New India Assurance Co. Ltd. vs Neena Goel And Ors.
1991 Latest Caselaw 78 Del

JUDGMENT

S.N. Sapra, J.

1. The only ground of challenge, raised in this appeal, filed by the New India Assurance Co. Ltd., appellant herein, under Section 110-D(1) of the Motor Vehicles Act, 1939, is that the insurance policy in favor of the insured owner had lapsed, because the offending vehicle had already been sold by the owner to a third person, prior to the date of accident and as such, the third party liability of the Insurance Company ended.

2. Notice was issued to respondents to show cause as to why the appeal be not admitted. Respondent Nos. 1 to 9 have filed answer to show cause. The appeal is at the stage of admission.

3. Briefly stated, the facts of the case are:

On September 10, 1971, at about 5.30 p.m. Bishan Lal Goel, now deceased, was going on his motor cycle, bearing No. DHO 2745, from Delhi to Ghaziabad on G.T. Road. A car bearing No. UPD 8851, which was driven rashly, recklessly and negligently by the driver, took a sudden turn for going towards petrol pump and in the process hit the motor cycle, on which the deceased was going. As a result of this, the deceased, along with the motor cycle, fell down and received severe head injuries.

4. After the accident, the driver did not care to stop and sped away with the car from the place of accident. As a result of injuries received by him in the accident, Bishan Lal Goel died in Irwin Hospital on September 28, 1971. The deceased left behind a widow and 8 unfortunate minor children.

5. Respondent Nos. 1 to 9 herein filed a petition under Section 110-A of the Motor Vehicles Act, 1939, thereby claiming a sum of Rs. 5,00,000/- as compensation, with interest at the rate of 12 per cent per annum.

6. One of the pleas taken by the appellant in its written statement was that on the date of accident, i.e., October 10, 1971 (the date of written statement), the new purchaser had not got the insurance policy duly transferred or endorsed in his favor from the appellant, as such, the new purchaser had no insurable interest in the vehicle, because the vehicle had already been transferred by the insured owner to a third person.

7. Respondent No. 11, Joginder' Singh, in his written statement alleged that he was not the owner of the offending vehicle on the date of accident as he had already transferred and sold the same on August 27, 1971 to V.P. Sharma, respondent No. 12 herein.

8. In their written statement, Varinder Sharma and Ganga Saran Sharma, respondent Nos. 12 and 13 herein (respondent Nos. 5 and 6 in the claim petition), stated that the car had been purchased from Joginder Singh on September 15, 1971.

9. One of the issues (issue No. 5) framed by the learned Motor Accident Claims Tribunal was "whether respondent Nos. 2 or 4 to 6 or any of them were the owners of the car No. UPD 8851 at the time of the accident.

10. In his judgment dated July 28, 1988, on issue No. 5, learned Tribunal found that the offending car was owned by Joginder Singh. A sum of Rs. 1,34,400/- was awarded as compensation in favor of claimants.

11. The contention urged before me by Mr. S.K. Paul, appearing for the appellant, was that the sale of the motor vehicle, like movable property, was governed under the provisions of Sale of Goods Act and as such, upon the delivery of possession and passing over the sale consideration, the sale was complete. In the present case, according to Mr. Paul, the third party liability of the appellant, Insurance Company, ended and insurance policy had lapsed prior to the date of accident, as respondent Joginder Singh had sold the offending vehicle to Varinder Sharma and Ganga Saran Sharma, respondent Nos. 12 and 13 herein.

12. The next contention of Mr. Paul was that the learned Tribunal had given the finding on issue No. 5 on the ground that as the offending car stood registered in the name of Joginder Singh on the date of accident, so he was the owner of the vehicle. This error has occurred on account of the fact that the judgment was delivered before the judgment of the Full Bench of this Court in Anand Sarup Sharma v. P.P. Khurana 1989 ACJ 577 (Delhi) : I (1989) ACC 155 (FB) (Delhi).

13. Mr. O.P. Goyal, learned Counsel for respondent Nos. 1 to 9, urged that the appeal filed by the Insurance Company on the ground of transfer of vehicle was not maintainable under the provisions of Motor Vehicles Act, 1939. Moreover, the owner of the vehicle has not filed any appeal. On merits, Mr. Goyal's contention was that there was no legal evidence to support the plea that the offending vehicle had been transferred by the insured owner prior to the date of accident. He has placed reliance upon the judgment in Dharman v. N.C.Srinivasan, .

