Case: Firdaus Vs. Oriental Insurance Co. Ltd.

a position to pay compensation or damages to the injured or to the dependants of the deceased and in that event the claimants could not get the damages. To meet such a situation, various legislations were enacted in England. For the first time, Third Parties (Rights Against Insurers) Act, 1930 was enacted, the provisions of which find place in Section 97 of the Act which gave to third party right to sue directly against the insurer. Subsequently, the Road Traffic Act, 1930 was enacted which provided for compulsory insurance of motor vehicles. The provisions of the said Act was engrafted in Section 95 of the Act. Under Section 38 of English Act, 1930, certain conditions of insurance policy were made ineffective so far as the third parties were concerned. The object behind the aforesaid legislation was that third party right should not suffer on account of failure to comply with those terms of the insurance policy. Section 94 of the Act gives protection to third party in respect of death or bodily injury or damage to the property while using the vehicle in public place and, therefore, the insurance of vehicle had been made compulsory under Section 94 read with Section 95 of the Act.4. A perusal of Sections 94 and 95 would further show that the said provisions do not make compulsory insurance to the vehicle or to the owners. Thus, it is manifest that compulsory insurance is for the benefit of third parties. The scheme of the Act shows that an insurance policy can cover three kinds of risk, i.e. owner of the vehicle; property (vehicle) and third party. The liability of the owner to have compulsory insurance is only in regard to the third party and not to the property. Section 95(5) of the Act runs as follows:"95. (5) Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of person specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of person."5. The aforesaid provision shows that it was intended to cover two legal objectives. Firstly, that no one who was not a party to a contract would bring an action on a contract; and secondly, that a person who has no interest in the subject matter of an insurance can claim the benefit of an insurance. Thus, once the vehicle is insured, the owner as well as any other person can use the vehicle with the consent of the owner. Section 94 does not provide that any person who will use the vehicle shall insure the vehicle in respect of his separate use.6. On an analysis of Section 94 and 95, we further find that there are two third parties when a vehicle is transferred by the owner to a purchaser. The purchaser is one of the third parties to the contract and other third party is for whose benefit the vehicle was insured. So far, the transferee who is the third party in the contract, cannot get any personal benefit under the policy unless there is a compliance of the provisions of the Act. However, so far as third party injured or victim is concerned, he can enforce liability undertaken by the insurer.7. For the aforesaid reasons, we hold that whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of insurer does not cease so far as the third party/victim is concerned, even if the owner or purchaser does not give any intimation as required under the provisions of the Act. 14. In Rikhi Ram Case (Supra), although this Court considered the provisions of Motor Vehicles Act, 1939, but the Motor Vehicles Act, 1988 also contains the similar provisions under Section 146, 147 and 157 of the Act. Hence, the ratio of judgment in Rikhi Ram case is fully applicable in the facts of the present case also. 15. Section 157 of the Motor Vehicles Act, 1988 clinches the issue. Section 157 sub-section(1) contains the deeming provision that "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 this transfer." Sub-section(1), Section 157 which is relevant is quoted as below: " 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]." 16. In view of the above, it is not necessary for us to give any concluded finding regarding ownership of the vehicle No.HR 2 G 1875 on the date of accident for the purpose of this case. In either of the eventuality, i.e. whether defendant no.1 was the owner of the vehicle on the date of the accident, or defendant no.4 was the owner of the vehicle, the liability of Oriental Insurance Co. Ltd. continues and Workmen compensation Commissioner has rightly fastened the liability on the Insurance Company. The remand made by the High court to find out as to whether Parvez Khan was an employee of the defendant no.1 or not, was unnecessary.17. We are thus of the opinion that the High court committed an error in setting aside the order of Workmen Compensation Commissioner.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]There is no dispute that defendant no.1 was the owner of the vehicle who got it insured with the Oriental Insurance Co. Ltd. The Workmen Compensation Commissioner has also observed that defendant no.1 failed to produce the Registration Certificate of the vehicle and since the name of defendant no.1 is in the insurance policy as owner of the vehicle, which points out that the vehicle is in the name of defendant no.1 till date. Before the High Court also, no material has been placed on the record which proved that vehicle stood in the name of defendant no.4. The Workmen Compensation Commissioner had come to the conclusion that defendant no.1 still continues to the owner of the vehicle and defendant No.4 has only looking after the vehicle. The High court having not returned any finding that vehicle was transferred to defendant no.4, ought not to have set aside the award of the Workmen Compensation Commissioner. The reliance on the mere submission of the claimant that his son was an employee of Mohd. Anisdefendant no.4 has no significance. Abdul Khalid the claimant was not the person who has knowledge of ownership of the truck except what he was told by his deceased son. When the Registration Certificate of the vehicle was not produced by defendant no.1 the High court ought to have drawn the adverse inference which was drawn by Workmen Compensation Commissioner against defendant no.1 regarding the ownership of the vehicle.13. Even if it is assumed for the sake of arguments that vehicle was transferred from defendant no.1 to defendant no.4, there will be no consequence with regard to liability of Oriental Insurance Co. Ltd. to pay compensation.In Rikhi Ram Case (Supra), although this Court considered the provisions of Motor Vehicles Act, 1939, but the Motor Vehicles Act, 1988 also contains the similar provisions under Section 146, 147 and 157 of the Act. Hence, the ratio of judgment in Rikhi Ram case is fully applicable in the facts of the present case also.In view of the above, it is not necessary for us to give any concluded finding regarding ownership of the vehicle No.HR 2 G 1875 on the date of accident for the purpose of this case. In either of the eventuality, i.e. whether defendant no.1 was the owner of the vehicle on the date of the accident, or defendant no.4 was the owner of the vehicle, the liability of Oriental Insurance Co. Ltd. continues and Workmen compensation Commissioner has rightly fastened the liability on the Insurance Company. The remand made by the High court to find out as to whether Parvez Khan was an employee of the defendant no.1 or not, was unnecessary.17. We are thus of the opinion that the High court committed an error in setting aside the order of Workmen Compensation Commissioner.