S.C. Pandey, J.
1. This appeal is directed against award dated 30.9.1988 passed by the Motor Accidents Claims Tribunal, Hoshangabad, in Claim Case No. 2 of 1982. The Claims Tribunal has given an award of Rs. 2,00,000/- (Rupees two lakh) in favour of the respondent Nos. 1 to 5 with interest at the rate of 12 per cent per annum from the date of filing the claim petition till the date of realisation, against the appellant respondent Nos. 6 and 8. The respondent No. 8, the Oriental Insurance Co. Ltd., has filed the Appeal No. 489 of 1989 against the same award. The order in this appeal shall govern the disposal of that appeal too.
2. The facts giving rise to this appeal are that Keshav Prasad Shukla died in an accident leaving behind his wife and four minor daughters. They filed a claim under Section 110-A of Motor Vehicles Act, 1939 (henceforth 'the Act'). It was claimed by respondent Nos. 1 to 5 that the deceased Keshav Prasad was killed in an accident with truck No. CPB 6317 on 1.8.1987. The deceased met with the aforesaid accident when he was going on motor cycle from Hoshangabad to Itarsi along with a pillion rider. The truck was driven by the respondent No. 6, Syed Masood Ali negligently at an excessive speed from opposite direction on the wrong side of the road. The truck dashed against the motor cycle at great speed. Consequently, Keshav Prasad died and the pillion rider received injuries. At the time of his death, Keshav Prasad was aged 33 years. He was enrolled as an advocate in July, 1975 and was having an average monthly income of Rs. 1,500/-. The father of the appellant Badriprasad was alive and was aged about 60 years. His grandfather, Narmada Prasad was alive too and was aged about 81 years. Thus, the respondent Nos. 1 to 5 claimed a sum of Rs. 1,00,000/- on account of future pecuniary loss suffered by them and another Rs. 1,00,000/- on account of mental pain and suffering, Rs. 2,000/- were further claimed for damage to the motor cycle.
3. A joint reply was filed on behalf of Syed Masood Ali, respondent No. 6 and Zamin Ali, respondent No. 7. They denied that the accident was caused by negligence of the driver Syed Masood Ali. It was claimed that accident was caused because of the negligence of the deceased. The respondent No. 8, the insurance company, also filed a written statement contesting the claim that the company was liable to pay damages. It was claimed that the truck driver was not having a valid licence at the time of accident. It was further claimed that the liability of the company ceased because the appellant truck owner Sabir Hussain had transferred truck in favour of respondent No. 7, Zamin Ali prior to the date of accident without the company's consent. It was also claimed that in any case the company's liability did not extend beyond Rs. 50,000/-. It was the statutory liability and, therefore, respondent Nos. 1 to 5 cannot claim more than that in absence of any term enhancing the liability.
4. The appellant who was added subsequently as non-applicant No. 2 (a) also filed his written statement. He submitted that he had transferred the truck in favour of respondent No. 7, Zamin Ali prior to the accident and the aforesaid purchaser was recorded as the owner with the R.T.O. Consequently, the appellant claimed, his liability ceased from the date of transfer.
5. Respondent Nos. 1 to 5 examined Sukhwati, PW 2, who deposed that she was accompanying the deceased on the motor cycle, when the truck No. CPB 6317 dashed against the motor cycle. It was driven at excessive speed as it came from the opposite direction. It dashed against the motor cycle of Keshav Prasad on the wrong side of road. Keshav Prasad died on the spot as a result of injuries suffered by him and she was thrown away. She also suffered injuries on account of the accident. The motor cycle too was damaged. As against the statement of this witness, the driver Syed Masood Ali was examined in defence. He admitted that accident took place and Keshav Prasad died but put the blame upon Keshav Prasad for the accident. He asserted that motor cycle accident was due to negligence of Keshav Prasad. The learned member of the Tribunal disbelieved the evidence of Syed Masood Ali and returned the finding that the accident was caused on account of negligence of the truck driver. She also came to the conclusion on the basis of evidence of Mayabai, PW 1, Badri Prasad Shukla, PW 4, that the deceased Keshav Prasad Shukla was aged about 33 years when he died. The learned member of the Tribunal estimated the income of late Keshav Prasad around Rs. 1,200/- per month on the testimony of Mayabai, PW 1, and L.N. Verma, PW 3. She concluded that the deceased would have contributed around Rs. 800/- per month or Rs. 9,600/- per year on the dependants. Looking to the fact that members of the family of Keshav Prasad enjoyed a long life, she concluded that he would have survived till the age of 70 years. Thus total dependency was Rs. 9,600/- x 37 = Rs. 3,55,200/-. From this lump sum amount, the learned member of the Tribunal reduced 20 per cent towards the uncertainties of life making it to Rs. 2,84,160/-. However, the learned member of the Tribunal granted Rs. 2,00,000/- only to the respondent Nos. 1 to 5 on account of pecuniary loss and mental pain and suffering due to loss of consortium. No damages were granted towards the damage to the motor cycle.
