Requirement To Intimate Transfer Of Vehicle To Insurance Company u/s 157(2) MV Act Only Directory

Reliance General Insurance Co. Ltd. Vs. Annamma Raju BincyOrs.
Kerala High Court
Citation: 2022 LiveLaw (Ker) 555

THE KERALA HIGH COURT: held that the stipulation under Section 157(2) of the Motor Vehicles Act, 1988 to intimate about the transfer of a vehicle to the Insurance Company within a period of 14 days of such transfer is only directory in nature, and not mandatory.

THE BRIEF FACTS

1. The appeal arose from the award passed by the Motor Accidents Claims Tribunal, Pala, in OP(MV) No.345/2014. M.A.C.A. No. 2585/2016 is filed by the Insurance Company challenging the said award, mainly on the ground that they are not liable to pay the compensation in view of the fact that, at the time when the accident occurred, the vehicle stood transferred from the insured and such transfer was not intimated to them within the period contemplated under section 157(2) of the Motor Vehicles Act, 1988 and also as per the terms and conditions of the policy.

2. The claim petition was filed by petitioner who are respondent in MACA No.2585/2016, seeking compensation for the death of one Rajumon, who died in a motor accident that occurred on 24.11.2013. At the relevant time, the deceased was travelling as a pillion rider on the motorcycle bearing registration No. KL-35-B-0976, which was being ridden by the 1st respondent in the claim petition. According to the petitioners, he was the owner cum rider of the motorcycle and the vehicle was insured with the 3rd respondent at the relevant time. The 2nd respondent in the claim petition was the person in whose name the insurance policy at the relevant time was issued. The petitioners claimed an amount of Rs.60 lakhs as compensation.

3. Upon receipt of the notice, the 1st respondent appeared and filed a written statement, disputing the claim put forward by the petitioners. However, he admitted that he was the registered owner of the said vehicle. It was also contended by him that the vehicle was validly insured with the 3rd respondent at the relevant time and, therefore, if any amount is found to be payable, the same has to be deposited by the 3rd respondent.

4. The 2nd respondent submitted a written statement contending that he sold the vehicle to the 1st respondent and the said transfer is already affected as per the endorsement made in the registration certificate with effect from 17.10.2013, whereas, the accident in this case occurred on 24.11.2013. Therefore it was contended that, he is not liable to pay any compensation. The 3rd respondent Insurance Company admitted the existence of a valid policy in respect of the vehicle in question but disputed the liability on various grounds. The quantum of compensation was also seriously disputed by them.

5. Itwas further contended by the Insurance Company that as on the date when the accident occurred, the vehicle stood transferred to the 1st respondent, whereas the policy was issued in the name of the 2nd respondent, who was the previous owner of the said vehicle. It is contended that, by virtue of the stipulations contained in Section 157(2) of the Motor Vehicles Act, 1988, the transferee/1st respondent had an obligation to intimate the Insurance Company as to the said transfer within a period of 14 days from the date of such transfer. In this case, no such intimation has been given by the 1st respondent and, therefore, no liability can be fastened upon the 3rd respondent, since there is violation of statutory stipulations.

6. After appreciating the materials placed on record, the Tribunal passed an award, allowing an amount of Rs.28,77,000/- as compensation to the petitioners, which was directed to be deposited by the 3rd respondent-Insurance Company along with interest at the rate of 9% per annum from the date of petition ie. from 16.6.2014 onwards. With regard to the contention raised by the 3rd respondentInsurance Company, as to their liability on account of the failure in intimating the transfer of the vehicle in tune with the statutory stipulation contained in Section 157(2) of the Motor Vehicles Act, 1988, it was found that the same is not applicable to the claim put forward by the petitioners, since the policy issued is a comprehensive policy which takes in the liability of the pillion rider also.

7. The insurance company being aggrieved with above decision and the amount of compensation awarded by the MACT ,filed an appeal before the High Court of Kerala.

8. The first question to be considered in these appeals is about the liability of the Insurance Company. As per the findings of the Tribunal, the contention of the Insurance Company was rejected on the ground that the policy issued is a comprehensive/package policy which takes in the liability of the pillion rider. The learned Senior Counsel for the Insurance Company specifically contends that, even though Section 157 of the Motor Vehicles Act contemplates a deemed transfer of policy upon the vehicle being transferred, the benefit of the same cannot be claimed by a person who is not covered under the statutory coverage contemplated under Section 147 of the Motor Vehicles Act. It was pointed out that, as far as the claim of the petitioners is concerned, the same is in respect of a person travelling on a motor cycle as a pillion rider, who is not covered under the statutory policy as contemplated under Section 147 of the Motor Vehicles Act.

