1. This appeal, at the instance of owner-appellant, is directed against the judgment dated 16.2.2004 passed by the learned Additional District Judge-Cum-Third Motor Accident Claims Tribunal,Gajapati, Parlakhemundi in MAC No.3/2001/125/99 (GDC) directingthe owner of the offending vehicle, a bus bearing registration No.OR-07-C-0099, to pay to the claimants-respondent Nos.2 to 4 compensation amount of Rs.1,15,000/- (Rupees one lakh fifteen thousand) with interest at the rate of 8 per cent from 1.10.2002, i.e., the date of appearance of the appellant with cost of Rs.500/- (Rupees five hundred) on account of death of deceased Sakuda Mandal in an accident involving the offending vehicle. On consent, the matter was taken up for final disposal at the stage of admission.
2. The accident took place on 28.6.1997. Initially the claimants filed claim application against appellant's husband KrushnaChandra Sahukar as the owner of the offending vehicle. It was pleaded that appellant's husband was insured in respect of the offending vehiclefor the period from 7.1.1997 to 28.2.1998 by respondent no.1-NewIndia Assurance Company. Subsequently, appellant's husband having died on 18.3.1997, the appellant was arrayed in the claim proceedings the owner of the offending vehicle. Appellant filed written statement pleading, inter alia, that the Insurance Company is liable to pay compensation arising out of use of the offending vehicle. Insurance Company filed written statement denying its liability. In order to substantiate the claim, appellant examined two witnesses and relied upon documents marked Exts.1 to 5. No oral evidence was adduced either by the owner of the offending vehicle or by the Insurance Company. However, documents marked Ext. 'A' series were admitted ton behalf of the owner and Ext. 'B' series were admitted to on behalf of the Insurance Company. Upon consideration of materials on record learned Tribunal held that the owner is liable to pay compensation.
3. In assailing the impugned judgment it was submitted bythe learned counsel for the appellant that as per Section 50(2)(a) of the Motor Vehicles Act, 1988 (for short the 'M.V. Act' ) the appellant got theownership of the offending vehicle transferred in her favor by the registering authority on 4.12.1997. The vehicle was insured during theperiod of accident. On the basis of such factual submissions it was contended that in view of Section 157 of the M.V. Act, insurance policy issued in favor of appellant's husband has to be deemed to have been transferred in favor of the appellant. It was further argued that the policy issued to appellant's deceased-husband covered the period of accident and the insurance policy was never cancelled by the Insurance Company. Therefore, third party benefits contemplated under the M.V.Act cannot be defeated due to delay, if any, in transfer of the ownership of the offending vehicle in the name of the appellant as the liability of the Insurance Company towards the third party is not contractual buts statutory. In support of his contentions learned counsel for the appellant relied upon decisions of our High Court in Hindustan General Ins. Society Ltd. vrs.-Kausalya Rani Das and another,1972 A.C.J 13 and of the Hon'ble Supreme Court in OrientalInsurance Co. Ltd. vrs.- Inderjit Kaur and others, 1998 (1) T.A.C.615 (SC).
4. In reply, learned counsel for the Insurance Company contended that as the person in whose favor insurance policy was issued died more than three months before the accident and no step was ever taken by the appellant to get the insurance policy transferred in her favor, the learned Tribunal rightly held that Insurance Company is not liable to pay compensation on account of accident involving the offending vehicle. It was argued that contract of indemnity between the Insurance Company and insurer-owner came to an end with his death on 18.3.1997. It was further contended that as the claim application was initially filed against a dead person and the case stood abated against the deceased-owner, no award can be passed against the Insurance Company on the strength of policy which had been issued to the appellant's husband. In support of his contentions learned counsel for the Insurance Company relied upon the decisions of our High Court in Cuttack Municipality vrs.- ShyamsundarBehera, 1976 CLT 1283, of the High Court of Madras in New India Assurance Co. Ltd. vrs.- Kaliathal and others, 2002 (3) T.A.C. 663(Mad.) and of the High Court of Gujarat in United India Insurance Co. Ltd. vrs.- Mohanlal Nandiram and others, 1999(3) T.A.C. 831(Guj.).
