Supreme Court of India
M/S. BALWANT SINGH & SONSversusNATIONAL INSURANCE COMPANY LTD & ANR.
- Citation
- 2019 INSC 844
- Decided
- 31 July 2019
- Disposal
- Appeal(s) allowed
- Bench
- D Y CHANDRACHUD
Holding
Section 157 effects a deemed transfer of the insurance certificate and policy to the new owner upon payment of premium and insurer’s knowledge of the transfer, making the insurer liable for the claim.
Summary
The appellant purchased a motor vehicle at an auction from a bank that had lifted its hypothecation lien and paid the insurance premium to the insurer, which issued a policy in the name of the original owner but also listed the appellant’s address. The vehicle was stolen shortly after purchase, and the insurer denied the claim, arguing that the appellant lacked insurable interest because the registration certificate had not yet been transferred. The appellant filed a consumer complaint, which was dismissed by lower forums, leading to this appeal. The Supreme Court examined the provisions of the Motor Vehicles Act, 1988, particularly Sections 50 and 157, and held that the insurer’s acceptance of premium and issuance of a policy, coupled with knowledge of the transfer, transferred the insurance rights to the new owner. Consequently, the insurer could not repudiate the claim, and the appellant was awarded the claim amount with interest. The appeal was allowed, overturning the decisions of the consumer fora.
Issues considered
- The insurer’s liability for a theft claim when the insurance policy was issued in the name of the previous owner but the premium was paid by the new owner.
- Whether Section 157 of the Motor Vehicles Act, 1988 transfers the certificate of insurance and policy to the transferee despite the registration certificate not being updated.
- The requirement of insurable interest for the transferee under the Motor Vehicles Act and consumer law.
Legislation cited
- Motor Vehicles Act, 1988s. 157, s. 2(30), s. 50
Subjects
Motor vehicle insuranceTransfer of ownershipInsurable interestSection 157Section 50Consumer disputeClaim repudiationThird party liability
Judgment
[2019] 11 S.C.R. 693 693
M/S. BALWANT SINGH & SONS A
v.
NATIONAL INSURANCE COMPANY LTD & ANR.
(Civil Appeal No. 5998 of 2019)
JULY 31, 2019 B
[DR. DHANANJAYA Y CHANDRACHUD AND
INDIRA BANERJEE, JJ.]
Motor Vehicles Act, 1988: ss. 50, 157 – Transfer of certificate
of insurance – On facts, appellant purchased vehicle in auction –
C
Insurance premium collected by insurer from the appellant-insured
– However, insurance policy continued to reflect the name of
respondent as insured and registration certificate still not transferred
– Thereafter, loss of vehicle occasioned by theft – Insurance claim
by insured – Claim rejected by insurer – Consumer complaint –
Consumer Forum held that insurer not liable on the claim preferred D
for loss of vehicle – On appeal, held: There was an acceptance of
premium as also issuance of a policy document – After the transfer
of the vehicle, the insurer was specifically informed by the Bank
which held a lien on the insurance policy, of the lifting of its lien
following the termination of the agreement of hypothecation –
E
Following this, insurer issued insurance policy – More so, third
respondent did not raise any claim in respect of the loss of the vehicle
since the vehicle had already been repossessed and sold by the
bank on account of its default in the payment of dues – Furthermore,
loss of the vehicle took place in close proximity to the date of auction
purchase – Thus, the insurer cannot repudiate the claim of the F
appellant holding that its liability is to the third respondent who has
no subsisting interest in the ownership in the vehicle and the claim
of the insured is allowed.
Allowing the appeal, the Court
G
HELD : 1.1 Section 50 of the Motor Vehicles Act, 1988
provides that where the ownership of any motor vehicle registered
under Chapter IV is transferred, certain formalities have to be
fulfilled. The formalities require the transferor to report the
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693
694 SUPREME COURT REPORTS [2019] 11 S.C.R.
A transfer to the registering authority within whose jurisdiction the
transfer has to be effected and to send a copy of the report to the
transferee. The transferee also has to report the transfer to the
registering authority within whose jurisdiction he resides or
maintains a place of business where the vehicle is normally kept.
