Smt. Jaya Ben and ors. Vs. Gaffar Khan and ors. - Court Judgment

Sunil Kumar Garg, J.

1. All these five special appeals are being decided by a common judgment as they all arise out of same accident that took place on 8.4.1972 and in all these special appeals, common questions of law and facts are involved.

2. All these five special appeals under Section 18 of the Rajasthan High Court Ordinance, 1949 have been filed by the appellants-petitioners against the judgment dated 9.7.1985 passed by the learned Single Judge of this Court by which the learned Single Judge while dismissing the five appeals filed by Gaffar Khan (respondent-1), reduced the quantum of compensation awarded by the Motor Accident Claims Tribunal, Jodhpur in each case and also dismissed the cross objections filed by the present appellants-petitioners and also held both Insurance Companies not liable.

3. Brief facts giving rise to these special appeals are as follows-

On 8.4.1972, Smt. Jaya Ben, appellant in D.B. Civil Special Appeal No. 28/1985 alongwith others, namely, Kirti Ben, appellant in D.B. Civil Special Appeal No. 32/85, Smt. Rama Laxmi appellant in D.B. Civil Special Appeal No. 33/1985i Lalita Ben, appellant in D.B. Civil Special Appeal No. 31/1985 and Smt. Bhanumati, appellant in D.B. Civil Special Appeal No. 30/85 hired a Taxi bearing No. RJT 1058 at Falna Station for going to Ranakpur. The owner of the said Taxi was Gaffar Khan (respondent No. 1) and its driver was Deva Ram (respondent No. 4) and the said Taxi was insured with the United Fire and General Insurance Company (for short 'Insurance Company'), respondent No. 3. The Bus bearing No. RJT 1920, the owner of which was deceased Akram Khan (respondent No. 2) and its driver was Punaram (respondent No. 6) and the said Bus was insured with the New Indian Assurance Company (for short 'the Assurance Company'), respondent No. 5, was coming from the opposite direction and both the vehicles collided, as a result of which, all the five appellants-petitioner suffered injuries.

All the five injured appellants-petitioners then filed separate claim petitions before the Motor Accident Claims Tribunal, Jodhpur (for short 'the Claims Tribunal') under the provisions of the Motor Vehicles Act, 1939 against the respondents-non-petitioners claiming compensation for the injuries suffered by them due to collusion of both the vehicles.

In the claim petitions, separate written statements were filed by the respondents-non-petitioners and the Assurance Company of the Bus, respondent No. 5 took the stand that the policy of insurance in respect of the Bus has been revoked and lapsed on the transfer of the vehicle by the owner of that vehicle. It is further submitted that there being no privity of contract in between the transferee and the Assurance Company, there could be no more valid insurance policy in existence in respect of the said vehicle at the material time and, therefore, the respondent No. 5 Assurance Company was not liable to pay any compensation.

The Insurance Company of the Car RJT 1058 i.e. respondent No. 3 took the stand in its written statement that this Insurance Company is also not liable to pay any compensation under Section 96(2)(a) & (c) of the Motr Vehicles Act, 1939 (old), as the policy of the vehicle RJT 1058 isvoid on the ground that the insured had obtained it by non-disclosure of a material fact or by a representation of fact which was false in some material particular in the manner that though the said Car was insured as a private car, but it was being used by the owner of that Car as a Taxi. Hence, the Insurance Company, respondent No. 3 is also not liable to pay any compensation.

The Claims Tribunal framed the issues in all the claim petitions separately, though identical in nature and deiced them separately through its judgment and award dated 24.12.1981 and awarded the following compensation to the claimants --

Spl. Appeal Name of Amount Amount ofNo. Claimants Claimed compensationawarded by ClaimsTribunal--------------------------------------------------28/85 Jaya Ben Rs.75.000/- Rs. 45,000/-31/85 Kirti Ben Rs. 60,000/- Rs. 26,000/-33/85 Rama Laxmi Rs. 49,000/- Rs. 27,000/-32/85 Lalita Ben Rs. 36,000/- Rs.25.000/-30/85 Bhanumati Rs.51.000/- Rs.26.000/----------------------------------------------------The Claims Tribunal further came to the conclusion that both the Insurance Company of Car, respondent No. 3 as well as the Assurance Company of Bus, respondent No. 5 are not liable to pay any compensation to the appellants petitioners and thus, award was passed against the owners and drivers of both the vehicles jointly and severally and both the Insurance Company of Car and the Assurance Company of Bus were absolved from the liability of paying compensation to the claimants.

