CASE TITLE:
Annamma Raju @ Bincy & Ors. Vs. Shalet Jose & Ors.
DATE OF ORDER:
27 October 2022
JUDGES:
Justice Ziyad Rahman A.A.
PARTIES:
Petitioner: Annamma Raju @ Bincy & Ors
Respondent: Shalet Jose &Ors.
SUBJECT
The Kerala High Court ruled on Thursday that an insurance policy taken out in relation to a vehicle is automatically presumed to have been transferred in favour of the transferee when a vehicle transfer has been completed in accordance with the Motor Vehicles Act, 1988.
IMPORTANT PROVISIONS
Motor Vehicles Act, 1988
Section 157(1) - Transfer of certificate of insurance. -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 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.
BRIEF FACTS
- Petitioners 1 through 5 - respondents 1 through 5 in MACA No. 2585/2016—filed the claim petition in order to seek restitution for the loss of Rajumon, who perished in a car accident on November 24, 2013, by filing it. The 1st respondent in the claim petition was riding the motorcycle with registration number KL-35-B-0976 when the deceased was travelling as a pillion rider on it. He was the motorcycle’s owner and rider, according to the petitioners, while the third respondent was the policyholder at the period in question. The person in whose name the insurance policy was issued at the relevant time was the second respondent in the claim petition. The petitioners requested compensation in the amount of Rs. 60 lakhs.
- Following receipt of the notification, the first respondent showed up and submitted a written declaration opposing the petitioners’ assertions. He did, however, acknowledge that he was the vehicle’s registered owner. Additionally, he argued that the third respondent was the vehicle’s legitimate insurance provider at the period in question; as a result, if any sum is determined to be due, the third respondent must deposit it.
- In a written statement, the second respondent claimed that he had sold the vehicle to the first respondent, and that the transfer had already taken place as evidenced by the endorsement on the registration certificate made effective as of October 17, 2013, even though the accident in question happened on November 24, 2013. Therefore, it was argued, he is not responsible for making any sort of restitution. The third respondent Insurance Company acknowledged that the subject car was covered by a legitimate policy, but it contested culpability for a number of reasons. They also vigorously disputed the amount of the settlement.
- The Insurance Company further argued that the policy was issued in the name of the 2nd respondent, who had previously owned the abovementioned car, even though the vehicle had been transferred to the 1st respondent as of the date the accident happened. According to the argument, the transferee/first respondent had a duty to inform the insurance company of the aforementioned transfer within 14 days of the transfer’s date in accordance with the provisions of Section 157(2) of the Motor Vehicles Act, 1988. Since the first respondent in this case did not provide such notice, there is no way to hold the third respondent accountable because the statutory requirements have been broken.
- PWs. 1 through 3 and Exhibits A1 to A11 from the petitioners’ side make up the majority of the evidence in this case. Exhibits B1 to B10 were noted and RWs. 1 and 2 were evaluated from the respondents’ perspective. After carefully reviewing the evidence submitted, the Tribunal made a decision and ordered the third respondent, the insurance company, to deposit Rs. 28,77,000 as compensation for the petitioners, plus interest at a rate of 9% per year beginning on the date of the petition, or starting on 16.6.2014.
- It was determined that the third respondent Insurance Company’s argument regarding their liability for failing to notify the transfer of the vehicle in accordance with the statutory requirement contained in Section 157(2) of the Motor Vehicles Act, 1988, is not applicable to the claim made by the petitioners because the policy issued is a comprehensive policy that includes coverage for the liability of the pillion rider as well. The Insurance Company filed MACA No. 2585/2016 after being offended by the aforementioned finding, and the Petitioners filed M.A.C.A. No. 2554/2017 after being offended by the amount of compensation.
ISSUES RAISED
- Whether the transfer would include the transfer of the obligations of the Insurance company towards a pillion rider, whose risk was not covered under statutory coverage under section 147(1)(b) of the Act, as well?
ARGUMENTS ADVANCED BY THE PETITIONER
- The aforementioned assertions are refuted by knowledgeable counsel for the petitioners in the claim petition. He claims that the Motor Vehicles Act’s Section 157 does not distinguish between statutory coverage and an insurer’s obligation to a third party. He argued that even though the pillion rider is not a person covered by Section 147 of the Motor Vehicles Act, pursuant to the directives issued by the Insurance Regulatory and Development Authority (hereinafter referred to as the “IRDA”), the liability of Insurance Companies towards the occupants in a private car and the pillion rider on a two-wheeler is included in Section 2 of the India Motor Tariff, which deals with the liability to pay damages.