5. Learned counsel for the claimants respondent nos.2 to 4also argued that in view of provisions under Section 50 (2) (a) and Section 157 of the M.V. Act the insurance policy which was never cancelled automatically got transferred in favor of the appellant. There might have been some delay in getting the vehicle transferred in the name of the appellant. However, delay is of no consequence so far as liability of the Insurance Company towards third party is concerned. Learned counsel for the claimants placed reliance on decision in RikhiRam and another vrs.- Sukhrania and others, 2003 (2) T.A.C. 22(S.C).
6. Having perused the materials on record and considered the contentions raised on behalf of the parties, it is found that certain facts are not at all disputed. Insurance policy was issued by the Insurance Company in favor of the appellant's deceased husband in respect of the offending vehicle prior to the accident covering the period from7.1.1997 to 28.2.1998 vide Ext.A series. Appellant's husband died on18.3.1997 and accident took place on 28.6.1997. Ownership of the offending vehicle was transferred by the registering authority in the name of the appellant on 4.12.1997 as is revealed from the copy of the registration certificate filed on behalf of the appellant. Claimapplication was filed on 19.3.1999 imp leading appellant's deceased- husband as the owner. Having learnt regarding death of the appellants husband claimants imp leaded the appellant as the owner of the vehicle when the claim application was pending. Accordingly, claim application was amended before hearing commenced. It is not disputedthat insurance policy issued in favor of the offending vehicle was never cancelled or rescinded by the Insurance Company.
7. In view of such admitted facts, there is no scope for the Insurance Company to assail impletion of the appellant in the claim proceeding as the owner. No objection was raised before the learned Tribunal against impletion of the appellant. Scheme of the Motor Vehicles Act also does not provide any scope to the Insurance Company to object to appellant's impletion on the ground of bar of limitation. Decision in Cuttack Municipality vrs.- Shyamsundar Behead(supra) relied upon by the learned counsel for the Insurance Company to canvass his objection to the impletion of appellant as the owner of the vehicle lays down that no substitution can be permitted in a case where there was a sole defendant, but where there are more defendants than one and one of them was dead when the suit was filed, the legal representatives of the deceased defendant can be brought on record subject to the question of limitation that may be available to be raised. In the present case, admittedly, deceased-owner was not the only opposite party against whom claim application was filed. Therefore, the objection is not sustainable.
8. The crucial issue to be decided in the appeal is as to whether third party liability of the Insurance Company subsisted in respect of the cause of action arising of use of the offending vehicle after the death of the appellant's husband but during the period for which the policy had been issued. Stand of the Insurance Company is that the liability towards third party ceased due to inaction on the part of the appellant to get ownership of the offending vehicle and insurance policy transferred in her favour after death of appellant's husband and before the accident.
9. Clause (a) of sub-section (2) of section 50 of the M.V. Actprovides for the contingency regarding transfer of ownership of avehicle in case of death of the registered owner. It reads:" Where(a) the person in whose name a motor vehicle stands registered dies, xx(b) the person succeeding to the possession of the vehicle or, as the case may be, who has purchased or acquired the motor vehicle, shall make an application for the purpose of transferring the ownership of the vehicle in his name, to the registering authority in whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, in such manner, accompanied with such fee, and within such period as may be prescribed by the Central Government."Thus the provision makes it clear that so far as transfer of ownership of the registered vehicle by the registering authority is concerned, the person succeeding to the possession of the vehicle is to make an application for the purpose. It is not disputed that the appellant succeeded to the possession of the vehicle. Therefore, transfer of ownership of the vehicle which the transferee acquired upon death of deceased owner was required to be registered on an application made by the successor of the deceased-owner.10. Legal consequence of not making an application within the period prescribed under sub-section (2) of Section 50 of the M.V. Act and the duties of the registering authority on receipt of the application have been provided under sub-section (3) to (7) of Section 50 of the M.V. Act, which read:-
"(3) If the transferor or the transferee fails to report to the registering authority the fact of transfer within the period specified in clause (a) or clause (b) of sub-section (1), as the case may be, or if the person who is required to make an application under sub-section (2) (hereafter in this section referred to as the other person) fails to make such application within the period prescribed, the registering authority may, having regard to the circumstances of the case, require the transferor or the transferee, or the other person, as the case may be, to pay, in lieu of any action that may be taken against him under section 177 such amount not exceeding one hundred rupees as may be prescribed under sub-section (5):
Provided that action under section 177 shall be taken against the transferor or the transferee or the other person, as the case may be, where he fails to pay the said amount.