6. The learned member of the Tribunal fixed the liability for payment of compensation upon the appellant Sabir Hussain (the original truck owner), Syed Masood Ali, the truck driver and the Oriental Insurance Co. Ltd. In doing so, the learned member of the Tribunal came to the conclusion that the transfer of the truck in favour of the appellant remained unproved. It was also held that the insurance policy in favour of appellant subsisted till the time of accident. The liability of the respondent No. 8, the Oriental Insurance Co. Ltd., could not be limited to Rs. 50,000/- only. She also held that there was no substance in the plea of the insurance company that the truck was driven by Syed Masood Ali without a proper driving licence. She also found that the claim was within the limitation. The conclusion of the Tribunal was that the insurance company could not raise a defence that it was absolved of its liability to pay compensation on account of transfer of the truck prior to date of incident. She relied on British India Genl. Ins. Co. Ltd. v. Capt. Itbar Singh 1958-65 ACJ 1 (SC); Orissa Co-operative Insurance Society Ltd. v. Bhagaban Sahu 1971 ACJ 49 (Orissa); Padma Devi v. Gurbakhsh Singh 1973 ACJ 460 (Rajasthan). Thus the claim of Rs. 2,00,000/- was awarded against appellant and respondent Nos. 6 and 8 jointly and severally with 12 per cent interest from the date of claim petition till realization.
7. Before we embark upon discussion of the points raised in this appeal, it would be in the fitness of things that we give our conclusion on the aforesaid point decided by the learned member at this stage. This point is definitely a subject matter of the connected appeal. It appears to us that Section 96 of the Act does not come in the way of raising such a defence. Section 96 (2) of the Act provides for limits of defence of an insurer who would be liable for the tort of negligence of the owner actually or vicariously. The provisions of 'the Act' do not require that an insurer must indemnify the third party independently of any liability of the owner. A careful scrutiny of Section 96 of 'the Act' would reveal that Clause 1 thereof requires that the insurer must satisfy the decree or order passed against any person insured by the policy in accordance with its terms provided conditions mentioned in the aforesaid Clause 1 of section are fulfilled. Who then is the person insured? Surely not the third party or the claimant. They are strangers to the contract. Obviously, the person who takes out the policy is the person insured. It is for his benefit that the sum assured is made payable. If he is not liable for damages the insurance company cannot be made liable. The Clause (2) of Section 96 assumes that there is relationship of insurer and insured and, therefore, it requires that insurer shall be served with a notice and made a party. When the notice is served to an insurer, it is certainly open to him to say that he is not a necessary party to the proceedings, because he is not insurer. Such a defence would not be covered by Clause (2) of Section 96. This would be in the nature of general defence. It is, therefore, open to insurance company to say that since the owner of vehicle with whom the contract was entered into in terms of the policy has since ceased to be an owner and, therefore, the insurance company is not liable. If any other view is taken, then it would be strange and incongruous for the reason the result would then depend upon willingness of insured owner to take up cudgels on behalf of the insurance company despite the fact that he is not concerned and has parted with the ownership of the vehicle. If such a person takes up the case and successfully pleads that he is not liable and that the insurance company cannot be made liable. If he refuses, then the insurance company would be liable. For these reasons, we hold, disagreeing with the learned member of the Tribunal, the insurance company can take the plea raised by it. In our view, we are supported by the view taken by the Full Bench of Delhi High Court in Anand Samp Sharma v. P.P. Khurana 1989 ACJ 577 (Delhi), in para 32 at page 586, it was held:
In British India Genl. Ins. Co. Ltd. v. Capt. Itbar Singh 1958-65 ACJ 1 (SC), it was held that Sub-section (2) of Section 96 gives the insurer the right to be made a party to the suit and to defend it. Sub-section (2) clearly provides that such an insurer is not entitled to take any defence which is not specified in it. It can raise those defences which are provided in that section. However, Section 96 (2) in our opinion proceeds on the premises that there is a valid subsisting insurance policy. The insurer in our view could raise a defence that the policy comes to an end on the transfer of the vehicle, subject-matter of insurance.
