K. Sasindran Pillai v. National Insurance Co. Ltd. & Insurance Ombudsman

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.N.RAVINDRAN MONDAY, THE 7TH FEBRUARY 2011 / 18TH MAGHA 1932 WP(C).No. 19646 of 2010(E) -------------------------- PETITIONER(S): --------------- K.P.SASINDRAN PILLAI, KONDATHU MADOM, KOTTUVALLY VILLAGE, KAITHARAM P.O., NORTH PARAVUR. BY ADV. SRI.C.CHANDRASEKHARAN RESPONDENT(S): --------------- 1. NATIONAL INSURANCE CO.LTD., DIVISIONAL OFFICE, STATUE JUNCTION,THRIPPUNITHURA. 2. INSURANCE OMBUDSMAN, PULINAT BUILDING, OPPOSITE TO KOCHIN SHIP YARD, M.G.ROAD, ERNAKULAM. ADV. SRI.RAJAN P.KALIYATH FOR R1 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/02/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ## W.P(C)No.19646/2010 ## APPENDIX ## PETITIONER'S EXHIBITS: EXT.P1. TRUE COPY OF THE POLICY NO.57002/31 (CRC)100010462 ISSUED TO THE PETITIONER FROM THE NATIONAL INSURANCE CO.;LTD., N.PARUR EXT.P2. TRUE COPY OF CLAIM DATED 24.02.2009 SUBMITTED BY THE PETITIONER BEFORE THE 1ST RESPONDENT. EXT.P3. TRUE COPY OF THE BILL DATED 13.02.2009 ISSUED TO THE PETITIONER FROM INDUS MOTORS CO.PVT. LTD. EXT.P4. TRUE COPY OF THE LETTER DATED 29.07.2009 SENT BY THE 1ST RESPONDENT TO MR.O.K.BABY PREVIOUS OWNER OF THE VEHICLE. EXT.P5. TRUE COPY OF THE LETTER DATED 18.12.2009 SENT TO THE PETITIONER FROM THE KOCHI REGIONAL OFFICE, OFFICE OF THE NATIONAL INSURANCE CO.LTD. EXT.P6. TRUE COPY OF THE ORDER DATED 9.3.2010 PASSED BY THE 2ND RESPONDENT. ## RESPONDENTS' EXHIBITS: EXT.R.1.1. TRUE COPY OF CLAIM FORM DTD. 9.11.2009 EXT.R.1.2. TRUE COPY OF LETTER DTD. 12.11.09 ADDRESSED TO THE PETITIONER. - EXT.R.1.3. TRUE EXTRACT OF GR 17 OF MOTOR TARIFF. / TRUE COPY / P.S.TO JUDGE ## **P.N.RAVINDRAN, J. ----------------------------------------W.P(C).No.19646 of 2010 ----------------------------------------Dated this the 7[th] day of February, 2011** ## **JUDGMENT** The petitioner purchased a motor car bearing registration No.KL-7 Z/5335 from its former owner Sri.O.K.Baby on 26.1.2009. The said vehicle was insured by the first respondent insurer as per a policy of insurance covering the period from 11.2.2008 to 10.2.2009. The petitioner did not admittedly apply within 14 days from the date of transfer of ownership of the car to make necessary changes regarding the transfer of ownership in the certificate of insurance and the policy relating to the car. The car met with an accident on 1.2.2009 and suffered heavy damage. It was repaired at an expense of Rs.1,06,468/-. After the car met with an accident the petitioner took a fresh insurance policy from the same insurer on 7.2.2009. That policy was valid till 6.2.2010. Three weeks after the car met with the accident, the petitioner sent Ext.P2 letter claiming reimbursement of the expenses incurred by him to repair the car. That request was rejected by Ext.P4 letter dated 29.7.2009 on the ground that the policy was ## **W.P(C).No.19646 of 2010** ## -:2:- not transferred in terms of sub-section (2) of section 157 of the Motor Vehicles Act, 1988. The petitioner thereupon represented to the Regional Office of the insurer and the same was also rejected. He thereafter moved the Insurance Ombudsman under the provisions of the Redressal of Public Grievances Rules, 1998. The Ombudsman also took the same view and passed Ext.P6 order rejecting the claim. It was held that as the police was not transferred the insurer is not liable. Hence this writ petition challenging Exts.P4, P5 and P6 and seeking a direction to the first respondent insurer to pay the expenses incurred by the petitioner for the repair of his car. 2. Sri.C.Chandrasekharan, learned counsel appearing for the petitioner contended that in view of sub-section (1) of section 157 of the Motor Vehicles Act the policy of insurance, which was in force during the period from 11.2.2008 to 10.2.2009 stood transferred in favour of the petitioner with effect from the date of transfer and therefore the insurer is liable. Per contra, Sri.Rajan P.Kalliyath, learned standing counsel appearing for the insurer, contended that sub-section (1) of section 157 is limited in its operation as regards third party claims and in claims for own damage made by the insured, unless the transferee of the car **W.P(C).No.19646 of 2010** ## -:3:- applies within 14 days from the date of transfer to make necessary changes in the certificate of insurance and the policy of insurance, the insurer is not liable. 3. The issue raised is, in my opinion, no longer res integra. In _**Complete Insulations (P) Ltd. v. New India Assurance**_ _**Co. Ltd**_ . (1996) 1 SCC 221 the Apex Court considered a similar question. The appellant before the Apex Court purchased the car on 15.6.1989. The intimation regarding transfer was sent on 26.6.1989. Asking for transfer of the insurance policy a reminder was also sent. The insurer did not reject the request. Meanwhile the car met with an accident on 17.9.1989. The appellant thereupon claimed the value of the car. The insurer did not respond. The owner thereupon filed a complaint before the State Consumer Disputes Redressal Commission, which directed the insurer to pay the insured value of the vehicle. On appeal by the insurer the National Consumer Disputes Redressal Commission set aside the order of the Consumer Disputes Redressal Commission, Chandigarh. Rejecting the appeal filed by