The transferee has to forward the certificate of registration to
B
the registering authority together with the prescribed fee and a
copy of the report received from the transferor so that particulars
of the transfer of ownership may be entered in the certificate of
registration. [Para 13][700-B-D]
1.2 As a result of s. 157, where a person in whose favour
C the certificate of insurance has been issued in terms of the
provisions of Chapter XI transfers the ownership of the vehicle
to another person, the certificate of insurance and the policy
described in the certificate are deemed to have been transferred
in favour of the new owner to whom the motor vehicle is
D transferred, with effect from the date of its transfer. [Para 17]
[702-E-F]
In the instant case, not only was there an acceptance of
premium but the issuance of a policy document. The insurer had
knowledge of the transfer when the Bank informed it of the lifting
E of the lien. In the instant case, the Court is dealing with a situation
where following the transfer of the vehicle, the insurer was
specifically informed by the Bank which held a lien on the
insurance policy, of the lifting of its lien following the termination
of the agreement of hypothecation. Following this, a policy of
insurance was issued by the insurer. Admittedly the payment of
F premium was made by the appellant. The third respondent did
not set up any claim in respect of the loss of the vehicle since the
vehicle had already been repossessed and sold by the bank on
account of its default in the payment of dues. The insurer cannot
repudiate the claim of the appellant holding that its liability is to
G the third respondent who has no subsisting interest in the
ownership in the vehicle. The appellant has undertaken to furnish
an indemnity to the insurer against any claim at the behest of the
third respondent. The transfer of the vehicle is not in dispute.
[Paras 25-27] [706-F-H; 707-A]
H
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 695
COMPANY LTD & ANR.
1.4 The insurer adopted a basis which was unsustainable A
to repudiate the insurance claim. The loss of the vehicle took
place in close proximity to the date of auction purchase. The claim
in the amount of Rs 2,42,000 is allowed on which the appellant
shall be entitled to interest at the rate of 9% per annum from the
date on which the claim was lodged until payment. [Para 28]
B
[707-B]
Life Insurance Corporation of India v. Raja Vasireddy
Komalavalli Kamba 1984 ACJ 345 ; Complete
Insulations (P) Ltd v. New India Assurance Co Ltd
(1996) 1 SCC 221 : [1995] 5 Suppl. SCR 500 ; Prakash
Chand Daga v. Saveta Sharma (2019) 1 SCALE 2 ; C
Naveen Kumar v. Vijay Kumar (2018) 3 SCC 1 : [2018]
2 SCR 572 ; T V Jose v. Chacko PM (2001) 8 SCC
748 : [2001] 3 Suppl. SCR 366 ; P P Mohammed v. K.
Rajappan (2008) 17 SCC 624 ; Pushpa v. Shakuntala
(2011) 2 SCC 240 : [2011] 1 SCR 334 - referred to. D
Case Law Reference
1984 ACJ 345 referred to Para 10
[1995] 5 Suppl. SCR 500 referred to Para 10
(2019) 1 SCALE 2 referred to Para 10 E
[2018] 2 SCR 572 referred to Para 10
[2001] 3 Suppl. SCR 366 referred to Para 19
(2008) 17 SCC 624 referred to Para 19
[2011] 1 SC 334 referred to Para 19 F
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5998
of 2019.
From the Judgment and Order dated 11.03.2014 of the National
Consumer Dispsutes Redressal Commission, New Delhi in Revision G
Petition No. 2809 of 2013.
Rohit Sharma, Raunak Nayak, Atul Agarwal, Anshul Chowdhary,
Kumar Dushyant Singh, Advs. for the Appellants.
H
696 SUPREME COURT REPORTS [2019] 11 S.C.R.
A Mrs. Nanita Sharma, Vivek Sharma, Amardeep Sharma, Bajrang
Lal Jat, Advs. for the respondents.
The Judgment of the Court was delivered by
DR DHANANJAYA Y CHANDRACHUD, J.
B 1. Leave granted.
