General Insurance and Another (2017) 1 SCC 724 – relied on.
Complete Insulations Private Limited v. New Indian Assurance Company Limited (1996) 1 SCC 221 : [1995]
5 Suppl. SCR 500; Dr. T.V. Jose v. Chacko P.P. @ Thankachan and Ors. (2001) 8 SCC 748 : [2001] 3 Suppl. SCR 366; Oriental Insurance v. Sony Cheriyam (1999) 6 SCC 451 : [1999] 1 Suppl. SCR 622 –
distinguished.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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