Compulsory Risks In Insurance Automatically Transferred To Transferee Of Vehicle Even When Certificate Of Insurance Not Transferred: Jammu & Kashmir High Court

The Jammu and Kashmir and Ladakh High Court has recently ruled that whoever may be the actual owner of the motor vehicle at the time of the accident, compulsory risks covered under the policy of insurance get automatically transferred to the transferee of a vehicle even though certificate of insurance has not been transferred in his favour.

The observations were made by Justice Sanjay Dhar while hearing an appeal filed by the insurance company against the award of Commissioner under Employee's Compensation Act whereby granting an amount of Rs. 7,60,651/- as compensation to claimants/respondents No.1 to 3, on account of death of deceased.

In the instant case the driver of the vehicle was killed by his conductor after which a claim for compensation came to be filed before the Labour commissioner. During the proceedings it had come to fore that vehicle in question was insured with the Insurance Co with effect from January 30th 2005 to January 29th 2006 in the name of Sutanter Singh respondent No. 5.

Respondent-Sutanter Singh in his reply to the claim petition had submitted that he had sold the vehicle in question to one Khemraj who got the same transferred in the name of his wife-Sunita Kumari. It was further submitted by the said respondent that the certificate of insurance of the vehicle has not been transferred from his name.

In their appeal the appellants contended that since the policy of insurance was not transferred in the name of respondent-Sunita Kumari, the employer of the deceased as such, the insurance company had no privity of contract with the employer, consequently it was not liable to satisfy the amount of the impugned award.

The Appellants submitted that since the deceased was not the employee of the insured as such, the insurance company cannot be held liable to satisfy the award.

The insurance company further argued that it had no statutory and legal obligation to indemnify the respondent-Sunita Kumari, with whom it was claimed that the deceased was having a relationship of employment since the deceased was not in the employment of insured-Sutanter Singh.

After considering the rival contentions Justice Dhar observed that it is an admitted fact that the policy of insurance in respect of the vehicle in question had not been transferred from the name of insured Sutanter Singh to the name of Sunita Kumari. It is also an admitted fact that the deceased was an employee of respondent No. 4-Sunita Kumari and not the employee of respondent No. 5-Sutanter Singh, it recorded.

Explaining the law on the subject the bench observed that section 157 of the Motor Vehicles Act is amply clear that when a person who is holding a certificate of insurance in accordance with provisions of Chapter XI of the Motor Vehicles Act, 1988, transfer of the ownership of the said vehicle to another person, the certificate of insurance and the policy described in the certificate is deemed to have been transferred in favour of the person to whom the motor vehicle has been transferred with effect from date of its transfer.

Elaborating further on the matter Justice Dhar explained that it is only the certificate of insurance which has been issued in accordance with Chapter XI of the Motor Vehicles Act which gets automatically transferred in the name of transferee of the vehicle, meaning thereby that a certificate of insurance to the extent it covers compulsory risks as per requirement laid down in section 147 of the Motor Vehicles Act which falls in Chapter XI of the said Act, would get transferred.

Elucidating on the compulsory risks prescribed under sec 147 MV Act the court said the compulsory policy requirements include risks (i) against any liability which may be incurred in respect of death of or bodily injury to any person including owner of the goods or his authorized representative carried in the motor vehicle or damage to any property of a third party. (ii) death of or bodily injury to any passenger of a transport vehicle, except gratuitous passengers of goods vehicle. (iii) a liability arising under the Workmen‟s Compensation Act in respect of death or bodily injury to any employee.

"Therefore, the certificate of insurance to the extent it covers compulsory risks as contemplated in section 147 of the Motor Vehicles Act would get automatically transferred to the transferee upon transfer of a vehicle by the original insurer",the bench pointed.

In view of the legal position, the court observed that it is immaterial whether the deceased was an employee of respondent Sunita Kumari or Sutanter Singh, so far as the liability of the appellant insurance company to satisfy the impugned award is concerned. Once the vehicle in question was transferred by Sutanter Singh to respondent-Sunita Kumari, the compulsory risks covered under the policy of insurance purchased by Sutanter Singh would get automatically transferred to respondent-Sunita Kumari from the date she became the owner of the vehicle,Justice Dhar underscored.

Accordingly the bench found the petition devoid of any merit and dismissed the same.

Case Title: New India Assurance Co. Ltd Vs Anita Devi and others

Citation: 2023 LiveLaw (JKL) 54

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