2. This appeal arises from a judgment of the National Consumer
Disputes Redressal Commission1 dated 11 March 2014 dismissing a
revision petition filed by the appellant. The NCDRC upheld the view of
the District Consumer Disputes Redressal Forum, Jalandhar2 and of the
C State Consumer Disputes Redressal Commission, Chandigarh 3 that the
insurer was not liable on a claim preferred under a policy of insurance
for the loss of a vehicle occasioned by theft.
3. The third respondent entered into a Hire Purchase Agreement
with ICICI Bank4, the second respondent through its Branch at Jalandhar
D in respect of a vehicle. Pursuant to the agreement, the third respondent
paid a few instalments but then committed a default upon which
possession of the vehicle was taken by the Bank. The vehicle was put
up for auction on 31 March 2006 and was purchased by the appellant
for a consideration of Rs 2,42,000. Besides the payment of an amount of
Rs 5,000 as earnest money, the appellant paid the balance by a cheque
E dated 31 March 2006 drawn on the State Bank of Bikaner & Jaipur.
Possession of the vehicle was handed over to the appellant on 7 April
2006 after the cheque was encashed together with a certificate of
possession of the vehicle. The Bank issued a letter dated 19 April 2006
to the first respondent, which had insured the vehicle, for the cancellation
F of the entry of hypothecation from the registration certificate of the
vehicle. On 22 May 2006, the appellant got the vehicle insured by the
first respondent in the amount of Rs 3,28,100 against payment of a
premium in the amount of Rs. 6,999. An insurance policy was issued by
the first respondent. The name of the insured was reflected as the third
respondent but significantly the address section in the policy document
G contained the name of the appellant together with its business address.
1
“NCDRC”
2
“District Forum”
3
“SCDRC”
4
H “Bank”
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 697
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
4. According to the appellant, insurance premium was collected A
by the insurer from it but since the registration certificate was still to be
transferred, the insurance policy continued to reflect the name of the
third respondent as the insured.
5. The appellant applied for and obtained a certificate of exemption
from the Regional Transport Authority so as to facilitate the transfer of B
the registration certificate to its name. The certificate of exemption was
on the ground that the vehicle was exempted from obtaining a route
permit.
6. The vehicle was stolen on the intervening night between 13
and 14 June 2006. The appellant lodged a First Information Report about C
the incident on 14 June 2006 and the first respondent was informed on 4
July 2006.
7. On 12 October 2006, the police issued a certificate to the effect
that the vehicle was untraced. On 19 October 2006, the appellant lodged
a claim for the loss of the vehicle with the first respondent and enclosed D
the registration certificate, FIR and the certificate of the police stating
that the vehicle was untraced.
8. On 16 November 2006, the first respondent rejected the claim
on the ground that the ownership of the vehicle and the insurance policy
stood in the name of the third respondent and on the ground that the E
bank had a financial interest. The first respondent stated that the vehicle
must have been insured by the Bank as well. The claim was also rejected
on the ground that the appellant did not have an insurable interest. The
appellant addressed a letter dated 28 November 2006 to the first
respondent. However, the claim was repudiated on 21 March 2007 by
the insurer on the ground that the appellant had no insurable interest F
since the registration certificate was not transferred to it. The rejection
of the claim led to the filing of a consumer complaint before the District
Forum at Jalandhar. The claim was dismissed on 30 April 2008. The
order of the District Forum was upheld by the State Commission on 22
March 2013 in appeal and, in revision, by the NCDRC on 11 March G
2014.
9. Assailing the view which has prevailed with the consumer fora,
Mr Rohit Sharma, learned counsel appearing on behalf of the appellant
submitted that it is undisputed that the appellant purchased the vehicle in
an auction sale conducted by Bank following a default committed by the
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698 SUPREME COURT REPORTS [2019] 11 S.C.R.
A original owner in the payment of instalments under a Hire-Purchase
Agreement. The Bank handed over to the appellant a certificate of
possession upon receiving the full bid consideration at the auction sale.
