S.157 MV Act | Transfer Of Vehicle Results In Deemed Transfer Of Its Insurance Policy Including All Obligations: Kerala High Court

The Kerala High Court on Thursday held that when transfer of a vehicle has been effected following the procedure in Motor Vehicles Act, 1988, the insurance policy taken out in respect of the vehicle is also deemed to have been transferred in favour of the transferee without any further process.Justice Ziyad Rahman A.A., in this light further found that, "Though sub-section (2) of Section 157 provides for intimation of such transfer, since the statute is silent as to the consequence of failure in doing so, it can only be treated as directory in nature and not mandatory". The Court observed that this position was also found to be fortified in Rule 144 of the Central Motor Vehicles Rules, formulated under the provisions of the Motor Vehicles Act, 1988.The Court further added in this light, while finding that the deemed transfer of policy would also contemplate transfer of all the obligations therein, that "the provisions relating to the compensation contained in the Motor Vehicles Act are part of welfare legislation intended to ensure that a victim in a motor accident is compensated adequately. Therefore, exonerating the Insurance Company from the liability to meet such a liability would be against the spirit of the Motor Vehicles Act, particularly when the claim at the instance of the pillion rider is specifically included in the coverage of package policy by IRDA....and it is a claim which can be adjudicated under the provisions of the Act". The Case:A petition was filed before the Motor Accidents Claims Tribunal, Pala, by the petitioners 1-5 herein, seeking compensation for the death of one Rajumon, who had died in a motor accident on November 24, 2013. It was averred by the petitioners that at the time of the accident, the deceased had been travelling as a pillion rider on the motorcycle, which was being ridden by the 1st respondent (Shalet Jose). The petitioners averred that Jose was the owner and rider of the motorcycle, and that the said vehicle had been registered with Reliance General Insurance Co Ltd (3rd respondent herein), at the time, in the name of Sajeev Kumar E.K. (the 2nd respondent herein). The petitioners, accordingly, claimed a compensation of Rs. 60 Lakhs. The 1st respondent conceded that he was the registered owner of the said vehicle, but contended that the vehicle was validly insured with the 3rd respondent at the relevant time, and the amount accordingly, had to be deposited by the latter. The 2nd respondent on his part, argued that he had sold the vehicle in question to the 1st respondent and the transfer was effected on October 17, 2013, while the accident had occurred on November 24, 2013, and he was thereby exempted from paying any compensation. The 3rd respondent insurance company on its part, although acknowledged the existence of a valid policy, however, contended that on the date of the accident, the vehicle stood transferred to the 1st respondent, whereas the policy was issued in the name of the 2nd respondent, who was the previous owner. It was contended by the 3rd respondent that by virtue of Section 157(2) of the Motor Vehicles Act, 1988, the transferee/ 1st respondent had an obligation to intimate the Insurance Company as to the said transfer within a period of 14 days from the date of such transfer, and since no such intimation had been given herein, no liability could be fixed on the insurance company. The Tribunal herein, had passed an award of Rs.28,77,000/- as compensation to the petitioners, which was directed to be deposited by the 3rd respondent-Insurance Company along with interest at the rate of 9% per annum from the date of petition. The contentions of the insurance company as regards liability was also negated since in the opinion of the Tribunal, the policy issued was a comprehensive one which took in the liability of the pillion rider also. The instant appeals were thus, preferred against the award passed by the Tribunal, by the Insurance company on the one hand, challenging the award that they weren't liable to provide compensation in view of Section 157(2) Motor Vehicles Act, and the petitioners 1-5 in the Court below seeking enhancement of compensation. Findings of the Appellate Court:The Court in this case perused Section 157 and the observation made by a Division Bench of the High Court in Sayed v. Gopalakrishnan & Ors (2016), wherein it had been held that, once the vehicle was transferred, there would be a deemed transfer of policy of insurance in the name of the transferee and the Insurance Company is liable to indemnify the insured or even the transferee by virtue of the deeming provision. It had further been observed therein that the Insurance Company could be exonerated from the liability only if they establish the violation of policy conditions or the defences as provided under Section 149(2) of the Motor Vehicles Act, 1988 and not otherwise. Although the Court noted that the said decision had been rendered in respect of a matter which arose...

S.157 MV Act | Transfer Of Vehicle Results In Deemed Transfer Of Its Insurance Policy Including All Obligations: Kerala High Court

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