National Insurance Co. Ltd. Vs. Mayadhar Pal and ors. - Court Judgment

A. Pasayat, J.

1. In this appeal under Section 30 of the Workmen's Compensation Act, 1923 (hereinafter referred to as 'the Act') the liability fastened on the National Insurance Company Limited (in short 'the Insurance') is under challenge.

2. Outlined in brief the factual controversy is as follows:

A claim petition was filed before the Deputy Labour Commissioner-cum-Com-missioner for Workmen's Compensation Rourkela (in short 'the Commissioner') by one Mayadhar Pal claiming that his son Zilanath was a workman under Kalinga Steel Limited, Rourkela, for some time and on 5.11.1979, the fateful date, met his end while going in a truck bearing Registration No. OSO 5256, belonging to one Balwant Singh, respondent No. 2 in the present appeal. Balwant Singh appeared pursuant notice and accepted the position that he was the owner of the truck in quest on to vehicle had been hired by Kalinga Steel Limited (in short 'Kalinga') and that the insurer was jointly and severally liable with Kalinga for payment of condensation, since the deceased was not a workman under him Kalinga, respondent No. 3 in the present appeal, contested the position and denied the averment that it had engaged the truck in question and/or to have engaged die deceased. The insurer took die plea that it had not incurred any liability and wanted the claimant to prove that the vehicle in question was insured with it, as well as the circumstances pertaining to accident.

The Commissioner framed four issues and on evaluation of the documentary and oral evidence came to hold that the deceased was employed as a workman under Balwant Singh. However, he held that there was no material to show that Kalinga had hired the vehicle in question. He quantified the compensation payable at Rs. 16,800/- and further awarded interest at the rate of 6 per cent per annum from the date of accident till the date of award. Coming to the most vital question as to on whom the liability was to be fastened, he held that though originally the vehicle was insured in the name of one Pritam Singh, yet there was material to show that the vehicle had already been transferred by Pritam Singh to Balwant Singh and, therefore, the insurance was liable to pay the amount. Strong reliance was placed on Exh. A filed by Balwant Singh to conclude that the transfer of the vehicle by Pritam Singh to Balwant Singh was within the knowledge of the insurer and, therefore, the liability was that of the insurer. He, however, held that the interest was to be paid by Balwant Singh, who according to him was the owner of the offending vehicle.

3. Mr. S.D. Das, the learned Counsel appearing for the insurer, strenuously urges that the correct principles of law relating to transfer of a policy of insurance were not kept in view by the Commissioner while fixing the liability on the insurer. Mr. B.P. Ray, the learned Counsel appearing for the claimant, submits that the transfer in question being within the knowledge of the insurer, it cannot avoid its liability. Similar submissions have been made by Mr. R.B. Mohapatra, the learned Counsel appearing for Balwant Singh.

4. In view of the contention raised, it would be desirable to refer to various relevant provisions of the Motor Vehicles Act, 1939 (in short 'the M.V. Act') which held the field at the relevant time, dealing with die liability of the insurer. The provision which needs consideration in the instant case relates to transfer of certificate of insurance as laid down in Section 103-A of the M.V. Act. It, inter alia, provides that where a person in whose favour the certificate of insurance has been issued proposes to transfer 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, he may apply 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 person to whom the motor vehicle is proposed to be transferred and if within fifteen days of die receipt of such application on intimation-regarding acceptance or refusal is received from the insurer, it shall be deemed that the policy described in the certificate has been transferred with effect from the date of its transfer. The conditions under which the insurer may refuse to transfer to the proposed transferee have been indicated in Sub-section (2) of Section 103-A. The insurer is mandated to refund the amount, if any, to the transferee for the unexpired term of the policy, when the insurer refuses to transfer the policy. It is the case of die claimant and Balwant Singh, die transferee, that due intimation was given to the insurer about proposed transfer and it having chosen not to refuse transfer within die stipulated period of fifteen days, it is to be deemed that the certificate of insurance and the policy were transferred in favour of the transferee. It has also been submitted that the transfer takes effect from die date of transfer, and even if intimation is given subsequent to the actual date of transfer it operates retrospectively. The submissions though prima facie attractive do not stand close scrutiny.

