Judgment:
V.V.S. Rao, J.
1. Challenge in this appeal by the New India Assurance Company Limited is to the award dated 15.03.2001 in M.V.O.P. No. 559 of 1996 passed by the Motor Accident Claims Tribunal-cum-II Additional District Judge, East Godavari at Rajahmundry.
2. The fact of the matter which is not seriously disputed may be noticed. Garaga Adilakshmi, statedly aged about 60 years and was earning about Rs. 600/- per month as a coolie, was victim of a hit and run accident occurred due to rash and negligent driving of the driver of a jeep bearing No. AP 5 T 2258 on the road between Peddapuram to Jaggampeta. Victim of the accident died on the spot. Her four childen instituted the O.P claiming Rs. 90,000/- as compensation for her death. As generally happens, driver remained ex parte. Owner of the jeep, one Suri Babu, contested the O.P. He admitted that he is the owner of the jeep and that even if driver is negligent it is insurance company which has to pay the am`unt.
3. Insurance Company opposed the O.P denying negligence and also disputing the quantum of compensation claimed. Insurer further alleged that the jeep had no valid permit, that the driver had no valid licence and that the petitioners in the O.P. are not legal heirs of deceased Adilakshmi. 4. Based on these pleadings, learned Tribunal framed two substantial issues, namely, i) Whether the accident occurred due to rash and negligent driving of the jeep by the driver? and ii) Whether the petitioners are entitled to any compensation. If so, to what amount and against whom?
5. During the enquiry, claimants examined two witnesses and marked four documents. Insurer examined three witnesses and marked Exs. B1 to B7. On considering the evidence, learned Tribunal came to the conclusion that accident occurred due to rash and negligent driving of the driver. Considering the age of the deceased, learned Tribunal applied the multiplier 0.97 and arrived at the loss of dependency at Rs. 6,984/-, and awarded a sum of Rs. 50,000/- under no fault liability. Further, a sum of Rs. 2,000/- was also awarded towards funeral expenses.
6. The appeal is sought to be supported by the learned Counsel for the appellant urging as follows. Insurance policy - Ex.B1 was issued by the appellant in favour of Secretary and Correspondent of Adarsh Vidyalaya. Insured was not party to the proceedings, and therefore, the insurer cannot be made liable to pay the compensation. According to the learned Counsel, the question of payment of compensation by the insurer in discharge of its obligation to indemnify insured arises only when insured is held responsible vicariously for the negligence of the driver. He placed reliance on Oriental Insurance Co. Limited v. Sunita Rathi : AIR1997SC4228 .
7. Learned Counsel for respondent Nos. 1 to 4 (claimants) relied on Section 157 of the Motor Vehicles Act, 1988 (the Act, for brevity), and submits that when jeep was transferred to Suri Babu along with the vehicle, policy of insurance shall be deemed to have been transferred, and therefore, even if the earlier owner of the jeep is not made party, the same does not enable the insurer to escape the liability.
8. In Sunita Rathi (supra) it was held that 'liability of the insurer arises only when the liability of the insured has been upheld for the purpose of indemnifying the insured under the contract of insurance.' Under Section 147(1)(b)(i) of the Act, a policy of insurance (act/statute policy) is required to insure the person specified in the policy against any liability which may be incurred by him in respect of death of or bodily injury of a third party. Therefore, ordinarily, unless and until it is held that insured is liable to pay the compensation, the insurance company, which indemnifies the insured by issuing policy, cannot be made liable. However, the question before this Court is little different.
9. There is no dispute that the jeep involved in the accident was originally owned by Adarsh Vidyalaya, and Ex. B1-policy was issued in the name of Secretary and Correspondent of the said Vidyalaya. There is also no dispute that vehicle was transferred to Suri Babu, who is admittedly arrayed as respondent No. 2 in the O.P. Whether this would satisfy the procedural requirement? In the considered opinion of this Court the impleadment of Suri Babu would be sufficient compliance, because under Section 157 of the Act, when the vehicle is transferred, insurance policy is deemed to have been transferred. Section 157 of the Act reads as under.
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 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 descried 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.
10. Explanation: For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.'(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.
11. A plain reading of Sub-section (1) above would show that in respect of third party risks, the certificate of insurance together with the policy of insurance described therein shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred. As per Sub-section (2) above, within fourteen days from the date of transfer, transferee has to apply to the insurer for making necessary changes with regard to policy in the certificate of insurance. Even, if this requirement is not complied with by the transferee, it has no effect on the third party to cover whom the policy of insurance is issued under Chapter XI of the Act. This Court, however, makes it clear that the deeming provision under Section 157(1) of the Act would only be available in case of only third party risk and in case of damage to the vehicle unless and until the policy is transferred in favour of transferee, transferee will not be entitled to claim any amount. A reference may be made to Complete Insulations (P) Limited v. New India Assurance Co. Limited : AIR1996SC586 . Relevant observations from this decision are as follows.. It is obvious on a plain reading of this provision that the legislature was anxious to protect third party interest. Then comes Section 157 which we have extracted earlier. This provision lays down that when the owner of the vehicle in relation whereto a certificate of insurance is issued transfers to another persons the ownership of the motor vehicle, the certificate of insurance together with the policy described therein shall be deemed to have transferred in favour of the new owner of the vehicle with effect from the date of transfer. Sub-section (2) requires the transferee to apply within fourteen days from the date of transfer to the insurer for making necessary changes in the certificate of insurance and the policy described therein in his favour..... It is only in respect of third party risks that Section 157 of the New Act provides that the certificate of insurance together with the policy of insurance described therein 'shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred'. If the policy of insurance covers other risks as well, e.g., damage caused to the vehicle of the insured himself, that would be a matter failing outside Chapter XI of the New Act and in realm of contract for which there must be an agreement between the insurer and the transferee, the former undertaking to cover the risk or damage to the vehicle....
Learned Counsel for the appellant has not raised any other contention in support of the appeal.
12. The Civil Miscellaneous Appeal fails, and is accordingly dismissed. There shall be no order as to costs. Dismissal of this appeal does not preclude the appellant/insurer to proceed against the original owner of the vehicle.