- It was also argued that because there constituted a duty to a third party, Section 157 of the Motor Vehicles Act’s deemed transfer provisions would apply. The learned counsel for the petitioners argued that the consequences of any failure on the part of the transferee are not mentioned in the said provision, and therefore it can only be treated as a provision that is directory in nature and not mandatory in response to the arguments made by the learned counsel for the Insurance Company regarding the failure to comply with the stipulation contained in Subsection (2) of Section 157 of the Motor Vehicles Act.
- As a result, the Insurance Company’s liability for claims brought at the request of third parties remains unaffected by the transferee’s failure to inform the Insurance Company of the same. The knowledgeable attorney for the petitioners bases his usage of the word “third parties” on the definition given in a circular issued by the IRDA in November 2009 and binding on the insurance company.
ARGUMENTS ADVANCED BY THE RESPONDENTS
- The learned counsel for the insurance company contended that even though Section 157 of the Motor Vehicles Act provides for a deemed policy transfer when the vehicle is transferred, a person who is not protected by the statutory coverage provided by Section 147 of the Motor Vehicles Act cannot benefit from this provision. It was noted that, as far as the petitioners’ claim is concerned, the same applies to a person riding as a pillion passenger on a motorcycle who is not protected by the statutory policy as provided for in Section 147 of the Motor Vehicles Act.
- It was pointed out that, as far as the petitioners’ claim is concerned, the same applies to a person riding as a pillion passenger on a motorcycle who is not protected by the statutory policy as provided for in Section 147 of the Motor Vehicles Act. Since Chapter XI of the Motor Vehicles Act, 1988, which deals with the insurance of motor vehicles against third party risks, includes Section 157 of the Motor Vehicles Act, the learned counsel argues that the deemed transfer contemplated under the said provision would be applicable only in respect of statutory liability as contemplated under Chapter XI of the Act and nothing else.
- The coverage, in the opinion of the learned Senior Counsel, can only be offered if the Company receives notice of the transfer within the time frame specified in the aforementioned provision and in accordance with the terms and circumstances of the policy.
JUDGMENT ANALYSIS
- The Insurance Company argued that they are not responsible since they were not notified of the transfer of the vehicle as required by Section 157(2) of the Motor Vehicles Act. The Division Bench of this Court rejected the aforementioned argument by noting that, once the title of the vehicle is transferred, there is a deemed transfer of the insurance policy into the name of the transferee, and the insurance company is obligated to defend the insured or even the transferee under the deeming provision. It was further noted that the Insurance Company could only be released from obligation if they could prove a violation of the terms of the policy or one of the defences allowed under Section 149(2) of the Motor Vehicles Act.
- The Court observed that when Section 157 of Motor Vehicles Act is carefully examined, as the learned counsel for petitioners rightly pointed out, it is clear that the law does not distinguish between the statutory coverage and the other liability of the Insurance Company against any third party. It is true that Subsection (2) of Section 157 of the Motor Vehicles Act specifies that the Insurance Company must be notified of the transfer of the vehicle within 14 days of the transfer. However, the provision makes no mention of the repercussions of failing to comply with Section 157, subsection (2).
- However, when the vehicle is transferred to a third party, Section 157(1) of the Act expressly contemplates a presumed transfer. This means that the certificate of insurance is presumed to have been transferred in favour of the transferee without further action whenever a transfer is affected by following the procedure specified in the Motor Vehicles Act, according to the aforementioned provision. Although sub-section (2) of Section 157 calls for notification of such transfers, it may only be regarded as advisory in nature and not mandatory because the Act is silent on the consequences of doing so incorrectly.
- When the vehicle is transferred to another person and the new owner does not notify the insurance company of the transfer in the manner required, the insurance company’s liability for the insured’s own damage will end. Due to the transferee’s non-party status to the insurance contract, the Insurance Company’s contractual obligations have been terminated. Since the claim for own damage is between the insurance company and the insured, who are parties to the insurance contract, it is not possible to apply the considered transfer as provided for in Section 157 of the Motor Vehicles Act in the case of own damage.
CONCLUSION
The Tribunal noted that despite the claim that the deceased’s name was registered with the Panchayat, no supporting documentation had been provided. 2013 was the year of the accident. The sum used by the Tribunal as monthly income is appropriate in light of the facts and circumstances of the case as well as the particular arguments made by the Tribunal in rejecting the petitioners’ position regarding the deceased’s monthly income.In addition to the aforementioned, the petitioners’ knowledgeable attorney requested an increase in compensation under a number of different headings, including pain and suffering, rate of interest, transportation to the hospital, loss of estate, etc. The court, however, determined that the amounts were acceptable after reviewing the compensation granted under the several headings. Due to these conditions, both of these appeals were dismissed because they lacked merit.
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