Insurance Company Can Be Made Liable Even If Transfer Of Vehicle Is Not Recorded: Allahabad High Court
The Allahabad High Court reiterated that an insurance company can be made liable even if the transfer of vehicle is not recorded in the records of the transport office.
The Court dismissed the petition filed under Article 227 of the Constitution challenging the validity of the judgment and order passed by the Permanent Lok Adalat regarding an insurance claim in a motor vehicle accident.
A Single Bench of Justice Subhash Vidyarthi observed, “Section 157 provides that upon transfer of ownership of a vehicle, 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. The deeming fiction provided by the statute means that even if the insurance policy is not transferred in fact, the insurance company would become liable under the policy to the transferee of the vehicle. Therefore, the intention of the legislature is to make the insurance company liable immediately, in spite the transfer having not been recorded in the records of the transport office.”
Advocate Asit Srivastava appeared for the petitioner, while Advocate Ashok Kumar represented the respondent.
The truck which met with an accident was insured by the insurance company, New India Assurance Co. Ltd. (petitioner). The registered owner of the truck (claimant) submitted a claim form, however, the petitioner rejected his insurance claim.
The investigator appointed by the petitioner had taken the written statement of the claimant, wherein the latter stated that he had transferred the truck to another person (third party) subject to the condition that the person would pay the Bank’s instalments.
It was submitted that at the time of the accident, the truck was being driven by a driver engaged by the third party, and therefore, the truck was not in the custody of the claimant.
The Permanent Lok Adalat concluded that the agreement between the claimant and the third party would not affect the adjudication of the dispute between the parties to the case.
The High Court stated that Section 157 of the Motor Vehicles Act, 1988 (MV Act) gets attracted when the owner of the vehicle transfers the ownership of the motor vehicle, which was not done in the case.
“The opposite party had merely entered into an agreement for transferring the ownership of the vehicle at a future point of time, after repayment of the entire loan taken for purchase of the vehicle,” the Court remarked.
The Lucknow Bench referred to the decision in Complete Insulations (P) Ltd. v. New India Assurance Co. Ltd., (1996), wherein the Supreme Court held that the Insurance Company is liable to indemnify the transferee even though the insurance policy had not been transferred in its name.
“This judgment also supports the view of this Court that the intention of the legislature is to make the insurance company liable immediately, in spite the transfer having not been recorded in the records of the transport office and the intention is not to exclude the transferees strictly,” the Court observed.
The Court clarified that since the transfer did not stand completed, the claimant continued to be the registered owner of the vehicle.
Consequently, the Court held, “In absence of the ownership of the vehicle having been transferred, the petitioner would continue to be liable under the contract of insurance entered between the appellant and the registered owner of the vehicle.”
Accordingly, the High Court dismissed the petition.
Cause Title: The New India Assurance Company Limited v. Permanent Lok Adalat (Neutral Citation: 2024:AHC-LKO:63642)