9. Therefore, since Section 157 of the Motor Vehicles Act is included in Chapter XI of the Motor Vehicles Act, 1988, which deals with the insurance of motor vehicles against third party risks, the deemed transfer contemplated under the said provision would be applicable only in respect of statutory liability as contemplated under Chapter XI of the Act and nothing beyond that, contends the learned counsel. Since the pillion rider is not a person coming within the said statutory coverage, the deemed transfer as contemplated under Section157 of the Motor Vehicles Act cannot be made applicable to such claim.

According to the learned Senior counsel, the coverage can be provided only if the intimation of such transfer is given to the Company, within the period stipulated in the said provision and also as per the terms and conditions of the policy. The learned Senior Counsel for the Insurance Company places reliance upon the decision in Complete Insulations (P) Ltd v. New India Assurance Co.Ltd [(1996)1 SCC 221], United India Insurance Co.Ltd, Shimla v. Tilak Singh and Others [(2006)4 SCC 404] to substantiate these points.

10. On the other hand, Sri.A.N.Santhosh, the learned counsel for the petitioners in the claim petition opposes the aforesaid contentions. According to him, Section 157 of the Motor Vehicles Act does not make any distinction between the statutory coverage and the liability of the insurer towards a third party. It was contended by him that even though the pillion rider is not included as a person covered under Section 147 of the Motor Vehicles Act, by virtue of the directions issued by the Insurance Regulatory and Development Authority (hereinafter referred to as 'IRDA'), the liability of Insurance Companies towards the occupants in a private car and the pillion rider on a two wheeler are included in Section 2 of the India Motor Tariff which deals with the liability to third parties. It was further contended that, since this being a liability towards a third party, the deemed transfer as contemplated under Section 157 of the Motor Vehicles Act would get attracted. With regard to the contentions raised by the learned counsel for the Insurance Company as to the failure to comply with the stipulation contained in Sub section (2) of Section 157 of the Motor Vehicles Act, it was contended by the learned counsel for the petitioners that, consequence of any failure on the part of the transferee is not mentioned in the said provision and hence it can only be treated as a provision which is directory in nature and not mandatory. Hence, the failure on the part of the transferee in informing the same to the Insurance Company would not take away the liability of the Insurance Company, as far as the claims at the instance of the 3 rd parties are concerned. While referring to the term 'third parties', the learned counsel for the petitioners places reliance upon the meaning of the said term as used in a Circular issued in November, 2009 by the IRDA, which is binding on the Insurance company.

OBSERVATIONS AND DECISION

11. The specific contention of the learned counsel for the Insurance Company is by placing reliance upon Section 157 of the Motor Vehicles Act which reads as follows:

"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.
[Explanation.—For the removal of doubts, it is hereby declared that such deemed transfer shall include transfer of rights and liabilities of the said certificate of insurance and policy of insurance.]

(2) The transferee shall apply within fourteen days from the date of transfer in the prescribed form to the insurer for making necessary changes in regard to the fact of transfer in the certificate of insurance and the policy described in the certificate in his favour and the insurer shall make the necessary changes in the certificate and the policy of insurance in regard to the transfer of insurance."

The impact of Section 157 of the Motor Vehicles Act was considered by a Division Bench of this Court in Sayed's case(supra).

That was a case in which the vehicle was transferred on 31.8.2000, the policy was taken on 14.01.2000 and the accident occurred on 21.11.2000.

It was contended by the Insurance Company that since the transfer of the vehicle was not intimated to the Insurance Company as stipulated under Section 157(2) of the Motor Vehicles Act, they have no liability.

The aforesaid contention was rejected by the Division Bench of this Court by observing that, once the vehicle is transferred, there is a deemed transfer of policy of insurance in the name of the transferee and the Insurance Company is liable to indemnify the insured or even the transferee by virtue of the deeming provision.

It was further observed that, the Insurance Company could be exonerated from the liability only if they establish the violation of policy conditions or the defences as provided under Section 149(2) of the Motor Vehicles Act, 1988 and not otherwise.

SECTION 144 of the MVA,1988 - Transfer of certificate of insurance.— When the ownership of a motor vehicle covered by a valid insurance certificate is transferred to another person together with the policy of insurance relating thereto the policy of insurance of such vehicle shall automatically stand transferred to that other person from the date of transfer of ownership of the vehicle and the said person shall within fourteen days of the date of transfer intimate to the authorised insurer who has insured the vehicle, the details of the registration of the vehicle, the date of transfer of the vehicle, the previous ownerof the vehicle and the number and date of the insurance policy so that the authorised insurer may make the necessary changes in his record."

12. On carefully going through the contents of Rule 144, it can be seen that, the purpose for which the information regarding the transfer of the vehicle has to be furnished to the Insurance Company is clearly mentioned therein. It is evident that such intimation is to enable the insurer to make necessary changes in their records and nothing beyond that.