8. However, in the present case both the insurance company as well as the previous owner have filed separate appeals. We have examined evidence on record and we find the appellant and the respondent No. 8 have raised the identical plea that both of them are not liable because truck No. CPB 6317 stood transferred to Zamin Ali, the respondent No. 7, prior to 1.8.81, the date of accident. The respondent No. 6, Syed Masood Ali and the respondent No. 7 also entered the witness-box as witness No. 1 and witness No. 2 for non-applicant Nos. 1 and 2 respectively. Zamin Ali frankly deposed that he had purchased the truck in the month of January, 1981 from Sabir Hussain. He had also filled the T.T.O. Form and sent it to the Office of R.T.O. after 4 to 6 days, and it was registered in his name since then. However, he has not produced any registration certificate. Syed Masood Ali also admitted that he was the employee of Zamin Ali at the time of accident. Joginder Singh, witness No. 1 for non-applicant No. 3 before the Tribunal (Sic.) the Oriental Insurance Co. Ltd. denied that the company received any information either from Sabir Hussain or Zamin Ali regarding the transfer of vehicle. In view of the evidence on record, the only conclusion that could be drawn is that the appellant Sabir Hussain sold the truck No. CPB 6317 to Zamin Ali in January, 1981, the truck driver was driving the vehicle as a driver of Zamin Ali on 1.8.1981 when the accident in question took place. We, therefore, set aside the finding of the learned member of the Tribunal on the issue No. 3 and hold that vehicle was transferred to Zamin Ali in or about the month of January, 1981 and the respondent No. 6 was his truck driver. At the time of accident the appellant ceased to be owner of the truck.
9. However, it is urged vehemently by the counsel for the respondent Nos. 1 to 5 and the counsel for the respondent Nos. 6 and 7 that since the vehicle was not registered in the name of Zamin Ali there was no transfer of title in favour of the respondent No. 7. For this reason he was not liable and the appellant and the respondent No. 8 were liable. This argument was countered by learned Counsel for the appellant and the respondent No. 8 and number of authorities were cited on either side and we shall refer to those in course of discussion.