14. In Anand Sarup Sharma's case (supra), the following question of law was referred to the Full Bench for decision:

Whether the third party liability of the Insurance Company comes to an end on the transfer of vehicle by the insured to someone else?

15. After construing the various provisions of law, including the provisions as contained in Sections 2(19), 22, 31, 94, 96 and 110-B of the Motor Vehicles Act, 1939, the answer of the Full Bench to the question referred was that the change of ownership of a vehicle put an end to the contract of insurer's policy and the third party liability of the Insurance Company comes to an end on the transfer of vehicle by the owner to another person. It was further held:

We have carefully examined the above provisions. In our considered opinion these provisions do not have the effect of postponing the transfer of property, from seller to the buyer till the transferor and transferee make the requisite report and the vehicle is registered in the name of the transferee. Section 22 simply imposes a statutory obligation. It prohibits the driving of any vehicle by any person unless the vehicle is registered. Non-compliance of these provisions does not have the effect of postponing the transfer of property in the vehicle from buyer to seller. To take a contrary view would result in absurd result. If a buyer after purchase does not use the vehicle he is the owner. But if after one year he uses it he ceases to be the owner. It is not and cannot be the law.

Opening words of Section 31 'where the ownership of any motor vehicle registered under the Chapter is transferred' make clear that transfer of ownership has to precede the reports required to be made under Section 31. Section 31 does not prohibit the transfer of a motor vehicle till the reports are made. These provisions only cast an obligation on the transferor and the transferee to report to the registering authority concerned regarding the transfer of the vehicle after the transfer has already taken place. These provisions have nothing to do with the ownership of the vehicle as such. They merely provide for regulations of use of motor vehicles in public places. Their non-compliance attracts penalties.

What is then the effect of the sale of the motor vehicle before the date of accident on the liability of the Insurance Company? Does the insurable interest survive even after the sale?

A contract of motor insurance is a contract whereby the insurer undertakes to indemnify the insured on the happening of an uncertain event by the use of the motor vehicle, subject-matter of the insurance, which makes the insured legally liable to pay compensation. Like any other contract it is basically governed by the rules which form part of the general law of contract. It is also formed by the making of an offer by one party and communicating of the acceptance by the other.

A decree or award, in our opinion, can never be made against a person who has sold the vehicle prior to the date of accident. A driver is always liable if the death or bodily injury is caused due to his rash and negligent driving. This is also the rule that an employer, though guilty of no fault of himself, is liable for damage done by a fault or negligence of his servant acting in the course of his employment on the principle that an owner is vicariously liable for the rash and negligent act of his servant. The buyer cannot, by any stretch of arguments, be termed as the servant of the seller. The seller, therefore, cannot be held liable for the tortious act of the purchaser or his servant, committed during the course of his (purchaser's) employment. The purchaser, in view of the provisions of Section 94, no doubt, is barred by statute from using the vehicle without getting it insured. The consequence of non-compliance of the statutory obligation can lead to two consequences, namely, (i) criminal liability and (ii) tortious liability. However, the seller in no case would be liable either under the tort or under the statute. This non-compliance by the buyer would not make the seller liable for damages. The fact that he continues to be the registered owner would not make any difference so far as his liability to pay compensation under tort or statute is concerned.

The policy effected by the Insurance Company in this case extended to cover also a driver who was driving on the insured's order or with his permission provided he held a driving license. It was argued by the learned Counsel for the appellant that the buyer was a person who was driving the scooter on seller's order or with his permission and, therefore, the claim against the Insurance Company was covered under the extended Clause. The policy, in our view, insures the insured in respect of the use of a particular vehicle, the extending Clause is an additional benefit conferred on the insured. It comes to an end the moment the vehicle is sold. Even otherwise the buyer cannot be held to be using the vehicle on the seller's order or with his permission. The moment the sale is complete the property in the vehicle is vested in the buyer. The seller was left with no right, title or interest in the vehicle. The vehicle becomes the out and out property of the buyer. The buyer, after the sale is complete, uses the vehicle by virtue of his own right and not by virtue of any permission of the seller.

16. As far as this Court is concerned, the proposition of law with regard to the aforesaid provisions, as contained in the Motor Vehicles Act, 1939, stands concluded by the Full Bench in Anand Sarup Sharma v. P.P. Khurana, (supra). In fact, there is no controversy with regard to the legal position. But, the question which arises for determination is whether it has been proved by evidence that the offending car had been transferred by the insured to the third person prior to the date of accident. Though it is immaterial for this purpose whether on the date of accident the vehicle stood registered in the name of the insured.