Aggrieved from the judgment and award dated 24.12.1981 passed by the Claims Tribunal, Gaffar Khan, respondent No. 1, who is owner of the Car, preferred five S.B. Civil Misc. Appeals and in all the five appeals, cross objections were also filed by the present appellants-petitioners.

The learned Single Judge of this Court vide his judgment dated 9.7.1985 dismissed all the five appeals filed by Gaffar Khan (respondent No. 1) and also dismissed the cross objections filed by the appellants-petitioners, as not pressed. The learned Single Judge in his judgment dated 9.7.1985 came to the following conclusions-

(1) That the Insurance Company of the Car, respondent No. 3 as well as the Assurance Company of the Bus, respondent No. 5 are not liable to pay amount of compensation, in view of the findings recorded by the Claims Tribunal.

(2) That the learned Single Judge reduced the amount of compensation which was awarded by the Claims Tribunal in the following manner-Spl. Appeal Name of Amount of Amount ofNo. Claimants compensation compensationawarded by the awarded by theClaims Tribunal learned Single Judge---------------------------------------------------------------28/85 Jaya Ben Rs.45.000/- Rs. 23,000/-31/85 Kirti Ben Rs. 26,000/- Rs. 10,000/-33/85 Rama Laxmi Rs. 27,000/- Rs. 8,000/-32/85 Lalita Ben Rs. 25,000/- Rs. 7,000/-30/85 Bhanumati Rs. 26,000/- Rs. 9,000/-

4. Feeling aggrieved by the said judgment of the learned Single Judge dated 9.7.1985, the appellants petitioners have filed the above five special appeal. In these special appeals, cross objections have also been filed by respondent No. 1 Gaffar Khan, owner of the Car.

Death of Akram Khan, respondent No. 2 during the pendency of the special appeals.

5. Before proceeding further, it may be stated that during the pendency of these special appeals, respondent No. 2 Akram Khan, who was owner of the Bus, has died and an application under Order 22 Rule 4 CPC was filed in this Court on 3.7.1996 stating that his 6 LRs be taken on record. On that application, notices were issued to the LRs and as per the office report, two persons namely, Ajad Khan, LR 2/c and Feroz khan, LR 2/e have been served and rest of the LRs have not been served so far. Thereafter, the learned Counsel for the appellants filed an application on 18.7.1998 with the prayer that the service on the unserved LRs of deceased Akram Khan may be dispensed with.

6. The prayer for dispensing with the service of the unserved LRs is accepted and simultaneously, the application filed under Order 22 Rule 4 CPC dated 3.7.1996 is also allowed and the following LRs of deceased respondent No. 2 Akram Khan are taken on record through amended cause title-

1. Ajad Khan

2. Firoz Khan

7. In these special appeals, the learned Counsel for the appellants has based his claim on two fold arguments-

(1) That the findings recorded by the learned Single Judge as well as the Claims Tribunal on issue No. 6 absolving the Insurance Company of the Bus are erroneous one and they should be set aside and he has relied on the decision of the Hon'ble Supreme Court in G. Govindan v. New India Assurance Co. Ltd. and Ors. : [1999]2SCR476 in this respect.

(2) That the learned Single Judge has arbitrarily reduced the amount of compensation awarded by the Claims Tribunal and the learned Single Judge has not discussed as to how and why the claim has been reduced and thus, these findings of the learned Single Judge are vitiated and should be set aside and the appellants-petitioners should be given the compensation to the extent awarded by the Claims Tribunal.

8. We have heard the learned Counsel for the parties arid perused the material available on record.

Point No. 1 regarding the liability of the Assurance Company of Bus No. RJT 1920, respondent No. 5

9. Whether the Assurance Company of Bus RJT 1920 is liable to pay compensation or not, for this issue No. 6 was framed by the Claims Tribunal which reads as under-

Whether the policy of Insurance in respect of vehicle Bus RJT 1920 was revoked and lapsed on transfer of the said vehicle?

