Sub: Claim cannot be denied to the seller of the vehicle on the fact that the vehicle is sold to another person unless the sale is complete and ownership of the vehicle is transferred to buyer.
FACTS OF THE CASE:
The Appellant was the owner of truck which was covered by a Policy of Insurance. The said lorry, which was loaded with Ammonia Nitrate and met with an accident on journey. The accident was reported to the Police Station and the Appellant lodged a claim with the Insurer, through one person. On receipt of information regarding the accident, and the claim, the Insurer appointed an independent Surveyor and Loss Assessor to conduct a spot survey. The independent Surveyor and Loss Assessor appointed by the Insurer, conducted a spot survey and submitted his report. However, instead of reimbursing the loss, the Insurer issued a show cause Letter to the Appellant requiring the Appellant to show cause why the claim of the Appellant should not be repudiated, on the allegation that, he had already sold the said truck to the other person. It was, however, not in dispute that the Appellant continued to be the registered owner of the said truck, on the date of the accident. The Appellant himself submitted a motor claim again but the Insurer refused to accept the same. Aggrieved by the action of the Insurer company in not releasing the claim of the Appellant, towards reimbursement of losses on account of the accident, the Appellant approached the District Forum.
THE DISTRICT FORUM allowed the complaint filed by the Appellant and directed the Insurer to pay sum to the Appellant within a month along with interest.
The Insurer appealed to the State Commission. The said appeal, was dismissed by the State Commission which was challenged by the Insurer before the National Commission by filing the Revision Petition.
THE NATIONAL COMMISSION set aside the orders of the District Forum and the State Commission, thereby rejecting the concurrent factual finding of both the forum, and dismissed the complaint on the ground that the Appellant had sold his vehicle to other person.
Held, while allowing the appeal:
(i) The FIR was lodged within three days of the accident. In the case of a major accident of the kind as in this case, where the said truck had turned turtle and fallen into a river, slight delay if any, on the part of the traumatized driver to lodge an FIR, could not defeat the legitimate claim of the Insured of course, there was no delay at all in lodging the FIR. In case of a serious accident in course of inter-state transportation of goods, delay of twenty days in lodging a claim was also no delay at all. It was nobody’s case that the claim application filed by the Appellant was time barred. Moreover, the Insurer had, in any case, duly sent its Surveyors/Assessors to assess the loss. The claim of the Appellant could not have, in this case, been resisted, either on the ground of delay in lodging the FIR, or on the ground of delay in lodging an Accident Information Report, or on the ground of delay in making a claim.
(ii) The National Commission erred in law in reversing the concurrent factual findings of the District Forum and the National Commission ignoring vital admitted facts including registration of the said truck being in the name of the Appellant, even as on the date of the accident, over three years after the alleged transfer, payment by the Appellant of the premium for the Insurance Policy, issuance of Insurance Policy in the name of the Appellant, permit in the name of the Appellant even after three years and seven months, absence of No Objection from the financier bank etc. and also overlooking the definition of owner in Section 2(30)* of the Motor Vehicles Act, as also other relevant provisions of the Motor Vehicles Act and the Rules framed thereunder, including in particular the transferability of a policy of insurance under Section 157#.
(iii) In view of the definition of owner in Section 2(30)* of the Motor Vehicles Act, the Appellant remained the owner of the said truck on the date of the accident and the Insurer could not have avoided its liability for the losses suffered by the owner on the ground of transfer of ownership.
JUDGEMENT:
The judgment and order of the National Commission is unsustainable. The appeal is, therefore, allowed. The impugned order of the National Commission under appeal is set aside and the order of the District Forum is restored. The Insurer shall pay to the Appellant a sum of Rs. 4,93,500/- as directed by the District Forum with interest as enhanced by the Supreme Court to 9% per annum from the date of claim till the date of payment. The sum of Rs. 5,000/- awarded by the District Forum towards compensation for mental agony and Rs. 2,000/- awarded towards the cost of litigation, is in the view of Supreme Court is grossly inadequate.
The Insurer shall pay a composite sum of Rs. 1,00,000/- to the Appellant towards costs and compensation for the agony caused to the Appellant by withholding his legitimate dues. The amounts as directed above shall be paid to the Appellant within six weeks from date of the judgment and order.
CONCLUSION: while going through above case ,it is clear that at the time of accident the sale procedure /transfer of ownership of alleged truck has not been completed and the person who lodged the claim was the owner of the truck. The insurance company is on fault for repudiating the claim filed by the insured.
Footnotes:
* Section 2(30) in The Motor Vehicles Act, 1988
(30) “owner” means a person in whose name a motor vehicle stands registered, and where such person is a minor, the guardian of such minor, and in relation to a motor vehicle which is the subject of a hire-purchase, agreement, or an agreement of lease or an agreement of hypothecation, the person in possession of the vehicle under that agreement;
# Section 157 in The Motor Vehicles Act, 1988
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.
Sources:
i) Manupatra https://www.manupatrafast.com/pers/Personalized.aspx
ii) Advocatekhoj.com https://www.advocatekhoj.com/library/judgments/announcement.php?WID=13002
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