AHMADI - (1.) A Maruti Car with registration No. CHK-9253 was purchased in the name of Mrs. Archana Wadhwa for which the respondent, M/s. New India Assurance Company Ltd., had issued a comprehensive insurance policy. The premium for the insurance was paid by the appellant company in whose favour the car was transferred. The registration of the car was transferred to the appellant on 15-6-1989. On 26-6-1989, the appellant intimated the transfer of registration and asked for transfer of the insurance policy. A reminder was sent on 24-7-1989. The respondent did not reply to the two letters. On 17-9-1989 the car met with a serious accident in which the Managing Director of the appellant suffered serious injuries and his sister died. On 11-10-1989 the appellant asked for the assessment of the damages as the car was a total loss. The respondent did not respond. A reminder dated 26-12-1989 met the same fate. The appellant got a notice issued to which the respondent replied that the appellant had no insurable interest in the car. The appellant filed the complaint before the Consumer Disputes Redressal Commission, Chandigarh, which directed the respondent to pay Rs. 83,000.00 i. e. the insured value of the vehicle, as the vehicle was a total loss, along with costs and interest. The National Consumer Disputes Redressal Commission set aside the order of the Commission at Chandigarh, dismissed the complaint and granted cost of the appeal. Hence the appeal.
(2.) THE moot question involved in the case is whether on the above facts, without the insurance policy being transferred in the name of the appellant, it was entitled to be indemnified by the insurer. THE National Consumer Disputes Redressal Commission held that under Section 157 of the Motor Vehicles Act, 1988, (hereinafter called 'the New Act') a certificate of insurance is deemed to have been transferred in favour of the person to whom the vehicle is transferred but that the said provision applied only in relation to third party risk and did not apply to policy covering risk of damage to the vehicle or person of the insured. THE National Commission placed reliance on a judgment of the High Court of Andhra Pradesh in Madinani Kondaiah v. Yaseen Fatima, AIR 1986 Andh Pra 62 (FB). Before proceeding further it is necessary to examine the provision of Section 103-A of the Motor Vehicles Act, 1939, hereinafter called the 'Old Act' and Section 157 of the New Act, in juxtaposition : JUDGEMENT_221_1_1996Html1.htm On a plain reading of Section 103-A it is obvious that the insurer could in a given case refuse to transfer the certificate of insurance and the policy described therein. It is only if the insurer fails to convey the refusal within fifteen days that the deeming clause comes into operation. However, Section 157 of the New Act makes the transfer of the Certificate of Insurance along with the insurance policy described therein automatic along with the transfer of the motor vehicle together with the policy of insurance to the purchaser. This is clearly an improvement over the previous provision on the subject.
(3.) THUS under the Old Act the insured was requiring to apply in the prescribed form to the insurer for transfer of the certificate of insurance and the policy described therein. Once such an application was made the insurer had to communicate its refusal within fifteen days of the receipt of the application for transfer failing which the certificate of insurance and the policy described therein "shall be deemed to have transferred" in favour of the transferee. This shows that the insurer had the right to refuse transfer of the certificate of insurance and the policy described therein provided the right was exercised within the stipulated time of fifteen days. Section 157 of the New Act introduces a deeming provision whereby the transfer of the certificate of insurance and the policy of insurance are deemed to have been made where the vehicle along with the insurance policy is transferred by the owner to another person. This provision has withdrawn the insurer's right to refusal which was granted under the Old Act. Old ActNew Act "103-A : TRANSFER OF CERTIFICATE OF INSURANCE"157 : 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 proposes to transfer 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, he may apply in the prescribed from to the insurer for the transfer of the certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle is proposed to be transferred, and if within fifteen days of the receipt of such application by the insurer, the insurer has not intimated the insured and such other person his refusal to transfer the certificate and the policy to the other person, 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.(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. (2) The insurer to whom any application has been made under sub-section (1) may refuse to transfer to the other person the certificate of insurance and the policy described in that certificate, if he considers it necessary so to do, having regard to-(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 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." a) the previous conduct of the other persons,-- (i) as a driver of motor vehicles; or (ii) as a holder of the policy of insurance in respect of any motor vehicle; or b) any conditions which may have been imposed in relation to any such policy held by the applicant; or c) the rejection of any proposal made by such other person for the issue of a policy of insurance in respect of any motor vehicle owned or possessed by him. (3) Where the insurer has refused to transfer, in favour of the person to whom the motor vehicle has been transferred, the certificate of insurance and the policy described in that certificate, he shall refund to such transferee the amount, if any, which, under the terms of the policy, he would have had to refund to the insured for the unexpired term of such policy." Now, under the Old Act although the insurer could refuse to transfer the certificate of insurance in certain circumstances and the transfer was not automatic as under the New Act, there was under the Old law protection to third parties, that is victim of the accident. The protection was available by virtue of Sections 94 and 95 of the Old Act. The relevant part of these two provisions was as under :- "Section 94-Necessity for insurance against third party risk-(1) No person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is in force in relation to the use of the vehicle by that person or that other person, as the case may be, a policy of insurance complying with the requirements of this chapter." The other sub-sections permitted the appropriate government to grant exemption from the operation of the aforesaid section to vehicle owned by the Central or State Government or any local authority or State Transport Authority under certain circumstances. "95. Requirements of policies and limits of liability-(1) In order to comply with the requirements of this Chapter, a policy of insurance must be a policy which- (a) is issued by a person who is an authorised insurer (or by a co-operative society) allowed under Section 108 to transact the business of an insurer, and (b) insures the person or classes of persons specified in the policy to the extent specified in sub-section (2)- (i) against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of vehicle in a public place; (ii) against the death of or bodily injury to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place : (5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons." ;