The Bank also informed the insurer of its ceasing to have a claim on the
vehicle based on the deed of hypothecation entered into by it with the
erstwhile owner. Following this, premium for the insurance cover was
B accepted by the insurer from the appellant. The insurance policy though
issued in the name of the third respondent, reflected the name of the
appellant and this was on the clear understanding of the insurer that the
appellant had paid the premium and obtained the cover of insurance as
the owner of the vehicle. In the circumstances, it was submitted that the
C insurer, having accepted the premium from the appellant, has absolutely
no ground to repudiate the policy. It was urged in support of the above
submission that the decisions of this Court in the context of third party
liability, in view of the provisions of Chapter XI of the Motor Vehicles
Act, 19885, more particularly Section 157, stand on a distinct footing. In
that context, it has been held that the erstwhile owner of a vehicle would
D continue to be jointly liable with the insurer even after the transfer of the
vehicle, unless the transfer is reflected in the registration certificate of
the vehicle. Learned counsel submitted that this can have no application
to a claim by the transferee against the insurer in a case such as the
present where the loss or damage is sustained on account of a theft of
the vehicle.
E
10. On the other hand, affirming the correctness of the view which
has been taken by the consumer fora, Ms. Nanita Sharma, learned counsel
appearing on behalf of the Respondents submitted that there is no privity
of contract between the appellant and the insurer. Learned counsel relied
upon the decisions of this Court in Life Insurance Corporation of
F India vs Raja Vasireddy Komalavalli Kamba 6; (ii) Complete
Insulations (P) Ltd vs New India Assurance Co Ltd7 ; (iii) Prakash
Chand Daga vs Saveta Sharma8 and (iv) Naveen Kumar vs Vijay
Kumar9 in support of the submission that until the name of the transferee
is reflected in the registration certificate, the insurance company would
not be liable. It was urged that in the present case, the appellant had no
G
5
Act of 1988
6
1984 ACJ 345 (1)
7
(1996) 1 SCC 221
8
(2019) 1 SCALE 2
9
H (2018) 3 SCC 1
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 699
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
insurable interest since the vehicle was not transferred in its name and A
consequently the insurer was within its rights in repudiating the claim
under the policy.
11. The basic facts are not in dispute. What is not in dispute is
that:
(i) The appellant purchased the vehicle at an auction conducted B
by the Bank to whom the vehicle was hypothecated in
pursuance of a Hire-Purchase agreement;
(ii) The appellant paid full consideration for the sale which was
conducted in an auction to the Bank;
(iii) A certificate of possession was furnished to the appellant C
by the Bank;
(iv) The Bank intimated the insurer that it ceased to have a lien
on the vehicle consequent to the auction sale;
(v) The proposal for insurance was submitted by the appellant
to the insurer; D
(vi) Premium in respect of the insurance cover was paid by the
appellant; and
(vii) The policy of insurance was issued by the insurer in the
name of the third respondent but clearly reflecting the name
of the appellant as well. Evidently, in this background, the E
reference of the appellant was not just for the purposes of
a postal address.
12. Now it is in this background that it becomes necessary to
determine the correctness of the basis for the repudiation of the insurance
claim by the insurer. Essentially, the contention of the insurer is that F
unless the transfer is reflected in the registration certificate issued by
the Regional Transport Authority, the insurer would not be liable and the
ownership would continue to stand in the name of the erstwhile owner.
In this context, it becomes necessary to analyse the provisions of the
Motor Vehicles Act, 1988 and the basis on which the decisions which
were relied upon by the insurer have been rendered. Section 2(30) defines G
the expression “owner” in the following terms:
“Section 2(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, any in relation to a motor vehicle which is
the subject of a hire-purchase agreement, or an agreement of
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700 SUPREME COURT REPORTS [2019] 11 S.C.R.
A lease or an agreement of hypothecation, the person in possession
of the vehicle under that agreement;”
13. Section 50 provides that where the ownership of any motor
vehicle registered under Chapter IV is transferred, certain formalities
have to be fulfilled. The formalities require the transferor to report the
B transfer to the registering authority within whose jurisdiction the transfer
has to be effected and to send a copy of the report to the transferee.