10. The Claims Tribunal decided the issue No. 6 in the following manner-

The Claims Tribunal found that the owner of the Bus Akram Khan (now deceased) has admitted in his cross examination that he purchased the Bus RJT 1920 from one Jairaj Singh at Merrut and permit was in the name of Bhanwarlal and Jairaj Singh used to get the said Bus insured, but he did not get it insured and he also did not deposit Rs. 5/- in the Assurance Company. Shri Suraj Mal Khandelwal, O.P.W. 6, Legal Assistant, New India Assurance Company, Jaipur has deposed in his cross examination that the Bus USL 9154 disputed bus was insured in the name of its owner Jai Raj Singh and the latter did not inform the Assurance Company about its transfer. Thus, the Claims Tribunal came to the conclusion that the Assurance Company of the Bus respondent No. 5 could not be held liable and therefore, decided this issue in favour of the Assurance Company, respondent No. 5.

11. The aforesaid findings of the Claims Tribunal were upheld by the learned Single Judge vide his judgment dated 9.7.1985.

12. Before proceeding further, we would like to know what are the provisions in the old Motor Vehicles Act, 1939 (hereinafter referred to as 'the Act of 1939') and new Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act of 1988') in respect of the liability of the Insurance Company when there is a transfer of vehicle.

Transfer of vehicle and the change effect in the New Act of 1998.

13. Section 157 of the new Act of 1988, which deals with 'transfer of certificate of insurance', corresponds to Section 103A of the Act of 1939. Under the old Act, it was incumbent upon the insured to give a prior notice of transfer of ownership of a motor vehicle to the insurer with a prayer for the transfer of the certificate of insurance and the policy in favour of the proposed transferee. If the insurer fails to give any information within 15 days of the receipt of such notice/application, the certificate shall be deemed to have been transferred in favour of the proposed transferee with effect from the date of transfer of the motor vehicle. Only this part of Section 103A (old Act) has been adopted with some variations in Section 157 of the new Act comprising two sub-sections. Sub-section (1) says that with the transfer of the ownership of the motor vehicle, the certificate of insurance and the policy described 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. Sub-section (2) imposes an obligation upon the transferee to apply within 14 days from the date of transfer to the insurer for making necessary changes in the certificate of insurance and policy incorporating therein the fact of transfer. Sub-section (2) further provides that the insurer, under such circumstance, is left with no option but to make necessary changes in the certificate and policy of insurance.

14. Sub-sections (2) and (3) of Section 103A of the Act of 1939 have been totally omitted in the new Act. This means that the insurance company has no right to refuse transfer of the certificate of insurance and policy in favour of the transferee.

15. A time limit of 14 days is fixed for making an application by the transferee for making necessary changes in the certificate of insurance and policy. During this period of 14 days from the date of transfer if the vehicle causes an accident due to the negligence of its driver, then the insurance company will be made liable. But it may so happen that the transferee failed or omitted to make an application in accordance with Sub-section (2) of Section 157. And an accident was caused by that vehicle after the expiry of 14 days from the date of transfer. In spite of that, there is no scope for the insurer to urge that the policy was not subsisting at the time of the accident. Subsection (1) of Section 157 makes it clear that the certificate of insurance and the policy described 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. As no penal consequence is contemplated in the event of noncompliance of the provisions contained in Sub-section (2) of Section 157, it seems that an application within 14 days from the date of transfer by the transferee for making necessary changes in the certificate and policy of insurance is a mere formality.

Note :- That the right of refusal to transfer a policy of insurance enjoyed by the insurance company under the old section has been taken away by the new section.

16. Sub-section (2) of Section 149 [old Section 96(2)] mentions the grounds on which the insurer is entitled to defend a third party claim. These grounds are firstly, that there has been breach of a specified condition of the policy, and secondly, that the policy had been obtained by non-disclosure of a material fact or by representation of a fact which was false in some material particular, thereby rendering the policy itself void. In the old Act, there had been one more defence dealing with cancellation of a policy by mutual consent or by virtue of any provisions contained in the policy of insurance before the accident had taken place. This defence has been deleted in the new Act.

17. Keeping in view the above principles in mind, the case of the appellants petitioners would be examined.

18. In the present case, from the statements of the witnesses, namely, Suraj Mal Khandelwal, OPW 6, Legal Assistant, New India Assurance Company and Surendra Chand Bhandafi, OPW 7 and Akram Khan, deceased respondent No. 2, OPW 4, as well as from the documentary evidence produced by the parties, the following factual position emerges-

(1) That there was a Bus bearing No. USL 9154, the owner of which, was Jairaj Singh.

(2) That this Bus No. USL 9154 was insured with respondent No. 5 Assurance Company and it was insured by Jairaj Singh.