5. A policy of insurance is a contract of indemnity. Insurance is available to the owner of the vehicle and is not related to the vehicle itself. When the insured ceases to be the owner of the vehicle, the contract becomes inoperative. A policy of insurance cannot be transferred by the insured without the consent of the insurer. That is the underlying principle of Section 103-A. There is a novation of the contract once the insurer agrees to transfer and the original assured is substituted by die new assured, transferee to whom the policy has been transferred. By operation of a deeming provision, there is automatic transfer of the certificate of the insurance the policy described in the certificate of insurance, and the policy taken by the owner of a vehicle shall cover the transferee thereof, when requisite notice in the prescribed form is given by the original owner-transferor and there is no refusal intimated in the insurer. The intention of the legislature is very clear from the expression used in Section 103-A that when a person, owner of a vehicle, proposes to transfer to another person the ownership of the motor vehicle, he has to apply in the prescribed form. Obviously, the application has to be made before actual transfer takes place. Similar view has been expressed in Oriental Fire & General Insurance Co. Ltd. v. Sant Ram 1982 ACJ (Supp) 472 (P&H;). A bare perusal of Exh. A shows that the requisite intimation at die stage of transfer was not given to the insurer. On the contrary, it is apparent that the transfer was sought for after die accident took place. In Exh. A the following line is very significant:

(Emphasis added).In the present case, as you know, the insurance was transferred to you after me accident....

Undisputedly the certificate of insurance issued in favour of Balwant Singh and one S.M. Behera indicates the effective date of commencement of insurance to be 10th November, 1979, i.e., after die date of accident. Even if knowledge is attributable to the insurer it is after the accident has occurred. No definite material was placed before the Commissioner to show that an intimation regarding proposed transfer was given to the insurer. Contrary to his conclusions, Exh. A goes to show that me intimation was after the accident. Even if the requisite information was given after die accident and die insurer did not exercise its option to refuse the transfer, yet the liability of die insurer can be only with effect from the date of intimation and not prior that. There is no question of any retrospective operation of the policy of insurance unless evidenced by material. Under almost identical circumstances, die Madras High Court held that merely because Insurance Company had knowledge of die transfer of the ownership in the vehicle, its liability under die policy, which never got transferred in favour of the transferee, cannot be deemed to have continued so as to bear the liability of compensation. See New India Assurance Co. Ltd. v. N. Ganapathy 1982 (Supp) 282 (Madras). Though slightly different aspects were under consideration, similar view was expressed by this Court in South India Insurance Co. Ltd. v. Puma Chandra Misra 1973 ACJ 46 (Orissa) and P.K. Panda v. Premalata Chaudhury 1980 ACJ 213 (Orissa).

6. A plea was raised by the learned Counsel for Balwant Singh that even if there was no effective and valid transfer of the certificate of insurance and the policy relating thereof, the same need be effective so far as the original owner was concerned and, therefore, the Insurance Company's liability subsists. Such a plea does not appear to have been taken by the parties before the Commissioner. The question of acceptability or otherwise of such a plea was not examined by die Commissioner. It is, therefore, appropriate that the Commissioner should adjudicate this aspect. It is, however, made clear, that die insurer has no responsibility of indemnification so far as Balwant Singh is concerned. The findings of the Commissioner so far as quantum is concerned do not need any variance. The only question the Commissioner will now adjudicate is whether there is subsisting certificate of insurance and certificate of policy so far as Pritam Singh is concerned to warrant fastening of liability, if any, on Pritam Singh, the original owner of the offending vehicle. Since die accident took place more than a decade back it is appropriate that the adjudicatory exercise should be undertaken as early as possible and finality given by the Commissioner as expeditiously as possible. Pritam Singh does not appear to be a party in the proceeding. It is open to the parties to take necessary steps for impleading him, if so available in law. This is necessary because in his absence the adjudication as afore stated would be rendered nugatory.

7. The appeal is accordingly disposed of.