Case: United India Insurance Co. Ltd.,Shimla Vs. Tilak Singh

2. Respondent No.5 Bal Krishan had issued his scooter with thecompany for the period 7.3.1989 to 6.3.1990. For covering liability to pillion, passengers endorsement of I.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 policy covering the scooter of respondent no. 5 did not contain an endorsement of IMT 70.3. On 23rd March, 1989 the scooter was admittedly sold by respondent no.5 to respondent no.1, Tilak Raj. It is also an admitted position that the registration certificate of the scooter was transferred in the name of Tilak Raj but no notice thereto was given by the transferor respondent no.5 to thecompany for transfer of the insurance policy and the insurance certificate in the name of the transferee i.e. respondent no.1. With effect from 1.7.1989 the Motor Vehicle Act, 1939 (hereinafter referred to as the 1939 Act) was repealed and the Motor Vehicle Act, 1988 (hereinafter referred to as the 1988 Act) came into force.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 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.1 before the accident, neither was any intimation of such sale was given, nor was the insurance policy got transferred in favour of respondent no.1. Respondent no. 5 denied his liability on the ground that he had ceased to be the owner of the scooter much 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 respondent no.1. It also held that the claimants (respondents 2 to 4) were entitled to a total compensation of Rs.The tribunal absolved thecompany from liability on the ground that no notice of the transfer of the insured vehicle had been given to thecompany in the manner prescribed by the 1939 Act. Only respondent no.1 was held liable for payment of the compensation determined by the tribunal together with interest and costs.4. Respondent No.1 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 2 to 4 also filedand 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 awarded. Being aggrieved thereby, thecompany is before this Court.

Court's reasoning:
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 would not affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed.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 sectionThus, 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. We find that clause (ii) of the proviso to section 95(1) has been eliminated while drafting section 147 of the 1988 Act. Under(1)(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 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 vehicle in a public place.place."21. In our view, although the observations made in Asha Ranis 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 also. Thus, we must uphold the contention of the appellantinsurance company that it owed no liability towards 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 passengers.