UNITED INDIA INSURANCE CO. LTD., SHIMLA v. TILAK SINGH AND ORS.

A # UNITED INDIA INSURANCE CO. LTD., SHIMLA # v. TILAK SINGH AND ORS. ## APRIL 4, 2006 ## B [B.N. SRIKRISHNA AND LOKESHWAR SINGH PANTA, JJ.] ## _Motor Vehicles Act, 1988:_ _ss. 147--Statutory insurance polic;r--Gratuitous passenger-Liability_ C _of insurance company-Held, insurance company owed no liability towards injuries suffered by deceased, a pillion rider, as insurance policy was a statutory policy and it did not cover the risk of death or bodily injury to gratuitous passenger-Motor Vehicles Act, 1939-s. 95._ D _s.157-Failure of transferor to notifY the insurer of facts of transfer of ownership of insured vehicle-Reid, situation is nut different whether u/s 103-A of 1939 Act or uls 157 of 19fl8 Act, in so far as liability towards a third person is concerned-s.157 provides that certificate of insurance and the policy "shall be deemed to have been transferred in favour of the persons to whom vehicle is transferred w.ej the date of its transfer- Motor Vehicles_ E _Act, 1939--ss. 94, 95 and 103-A._ _Transfer of Vehicle-Motor accident· --Claim petition-Applicability of provisions of relevant Act--Held, it is not transfer of vehicle but the accident which furnishes the cause of action-Since accident took place after 1988_ F _Act came into force, the same would govern the situation._ Respondent No. I purchased a scooter from respondent No. 5 on 23.3.1989. Though registration certificate was transferred in the name of respondent No. I, no notice to appellant-insurance _company was given for transfer of insurance policy and insurance certificate. On 31.10.1989 while G respondent No. 1 was driving the scooter, it met with an accident and as a result the pillion rider died. Legal heirs filed claim petition arraying _inter a/ia_ respondent No. 1, respondent No. 5 and the insurance company. The Tribunal held the claimants entitled to Rs. 3,89,000/- holding respondent No. 1 only liable for payment of compensation and absolved the insurance company H 75& 759 UNITED INDIA INSURANCE CO. LTD., SHIMLA 1•. TILAK SINGH _<_ . ' of the liability on the ground that no notice of the transfer of the vehicle had been given to the insurer as prescribed by the Motor Vehicles Act, 1939. On appeal by respondent No. 1, the High Court held that the insurance company was severally and jointly liable along with respondent No. 1 for payment of the compensation awarded. Aggrieved, the insurance company filed the appeal. It was contended for the appellant that the law applicable in determining B the liability of the insurance company would be 1939 Act and not the 1988 Act; that since the transferor of the vehicle did not apply to the insurance company for transfer of insurance policy and insurance certificate in terms of s.103-A of 1939 Act, insurer was absolved from the liability; and that since deceased was a pillion rider, and risk of death or disability of pillion rider i.e. a gratuitous passenger, was not covered under the insurance policy, the insurance company was not liable. ## Allowing the appeal, the Court HELD: 1. It is not the transfer of the vehicle but the accident which furnishes the cause of action for the claim petition before the tribunal. Undoubtedly, the accident took place after the Motor Vehicles Act, 1988 had come into force. Hence it is the 1988 Act which governs the situation. (765-D] 2.1. The situation in law which arises from the failure of the transferor to notify the insurer of the fact of transfer ofownership of the insured vehicle is no different, whether under section 103-A of the Motor Vehicles Act, 1939 or under section 157 of the Motor Vehicles Act, 1988 in so far as the liability· towards a third party is concerned. Thus, whether the old Act applies to the facts or the new Act applies, as far as the deceased third party was concerned, the result would not be different. Section 157 of the 1988 Act, which corresponds to the earlier section 103-A of the 1939 Act provides that upon the transfer of 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". The explanation to the section makes it clear that such deem!:d transfer shall include transfer of rights and liabilities of the said certifi~ate of insurance a'nd policy of insurance. 1763-A-D; 765-B-Cj _Complete Insulation Ltd._ v. _New India Assurance Co. Ltd.,_ 11996) 1 SCC 221; _New Indian Assurance Co. ltd._ v. _Sheela Rani (Smt.) and Ors.,_ 760 [2006] 3 S.C.R. ## SUPREME COURT REPORTS - A (1998) 6 SCC 599; _G. Govindan_ v. _New India Assurance Co. ltd and Ors.,_ (19991 3 SCC 754 and _Rikhi Ram and Anr._ v. _Sukhrania (Smt.J and Ors .._ (2003) 3 sec 97, relied on. 2.2. Section 6(c) of the General Clauses Act would hardly have any application to a cause of action in favour of person who was neither a B transferor, nor the transferee of the insured vehicle. At the most, the failure to give an intimation under Section 103-A of the 1939 Act would create a liability on the part of the transferor _vis-a '-vis_ the insurance company, but would hardly affect a third party's claim for compensation. (763-G-H] C _Madineni Kondaiah and Ors._ v. _Yaseen Fatima and Ors.,_ AIR (1986) AP 62 and _Ramesh Singh and Anr._ v. _Cinta Devi and Ors .._ (1996( 3 SCC 142, cited. 