The transferee also has to report the transfer to the registering authority
within whose jurisdiction he resides or maintains a place of business
where the vehicle is normally kept.
C 14. The transferee has to forward the certificate of registration to
the registering authority together with the prescribed fee and a copy of
the report received from the transferor so that particulars of the transfer
of ownership may be entered in the certificate of registration. Sub-
section (1) of Section 50 provides as follows:
D “Section 50 Transfer of ownership –(1) Where the ownership of
any motor vehicle registered under this Chapter is transferred, -
(a) the transferor shall, -
(i) in the case of a vehicle registered within the same State, within
fourteen days of the transfer, report the fact of transfer, in
E such form with such documents and in such manner, as may
be prescribed by the Central Government to the registering
authority within whose jurisdiction the transfer is to be effected
and shall simultaneously send a copy of the said report to the
transferee; and
F (ii) in the case of a vehicle registered outside the State, within
forty five days of the transfer, forward to the registering
authority referred to in sub-clause (i) -
(A) the no objection certificate obtained under section 48; or
(B) in a case where no such certificate has obtained, -
G
(I) the receipt obtained under sub-section (2) of section 48;
or
(II) the postal acknowledgment received by the transferee if
he has sent an application in this behalf by registered post
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M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 701
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
acknowledgment due to the registering authority referred A
to in section 48,
together with a declaration that he ha snot received any
communication from such authority refusing to grant such
certificate or requiring him to comply with any direction
subject to which such certificate may be granted; B
(b) the transferee shall, within thirty days of the transfer, report
the transfer to the registering authority within whose
jurisdiction he has the residence or place of business where
the vehicle is normally kept as the case may be, and shall
forward the certificate of registration to that registering C
authority together with the prescribed fee and a copy of the
report received by him from the transferor in order that
particulars of the transfer of ownership may be entered in
the certificate of registration.”
15. Sub-section (3) of Section 50 provides the consequence of a D
failure to fulfil the obligation under sub-Section (1) in the following terms:
“(3) If the transferor or the transferee fails to report to the
registering authority the fact of transfer within the period specified
in clause (a) or clause (b) of sub-section (1), as the case may be,
or if the person who is required to make an application under sub- E
section (2) (hereafter in this section referred to as the other person)
fails to make such application within the period prescribed, the
registering authority may, having regard to the circumstances of
the case, require the transferor or the transferee, or the other
person, as the case may be, to pay, in lieu of any action that may
be taken against him under section 177 such amount not exceeding F
one hundred rupees as may be prescribed under sub-section (5):
Provided that action under section 177 shall be taken against the
transferor or the transferee or the other person, as the case may
be, where he fails to pay the said amount.”
G
16. Chapter XI provides for the insurance of motor vehicles against
third party risks. Section 146 prohibits the use of a motor vehicle in a
public place unless there is in force in relation to its use, a policy of
insurance complying with the requirements of the Chapter. Section 147
specifies the requirements of such a policy and the limits of liability.
H
702 SUPREME COURT REPORTS [2019] 11 S.C.R.
A Section 149 imposes a duty on the insurer to satisfy judgments and awards
against persons insured against third party risks. Section 157 deals with
the transfer of the certificate of insurance:
“157. Transfer of certificate of insurance - (1) Where a person in
whose favour the certificate of insurance has been issued in
B 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
C 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
D 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.”
E 17. As a result of the above provision, where a person in whose
favour the certificate of insurance has been issued in terms of the
provisions of Chapter XI transfers the ownership of the vehicle to another
person, the certificate of insurance and the policy described in the
certificate are deemed to have been transferred in favour of the new
owner to whom the motor vehicle is transferred, with effect from the
F
date of its transfer.
18. The above provisions have been the subject matter of several
decisions of this Court. In Complete Insulations(P) Ltd (supra), a
request was made to the insurer for the transfer of the certificate of
insurance prior to the enforcement of the Motor Vehicles Act, 1988 on 1
G July 1989. The vehicle met with an accident but the insurer repudiated
the claim on the ground that the appellant had no insurable interest. The
claim was, allowed by the District Forum but the decision was set aside
by the NCDRC.