13. Therefore, it is clear that, as far as the non compliance with Section 157(2) is concerned, it will have no consequence as regards the liability of the Insurance Company to indemnify the insured in respect of the claims arising from the victims of the motor vehicle accident.

14. In this case, the accident occurred after the transfer of ownership is completed by following the provisions of the Motor Vehicles Act, and therefore the deemed transfer of policy had occurred before the accident.

15. The next question that arises is whether, such transfer would include the transfer of the obligations of the Insurance company towards a pillion rider, whose risk is not covered under statutory coverage under section 147(1) (b) of the Motor Vehicles Act.

16. It is true that, in Complete Insulations' case (supra), after referring to the stipulations in Section 157 of the Motor Vehicles Act, it was held by the Hon'ble Supreme Court that, the deemed transfer contemplated under Section 157 of the Motor Vehicles Act may not be applicable in respect of own damage claims. As rightly pointed out by the learned counsel for the petitioners, there is a clear distinction between the factual situation in which the decision in Complete Insulations' case (supra) was passed and the facts in this case. The subject matter of the decision rendered by the Hon'ble Supreme Court was the 'own damage' claims of the insured, whose name is mentioned in the certificate of insurance.

When the transfer of the vehicle is made and the same is not intimated to the Insurance Company, the person who transfers the vehicle would cease to have any insurable interest in the property so as to make any claim in respect of the vehicle, which he already transferred. Therefore, the liability of the Insurance Company, as far as the own damage of the insured is concerned, will cease to have any effect, when the vehicle is transferred to another person and he fails to intimate such transfer in the manner prescribed. The aforesaid termination of the contractual liability of the Insurance Company is on account of the fact that, the transferee is not a party to the contract of insurance. Therefore, the deemed transfer as contemplated under Section 157 of the Motor Vehicles Act cannot be made applicable in the case of own damage since the claim of own damage is something between the insurance company and the insured, who are parties to the contract of insurance.

17. Moreover, the claim in respect of own damage is something which would not come under the jurisdiction of the Motor Accidents Claims Tribunal, constituted under the Act. The said Tribunal is constituted to streamline the procedure for adjudicating the claims in relation to the tortious liability of the driver and owner, arising out of the use of motor vehicles and it is not competent to decide a claim of the owner arising from the terms of insurance policy in respect of the own damages. On the other hand, the provisions in the Motor Vehicles Act relating to the claims to be adjudicated by the Motor Accidents Claims Tribunal are intended for determining the liability of the driver and owner of the vehicle towards the victims of the motor accident on account of the tortious act of such driver.

18. A careful reading of the Circular[Rf:IRDA/NL/CIR/F&U/073/11/2009 dated 16th November,2009] would reveal that, the claim at the instance of a pillion rider is specifically included under the head of a third party. Moreover, as far as the claim of the pillion rider of the motor cycle is concerned, it is a claim which can be adjudicated by the Motor Accident Claims Tribunal, even if his claim may not come with the statutory coverage contemplated under section 147(1) (b) of the Act.

Therefore, while interpreting the deemed transfer contemplated under section 157, it has to be understood in such a manner to extend the benefit of the same to all the claims, which can be adjudicated by the Motor Accidents Claims Tribunal constituted under the Act. In other words, the deemed transfer as contemplated under Section 157 has to be made applicable in respect of the claim of the motor accident victim, which is to be tried by the Motor Accidents Claims Tribunal constituted under the provisions of the Motor Vehicles Act.

It is also relevant to note that the provisions relating to the compensation contained in the Motor Vehicles Act are part of welfare legislation intended to ensure that a victim in a motor accident is compensated adequately.

Therefore, exonerating the Insurance Company from the liability to meet such a liability would be against the spirit of the Motor Vehicles Act, particularly when the claim at the instance of the pillion rider is specifically included in the coverage of package policy by IRDA as per the Circular mentioned above, and it is a claim which can be adjudicated under the provisions of the Act.

Thus, section 157 of the Act is required to be interpreted in such a manner that the deemed transfer of the policy contemplated therein includes the transfer of all actionable claims under the provisions of the Motor Vehicles Act, which come within the jurisdiction of the Motor Accidents Claims Tribunal constituted under the said Act.

19. Moreover, from the reading of section 157 of the Act, it can be seen that, the same does not contain any reference to the coverage contemplated under section 147 (1)(b) of the Act, but instead, it refers to the policy of insurance alone. Since Section 157 is provided for and in connection with the adjudication of the claims by the Motor Accidents Claims Tribunals, it has to be interpreted widely to promote the object of the legislation, and it should take in, all matters covered by the policy in respect of the claims of a third party, i.e. a victim of a motor accident. Therefore, the contention put forward by the Insurance Company in this regard is only to be rejected.