(3) That thereafter, the registered owner became one Bhanwarlal, from whom, respondent No. 2 Akran Khan, now deceased purchased the Bus, but on papers, the registered owner remained Bhanwarlal.

(4) That the Bus was being plying in the State of Rajasthan bearing No. RJT 1920 and at the time of accident i.e. on 8.4.1972, the number of the bus was the same and No. USL 9154 has no bearing.

(5) That no intimation whatsoever about the transfer of the bus as well as change of the number of the bus was ever given by any one to the Assurance Company, respondent No. 5.

(6) That no insurance charges were even paid to the Insurance Company either by Bhanwarlal or Akram Khan, respondent No. 2, now deceased.

19. The question that arises for determination is whether the findings recorded by the Claims Tribunal on issue No. 6, which were upheld by the learned Single Judge of this Court, are liable to be confirmed or not, keeping in view the factual position of this case and the position of law in respect of the transfer of vehicle and liability of the Insurance Company as discussed in various provisions of the Act of 1939.

20. The learned Counsel for the appellants petitioners has relied on the decision in G. Govindan v. New India Assurance Co. Ltd. and Ors. : [1999]2SCR476 decided on 8.4.1999 where the Hon'ble Supreme Court has held that policy not transferred in the name of transferee of vehicle is not a ground to deny compensation by insurer to victim or LRs of victim (third party). The law laid down by the Hon'ble Supreme Court in that case is that under the new Act, the Legislature was anxious to protect the third party (victim) interest.

21. As far as the third party risks are concerned, the liability being statutory, it cannot be overridden by the terms of the contract of insurance, between the parties. As against the liability of the insurer to the third parties, the terms of the policy of insurance are subject to the provisions of Section 96(2) of the old Act of 1939.

22. From the provisions of the Act of 1939, which have been discussed above, it appears that where an application for transfer of the certificate and policy of insurance to the intending purchaser has been made and no refusal to do so has been received within 15 days, the certificate and policy are deemed to be transferred in favour of the transferee of the motor vehicle from the date of its transfer.

23. In the present case, the puestion is very much clear that. the bus in question has been transferred first to Bhanwarlal and then from Bhanwarlal to respondent No. 2 deceased Akram Khan, but in the insurance papers, the name of the original owner Jairaj Singh is there and no intimation whatsoever has ever been given to the Assurance Company, respondent No. 5. When this being the position, the Assurance Company, respondent No. 5 cannot be held liable. Apart from this, this is not a case of transfer alone, but vehicle number has also been changed. From Ex. B/1, it appears that the name of the insured was Jairaj Singh and the number of the vehicle was VSL 9154, but the bus involved in the accident bears No. RJT 1920 and owners are different for which there is no entry in the office of the Assurance Company, respondent No. S. In such circumstances, it cannot be said that there is privity of contract between the respondent No. 5 Assurance Company and the deceased respondent No. 2 Akram Khan, who is said to be owner of the bus in question. Thus, it can be easily said that Assurance Company respondent No. S cannot be he8ld liable.

24. In these circumstances, the findings of the Claims Tribunal as well as the learned Single Judge of this Court on issue No. 6 that the respondent No. 5 Assurance Company is not liable to pay compensation are correct one and liable to be upheld.

25. In our view, the law laid down in G. Govindan's case (supra) would not be helpful to the appellants petitioners as the present case is not a case of simple transfer. Apart from this, in the case of G. Govindan, the Insurance Company had the knowledge that the bus has been transferred and it has received the premium for the subsequent periods from the transferee and in such circumstances, the Insurance Company was held liable. However/in the present case, no intimation whatsoever about the transfer of bus in question was given to the Assurance Company, therefore, the case of G. Govindan (supra) relied upon by the learned Counsel for the appellants petitioner, has no application to the facts of the present case. Thus, the first argument of the learned Counsel for the appellant fails.

Point No. 2--Regarding enhancement of compensation.

26. The next argument of the learned Counsel for the appellants petitioner is that the amount of compensation awarded by the Claims Tribunal was wrongly reduced by the learned Single Judge and, therefore, It should be enhanced upto the extent awarded by the Claims Tribunal.