10. The most question for discussion is what is the nature of liability in the case where the original owner sells the vehicle in a bona fide transaction for value and same is not registered with R.T.O. in the name of transferee. Whether transfer of movable goods like a motor vehicle would be dependent upon registration? Is there any law that governs the transfer of title in the movable goods? The answer to such questions would be found in study of provisions of Sale of Goods Act. Section 4 of the Sale of Goods Act shows how a property in goods is transferred, i.e., by agreement to do so. Now we must further examine whether the provisions of 'the Act' affect the passing of title in case of a vehicle which is not registered under 'the Act' after transfer. Here we may remind ourselves that 'the Act' is a special law for mechanically propelled vehicles. 'The Act' is not an act which controls the transfer of vehicle. The primary aim of 'the Act' is to control traffic of vehicles of various kinds so that a safe and systematic transport system of fast moving vehicles could be developed on the roads. For the purpose of 'the Act' the vehicles are registered. Registration of vehicles under 'the Act' is not for the same purpose as registration in case of transfer of immovable property under the Transfer of Property Act. The registered sale deed or gift deed, and the like are documents of title in case of transfer of immovable property, but no such sanctity is attached to a registration certificate. It is not in reality a document of title. A person who does not hold a certificate may suffer penalties under 'the Act'. That is all there to the definition of 'owner' in Section 2(19) of 'the Act'. It refers mainly to the possession of vehicle. Section 31 of 'the Act' requires intimation of the transfer to the Registration Authority in case of transfer of registered vehicle. The first line of this section is significant. The requirement under Section 31 of 'the Act' is giving of information of a completed fact. We may also find some light from Section 22 and 42 of 'the Act'. They are similar in nature. The first relates to restriction on the use of any vehicle without registration and second restricts the use of a vehicle of transport without permit by an 'owner'. Therefore, it is significant that while interpreting the word 'owner' in Section 42 (1) of 'the Act' the Supreme Court in the case of State of Mysore v. Syed Ibrahim AIR 1967 SC 1424 at 1425, observed in para 5 as follows:
The Sub-section (1), therefore, must be construed in such a manner as to effectuate the object for which it was enacted. So construed, it must mean, that if a person owns a motor vehicle and uses it or permits its use as a transport vehicle, he can do so provided he takes out the requisite permit therefor. If he does not take out the permit and uses it or permits its use as a transport vehicle he commits an infringement of the sub-section. What the sub-section emphasises is the use of a motor vehicle as a transport vehicle and the necessity of a permit which is required for purposes of exercising control over vehicles used as transport vehicles.
11. By parity of reasoning it can be said that the words 'owner of a vehicle' do not imply that in order to prove his title a person should be holding a registration certificate. Supreme Court in Pannalal v. Shri Chand Mal 1980 ACJ 233 (SC), held that it is not necessary for sale to be complete that registration should be done under Section 31 of the Act.
12. Apart from the above discussion we also rely on the following authority of our court for this conclusion. In the case reported in Balwant Singh v. Jhannubai 1980 ACJ 126 (MP), Mulye, J., speaking for Division Bench, stated in para 11:
11. However, the single Bench decision of the Delhi High Court reported in Vimal Rai v. Gurcharan Singh and Oriental Fire & Genl Ins. Co. 1967 ACJ 115 (Delhi), came up for consideration in a Letters Patent Appeal and a Division Bench of that court in its decision reported in Oriental Fire & Genl. Ins. Co. Ltd. v. Vimal Roy 1972 ACJ 314 (Delhi), has found itself unable to agree with the view taken by the learned single Judge. In this Letters Patent Appeal it has been held that according to the provisions of the Sale of Goods Act the sale of a motor car which is a movable property is governed by the provisions of that Act and as soon as a sale of movable property is completed by delivery of possession and acceptance of price in the manner agreed to and accepted by the parties, the contract is complete and the property in the goods immediately passes to the buyer when the contract is made and it has further been found that Section 54 of the Transfer of Property Act has no application to the sale of a motor vehicle as that section exclusively deals with the sale of an immovable property and this authority has, after considering all the relevant provisions of the Motor Vehicles Act dealing with the ownership and its transfer, came to the conclusion that there is no provision of law stating that the registration of motor vehicle is a condition precedent for any transfer of the vehicle or that in the absence of registration the sale would be void or ineffective. On the other hand, an analysis of Section 31 of the Act shows that it presupposes a valid and subsisting transfer by the registered owner of the vehicle to another person and the transferor is enjoined upon a duty within 4 days after the transfer to report the transfer to the authority and the transferee is, within 30 days, required to report to the authority. The endorsement of the transfer in the records of the registering authority is, therefore, not a condition precedent to the transfer, nor does it deal with the legality or validity of the transfer which must be determined by other provisions of the law. Should any person, in disregard of the provisions of law, fail to intimate the transfer to the authority or may drive the vehicle in a public place without a certificate of registration he runs the risk of incurring the penalties provided by the Act, but his title to the purchase of the vehicle undoubtedly remains unaffected, nor does the title remain in suspense during the grace period allowed for effecting endorsements of registration. It has further been held by this decision that registration certificate is a very important piece of evidence to show the ownership of the vehicle for certain purposes. However, failure to do so cannot be deemed to militate against the validity and legality of the passing of the title in the vehicle so transferred or to expose the innocent seller who may have done his all to complete the transfer to legal liabilities for acts and omissions in respect of the vehicle subsequent to the transfer. Moreover, the certificate of registration is not a document of title, it is issued to the owner of the vehicle, that is the person by whom the vehicle is kept and used and although provision is made for changes of ownership to be recorded in the book the name appearing in it may not be that of the legal owner of the vehicle, the registration book is evidence of title and its absence at the time of sale should put a purchaser on enquiry.
