24 June 2024


Judgments

Supreme Court

Surendra Kumar Bhilawe vs The New India Assurance Company

MANU/SC/0488/2020

18.06.2020

Insurance

If insured continues to remain the owner view of the statutory provisions of the Motor Vehicles Act, 1988, Insurer cannot evade its liability in case of an accident

In facts of present case, the Appellant was the owner of Ashok Leyland Truck which was covered by a Policy of Insurance issued by the Insurer effective for the period from 2nd June, 2011 to 1st June, 2012. On 13th November, 2011, while the said truck was on its journey from Raipur to Dhanbad, it met with an accident. The Appellant lodged a claim with the Insurer, through one Mohammad Iliyas Ansari. However, instead of reimbursing the loss, the Insurer issued a show cause Letter dated 22nd March, 2012 to the Appellant requiring the Appellant to show cause why the claim of the Appellant should not be repudiated, on the allegation that, he had already sold the said truck to the said Mohammad Iliyas Ansari on 11th April, 2008. It is, however, not in dispute that the Appellant continued to be the registered owner of the said truck, on the date of the accident.

Aggrieved by the action of the Insurer Company in not releasing the claim of the Appellant, towards reimbursement of losses on account of the accident, the Appellant approached the District Forum. By a judgment and order, the District Forum allowed the complaint filed by the Appellant and directed the Insurer to pay Rs.4,93,500 to the Appellant within a month along with interest @ 6% per annum from the date of filing of the complaint till the date of payment and further directed the Insurer to pay the Appellant a sum of Rs.5,000 towards compensation for mental agony and Rs.2,000 towards cost of litigation.

The Insurer appealed to the State Commission. The said appeal was dismissed by the State Commission by an order, which was challenged by the Insurer before the National Commission by filing the Revision Petition. By the Judgment and order impugned, the National Commission has allowed the Revision Petition, set aside the orders of the District Forum and the State Commission respectively, and dismissed the complaint of the Appellant.

In Naveen Kumar vs. Vijay Kumar and Others , a three- Judge Bench of this Court held that in view of the definition of the expression ‘owner’ in Section 2(30) of the Motor Vehicles Act, 1988, it is the person in whose name the motor vehicle stands registered, who, for the purposes of the said Act, would be treated as the owner of the vehicle. Where the registered owner purports to transfer the vehicle, but continues to be reflected in the records of the Registering Authority as the owner of the vehicle, he would not stand absolved of his liability as owner.

The registered owner continues to remain owner and when the vehicle is Insured in the name of the registered owner, the Insurer would remain liable notwithstanding any transfer, would apply equally in the case of claims made by the insured himself in case of an accident. If the insured continues to remain the owner in law in view of the statutory provisions of the Motor Vehicles Act, 1988 and in particular Section 2(30) thereof, the Insurer cannot evade its liability in case of an accident.

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. The National Commission also failed to appreciate that Section 157 of the Motor Vehicles Act 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.

The FIR was lodged within three days of the accident. In the case of a major accident of the kind as in present case, where the said truck had turned turtle and fallen into a river, slight delay 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.

The National Commission erred in law in reversing the concurrent factual findings of the District Forum and the National 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 of Act.

In view of the definition of ‘owner’ in Section 2(30) of the Motor Vehicles Act, the Appellant remained the owner of the said truck on the date of the accident and the Insurer could not have avoided its liability for the losses suffered by the owner on the ground of transfer of ownership to Mohammad Iliyas Ansari. The judgment and order of the National Commission is unsustainable. The appeal is, therefore, allowed. The impugned order of the National Commission under appeal is set aside and the order of the District Forum is restored.

Tags : Claim Repudiation Legality

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