27. The Motor Accident Claims Tribunal has determined the amount of compensation payable to each of the claimants by considering the nature of injuries, total period of confinement due to injuries caused on account of accident, the loss of earnings caused due to such injuries and disability arising out of the accident in pursuing the vocation/profession of the injured, the nature of disability; (permanent/partial or transient) mental shock and physical pain and medical expenses, and has given cogent reasons for arriving at the different sums of compensation estimated in respect of each of the claimants. The learned Single Judge, while reducing the quantum of compensation has not found the reasoning of the Motor Accident Claims Tribunal in any manner wanting or erroneous. In these circumstances, we are of the opinion that the reduction in compensation awarded by Motor Accident Claims Tribunal was not justified. Moreover, having gone through the material on record, we are satisfied that the findings recorded by the Motor Accident Claims Tribunal about the compensation payable to each of the claimants are well supported by evidence and ought not to be disturbed. Accordingly, we set aside the order of learned Single Judge to the extent the compensation awarded in respect of each of the claimants is reduced and restore the amount of compensation in each case to the same as has been accepted by the Motor Accident Claims Tribunal in each of the case.

Cross objections filed by respondent No. 1 - Gaffar Khan, who is said to be owner of the Car RJT 1058.

28. The case of the respondent No. 3 Insurance Company of Car RJT 1058 is that the Insurance Company is not liable to pay compensation as the policy of the said vehicle No. RJT 1058 (Car) is void on the ground that the insured had obtained it by nondisclosure of the material fact, inasmuch as that Car was insured with the Insurance Company as private Car and not as Taxi, though it was being used as a Taxi and furthermore, the policy of the Car did not cover the risk of the travellers. Hence, Insurance Company, respondent No. 3 is not liable.

29. In this regard, additional issue No. 1 was framed by the Claims Tribunal, which runs as under-

Whether insurance company detained on RJT 1058 was obtained by non-disclosure of material fact or representation of false fact and is, therefore void?

30. The Claims Tribunal while deciding the additional issue No. l has held that the Car RJT 1058 was being used as a Taxi and furthermore, from the insurance policy Ex. C/1 of the Car, it is well proved that it was got insured as a private car and not as a taxi and further, it is proved that this policy does not cover the risk of the travellers and in these circumstances, the Insurance Company, respondent No. 3 cannot be held liable to pay compensation for the 88accident which was caused by that Car. These findings of the Claims Tribunal were upheld by the learned Single Judge of this Court vide his judgment dated 9.7.1985.

31. In our view, these findings of the Claims Tribunal, which were affirmed by the learned Single Judge of this Court, are based on proper appreciation of oral as well as documentary evidence and they do not suffer from any infirmity. No view different from the one taken by the Claims Tribunal as well as the learned Single Judge can be taken. Therefore, it can be said that the policy of the Car No. RJT 1058 was obtained by nondisclosure of material fact or by representation of a fact which was false in some material particular and as such, the Insurance Company, respondent No. 3 is entitled to the defence available in Section 96(2) of the old Act of 1939 against the third party claim. In these circumstance, findings recorded by the Claims Tribunal on additional issue No. 1, which were affirmed by the learned Single judge of this Court are liable to be upheld.

32. Thus, then cross objections filed by the respondent No. 1 - Gaffar Khan owner of the Car No. RJT 1058 are liable to be rejected.

Rajesh Balia, J.

33. I have had the advantage of the opinion of esteemed Brother Garg J. I entirely agree with him that the appeal be partly allowed. However, I would like to add my views in respect of liability of the insurance company on transfer of the vehicle without informing the insurance company about such transfer either by the transferor or the transferee of the vehicle.

34. Issue No. 6 is about the liability of insurer, respondent No. 5 M/s. New India Assurance Company Limited, in respect of the insurance concerning Bus No. RJ-T-1920 involved in the accident. Respondent No. 5 was impleaded as insurer of the said Bus along with non-applicant No. 2 Akram as owner of the vehicle. The respondent No. 5 in its reply has derived its liability to indemnify only on the ground that the policy of insurance in respect of vehicle RJ-T-1920 stood revoked and lapsed on the transfer of the said vehicle. It is so because there being no privity of contract between the transferee and the insurance company, as no intimation about transfer of vehicle and insurance policy was given to the insurer as required u/s. 103A of the Motor Vehicles Act 1939 (hereinafter called the Act of 1939). According to the alleged owner of the vehicle, Akram Khan, he has purchased the vehicle from one Jai Ram Singh of Meerut and since the permit for plying the vehicle was in the name of Bhanwarlal, the vehicle had also been registered in the name of said Bhanwarlal. He has further stated that the vehicle was being insured by Jai Ram Singh, the previous owner. He himself has not got the vehicle insured. He has also not deposited the fees of Rs. 5 for transferring the vehicle. This Is apparent from the cross-examination of Akram as OPW 4 on behalf of the concerned insurance company. One Shambhoo Chand Bhandari an officer of the insurer has been examined as OPW-7. He has stated that no information about the transfer of the vehicle was given and no transfer fee was deposited. He has stated that had any information about transfer of vehicle at Meerut would have been given, the insurance certificate B-2 would not have been on record because on transfer the old certificate is kept with the insurance company and new certificate is issued.