19. In that context, a three judge Bench of this Court held thus:
H
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 703
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
“10. There can be no doubt that the said chapter provides for A
compulsory insurance of vehicles to cover third-party risks. Section 146
forbids the use of a vehicle in a public place unless there is in force in
relation to the use of that vehicle a policy of insurance complying with
the requirements of that chapter. Any breach of this provision may
attract penal action. In the case of property, the coverage extends to
B
property of a third penal action. In the case of property, the coverage
extends to property of a third party i.e. a person other than the insured.
This is clear from Section 147(1)(b)(i) which clearly refers to “damage
to any property of a third party” is Rupees six thousand only as pointed
out earlier. That is why even the Claims Tribunal constituted under Section
165 is invested with jurisdiction to adjudicate upon claims for compensation C
in respect of accidents involving death of or bodily injury to persons
arising out of the use of motor vehicles, or damage to any property of a
third party so arising, or both. Here also it is restricted to damage to
third-party property and not the property of the insured. Thus, the entire
Chapter XI of the new Act concerns third-party risks only. It is, therefore,
D
obvious that insurance is compulsory only in respect of third-party
risks since Section 146 prohibits the use of a motor vehicle in a
public place unless there is in relation thereto a policy of insurance
complying with the requirements of Chapter XI. 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 E
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,
F
the National Consumer Disputes Redressal Commission was right in the
view it took based on the decision in Kondaiah 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 G
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
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704 SUPREME COURT REPORTS [2019] 11 S.C.R.
A 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
B
correct.”
(emphasis supplied)
20. This Court dealt with the provisions of Chapter XI and explained
that it concerns only third party risks and as a result, the fiction contained
C in Section 157 must be limited for that purpose. The above extract
emphasises that if the policy covers other risks, that would be a matter
which falls outside Chapter XI and would rest in the domain of contract
for which there has to be an agreement between the insurer and the
transferee. In that case the Court held that there was no such agreement
since the insurer had not transferred the policy of insurance in relation
D thereto to the transferee and was held therefore not to be liable to make
good the damage.
21. Another line of judgments specifically deals with the obligation
to satisfy third party claims with reference to the provisions contained in
Chapter XI. A three judge Bench of this Court in Naveen Kumar (supra)
E adverted to the judgments of this Court in T V Jose vs Chacko PM10,
P P Mohammed vs K. Rajappan11 and Pushpa vs Shakuntala12 and
held thus:
“13. The consistent thread of reasoning which emerges from the
above decisions is that in view of the definition of the expression
F “owner” in Section 2(30), it is the person in whose name the motor
vehicle stands registered who, for the purposes of the Act, would
be treated as the “owner”. However, where a person is a minor,
the guardian of the minor would be treated as the owner. Where
a motor vehicle is subject to an agreement of hire purchase, lease
or hypothecation, the person in possession of the vehicle under
G that agreement is treated as the owner. In a situation such as the
present where the registered owner has purported to transfer the
vehicle but continues to be reflected in the records of the
10
(2001) 8 SCC 748
11
(2008) 17 SCC 624
H 12
(2011) 2 SCC 240
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 705
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
Registering Authority as the owner of the vehicle, he would not A
stand absolved of liability. Parliament has consciously
introduced the definition of the expression “owner” in
Section 2(30), making a departure from the provisions of
Section 2(19) in the earlier 1939 Act. The principle
underlying the provisions of Section 2(30) is that the victim
of a motor accident or, in the case of a death, the legal heirs B
of the deceased victim should not be left in a state of
uncertainty. A claimant for compensation ought not to be
burdened with following a trail of successive transfers, which
are not registered with the Registering Authority. To hold
otherwise would be to defeat the salutary object and purpose
of the Act. Hence, the interpretation to be placed must C
facilitate the fulfilment of the object of the law. In the
present case, the first respondent was the “owner” of the
vehicle involved in the accident within the meaning of
Section 2(30). The liability to pay compensation stands fastened
upon him. Admittedly, the vehicle was uninsured. The High Court
has proceeded upon a misconstruction of the judgments of this D
Court in Reshma and Purnya Kala Devi”
22. This position of law was subsequently followed by a two judge
Bench in Prakash Chand Daga (supra).
