INSURER’S LIABILITY WHEN POLICY NOT TRANSFERRED AFTER SALE OF VEHICLE

It often happens when purchaser takes time to get the policy also transferred to his name after he obtains all papers from the owner of the vehicle. The first thing one does is to get the registration certificate transferred; it is only after that he can go for transfer of policy to his name though he might get blank papers signed from the seller authorizing him to do so. In between this situation if vehicle in question meets with some accident, what will be the fate of insurance claim is a vital question .Number of such cases pour into the various courts on this issue and courts have made their observations depending upon the facts and circumstances of each case. In a recent case decided by the Hon’ble National Commission on this issue on 14.02.2014, Apex Commission has relied upon previous judgments pronounced by the Hon’ble Supreme court while delivering its judgement.

In the present case of Sandeep Gupta v/s United India Insurance Company, revision petition no. 2355 OF 2012 one Mr.Jit Singh along with Prem Singh were owner of truck PB-32A-4797 and got it insured from United India Insurance Co. for a period of one year commencing from 09.11.2005 to 08.11.2006.  Jit Singh and Prem Singh sold their truck to Sandeep Gupta on 13.11.2005.  On 13.04.2006, vehicle was stolen and report was lodged on the same  day and intimation was also given to the insurance co. and submitted claim papers, but claim was repudiated by the insurance company on the ground transfer of vehicle was not informed to insurance company.

The matter came before the district forum and complainant took the plea that vehicle was automatically insured as per sec 157 of The Motor Vehicle Act and hence repudiation of claim by the insurance company is illegal

District forum allowed complaint, directed to pay the claim amount and also awarded compensation

Appeal filed by the insurance company was allowed by the State Commission rejecting the order by the district forum. Against the order of State Commission, a revision petition is filed by the original the purchaser, against insurance company.

            Complainant submitted that as per section 157 of the Motor Vehicle Act, policy automatically stands transferred in the name of subsequent registered owner of the vehicle and Section 157 (2) of Motor Vehicle Act is only procedural provision, so complaint cannot be deprived of benefits of policy merely because Insurance policy has not been transferred in his name

            The core question to be decided in this revision petition is whether insurance company is liable to make payment to the subsequent registered owner without transfer of insurance policy in his name.

National commission went into details of the question and number of judgments were discussed. 

In view of the matter of  Complete Insulations (P) Ltd. vs. New India Assurance Company Ltd., (1996) CPJ 1 (S.C.) AND in the case of  United India Insurance Company vs. Harinder Kaur, III (2007) CPJ 411 (NC), National  Commission came to the conclusion that subsequent  purchaser  of vehicle is not entitled to get compensation for loss to the vehicle in the absence of transfer of Insurance policy in his name and further observed that as vehicle has already been sold by Jit Singh and Prem Singh to Sandeep Gupta, they were also not entitled to any insurance claim

 

 It was relied upon the Hon’ble Apex Court in Complete Insulation (P) Ltd. case (supra) wherein the insured vehicle was burnt by fire but the vehicle was not transferred in the name of purchaser at the time of incident. Since the Registration Certificate (RC) of the vehicle and salvage could not be provided by the complainant, case of the complainant was closed by the insurance company .Court held insurance company justified in repudiating the claim.

 

Further, in the case of United India Insurance Company vs. Harinder Kaur, III (2007) CPJ 411 (NC) also same stand was taken by the national commission on the issue.

In this case, one Jaswant Singh was the owner of Maruti car. He had taken insurance policy for a period from 27.7.2002 to 26.7.2003. He transferred the said car to Punjab Singh, husband of the complainant on 20.9.2002 but insurance policy was not transferred in the name of Punjab Singh This was also clear from the facts that no steps were taken by Punjab singh to get insurance transferred to his name .Unfortunately on 3.3.2003, the car met with the accident and Punjab Singh succumbed to the injuries. An FIR was lodged against the driver of the truck with which the vehicle met with the accident. Wife of Mr. Punjab Singh filed complaint No. 115/2003 before the District Consumer Disputes Redressal Forum, Fatehgarh Sahib claiming assured sum of Rs. 2 lakh from the Insurance Company. District Forum by its judgment and order dated 30.3.2005 allowed the complaint. State Commission confirmed the order but National Commission did not agree and complainant was not held entitled to claim.

This issue was in clear terms settled in the year 2003 also in Rikhi Ram & Anr. Vs. Sukhrania & Ors. -  (2003) 3 SCC 97, wherein 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:

“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 who 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.”

 Hence National Commission concluded in the present case of Sandeep Gupta, in view of the provisions of the Motor Vehicles Act and the Tariff Regulations and the decisions of the Supreme Court,

·         If the purchaser 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 purchaser , then the Insurance Company cannot be held liable to pay the claim in the case of own damage of vehicle.

·         This has also come up in the Supreme Court other judgement in the matter of Complete Insulations (P) Ltd. vs. New India Assurance Company Ltd., that purchaser is not entitled to claim when RC has not been transferred to his name after the purchase and on the day of incident.

 

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