3.1. The insurance company owed no liability towards the injuries suffered by the deceased who was a pillion rider, as the insurance policy was D a statutory policy, and it did not cover the risk of death of or bodily injury to gratuitous passenger. (768-AI > 3.2. Even under the 1939 Act the established legal position was that unless there was a specific coverage of the risk pertaining to a gratuitous passenger in the policy, the insurer was not liable. Clause (ii) of the proviso E to section 95(1) of 1939 Act has been eliminated while drafting section 147 of the 1988 Act. Under sub-section (l)(b) under the 1988 Act, compulsory policy of insurance required under the statute must now provide against any liability which may be incurred by the owner of the vehicle "in respect of the death of or bodily injury to any person including owner of the goods or F authorized representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place." (766-E-FJ _New India Assurance Company_ v. _Asha Rani and Ors.,_ (20031 2 SCC 223 and _Dr. TV. Jose_ v. _Chacko P.M. alias Thankachan and Ors .._ 12001 I 8 G sec 748, relied on. _Pushpabai Purshottam Udesh and Ors._ v. _Mis. Ranjit Ginning & Pressing Co. (P) ltd. and Anr.,_ (1977) 2 SCC 745 and _Amrit Lal Sood and Anr._ v. _Kausha/ya Devi Thapar and Ors.,_ (199813 SCC 744, referred to. H _New India Assurance Company_ v. _Satpal Singh and Ors.,_ 12000] I SCC UNITED INDIA INSURANCE CO. LTD., SHIMLA 1·. TILAK SINGH [SRIKRISHNA, J.] 76 J ## 237, stands overruled. CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2291/2000. From the Judgment and Order dated 26.3.1998 of the High Court of Himachal Pradesh in F.A. No. 9/1993. B Vishnu Mehra, Ms. Sakshi Mittal and B.K. Satija for the Appellants. V.C. Mahajan, Sarwa Mitter, Mrs. S. Gupta and Amit Gupta for _Mis._ Mitter and Mitter Co., Mohan Pandey, Mrs. Rachna Gupta for the Respondents. c > The Judgment of the Court was delivered by SRIKRISHNA, J. The core issue involved in this appeal is: Whether a statutory insurance policy under the Motor Vehicles Act, 1998, intended to cover the risk to life or damage to properties of third parties, would cover the risk of death or injury to a gratuitous passenger carried in a private vehicle. D Respondent No. 5 Bal Krishan had insured his scooter with the appe\lantinsurance company for the period 7.3.1989 to 6.3.1990. For covering liability to pillion passengers endorsement of l.M.T. 70 pertaining to accident to unnamed hirer/driver/pillion passenger, is required on the insurance policy, which may be obtained by payment of additional premium. The insurance E policy covering the scooter of respondent no.5. did not contain an endorsement of!MT 70. On 23rd March 1989 the scooter was admittedly sold by respondent no.5 to respondent no. I, Tilak Raj. It is also an admitted position that the registration certificate of the scooter was transferred in the name of Tilak Raj F but no notice thereto was given by the transferor respondent no. 5 to the appellant-insurance company for transfer of the insurance policy and the insurance certificate in the name of the transferee i.e. respondent no. I. With effect from 1.7.1989 the Motor Vehicle Act, 1939 (hereinafter referred to as the '1939 Act') was repealed and the Motor Vehicle Act, 1988 (hereinafter referred G to as the '1988 Act') came into force. On 31.10. 1989 one Rajinder Singh, who was riding as a pillion rider while the scooter was being driven by respondent no. 1, died as a result of an accident. Respondents 2 to 4 being the legal heirs (wife and minor daughters) of the deceased Rajinder Singh moved an application under Section 166 of the Motor Vehicles Act, 1988, seeking H [2006 I 3 S.C.R. 762 SUPREME COURT REPORTS D A compensation for the death of the deceased Rajinder Singh. This petition was opposed by the insurance company on two grounds (a) that the deceased was a pillion rider and the insurance policy did not cover the liability towards a pillion rider and, (b) that, although. the original insurer respondent no. 5. had sold the scooter to respondent no. I before the accident neither was any intimation of such sale was given. nor was the insurance policy got transferred B in favour of respondent no. I. Respondent no.5 denied his liability on the ground that he had ceased to be the owner of the scooter prior to the accident. The Motor Accidents Claims Tribunal (hereinafter referred to as 'the tribunal') made an award dated 8.12.1992 and came to the conclusion that the accident had taken place due to rash and negligent driving on the part of C respondent no. I. It also held that the claimants (respondents 2 to 4) were entitled to a total compensation of Rs. 3,89,000/- The tribunal absolved the appellant-insurance company from liability