(4) Where a person has paid the amount under sub-section (3), no action shall be taken against him under section 177.
(5) For the purposes of sub-section (3), a State Government may prescribe different amounts having regard to the period of delay on the part of the transferor or the transferee in reporting the fact of transfer of ownership of the motor vehicle or of the other person in making the application under sub-section (2).
(6) On receipt of a report under sub-section (1), or an application under sub-section (2), the registering authority may cause the transfer of ownership to be entered in the certificate of registration.
(7) A registering authority making any such entry shall communicate the transfer of ownership to the transferor and to the original registering authority, if it is not the original registering authority."
Thus, it is evident that what is required to be done by filing an application under sub-section (2) of Section 50 of the M.V. Act is simply to intimate to the registering authority "the fact of transfer" of the ownership of the vehicle in case of death of the owner by the person succeeding to the possession of the vehicle by filing an application within the prescribed period. In the event of failure to do so, instead of taking action under Section 177 of the M.V. Act, "transferee" may be required to pay such amount not exceeding one hundred rupees as may be prescribed under sub-section (5) of Section 50 of the M.V. Act. Only when the "transferee" fails to pay the amount, action under Section 177 of the M.V. Act has to be taken against the "transferee". It has been categorically provided that where a person has paid the amount under sub-section (3) of Section 50 of the M.V. Act, no action shall be taken against him under Section 177 of the M.V. Act.
11. Provisions under Section 50 of the M.V. Act extracted above make it clear that the registering authority is bound to record the transfer of the vehicle once an application is made. Entry in the certificate of registration does not cause the transfer of ownership. The transfer of ownership takes place from the date of sale when the transferee purchases the vehicle, and from the date of death of owner when the successor-in-interest succeeds to the possession of the vehicle. Registration certificate does not confer title. Change of entry in the registration certificate does not convey the ownership. Transfer of ownership of motor vehicle is governed by the provisions of Sale of Goods Act or law of succession as the case may be. In this connection, decisions of Kerala High Court in V. Parakashan vrs.-Pankajakshan and another: 1985 CRI.L.J. 951 and of Bombay HighCourt in Virendrakumar J. Handa vrs.-Dilawarkhan Alij Khanand others : 1992 CRI.L.J.2476 may be referred to.
12. Section 157 of the M.V. Act lays down provisions relating to transfer of certificate of insurance in the event of transfer of ownership of a motor vehicle. It reads:" 157. Transfer of Certifificate of Insurance :-
(1) Where a person in whose favor 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 favor 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 favor and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance."
The language of sub-section (1) of Section 157 of the M.V. Act is unambiguous in stating that certificate of insurance as well as the policy described in the certificate shall be deemed to have been transferred in favor of the transferee with effect from the date obits transfer. Transfer of insurance policy is automatic. Therefore, incase of death of the insured, transferee in possession has to be deemed to have been covered by the policy.
13. At this stage it is also essential to refer to the provisions relating to duties and liabilities of the insurer and insured under theM.V. Act.14. Sub-section (5) of Section 147 of the M.V. Act reads:-"147. Requirements of policies and limits of liability.-
(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."
15. Sub-section (1) of Section 149 of the M.V. Act reads:-
"149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. (1) If, after a certificate of insurance has been issued under sub- section (3) of section 147 in favors of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) [or under the provisions of section 163-A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."
16. Section 156 of the M.V. Act reads:-
"156. Effect of certificate of insurance.- When an insurer has issued a certificate of insurance in respect of a contract of insurance between the insurer and the insured person, then- (a) if and so long as the policy described in the certificate has not been issued by the insurer to the insured, the insurer shall, as between himself and any other person except the insured, be deemed to have issued to the insured person a policy of insurance conforming in all respects with the description and particulars stated in such certificate; and (b) if the insurer has issued to the insured the policy described in the certificate, but the actual terms of the policy are less favorable to persons claiming under or by virtue of the policy against the insurer either directly or through the insured than the particulars of the policy as state in the certificate, the policy shall, as between the insurer and any other person except the insured, be deemed to be in terms conforming in all respects with the particulars stated in the said certificate."
