At, National Consumer Disputes Redressal Commission NCDRC
By, THE HONOURABLE MR. JUSTICE V.K. JAIN
By, PRESIDING MEMBER
For the Petitioner: Nishant Kishore, Advocate. For the Respondents: R1, Prakash S. Jain, R2, Punit K. Bhalla, Advocates, R3, Nemo.
The complainant purchased a vehicle and got it financed from ICICI Bank. The registration of the vehicle was got transferred by the complainant/respondent No. 1 in his name on 15.06.2006. The vehicle had been insured with the petitioner company by the seller respondent number 3 namely Mr. Saosh Sajerao Jadhav. However, the complainant did not apply to the petitioner company for transfer of the insurance in his favour even within 14 days of the transfer of the registration in his favour. The Ld. counsel for the complainant submits that the vehicle was purchased on the very same day that is 15.06.2006 when the registration was transferred in the name of the complainant. The period of 14 days for applying for transfer of the insurance in favour of the complainant therefore expired on 29.06.2006. The vehicle was stolen in the night intervening 4/5.07.2006 and the complainant applied for transfer of the insurance in his name on 07.07.2006. The insurance policy was transferred by the seller in favour of the complainant on 07.07.2006. Thus even transfer of the policy by the seller in favour of the complainant was applied after expiry of the statutory period of 14 days prescribed in section 157 of the Motor Vehicle Act, 1988.
2. The claim was rejected wide letter dated 29.12.2006 which to the extent it is relevant reads as under:-
* “Claim has been registered on the policy policy for theft of vehicle on 05/07/2006.
* We have also received copy of the RC of the above vehicle which shows that the vehicle has been transferred in your name on 15/06/2006.
* The above policy has been endorsed for transfer on 07.07.2006.
* This means that on the date of loss the ownership of the vehicle is in your name whereas the policy is in the name of Mr. Santosh S. Jadhav.
From the above it is very clear that on the date of loss, though you have insurable interest in the vehicle you do not have an Insurance policy in your name and Mr. Santosh B. Jadhav who has a insurance policy has no insurable interest in the vehicle. This is a violation of principle of insurance.
We therefore repudiate your claim and close the file.”
3. Aggrieved from rejection of the claim, the complainant approached the concerned District Forum by way of a consumer complaint. The complaint was resisted by the insurer primarily on the grounds on which the claim had been repudiated.
4. The District Forum having allowed the consumer complaint the petitioner company approached the concerned State Commission by way of an appeal. Vide impugned order dated 03.07.2013 the State Commission dismissed the appeal filed by the insurer. Being aggrieved the insurer is before this Commission.
5. It is evident from the chronology of the facts stated hereinabove, that there was no privity of contract between the petitioner and the complainant on 04/05.07.2006 when the vehicle was allegedly stolen. The insurance policy by the previous owner itself had been transferred by him in favour of the complainant on 07.07.2006 after the vehicle was stolen. As far as R-3 is concerned he having sold the vehicle and the registration having been transferred in favour of the complainant on 15.06.2006 he was left with no insurable interest in the vehicle on the date it was stolen.
6. The issue involved in this petition came up for consideration of this commission in RP No. 3270 of 2018 Oriental Insurance Co. Ltd. Vs. Enamul Haque order dated 04.09.2019 and the following view was taken:-
“4. Section 157 of the Motor Vehicle Act which deals with the transfer of insurance, 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.