on the ground that no notice of the transfer of the insured vehicle had been given to the appellant-insurance company in the manner prescribed by the 1939 Act. Only respondent no. I was held liable for payment of the compensation determined by the tribunal D together with interest and costs. Respondent no. I appealed against the award by FAO No. 9/93 before the High Court and assailed the findings of the tribunal on all the issues, particularly its absolution of the insurance company from liability. Respondents E 2 to 4 also filed cross-objections and sought increase in the compensation awarded. The High Court by the impugned judgment upheld the finding, as to the quantum of compensation at Rs. 3,89,000/- but set aside the finding of the tribunal that the insurance company was not liable under the policy and held that the insurance company was jointly and severally liable along with the appellant for the payment of the amount of compensation determined and F awarded. Being aggr:eved thereby, the appellant-insurance company is before this Court. The learned counsel for the appellant-insurance company has urged three contentions in support of the appeal: (a) The law applicable in determining the liability of the insurance company would be the 1939 Act and not the 1988 G Act; (b) under Section I 03-A of the 1939 Act if a transferor of an insured vehicle does not apply to the insurance company for transfer of certificate of insurance and the policy in favour of the transferee in the manner prescribed, the insurer was absolved from the liability; and (c) since the deceased was a pillion rider the risk of death or disability of pillion rider was not covered H under the policy. UNITED INDIA INSURANCE CO LTD., SHIMLA 1•. TILAK SINGH [SRIKRISHNA, J.] 763 The first question that arises is, whether the 1939 Act or the 1988 Act A would govern the situation. Undoubtedly, under section I 03-A of the 1939 Act, if there was in existence an insurance policy covering the vehicle and the vehicle was transferred, then there was no automotive transfer of policy of insurance but it was open to the transferor to apply in the prescribed form to the insurer for transfer of certificate of insurance before the transfer and, if within 15 days of receipt of such application by the insurer such application B had not been refused, the certificate of insurance and the insurance policy, were deemed to have been transferred in favour of the transferee. The 1988 Act however, brought about a drastic change in the situtation. Section 157 of the 1988 Act, which corresponds to the earlier section 103-A of the 1939 Act, provides that upon the transfer of ownership of the motor vehicle in C 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". The explanation to the section makes it clear that such deemed transfer shall include transfer of rights and liabilities of the said certificate of D insurance and policy of insurance. Learned counsel for the appellant insurance company contended that vi de sub-section (I) of section 217 of 1988 Act, the 1939 Act stood repealed but sub-section (4) provides: "The mention of particular matters in this section E shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 ( 10 of 1987) with regard to the effect of repeals." There was no intention evidenced in the 1988 Act to make a clean departure from the previous position in law. Section 217 ( 4) evidences an intention to the contrary. Thus, the situation would be governed by Section 6(c) of the General Clauses Act, which provides that the repeal of an Act F would not affect any right, privilege>obligation or liability acquired, accrued or incurred under any enactment so repealed. The learned counsel relied on the judgment of this Court in _Ramesh Singh and Anr._ v. _Cinta Devi and Ors.,_ [ 1996] 3 sec 142 in support of his contention. Section 6( c) of the General Clauses Act would hardly have any application G to a cause of action in favour of a person who was neither a transferor, nor the transferee of the insured vehicle. At the most, the failure to give an intimation under Section 103-A of the 1939 Act would create a liability on the part of the transferor _vis-a-vis_ the insurance company, but would hardly affect a third party's claim for compensation. This position of law is well established H 764 [2006] 3 S.C.R. SUPREME COURT REPORTS c A by judgments of High Courts and this Court. Citing with approval the judgment of the Full Bench of the Andhra Pradesh High Court in _,\Iadineni Konduiah and Ors._ v. _Yaseen Fatima and Ors .._ AIR (1986) AP 62 and contrasting the provision of section 103-A of the 1939 Act with Section 157 of the 1988 Act, this Court said in _Complete_ B _Insulations Ltd_ v. _New India Assurance Co. Ltd.,_ [ 1996] I SCC 221 (vide para 6). ·'Now, under the old Act although the insurer could refuse to transfer the certificate of insurance in certain circumstances and the transfer was not automatic as under the new Act, there was under the old law protection to third