17. Sub-section (5) of Section 147 of the M.V. Act is substantially in
pari materia with sub-section (5) of Section 95 of the Motor Vehicles
Act, 1939 (for short the '1939 Act').
18. In Rikhi Ram and another vrs.- Sukhrania and others
(supra) the Hon'ble Apex Court had the occasion to analyse the effect
and implication of Section 95 (5) of the 1939 Act. It was held:
"3. This Court in G. Govindan v. New India Assurance Co. Ltd. and others, 1999 (3) S.C.C. 754, has settled the controversy as regards liability of insurer to pay compensation to third party in the absence of any intimation of transfer of the vehicle to the transferee. It was held therein that since insurance against third party is compulsory, and once the Insurance Company had undertaken liability to third party incurred by the persons specified in the policy, the third party's right to recover any amount is not affected by virtue of the provisions of the Act or by any condition in the policy. We are of the view that said decision concludes the controversy in the present appeal. However, we would like to give further reasons that the liability of an insurer does not come to an end even if the owner of the vehicle does not give any intimation of transfer to the Insurance Company. Chapter VIII of the Act has been enacted following several English statutes. In England, prior to 1930, there was no law of compulsory insurance in respect of third party rights. Whenever an accident took place the victim or the injured used to take legal proceedings against an erring motorist for recovery of damages. But many a times it was found that the owner of an offending vehicle was not always in a position to pay compensation or damages to the injured or to the dependants of the deceased and in that event the claimants could not get the damages. To meet such a situation, various legislations were enacted in England. For the first time, Third Parties (Rights Against Insurers) Act, 1930 was enacted, the provisions of which find place in Section 97 of the Act which gave to third party right to sue directly against the insurer. Subsequently, the Road Traffic Act, 1930 was enacted which provided for compulsory insurance of motor vehicles. The provisions of the said Act was engrafted in Section 95 of the Act. Under Section 38 of English Act, 1930, certain conditions of insurance policy were made ineffective so far as the third parties were concerned. The object behind the aforesaid legislations was that third party right should not suffer on account of failure of comply with those terms of the insurance policy. Section 94 of the Act gives protection to third party in respect of death or bodily injury or damage to the property while using the vehicle in public place and, therefore, the insurance of vehicle had been made compulsory under Section 94 read with Section 95 of the Act.
4. A perusal of Sections 94 and 95 would further show that the said provisions do not make compulsory insurance to the vehicle or to the owners. Thus, it is manifest that compulsory insurance is for the benefit of third parties. The scheme of the Act shows that an insurance policy can cover three kinds of risks, i.e., owner of the vehicle; property (vehicle) and third party. The liability of the owner to have compulsory insurance is only in regard to the third party and not to the property. Section 95 (5) of the Act runs as follows:
"Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."
5. The aforesaid provision shows that it was intended to cover two legal objectives. Firstly, that no one who was not a party to a contract would bring an action on a contract ; and secondly, that a person who has no interest in the subject matter of an insurance can claim the benefit of an insurance. Thus, once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 94 does not provide that any person who will use the vehicle shall insure the vehicle in respect of his separate use.
6. On an analysis of Sections 94 and 95, we further find that there are two third parties when a vehicle is transferred by the owner to a purchaser. The purchaser is one of the third parties to the contract and other third party is for whose benefit the vehicle was insured. So far, the transferee who is the third party in the contract, cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer.
7. For the aforesaid reasons, we held that whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of insurer does not cease so far as the third party/ victim is concerned, even if the owner or purchaser does not give any intimation as required under the provisions of the Act."
19. Similarly, our High Court in Hindustan General Ins. Society
Ltd. vrs.-Kausalya Rani Das and another (supra) has held:
"11. Chapter 8 of the Act, as its heading indicates, makes provision for insurance of motor vehicles against third party risks. In other words, the object of the provisions contained in this Chapter is to ensure that third parties who suffer on account of user of motor vehicles would be able to get damages for the injuries sustained by them and their ability to get damages will not be dependent on the financial condition of the owner or driver of the vehicle. Under section 94 of the Act, a person is prohibited from using, causing or allowing any other person to use a motor vehicle in a public place except as a passenger unless there exists a policy of insurance respecting user of that vehicle and the same complies with the requirements of Chapter 8. The policy, therefore, must provide insurance against any liability to third party incurred by the person when using that vehicle. Under section 95, the requirements to be complied with are ; firstly, the policy must specify the person or classes of persons who are insured with respect to their liability to third parties; secondly, the policy must specify the extent of liability which must extend to the extent specified in sub-section (2) there under and thirdly, the liability which be incurred by the specified person or classes of persons in respect of death or bodily injury to any person caused by or arising out of the use of the vehicle insured. Sub- section (4) thereof provides for issue of a certificate of insurance to the person who effects the policy and sub- section (5) is as follows:
"95 (5) "Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."
