IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH F.A.O. No. 172 of 1988 Date of Decision : May 07, 2008 Gobind Ram ....Appellant Versus Umed Singh and others .....Respondents CORAM : HON’BLE MR. JUSTICE T.P.S. MANN Present: Mr. S.C. Pathela, Advocate for the appellant. Mr. Ravinder Arora, Advocate for respondent No. 3. T.P.S. MANN, J. Petition filed by Umed Singh-respondent under Section 110-A of the Motor Vehicles Act, 1939 (hereinafter referred to as ‘the Act’) for the grant of compensation of Rs. 75,000/- on account of receiving injuries suffered by him in a road accident, was partly accepted and he was granted the compensation of Rs. 16,000/- along with costs and interest at the rate of 12% per annum, to be paid by Kewal Singh-respondent No. 2 and Gobind Ram-appellant, who were driver and owner of the offending vehicle, jointly and severally. Aggrieved of the same, the owner of the offending vehicle has filed the present appeal. F.A.O. No. 172 of 1988 The only controversy in the present case is as to who has to pay the amount of compensation. Whether it was to be paid by the owner and driver of the offending vehicle or by the Insurance Company with which the vehicle in question was insured? The offending truck bearing registration No. RJK-7006 was owned by one Mohinder Singh. It stood insured with respondent- Insurance Company for third party risks with effect from 8.8.1985 upto 7.8.1986. The accident in question took place on 11.1.1986, which was admittedly within the currency of the insurance policy. However, it was the case of the appellant that he had purchased the offending truck from Mohinder Singh. However, he did not apply for transfer of the Insurance Certificate in his name. After relying on the judgments in New India Assurance Co. Ltd. and others Vs. E.K. Muhammed and others 1985 ACJ 109 and Precto Pipe Company and another Vs. National Insurance Company Ltd. and others 1984 ACJ 218, learned Tribunal held that Insurance Company was not at all liable to pay anything by way of compensation to the claimant. Only the driver and the owner, namely, Kewal Singh and Gobind Ram, were held liable for the same. Learned counsel for the appellant submitted that the appellant could not be held liable to pay the compensation as the vehicle stood duly insured for third party risks. -2- F.A.O. No. 172 of 1988 Learned counsel for respondent No. 3 submitted that the vehicle in question had been purchased by Gobind Ram much before the issuance of the insurance policy. In this regard, he has referred to the statement of Gobind Ram, who appeared as RW1, wherein he stated that he had purchased the truck about a year before 11.1.1986. From the aforementioned statement of Gobind Ram, it cannot be conclusively said that he had purchased the truck before 8.8.1985. The period of about a year mentioned by him was only by rough estimation. Apart from that, no other evidence has been brought by the Insurance Company on the record from which it can be said that the appellant had purchased the truck even before the issuance of the insurance policy. It is then submitted by learned counsel for the Insurance Company that the registered owner, who was the person insured, had not been impleaded as a respondent in the claim petition, therefore, no order could be passed against the Insurance Company. This objection is too hyper-technical and raised by the Insurance Company just to avoid the liability. On the date of the accident, for all intents and purposes, it was Gobind Ram, who was owner of the offending vehicle. Though, the registration of the vehicle still stood in the name of Mohinder Singh, yet this fact could not be in the notice of the claimant, as the appellant was the owner and he had obtained a power of attorney from Mohinder Singh about having purchased the truck from -3- F.A.O. No. 172 of 1988 him. He must be the one running around after the accident in question, including filing of an application for getting the truck released on Superdari. That was sufficient indication for the claimant to describe appellant Gobind Ram as the owner of the vehicle instead of Mohinder Singh, who was still the registered owner. It is then submitted that after purchasing the truck from Mohinder Singh, the appellant did not send any intimation to the Insurance Company and, therefore, in view of the provisions of Section 113-A of the Act, the liability of the insurer ceased to exist. The failure of the registered owner to notify the insurer of the fact of transfer of ownership of the insured vehicle does not absolve the insurer of the liability, especially towards third party. It is not the transfer of the vehicle but the accident which furnishes the cause of action for the filing of an application before the Tribunal. In G. Govindan Vs. New India Assurance Co. Ltd. 1999(2) RCR (Civil) 489, the Hon’ble Supreme Court held that on transfer of vehicle, there was no automatic transfer of insurance policy qua other claims than third party claims. Transferee, who did not follow the procedure of intimation and getting the policy transferred was not entitled to claim for his personal damages and to the vehicle from the insurer. However, the third party interest remained protected. -4- F.A.O. No. 172 of 1988 In New Asiatic Insurance Co. Ltd. Vs. Pessumal Dhanamal Aswani and others AIR 1964 SC 1736, the Court, after noticing the compulsory nature of insurance against third party, observed that once the company had undertaken liability to third parties, the third parties’ right to recover any amount under or by virtue of the provisions of the Act was not affected by any condition in the policy. In United India Insurance Co. Ltd. Shimla Vs. Tilak Singh and others 2006(3) RCR (Civil) 168, the Hon’ble Supreme Court reiterated that the failure of the transferor to notify the insurer of the fact of transfer of ownership of the ensured vehicle was no different, whether under Section 103-A of the 1939 Act or under Section 157 of the Motor Vehicles Act, 1988 in so far as the liability towards a third party was concerned. In State and others Vs. Subhash Chand and others 2007 (4) RCR (Civil) 190, it was held that Certificate of insurance was deemed to have been transferred in favour of the person to whom the vehicle is transferred with effect from the date of its transfer. The deemed transfer was in respect of third party claim and, therefore, Insurance Company could not be absolved from the grant of compensation. -5- F.A.O. No. 172 of 1988 In view of the aforementioned, the finding arrived at by the learned Tribunal in absolving the Insurance Company of its liability to pay the amount of compensation cannot be sustained. The said finding is, accordingly, reversed. Resultantly, the appeal is allowed. The appellant, and for that matter, even Kewal Singh respondent are absolved of the liability to pay anything by way of compensation. Instead, the liability to pay the compensation is of Insurance Company. In case the amount of compensation along with costs and interest has already been paid by the appellant to the claimant, the same shall be receivable by him from the Insurance Company along with interest at the rate of 6% per annum from the date of payment till the time of realization. No costs. ( T.P.S. MANN ) May 07, 2008 JUDGE satish Whether to be referred to the Reporters : YES / NO -6-