parties, that is victim of the accident. The protection was available by virtue of Sections 94 and 95 of the old Act." The judgment of the Andhra Pradesh High Court in _Kondaiah_ (supra) was specifically referred to and affirmed in the subsequent judgment of this D Court in _New India Assurance Cu. Ltd._ v. _Sheela Rani (Sm/.) and Ors.,_ [ 1998] 6 SCC 599, where this Court observed after ref~rring to the judgment in _Complete Insulations_ (supra) as follows (vide para IO)" E .. A careful reading of the judgment of this Court, extracted as above, will clearly show that on the transfer of the vehicle about which intimation was given though not strictly as required under Section 103-A of the Act and in the absence of refusal from the insurer the Policy already given by the Insurance Company to the transferor will not lapse." In G. _Govindan_ v. _New India Assurance_ ( _'o. ltd and Ors.,_ (1999] 3 SCC F 754, this Court had occasion to refer to the decisions of the Full Bench of the Andhra Pradesh High Court in _Kondaiah 's_ case (supra), _Complete Insulations Ltd._ (supra) and _New India Assurance Co. Ltd._ v. _Sheela Rani (Smt.) and Ors.,_ in the context of the 1988 Act and, after contrasting it with the provisions of 1939 Act, held (vide para 13 ): G ·Jn our opinion, both under the old act and under the new Act the Legislature was anxious to protect the third party (victim) interest. It appears that what implicit in the provision of the old Act is now made explicit. presumably in view of the conflicting decisions on this aspect among the various High Courts." H In _Rikhi Ram and Anr._ v. _Sukharnia (Sm!.) and Ors.,_ [~003] 3 SCC 97, UNITED INDIA INSURANCE CO. LTD. SHIM LA,._ TILAK SINGH [SRIKRISHNA. J.] 765 a Bench of three learned judges of this Court had occasion to consider A section I 03-A of the 1939 Act. this court re-affirmed the decision in _U Govindan 's_ case (supra) and added that the liability of an insurer does not cease even if the owner or purchaser fails to give intimation of transfer to the insurance company, as the purpose of the legislation was to protect the rights and interests of the third party. B Thus, in our view, the situation in law which arises from the failure of the transferor to notify the insurer of the fact of transfer of ownership of the insured vehicle is no different, whether under section 103-A of the 1939 Act or under section 157 of the 1988 Act in so far as the liability towards a third party is concerned. Thus, whether the old Act applies to the facts before us, C or the new Act applies, as far as the deceased third party was concerned, the result would not be different. Hence, the contention of the appellant on the second issue must fail, either way, making a decision on the first contention unnecessary, for deciding the second issue. HowP,ver, it may be necessary to decide which Act applies for deciding the third contention. In our view, it is not the transfer of the vehicle but the accident which furnishes the cause of D action for the application before the tribunal. Undoubtedly, the accident took place after the 1988 Act come into force. Hence it is the 1988 Act which would govern the situation. Turning to the third contention of the appellant, the question as to whether a gratuitous passenger would be covered by a statutory insurance E policy, has been the subject matter of a number of decisions of this Court. _A. The 1939 Act:-_ In _Pushpabai Purshottam Udesh and Ors._ v. _Mis. Ranjit Ginning and Pressing Co. (P) Ltd. and Anr.,_ [ 1977] 2 SCC 745 the insurance company had F raised the contention that the scope of statutory insurance under section 95( 1 )(a) read with 95( I )(b )(i) of the Motor Vehicles Act, 1939 does not cover the injury suffered by a passenger and, since there was a limited liability under the insurance policy, the risk of the insurance company would be limited to the extent it was specifically covered. After referring to the English G Road Traffic Act, 1960, and Halsbury's Laws of England (Third Edition) this Court came to the conclusion that section 95 of the 1930 Act required that the policy of insurance must be policy insuring the insured against any liability incurred by him in respect of death or bodily injury to a third party and rejected the contention that the words "third party" were wide en01.igh to cover all persons except the insured and the insurer. This Court held as H 766 (2006] 3 S.C.R. SLPREME COURT REPORTS A under : (vide para 20) "Therefore it is not required that a policy of insurance should cover risk to the passengers who are not carried for hire or reward. As under Section 95 the risk to a passenger in a vehicle who is not carried for hire or reward is not required to be insured the plea of the counsel B for the insurance company will have to be accepted and the insurance company held not liable under the requirements of the Motor Vehicles Act." In _Amrit Lal Sood and Anr._ v. _Kaushalya Devi Thapar and Ors.,_ (1998] 3 sec 744 it was held that in that