35. From the statements of the two witnesses, it is apparent that there is no dispute about the identity of the vehicle No. RJT-1920 with the vehicle which was originally registered in the name of Jai Ram Singh at meerut and the said policy had not expired. Had the policy in respect of the vehicle expired at the time of accident and no policy would have been issued, the plea of the insurance company would have been different and not about the lapse of the policy on account of non-fulfilment of required procedure of transferring the insurance policy. The only objection raised on behalf of the insurance company was its non-liability on account of there being no privity of contract between the insurer and the owner of the vehicle at the time of accident because of non-intimation about such transfer.

36. The plea of the insurance company that the insurance policy lapsed because of the non-information of transfer was accepted by the Motor Accident Claims Tribunal and has further been affirmed by the learned Single Judge. The reasons for such conclusion are obscure and needs be explained.

37. The accident has taken place on 8.4.1972 when the Motor Vehicles-Act, 1939 was in force and the Motor Vehicles Act No. 1988 (The Act of 1988) had not come into force. This is also well settled that the liability of the insurance company is governed by the provisions of the Motor Vehicles Act in terms of the policy as on the date of accident and not by later amendments. Chapter VIII of the Act of 1939 governs the insurance of Motor vehicles against third party risks. Section 94 envisages that no person shall use except as a passenger or cause or allow any other person to use a motor vehicle in a public place, unless there is force in relation to the use of the vehicle by that person or that other person as the case may be, a policy of insurance complying with the requirements of this Chapter. Section 95(5) is a non-obstante clause that protects the third party interest which is in the nature of public liability. It provides that notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under Section 95 shall be liable to indemnify the person or class 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 class of persons. Section 103-A of the Act of 1939 concerns the transfer of certificate of insurance which inter alia reads as under-

103A. 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 Chaper 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 the receipt of such application by the insurer, the insurer has not intimated the insured and such other person, his refusal to transfer the certificate and the policy to the other person, the certificate of insurance and the policy described 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.

(2) The insurer to whom any application has been made under Sub-section (1) may refuse to transfer to the other person the certificate of insurance and the policy described in that certificate if he considers it necessary so to do, having regard to-

(a) the previous conduct of the other person-

(i) as a driver of motor vehicles; or

(ii) as holder of the policy of insurance in respect of any motor vehicle; or

(b) any conditions which may have been imposed in relation to any such policy held by the appellant; or

(c) the rejection of any proposal made by such other person for the issue of a policy of insurance in respect of any motor vehicle owned or possessed by him.

(3) Where the insurer has refused to transfer, in favour of the person to whom the motor vehicle has been transferred, the certificate of insurance and the policy described in that certificate, he shall refund to such transferee the amount, if any, which, under the terms of the policy, he would have had to refund to the insured for the expired term of such policy.

This provision which laid down the procedure for securing transfer of current insurance policy on the transfer of the vehicle and also reserves the right of the insurance company to refuse to transfer the certificate in favour of the transferee of the motor vehicle keeping in view the conduct of the transferee in respect of the vehicle as a holder of the policy and his interaction with the insurance company in past. The provisions of Section 103-A gave rise to sharp cleavage of the opinion amongst various High Courts about the effect of non-intimation of such transfer to insurance company on the continuance of liability of insurance company qua the transferee in respect of any liability arising because of the case of vehicles by such transferee or at his instance by any other person.

