An insurer is liable for the accident of vehicle, even if ‘No Objection’ certificate’ was not issued by the Financial body

Pranjal Sharma | Symbiosis Law School, Hyderabad | 21st June 2020

SURENDRA KUMAR BHILAWE VERSUS THE NEW INDIA ASSURANCE COMPANY LIMITED

Facts

1. The current case is a civil appeal against the judgment and order passed by the national consumer disputes redressal commission of New Delhi, on the 23rd of February 2015.
2. The appellant owned an Ashok Leyland truck covered by the policy of insurance issued by the respondent effective from 2nd of June of 2011 to the 1st of June 2012.
3. On 11th of November 2011, the truck was loaded with Ammonia Nitrate at Raipur to travel to Dhanbad and was driven by Driver, Rajendra Singh.
4. On 13th of November 2011, the truck met an accident near the Bhakuwa Toil Police Station, Gulma in Jharkhand.
5. On the 25th November, the Appellant lodged a claim with the Respondent through one Mohammad Illiyas Ansari. On receiving the information, the respondent appointed an independent Surveyor and loss Assessor, who conducted a spot survey and submitted a report on the 29th of November 2011.
6. The respondent, thereafter, appointed one Shri Gyan Chandra, Valuer, Surveyor, Loss Assessor and Investigator to conduct the final survey who submitted a report dated 25.1.2012 assessing the loss recoverable from the insurer at Rs.4,93,500/- after deduction of salvage value.
7. The respondent later issued a show-cause notice to the appellant to determine why the appellant should not be repudiated, as he had sold the truck to Mohammad Iliyas Ansari on 11th of April 2008 but the Appellant continued to be the registered owner of the said truck, on the date of the accident.
8. It was determined that Appellant purchased the truck with finance from ICICI bank and stood Hypothecated to ICICI bank and it cannot be transferred without the bank issuing a ‘no objection’, which had not been issued to the respondent. The Appellant had also not cleared to bank dues till the date of the accident.
9. The appellant had duly replied to the show cause notice and sent a legal notice to the respondent to which he received no reply. The respondent disputed the claim on the grounds that the show cause was submitted by Mohammad Iliyas Ansari and as they also delayed in filing the police complaint and reporting the accident to the respondent.
10. Aggrieved by the action on the respondent the appellant approached the district court. On the grounds that,
11. Even when that sale agreement with Mohammad Iliyas Ansari was dated 11.4.2008, the Appellant continued to pay instalments towards repayment of the loan obtained from ICICI Bank.
12. The Appellant had produced documents to show that he had paid the premium for the insurance policy after 11.4.2008.
13. The respondent had not produced any materials to show said that the insurance premium had not been paid by the Appellant but had been paid by Mohammad Iliyas Ansari.
14. The said truck was registered in the name of the Appellant and the permit for operating the said truck for the carriage of goods also stood in his name.
15. Mohammad Iliyas Ansari had not objected to releasing of compensation to the Appellant for damage caused to the vehicle, by reason of the accident.
16. The respondent had not established that Driver, Rajendra Singh was an employee of Mohammad Iliyas Ansari.

The district court ordered the respondent to pay Rs.4,93,500/- to the Appellant within a month along with interest @ 6% per annum from the date of filing of the complaint which is 6^th October 2012 and further asked the respondent to pay extra Rs. 5000 for the mental agony and 2000 for the cost of litigation.

1. The respondent applied to state commission, which was dismissed, then he further challenged the order of the state commission in the national commission.
2. The National commission allowed the revision petition and set aside the orders of the district forum and state commission on the grounds that the appellant had sold the truck to Mohammad Illiyas Ansari for a consideration of 1,40,000 and that he made a delay in filing the police complaint and the claim for reimbursement.

Issues

Whether transfer of possession is enough requirement to determine even the transfer of ownership of the Vehicle.

Judgement

The hon’ble judges observed that the national commission overlooked the definition of ‘owner’ according to the Section 2(30) of the Motor Vehicles Act, 1988 which is the person in whose name the motor vehicle stands registered. The court also stated that it is necessary to note the difference between definition of owner in Section 20(30) of the Motor Vehicles Act of 1988 and the definition of owner in the Motor Vehicles Act of the 1939 which has repealed and replaced the definition of owner from the person in possession of the motor vehicle to the person under whose name the vehicle has been registered.

The court determined that it is difficult to accept that a person who has transferred the ownership of the truck on receipt of consideration does not apply for transfer of registration or transfer of permit, and continue to incur the risks and liabilities of ownership of the vehicle under the provisions of law.

The court also held that the FIR was lodged within three days of the accident and as it was a major accident a slight delay on the part of the traumatized driver to lodge an FIR, cannot defeat the legitimate claim of the insurance.

The court held that absence of ‘No Objection’ from the financier bank although it was imperative for transfer makes the contract unlawful and void under section 10 of the Contract Act, 1872.

In view of the definition of ‘owner’ in Section 2(30) of the Motor Vehicles Act, the Appellant remained the owner of the said truck on the date of the accident and the Insurer could not have avoided its liability for the losses suffered by the owner on the ground of transfer of ownership to Mohammad Iliyas Ansari claim of the insured and as the insurance has not been rejected on the ground of the same not being covered by the policy of insurance, but on the ground of purported transfer to a third party by entering into a sale agreement it nullifies the ground and makes the judgement of the National commission Unsustainable.

The court ordered the respondent to pat the Appellant a sum of Rs.4,93,500/- as directed by the District Forum with the interest of 9% per annum from the date of claim till the date of payment, a sum of Rs.5,000/- for mental agony and the composite sum of Rs.1,00,000/- the agony and cost caused by court dues and the amounts is to be paid to the Appellant within six weeks from date of the judgment and order