Similar view was expressed by the Division Bench of Bombay High Court in the case Oriental Fire & Genl. Ins. Co. Ltd. v. Ratnabai Balu Kadam 1986 ACJ 729 (Bombay), Sawant J. (as his Lordship then was) speaking for Division Bench, stated in para 2:
It will therefore have to be held that the stand taken by the insurance company that it is not liable to pay compensation in the present case is legally justified. It is not disputed that the view on the point taken by this Court in three successive judgments, namely, those reported in Gulab Bai Damodar Tapse v. Peter K. Sunder 1975 ACJ 100 (Bombay), Kishan Pandurang Kagde v. Baldev Singh Gian Singh 1977 Mah LJ 656, Mohd. Abdul Waheed Mohd. Nakim Khan v. Shyam Behari Rameshwar Kalvar 1983 ACJ 369 (Bombay), still stands as good law in view of the said decisions. It is more than clear that although the insurance is in respect of the vehicle, the insurance policy does not run with the vehicle. It is a contract between the insured and the insurer and the moment the vehicle is transferred the insurance policy lapses. The only exception to this proposition of law is Section 103A (1) of the Act which states that if at the time of the transfer, the transferee applies in the prescribed form to the insurer, for the transfer of the certificate of insurance and the policy described in the certificate, in favour of the transferee 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 fails to intimate the insurer's refusal to transfer the certificate and the policy, the certificate of insurance and the policy is deemed to have been transferred in favour of the transferee with effect from the date of its transfer. As stated earlier, admittedly, there was no such application made by opponent No. 4 to the insurance company. Hence, the insurance company cannot be held liable to pay compensation to the applicant. To that extent, therefore, the decision of the Tribunal will have to be set aside and it is hereby set aside. The appeal of the insurance company, therefore, stands allowed and it is held that the original opponent No. 3 is not liable to pay any part of the compensation awarded by the Tribunal.
Full Bench of Delhi High Court in Anand Sarup Sharma v. P.P. Khurana 1989 ACJ 577 (Delhi), also held that once the sale is completed after payment of price and delivery of possession the provision of Sections 22 and 31 of 'the Act' do not postpone the transfer. The Full Bench relied upon number of decisions in support of its conclusions as given in para 27 of its judgment:
27. Besides the Division Bench's decision of this Court in Vimal Roy's case, 1972 ACJ 314 (Delhi), Punjab & Haryana High Court in Precto Pipe Company v. National Insurance Co. Ltd. 1984 ACJ 218 (P&H) and Labh Singh v. Sunehri Devi 1988 ACJ 170 (P&H;); Calcutta High Court in National Insurance Co. Ltd. v. Labanya Roy 1985 ACJ 720 (Calcutta); Orissa High Court in South India Insurance Co. Ltd. v. Puma Chandra Misra 1973 ACJ 46 (Orissa); Full Bench of Gujarat High Court in Shantilal Mohanlal v. Aher Bawanji Malde 1985 ACJ 505 (Gujarat); Madhya Pradesh High Court in Balwant Singh v. Jhannubai 1980 ACJ 126 (MP); Madras High Court in Govind Singh v. A.S. Kailasam 1975 ACJ 215 (Madras); Mysore High Court in B.P. Venkatappa Setty v. B.N. Lakshmiah 1973 ACJ 306 (Mysore), Bombay High Court in Gulab Bai Damodar Tapse v. Peter K. Sunder 1975 ACJ 100 (Bombay) and Rajasthan High Court in Automobile Transport (Rajasthan) Pvt. Ltd. v. Dewalal 1977 ACJ 150 (Rajasthan), had taken the same view.