23. The principle that emerges from the precedents of this Court
is that even though in law there would be a transfer of ownership of the E
vehicle, that by itself would not absolve the person in whose name the
vehicle stands in the registration certificate, from liability to a third party.
So long as the name of the registered owner continues in the certificate
of registration in the records of the RTO, that person as an owner would
continue to be liable to a third party under Chapter XI of the Motor
F
Vehicles Act, 1986. The above decisions, therefore, deal with the obligation
of the registered owner to meet third party claims.
24. The principles which have been elucidated by this Court in the
context of the liability of the registered owner of the vehicle in satisfying
third party claims consequently has no application to the present case.
For this reason, the three judge Bench of this Court in Complete G
Insulations (P) Ltd (supra) carefully noted that third party claims with
reference to insurance policies issued under Chapter XI stand on a
different footing. Hence, it was held that if the policy of insurance covers
other risks, that would be a matter of the contract of insurance between
the insurer and the transferee in whose favour the risk is assumed. In
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706 SUPREME COURT REPORTS [2019] 11 S.C.R.
A Raja Vasireddy (supra), a two judge Bench of this Court has observed
that the mere receipt and retention of premium until after the death of
the applicant for insurance or the mere preparation of a policy document
does not constitute acceptance and that acceptance must be signified by
by some act or acts agreed on by the parties or from which the law may
raise a presumption. It has been further held:
B
“15. Though in certain human relationships silence to a proposal
might convey acceptance but in the case of insurance proposal
silence does not denote consent and no binding contract arises
until the person to whom an offer is made says or does something
to signify his acceptance. Mere delay in giving an answer cannot
C be construed as an acceptance, as, prima facie, acceptance must
be communicated to the offeror. The general rule is that the
contract of insurance will be concluded only when the party to
whom an offer has been made accepts it unconditionally and
communicates his acceptance to the person making the offer…..
D ***** ***** *****
17. Having regard to the clear position in law about acceptance
of insurance proposal and the evidence on record in this case, we
are, therefore, of the opinion that the High Court was in error in
coming to the conclusion that there was a concluded contract of
E insurance between the deceased and the Life Insurance
Corporation and on that basis reversing the judgment and the
decision of the learned Subordinate Judge.”
25. In the present case, not only was there an acceptance of
premium but the issuance of a policy document. The insurer had
knowledge of the transfer when the Bank informed it of the lifting of the
F
lien.
26. In the present case, the Court is dealing with a situation where
following the transfer of the vehicle, the insurer was specifically informed
by the Bank which held a lien on the insurance policy, of the lifting of its
lien following the termination of the agreement of hypothecation.
G Following this, a policy of insurance was issued by the insurer. Admittedly
the payment of premium was made by the appellant. The third respondent
did not set up any claim in respect of the loss of the vehicle since the
vehicle had already been repossessed and sold by the bank on account
of its default in the payment of dues. The insurer cannot repudiate the
H claim of the appellant holding that its liability is to the third respondent
M/S. BALWANT SINGH & SONS v. NATIONAL INSURANCE 707
COMPANY LTD & ANR. [DR DHANANJAYA Y CHANDRACHUD, J.]
who has no subsisting interest in the ownership in the vehicle. The A
appellant has undertaken to furnish an indemnity to the insurer against
any claim at the behest of the third respondent.
27. The transfer of the vehicle is not in dispute.
28. The insurer adopted a basis which was unsustainable to
repudiate the insurance claim. The loss of the vehicle took place in B
close proximity to the date of auction purchase. We allow the claim in
the amount of Rs 2,42,000 on which the appellant shall be entitled to
interest at the rate of 9% per annum from the date on which the claim
was lodged until payment.
29. The appeal is allowed in the above terms. There shall be no C
order as to costs.
Nidhi Jain Appeal allowed.
D
E
F
G
H
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