Thus, if the policy covers the insured for his liability to third parties, the insurer is bound to indemnify the person or classes of persons specified in the policy. The same is the effect of sub-section (1) of section 96 which provides that the insurer is bound to pay to the person entitled to the benefit of a decree he obtains in respect of any liability covered by the terms of the policy against any person insured by the policy irrespective of the fact whether the insurer was entitled to avoid or cancel or might have avoided or cancelled the policy. Thus, the liability of the insurer to third parties who suffer injury or damage due to the use of the motor vehicle is statutory and not contractual."
20. In Oriental Insurance Co. Ltd. vrs.- Inderjit Kaur and others
(supra) while dealing with provisions under Section 147 (5) and 149 (1)
of the M.V. Act, the Hon'ble Apex Court held:
"6. Chapter 11 of the Motor Vehicles Act, 1988, provides for the insurance of motor vehicles against third parry risks. Section 146 there under states that no person shall use or cause or allow any other person to use a motor vehicle in a public place unless there is in force in relation to the use of the vehicle a policy of insurance that complies with the requirements of the Chapter. Section 147 sets out the requirements of policies and the limits of liability. A policy of insurance, by reason of this provision, must be a policy which is issued by a person who is an authorized insurer. Sub-section 5 reads thus :
"(5) Notwithstanding anything contained in any law for the time being in force, an insurer issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons
specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons."
Section 149 refers to the duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks. Sub-section (1) thereof reads :
"(1) If, after a certificate of insurance has been issued under sub-section (3) of Section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under Clause (b) of sub-section (1) of Section 147 (being a liability covered by the terms of the policy) [or under the provisions of Section 163-A] is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable there under, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments."
7. We have, therefore, this position. Despite the bar created by Section 64-VB of the Insurance Act, the appellant, an authorized insurer, issued a policy of insurance to cover the bus without receiving the premium therefore. By reason of the provisions of Sections 147 (5) and 149 (1) of the Motor Vehicles Act, the appellant became liable to indemnify third parties in respect of the liability which that policy covered and to satisfy awards of compensation in respect thereof notwithstanding its entitlement (upon which we do not express any opinion) to avoid or cancel the policy for the reason that the cheque issued in payment of the premium thereof had not been honored.
8. The policy of insurance that the appellant issued was a representation upon which the authorities and third parties were entitled to act. The appellant was not absolved of its obligations to third parties under the policy because it did not receive the premium. It remedies in this behalf lay against the insured.
9. We may note in this connection the following passage in the case of Montreal Street Railway Company v. Normandin, AIR 1917 Privy Council 142 :
"When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the
validity of the acts done.
21. Such being the legal dispensation under the M.V. Act, thereis absolutely no scope for the Insurance Company to avoid the statutory liability towards third-party claimants. I am in respectful disagreement with any other interpretation of the statutory provisions and their implications which learned counsel for the Insurance Company seeks to assign by placing reliance on the decisions in New India Assurance Co. Ltd. vrs.- Kaliathal and others (supra) and in United India Insurance Co. Ltd. vrs.- Mohanlal Nandiram andothers (supra).
22. In view of the above, the impugned award directing the owner to pay the compensation amount is not sustainable in law. Therefore, the impugned award is set aside and it is held that the 18 Insurance Company is liable to pay the compensation amount with interest and cost as awarded to the claimants.
23. Accordingly, the appeal is allowed. The Insurance Company is directed to deposit with the Tribunal the award amount with interest and cost within two months. On such deposit the learned Tribunal shall deposit and disburse the amount among the claimants in the same proportion as directed in the impugned award. Parties shall bear their own cost.