Similar view was taken in Paragounda v. Bhimappa 1993 ACJ 568 (Karnataka) and Rikhi v. Sukhrania 1995 ACJ 288 (P&H;) by a Division Bench of Punjab & Haryana High Court.
13. It is true that a contrary view has been expressed in the case of Mohammad Ramzan v. Sharifanbai 1982 ACJ 445 (MP). With greatest respect to the learned Judges constituting the Division Bench, it appears that the decision of the earlier Division Bench was not brought to their notice. Therefore, the case was decided per in curiam. Similarly, in Sama v. Yusuf 1988 ACJ 139 (MP), the same view was taken without noticing the conflict. We have anxiously considered these decisions, but we are bound by earlier decision of this Court in Balwant Singh v. Jhannubai 1980 ACJ 126 (MP). There are contrary decisions of other High Courts [Santosh Rani v. Sheela Rani 1988 ACJ 299 (Rajasthan) and New India Assurance Co. Ltd. v. Avinash 1988 ACJ 322 (Rajasthan)]. However, the Division Bench of this High Court has already concluded the matter. Moreover, these cases are based mostly on the argument of fear that owners of the vehicles are likely to misuse the provisions of law by transferring the vehicles without registration in order to deprive rightful claimants. However, registration is no safeguard against such a fraud because the policy does not get automatically transferred by registration.
14. Mr. A.D. Deoras, learned Counsel for the respondent Nos. 1 to 5 sought to urge that in view of Section 103-A of 'the Act' the vesting of title in Zamin Ali was postponed. We do not agree. There is nothing to show that such a step for transferring the policy in favour of Zamin Ali was taken. Insurer cannot be blamed if the owner did not apply for transfer of policy. The insurance company has also option to reject the application for transfer.
15. Learned counsel for the respondent Nos. 1 to 5 sought to urge that insurance company should be held vicariously liable even though there was no fresh policy or transfer of previous policy, in favour of new owner. He relied upon the case in Guru Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC). The case cited by the learned Counsel is not on all fours. The principle of extension of vicarious liability cannot be taken to the extreme point in a case where the owner has transferred the vehicle and there is no privity of contract between the new owner and insurance company. The new owner would not be bound at any time by the policy because of lack of a contract. Despite there being lack of reciprocity, we are called upon to take a view that the insurance company would be still liable. There is nothing to suggest in Section 95 for taking such a view. We are, therefore, unable to accept the argument of the learned Counsel for respondent Nos. 1 to 5.
16. The learned Counsel for the respondent No. 8, the Oriental Insurance Co. Ltd., argued that the statutory liability of insurance company would not exceed Rs. 50,000/-. We do not propose to decide this point.
17. Since, we are allowing the appeals and absolving the appellant and the respondent No. 8 of the liability to pay the compensation, it is in the interest of justice that this Court should exercise its powers under Order 41, Rule 33, Code of Civil Procedure. [See Manjula Devi Bhuta v. Manjusri Raha 1968 ACJ 1 (MP)]. Accordingly, we shall substitute a new award whereby the persons held liable to pay compensation by this Court in these appeals shall be directed to pay the amount found by the Claims Tribunal due by way of damages.
18. In view of the above discussion, the two appeals M.A. No. 45 of 1989 and M.A. No. 489 of 1989, succeed and they are allowed. The appellant Sabir Hussain and respondent No. 8, Oriental Insurance Co. Ltd. shall not be liable to pay the damages amounting to Rs. 2,00,000/- (Two lakhs) together with interest thereupon awarded by the Tribunal either jointly or severally. Instead of the award dated 30.9.1988 in favour of respondent Nos. 1 to 5, passed by Motor Accidents Claims Tribunal, Hoshangabad in Claim Case No. 2 of 1988, a new award will be substituted. The respondent Nos. 6 and 7 shall be liable to pay Rs. 2,00,000/- with interest from the date of filing of claim till realization jointly and severally. They shall also pay the costs awarded by the Tribunal to respondent Nos. 1 to 5. However, there shall be no order as to costs of this appeal.