particular case that the terms of the policy C were wide enough to cover a gratuitous passenger and, therefore, there was liability towards the gratuitous person. In _Dr. T. V. Jose_ v. _Chacko P.M. alias Thankachan and Ors.,_ (200 I] 8 SCC 748 Variava, J. had an occasion to survey the law with regard to the D liability of insurance companies in respect of gratuitous passengers. After referring to a number of decisions of this Court the learned Judge observed (vide para 20) "the law on this subject is clear. a third-party policy does not cover liability to gratuitous passengers who are not carried for hire or reward." The insurer company was held not liable to reimburse the appellant. E Thus even under the 1939 Act the established legal position was that unless there was a specific coverage of the risk pertaining to a gratutious passengers in the policy, the insurer was not liable. We find that clause (ii) of the proviso to Section 95( 1) has been eliminated while drafting section 147 of the 1988 Act. Under sub-section (l)(b) under the 1988 Act, compulsory policy of insurance required under the statute must now provide against any F liability which may be incurred by the owner of the vehicle "in respect of the death of or bodily injury to any person including owner of the goods or authorised representative carried in the vehicle or damage to any property of a third party caused by or arising out of the use of the vehicles in a public place." G _B. The 1988 Act:_ The argument that the risk pertaining to a third party would extend to a person other than the parties to the insurance contract was raised in New _India Assurance Company_ v. _Satpal Singh and Ors.,_ (2000] J SCC 237 where H after contrasting the language of section 95 (I) of the I 939 Act with the UNITED INDIA INSURANCE CO. LTD, SHIMLA r. TILAK SINGH [SRIKRISHNA, J.) 767 A provisions of section 147 (I) of the 1988 Act this Court held: "The result is that under the new Act an insurance policy covering third party risk is not required to exclude gratutious passengers in a vehicles, no matter that the vehicle is of any type or class. Hence the decisions rendered under the old Act _vis-a-vis_ gratuitous passengers are of no avail while considering the liability of the insurance company B in respect of any accident which occurred or would occur after the new Act came into force." The view expressed in _Satpal Singh 's_ case (supra) however, has been specifically overruled in the subsequent judgment of a Bench of three judges in _New India Assurance Company_ v. _Asha Rani and Ors.,_ [2003] 2 SCC 223. C In that case the discussion arose in connection with carrying passengers in a goods vehicle. This Court after referring to the terms of section 147 of the 1988 Act, as contrasted with section 95 of the 1939 Act, held that the judgment in _Satpal Singh 's_ case (supra) had been incorrectly decided and that the insurer will not be liable to pay compensation. In the concurring D judgment of Sinha, J. after contrasting the language used in the 1939 Act with that of the 1988 Act, it has been observed (vide paras 25 and 27): "25. Section 147 of 1988 Act, _inter alia,_ prescribes compulsory coverage against the death of or bodily injury to any passenger of "public service vehicle". Proviso appended thereto categorically states E that compulsory coverage in respect of drivers and conductors of public service vehicle and employees carried in a goods vehicle would be limited to the liability under the Workmen's Compensation Act. It does not speak of any passenger in a 'good carriage'. 27. Furthermore, sub-clauses (i) of Clause (b) of sub-section (I) of F Section 14 7 speaks of liability which may be incurred by the owner of a vehicle in respect of death of or bodily injury to any person or damage to any property of a third caused by or arising out of the use of the vehicle in a public place. Whereas sub-clause (ii) thereof deals with liability which may be incurred by the owner of a vehicle against G the death of or bodily injury to any passenger of a public service caused by or arising out of the use of the vehicle in a public place." In our view, although the observation made in _Asha Rani's_ case (supra) were in connection with carrying passengers in a goods vehicle, the same would apply with equal force to gratuitous passengers in any other vehicle H 768 [2006] 3 S.C.R. ## SUPREME COURT REPORTS - A also. Thus, we must uphold the contention of the appellant-insurance compan:,, that it owed no liability toward the injuries suffered by the deceased Rajinder Singh who was a pillion rider, as the insurance policy was a statutory policy, and hence it did not cover the risk of death of or bodily injury to gratuitous passenger. B For the aforesaid reasons, we allow the appeal and set aside the impugned judgment holding that the appellant-insurance company is not liable to pay the compensation awarded to the claimants. The appeal is accordingly allowed. No orders as to costs. C RP. Appeal allowed.