38. A Full Bench of the Delhi High Court in Anand Sarup Sharma v. P.P. Khurana : AIR1989Delhi88 and a Full Bench of Karnataka High Court in National Insurance Co. Ltd. v. Mallikarjun : AIR1990Kant166 had held the insurance policy lapses when the insured vehicle was transferred and no application/intimation as prescribed under Section 103-A of the Act was made/given and consequently the liability of insurance company ceased in respect of such vehicle. On the other hand, a Full Bench of Andhra Pradesh High Court in Madineni Kondaiah v. Yaseen Fatima A.I.R. 1986 Andhra Pradesh 62 had held otherwise. It has founded its conclusions on the conjoint reading of Section 94 and Section 103-A, keeping in view the policy underlying Section 95(5) of the Act of 1939 that insurable interest in the property is not necessary in the case of public liability insurance. The test is whether the liability under the statute ceased or not notwithstanding the passing of title and it cannot be said that on the sale of the vehicle the insurable interest ceases and the policy lapses. Any claim of the transferee in respect of his property and his person cannot be enforced against the insurance company, he being a stranger he cannot have any claim against the insurance company but the third party risks concerns, so long the obligation under the statute are not fulfilled as contemplated under interest. Till such obligations are fulfilled, it must be deemed that transferor allowed the purchaser to use the vehicle in a public place in such territories in the said transitional period. The transtional period was taken to be till transferee complies with the requirements of Section 31 to get the mutation of his name in the certificate of registration. Till that is done, he is considered to be the person allowed to ply the vehicle by the original owner in terms of Section 94 who holds insurable interest in the vehicle till transfer of it is complete and until such time insurance company is liable to indemnify. The facts before the Andhra Pradesh High Court were that the original holder of the vehicle had sold the vehicle on March 14, 1973. He had delivered the possession of the vehicle and the permit under which the vehicle was being driven. The vehicle was insured for third party risks. The insurance policy was not transferred to the vendee. The vendee or the vendor did not inform the transfer of the vehicle. The vendee used the vehicle between March and October 1973 without obtained a fresh insurance policy to protect third party risk and as vendee had further not lodge before the registering authority any application under the Motor Vehicles Act, 1939 under Section Section 31 for mutation of vehicle certificate in his name. In the aforesaid circumstances the driving of the vehicle at the instance of the vendee was considered to be the use of vehicle allowed to transferee by the registered owner of the vehicle, insurable interest on the property has not ceased to exist in the person and the insurance policy was current at the time of accident. It may be noticed that under the Act of 1939 the transfer of insurance policy on transfer of vehicle was not automatic but was subject to follow of a procedure and right has been reserved with the insurance company to refuse the transfer of the insurance policy. Therefore, on the transfer of vehicle having been complete under Section 31 of the Act of 1939, unless the insurance policy was not transferred in favour of vehicle, under whose company vehicle was used, in accordance with the provisions of Section 103-A, the vehicle could not be claimed to be covered by an insurance policy thereafter because the insurable interest in the property by the insured ceased on such transfer being completed and with the New owner in whom the insurable interest in vehicle vests on such transfer does not have any privity of contract with the insurance company, for which liability arising from use of vehicle in any public place the insurance company could be held responsible.

39. The controversy has since been considered by the Supreme Court in the case of G. Govindan v. New India Assurance Co. Ltd. : [1999]2SCR476 . That was also a case arising out of an accident which took place on 18.5.1975 before the commencement of the Motor Vehicles Act, 1988. The Apex Court approved the decision of Andhra Pradesh High Court in Madineni Kondaiah (supra) and overruled the contrary view taken by Delhi and Karnataka High Courts. However, reliance on the decision in G. Govindan (supra) does not carry the case of the claimants as well as the owner any further in respect of extending the liability arising out of accident with Bus No. RJ-T-1920.

40. The accident has taken place in 1972 in the present case, much before the Act of 1988 came into force and the Act of 1988 has made vital departure so far as transfer of insurance policy on transfer of vehicle is concerned, with which we are not concerned. In the present case, it is admitted position that after the vehicle was purchased from Jai Ram Singh of Meerut, the same has been transferred and registered in Rajasthan in the name of Bhanwarlal. The original vehicle registered with the insurance company was bearing the registration No. USA 9154 in the name of Jai Ram Singh of Meerut and the policy was also in respect of the vehicle carrying said registration No. whereas the vehicle at the time of accident was registered in the Rajasthan State as RJ-T1920 in the name of Bhanwarlal. Thus, transfer under Section 31 of the Act of 1939 in favour of the vendee was complete by mutuation of the owners' name in registration certificate. The new registered owner could not thereafter be said to be using the vehicle as allowed by the original holder. Thereafter he was driving the vehicle in his own right or if any other person was using such vehicle lie can deemed to be allowed by Bhanwarlal and not as allowed by insured Jai Ram Singh. Thus the insurance company cannot be held liable with the aid of Section 94 of the Act of 1939. Therefore, even applying the principle enunciated in Andhra Pradesh's case, insurance company cannot be held liable for the public liability insurance after the transfer under Section 31 was complete and such view has been approved by the Supreme Court in the aforesaid decision.