17. In support of his contentions regarding the transfer of the offending car prior to the date of accident, Mr. Paul has drawn my attention to the following evidence as was led before the learned Tribunal:

(i) Statement made by Ganga Saran Sharma, respondent No. 13, on October 21, 1975, before the Additional Chief Metropolitan Magistrate, which is Exh. RW 6/1;

(ii) The letter, Exh. PW 5/3 written by Ganga Saran Sharma on August 8, 1972, in reply to the notice issued under Section 88 of the Motor Vehicles Act;

(iii) Statement Exh. PW 7/1, made by the driver, namely, Gopi Nath, as accused before the Additional Chief Metropolitan Magistrate;

(iv) Statements made by Joginder Singh, RW 4/1, Charanjit Singh, RW 4/3, before the learned Tribunal;

(v) Delivery receipt Exh. RW 3/A.

18. Before considering the evidence, it may be pointed out that Bishan Lal Goel met with a fatal accident on September 10, 1971, leaving behind his widow and 8 minor children. The judgment, thereby awarding a sum of Rs. 1,34,400/-, was passed on August 28, 1988. Till today, not a single rupee has been paid to the claimants. In other words, for about 20 years, the widow and the children have been involved in the litigation. Therefore, it has become necessary to find out whether trustworthy evidence with regard to the transfer of vehicle has been led before the Tribunal or not.

19. I also want to put a note of caution. There can be cases, and the possibility of such cases cannot be ruled out, that, with a view to avoid the criminal liability, the owner who continues to be the registered owner of the offending vehicle on the date of accident, can manage the transfer of the vehicle to a third person, prior to the date of accident. Hence, the evidence with regard to the transfer of vehicle produced before the learned Tribunal, in such type of cases, should be closely scrutinised by the Courts.

20. In the present case, after hitting the deceased on September 10, 1971, the driver of the offending car sped away with the car. One witness tried to follow him, but could only note down the registered number. It is on record that the driver of the offending car did not surrender himself after the accident. A notice under Section 88 of the Motor Vehicles Act, 1939, was issued to Ganga Sharan Sharma, in August 1972, by the Investigating Officer. In reply to the notice, which is Exh. PW/3, Ganga Saran Sharma informed the Investigating Officer that the car was in the workshop for repairs and that he would produce the same on August 8, 1972, in the accident office, Civil Lines, Delhi. He further pointed out in reply that on September 10, 1971, the car was being driven by Gopi Nath, aged 30 years. The address of the driver was also given Ganga Saran Sharma further stated that he would make enquiries and on August 20, 1972, or earlier, if possible, he would produce Gopi Nath in the accident office, it shows that for about one year, the driver of the offending car was not arrested and thereafter, he was produced by Ganga Saran Sharma.

21. In the beginning of the trial before the Additional Chief Metropolitan Magistrate, Delhi, Gopi Nath, the accused therein, pleaded not guilty. On October 21, 1975, Ganga Saran Sharma, who had purchased the car from the insured/registered owner, namely, Joginder Singh, appeared as a witness, PW 4, before the Additional Chief Metropolitan Magistrate and made the statement to the effect that he was the owner of the car and Gopi Nath, accused present in Court, was his driver and the car was being driven by him on September 10, 1971.

22. After long trial, and on April 7, 1977, accused Gopi Nath made a statement before the Additional Chief Magistrate, thereby confessing that he was driving the car on September 10, 1971 .rashly and negligently, and on account of this the accident took place, resulting in the death of Bishan Lal.

23. Relying upon the evidence on record statement of accused and other circumstances of the case, vide judgment dated April 7, 1977, learned Additional Chief Metropolitan Magistrate, Shahdara-Delhi, convicted Gopi Nath under Section 304-A of the Indian Penal Code, Vide its order dated April 11, 1977, the learned Additional Chief Metropolitan Magistrate, in the circumstances of the case, decided to give a chance to the accused to reform himself and instead of sentencing him at once, accused was directed to be released on furnishing one surety of Rs. 5,000/- and personal bond of the like amount, for keeping peace and good behavior for a period of 1-1/2 years. It was further directed that accused would receive sentence whenever called upon, during the said period.