5. The above referred statutory provision came up for consideration of the Hon’ble Supreme Court in M/s Complete Insulations (P) Ltd Vs. New India Assurance Company Ltd. I (1996) CPJ 1 (SC). In the case before the Hon’ble Supreme Court, a Maruti car was purchased in the name of one Mrs. Archana Wadhwa and was insured in her name. The premium for the insurance was paid by the appellant company in whose favour the vehicle had been transferred. The registration of the vehicle was transferred to the appellant company on 15.06.1989. On 26.06.89, the appellant intimated the transfer of registration and asked for transfer of the insurance policies. There was no response to the said request till the vehicle met with an accident on 17.09.89 in which the Managing Director of the appellant got injured and his sister died. The appellant asked for assessment of the damage to the vehicle. There being no response from the insurer, the appellant approached the Consumer Forum at Chandigarh by way of a Consumer Complaint. The complaint was allowed but the order was set aside by this Commission. Being aggrieved, the appellant approached the Hon’ble Supreme Court. The question before the Hon’ble Supreme Court was as to whether the appellant was entitled to indemnity without the insurance policies having been transferred in its name. This Commission, while dismissing the Consumer Complaint, had taken a view that Section 157 of the Motor Vehicle Act applied only in relation to a third party risk and did not apply to a policy covering risk of damage to the vehicle or to the person of the insured. Dismissing the appeal, the Hon’ble Supreme Court interalia observed and held as under:
9. …………… Then comes Section 157 which we have extracted earlier. This provision lays down that when the owner of the vehicle in relation whereto a certificate of insurance is issued transfers to another person the ownership of the motor vehicle, the certificate of insurance together with the policy described therein shall be deemed to have been transferred in favour of the new owner of the vehicle with effect from the date of transfer. Sub-section (2) requires the transferee to apply within fourteen days from the date of transfer to the insurer for making necessary changes in the certificate of insurance and the policy described therein in his favour.
10. There can be no doubt that the said chapter provides for compulsory insurance of vehicles to cover third party risks.
Thus, the requirements of that chapter are in relation to third party risks only and hence the fiction of Section 157 of the New Act must be limited thereto. The certificate of insurance to be issued in the prescribed form (See Form 51 prescribed under Rule 141 of the Central Motor Vehicles Rules, 1989) must, therefore, relate to third party risks. Since the provisions under the New Act and the Old Act in this behalf are substantially the same in relation to liability in regard to third parties, the National Consumer Disputes Redressal Commission was right in the view it took based on the decision in Kondaih's case because the transferee-insured could not be said to be a third party qua the vehicle in question. It is only in respect of third party risks that Section 157 of the New Act provides that the certificate of insurance together with the policy of insurance described therein "shall be deemed to have been transferred in favour of the person to whom the motor vehicle is transferred". If the policy of insurance covers other risks as well, e.g., damage caused to the vehicle of the insured himself, that would be a matter falling outside Chapter XI of the New Act and in the realm of contract for which there must be an agreement between the insurer and the transferee, the former undertaking to cover the risk or damage to the vehicle. In the present case since there was no such agreement and since the insurer had not transferred the policy of insurance in relation thereto to the transferee, the insurer was not liable to make good the damage to the vehicle. The view taken by the National Commission is therefore correct.
6. Thus, the Hon’ble Supreme Court expressly held that Section 157 of the Motor Vehicles Act which provides for the deemed transfer of the certificate of insurance, applies only in respect of third party risk and it does not cover the damage caused to the vehicle or to the insured himself. The Hon’ble Apex Court expressly held that if the insurance policy covers risks such as damage caused to the vehicle of the insured himself, that would be a matter in the realm of the contract for which there has to be an agreement between the insurer and the transferee.
7. In the present case, there was no contract of insurance between the petitioner and the complainant on the date the vehicle was stolen, since the insurance policy had not been transferred in the name of the complainant on that date. Therefore, though the insurer would be liable in respect of a third party risk, it would
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not be liable in respect of damage to the vehicle of the insured himself. Since the claim lodged by the complainant/respondent was not a third party claim but was a claim on account of loss of his own vehicle and the insurance had not been transferred in his name on the date the vehicle was stolen, the petitioner company was not liable to reimburse him for the loss suffered by him. ” 8. Since the insurance policy had not been transferred in favour of the complainant and in fact he had not even applied for such transfer by the date on which the vehicle was stolen, the petitioner company is not liable to reimburse the complainant for the loss alleged to have been suffered by him, there being no privity of contract between the complainant and the petitioner. As far as respondent No. 3 is concerned he is also not entitled to any reimbursement he having no insurable interest in the vehicle after 15.06.2006. 9. For the reasons stated hereinabove, the impugned orders are set aside and the complaint is consequently dismissed with no order as to cost.