41. Moreover the vehicle as per the provision of Motor Vehicles Act stood transferred in the name of Bhanwarlal. It is not the case of anybody that the vehicle was being used by or allowed to be used by said Bhanwarlal. On their own showing vehicle was used by Akram Khan as owner of the vehicle and the driver had been put in control of the vehicle by Akram Khan only. He cannot be treated as transferee of vehicle from the insured jai Ram under the Motor Vehicles Act 1939. Thus vehicle at the time of accident was neither used by or at the instance of Jai Ram or his transferee Bhanwarlal, so as to hold insurance company liable on any principle.

42. In this connection the vital difference which has taken place under the Motor Vehicles Act, 1988 may also be noticed. The corresponding provision to Section 103-A of the old Act has been enacted under new Section 157, which 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 described 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.

(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.

43. While under the Act of 1939 the making of an application was an integral and imperative part of securing a transfer of policy in the name of transferee of vehicle and even after intimation was given it was for the insurance company to accept or refuse to treat the transferee as holder of the policy. In case of refusal the policy would stand revoked. In contrast, under the Act of 1988, the transfer of policy takes place automatically with the transfer of vehicle by force of statutory provisions. Sub-section (1) of Section 157 does not leave it to insurance company's discretion to accept or refuse the transfer of certificate of insurance in favour of transferee of vehicle. Sub-section (2) which is not at all a condition of securing the transfer of the insurance policy in favour of the transferee of the vehicle, but only prescribes the procedure for setting the record correct does not affect the operation of Sub-section (1). Under Sub-section (1) the transfer of policy along with transfer of vehicle are co-existence. Even assuming the Sub-section (1) operates only an mutation of owners name in registration certificate, during transitional period the liability of insurance company still continues on principle laid by A.P. High Court in Madineni Kondaiah case which has been unstintedly approved by the Apex Court. Therefore, the provisions of Sub-section (2) of Section 157 of the Act of 1988 cannot be elevated to the same level to which the provisions of Section 103-A(1) had been held by the Courts in decisions rendered under the Act of 1939. Sub-section (2) of Section 157 of the Act of 1988 in the context of the mandate of Sub-section (1) can only be taken to be a procedural requirement not mandatory but directing for correcting the record on information not affecting the continued liability of insurance company in respect of a vehicle on transfer which has a subsisting policy. This is so because the transfer of policy takes place simultaneously alongwith the transfer of vehicle by virtue of operation of Sub-section (1) of Section 157. The transfer of the policy no more depends on any discretion to be exercised by the insurance company or on the foundation of privity of contract between the insurer and the transferee of the vehicle from the holder of the policy. On transfer, the policy continues as attached with the vehicle. The contract between the insurance and transferee comes into existence by statutory provision and not by privity of contract. However, since this provision has come into effect during the pendency of these appeals and the provision is not retrospective in its operation, the benefit of Section 157 cannot be extended to the cases of accidents which had taken place before commencement of Act of 1988. For the aforesaid reasons I shall uphold finding on issue No. 6 also.

44. For the aforesaid reasons, all the above five special appeals of the appellants petitioners are partly allowed in the manner that:

(1) That portion of the judgment of the learned Single Judge dated 9.7.1985 reducing amount of compensation in each case is set aside and the appellants petitioners would be entitled to get that amount of compensation which was awarded by the Claims Tribunal through its judgment and award dated 24.12.1981 in each case.

(2) That the findings of the Claims Tribunal as well as the learned Single Judge that the Assurance Company of the Bus No. RJT 1920, respondent No. 5 as well as the Insurance Company of the Car RJT 1058, respondent No. 3 are not liable to pay compensation, are upheld.

(3) Thus, all the above five special appeals against the Assurance Company of the Bus No. RJT 1920, respondent No. 5 as well as against the Insurance Company of the Car No. RJT 1058, respondent No. 3 stand dismissed.

(4) That it is made clear that in other words, the judgment and award dated 24.12.1981 passed by the learned Judge, Motor Accident Claims Tribunal, Jodhpur in each case are upheld in toto in respect of the compensation awarded and liabilities of the parties.

(5) That the cross objections filed by respondent No. 1 - Gaffar Khan, owner of the Car No. RJT 1058 also stand rejected simultaneously.