24. In his written statement (which was filed jointly with his son Virinder Sharma) filed on February 19, 1974, before the Tribunal, Ganga Saran Sharma alleged that he had purchased the car in question from Joginder Singh on September 15, 1971. In other words, simultaneously, Ganga Saran Sharma was taking extremely contradictory stand. Before the A.C.M.M., he made a statement on October 21, 1975, that he was the owner of the offending car and that the car was being driven by his driver, accused Gopi Nath, on September 10, 1971. But, in the written statement dated December 7, 1975, he took the stand that the car had been purchased on September 15, 1971. Again Ganga Saran Sharma, as RW 6, made a statement on oath before the learned Tribunal on November 12, 1982, that he had purchased the car on September 15, 1971, and had sent his son, namely, Virender Sharma, for taking delivery on the same date. He further deposed that only on September 15, 1972, the sale letter, which had been written by Joginder Singh, was delivered to the Regional Transport Office, at Meerut. He also stated that Gopi Nath was his driver, only for one month, with effect from September 15, 1971.

25. In my view, the versions of transfer of car, as stated above, are surrounded by suspicious circumstances. Why Ganga Saran Sharma was taking one stand in the criminal trial and another contradictory stand before the learned Tribunal. It is intriguing.

26. Joginder Singh, RW 4/1, deposed before the Motor Accidents Claims Tribunal that he had sold the offending car to one V.P. Sharma, on August 27, 1971. All the documents relating to the vehicle had been given to V.P. Sharma by him. In his cross-examination, this witness deposed that he had given an application to the Regional Transport Office, Meerut, regarding transfer of the car, 2 or 3 days after the sale of the vehicle. The vehicle was, however, according to him, sold on August 27, 1971 and he received a sum of Rs. 14,000/-. He denied that he sold the vehicle to Ganga Saran Sharma. Charanjit Singh, RW4/ 3, who is brother of Joginder Singh, deposed before the Tribunal that the vehicle in question was sold to V.P. Sharma by his brother and V.P. Sharma executed a delivery receipt Exh. RW 4/3-A. This receipt was signed by him as a witness.

27. Rishi Kumar, RW 4/2, an official in the Regional Transport Office, Meerut, stated on oath that on the basis of the Transfer letter, issued by Joginder Singh, the then registered owner of the car, the car was registered on September 15, 1971, in the name of Ganga Saran Sharma. This sale letter, according to this witness, was filed in the Regional Transport Office, Meerut, on September 15, 1971. Only a true copy of the sale letter, which is marked A, was brought by this witness. This true copy is not even a certified true copy of the original sale letter and, according to this witness, the original sale letter was not traceable.

28. It is not disputed that the car was registered in the name of Ganga Saran Sharma, on September 15, 1971. This could be done, only on the basis of a letter, may be a sale letter, written by the previous registered owner. On the one hand, according to Joginder Singh he had sold the car to V.P. Sharma and the sale letter was given to him two or three days after the date of delivery of the car. But, the car was registered in the name of Ganga Saran Sharma in the Regional Transport Office, Meerut. Thus, there are material contradictions in the statements of these witnesses before the Tribunal. These statements are against the record maintained by the Regional Transport Authority, Meerut. The statement of Charanjit Singh also loses its credibility in view of these material contradictions. The delivery receipt, Exh. RW 4/3-A, on which great emphasis was laid by Mr. Paul, does not support the case of the appellant with regard to the transfer. At the most, this receipt was signed by one V.P. Sharma. Admittedly, the vehicle could not be registered in the name of Ganga Saran Sharma on the basis of this delivery receipt, as it is not signed by Joginder Singh.

29. In my view, these witnesses have been intentionally suppressing the material facts and truth from the Court.

30. In view of this, the evidence produced before the Tribunal does not substantiate the plea of transfer of the offending vehicle prior to the date of accident. This is not a fit case for admission.

31. Under the facts and circumstances, as mentioned above, the appeal being F.A.O. No. 182 of 1988 is dismissed in liming with costs. The costs shall be payable to claimant/ respondent No. 1 to 9 herein.

32. In case the entire amount with interest awarded by the Tribunal has been deposited in Court, then the claimants shall be entitled to withdraw the same. In case the amount has not been deposited, then the appellant shall deposit the same, with up to date interest within 4 weeks from today and claimants shall be at liberty to withdraw the same, in accordance with the award. Stay granted on February 28, 1989, in CM. No 2253 of 1988 stands vacated.