the owner, the Apex Court held as follows: _“9. Section 157 appears in Chapater XI entitled “Insurance of Motor Vehicles against Third Party Risks” and comprises Sections 145 to 164._ -:4:- ## **W.P(C).No.19646 of 2010** _Section 145 defines certain expressions used in the various provisions of that chapter. The expression “Certificate of Insurance” means a certificate issued by the authorised insurer under Section 147(3). “Policy of Insurance” includes a certificate of insurance. Section 146(1) posits 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 in 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”. Of course this provision does not apply to vehicles owned by the Central or State Government and used for Government purposes not connected with any commercial enterprise. This provision corresponds to Section 94 of the old Act. Section 147 provides that the policy of insurance to be issued by the authorised insurer must insure the specified person or classes of persons against any liability incurred in respect of death of or bodily injury to any person or damage to any property of a third party as well as against the death of or bodily injury caused to any passenger of a public service vehicle caused by or arising out of the use of the vehicle in a public place. This provision is akin to Section 95 of the old Act. It will be seen that the liability extends to damage to any property of a third party and not damage to the_ ## **W.P(C).No.19646 of 2010** ## -:5:- _property of the owner of the vehicle, i.e., the insured. Sub-section (2) stipulates the extent of liability and in the case of property of a third party the limit of liability is Rupees six thousand only. The proviso to that sub-section continues the liability fixed under the policy for four months or till the date of its actual expiry, whichever is earlier. Sub-section (3) next provides that the policy of insurance shall be of no effect unless and until the insurer has issued a certificate of insurance in the prescribed form. The next important provision which we may notice is Section 156 which sets out the effect of the certificate of insurance. It says that when the insurer issues the certificate of insurance, then even if the policy of insurance has not as yet been issued, the insurer shall, as between himself and any other person except the insured, be deemed to have issued to the insured a policy of insurance conforming in all respects with the description and particulars stated in the certificate. It is obvious on a plain reading of this provision that the legislature was anxious to protect third-party interest. 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_ -:6:- ## **W.P(C).No.19646 of 2010** _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. These are the relevant provisions of Chapter XI which have a bearing on the question of insurer's liability in the present case._ _10. There can be no doubt that the said chapter provides for 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 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” and not damage to the property of the 'insured' himself. And the limit of liability fixed for damage to 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 in respect of accidents involving death of or bodily_ ## **W.P(C).No.19646 of 2010** ## -:7:- _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, 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 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 Kondoaiah 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_ -:8:- ## **W.P(C).No.19646 of 2010** _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._ _(emphasis supplied)_ It was held that the requirements of Chapter XI of the Motor Vehicles Act 1988 are in relation to third party risks and hence the fiction in section 157 of the Act must be limited to third party risks and that damage caused to the vehicle of the insured himself is a matter falling outside Chapter XI of the Act and in the realm of contract for which there must be an agreement between the insurer and the transferee. 4. In the instant case the petitioner has no case that the policy of insurance stood transferred in his name on an application -:9:- ## **W.P(C).No.19646 of 2010** made by him within 14 days as required in section 157(2) of the Motor Vehicles Act, 1988. As a matter of fact the petitioner had not made such a request. He had only claimed reimbursement of the expenses incurred by him for repairing the car. He had also taken another policy of insurance after the accident and that policy was valid during the period from 7.2.2009 to 6.2.2010. Therefore the inference is irresistible that the petitioner, the transferee of the car, did not apply within 14 days from the date of transfer of the car for transferring the policy in his name. In the light of the authoritative pronouncement of the Apex Court the petitioner cannot be heard to contend that the insurer was bound to reimburse the expenses incurred for repairing the car. In such circumstances I find no merit in the challenge to the impugned orders and the repudiation of the claim. The writ petition fails and is accordingly dismissed. **P.N.RAVINDRAN, Judge.** **ahg.** **P.N.RAVINDRAN, J. --------------------------W.P(C).No.19646 of 2010 ----------------------------** ## **JUDGMENT** **7[th] February, 2011**