BEFORE THE CONSUMER DISPUTES REDRESSAL COMMISSION, RAJASTHAN, JAIPUR


APPEAL NO.2134/2008


National Insurance Co. Ltd.

Regional Office, Jeevan Nidhi,

Bhawani Singh Road, Jaipur.

through its Manager

Opposite party-appellant

Vs.


1. Sh. Bilal Mohammad,

r/o Kevda ki Naal, Teh. Salumber,

Distt. Udaipur.

2. Sh. Suresh Jain,

r/o Punarwas Colony,

Sagwada, Distt. Dungarpur.

Complainants-respondents


Date of judgment 16.4.09


Before:

Mr.Justice Sunil Kumar Garg-President

Mrs.Vimla Sethia-Member


Mr. Dinesh Kala counsel for the appellants

Mr.S.N.S.C. Jhaweria counsel for the respondents


JUDGMENT

BY THE STATE COMMISSION ( PER HON. MR.JUSTICE SUNIL KUMAR GARG, PRESIDENT)

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This appeal has been filed by the appellant which were opposite party before the District Forum against order dated 19.9.08 passed by the District Forum, Udaipur in complaint no.42/2004 by which the complaint out of two complainants, complaint of complainant respondent no.2 was allowed against the appellants in the manner that the appellants were directed to pay a sum of Rs.54,300/-, the amount of the insurance policy alongwith interest @ 9% p.a. w.e.f. 4.3.04 and further to pay Rs. 1000/- as costs of litigation but the complaint of complainant respondent no.1 against the appellants was rejected.


2. It arises in the following circumstances-


That the complainants respondents both have filed a joint complaint against the appellants Insurance Company before the District Forum, Udaipur on 4.3.04 inter alia stating that a vehicle bearing no. RJ 12 C 0964 was in the name of Suresh complainant respondent no.2. It was further stated in the complaint that the said vehicle was sold by complainant respondent no.2 to complainant respondent no.1 and the vehicle in question was transferred in the name of complainant respondent no.1 on 29.1.03 in the registration certificate. It was further stated in the complaint that the vehicle in question was got insured by the complainant respondent no.2 from the appellants Insurance Co. for the period from 23.7.02 to 22.7.03 for a sum of Rs. 1,25,000/- . It was further stated in the complaint that the vehicle in question had met with an accident on 17.6.03 as a result of which the vehicle in question was damaged. It was further stated that a claim was preferred by the complainants respondents before the office of the

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appellants claiming Rs. 1 lac as complainant respondent no.1 had spent that amount in getting the repair of the vehicle but the claim was not settled by the appellants Insurance Co. and thereafter complaint was filed by both of them jointly against the Insurance Company.


A reply was filed by the appellants before the District Forum,Udaipur on 3.6.06 and in the reply it was stated that

no doubt the vehicle was registered on 29.1.03 in the name of complainant respondent no.1 but that was done after suppressing material facts. In the reply it was admitted that the vehicle in question was insured in the name of complainant respondent no.2 for the period 23.7.02 to 22.7.03. It was also admitted in the reply that a surveyor was appointed by the appellants. It was further stated in the reply that since on the date of accident i.e. on 17.6.03 the vehicle was sold to complainant respondent no.1, therefore, on the date of accident complainant respondent no.2 could not be said to have any interest in the vehicle as after accepting the consideration he had sold the vehicle to the complainant respondent no.1 and thus he was not the owner of the vehicle on the date of accident and further after the transfer of the vehicle and after registration of the vehicle in the name of complainant respondent no.1, the complainant respondent no.2 had ceased to be the owner of the vehicle as well as he had lost his right to be insured also, therefore, he was not entitled to any claim of the vehicle and similarly the complainant respondent no.1 being the purchaser had no privity of contract with the appellants Insurance Co. and thus claim could not be entertained on his behalf and it was prayed that complaint be dismissed.

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After hearing the parties, the District Forum, Udaipur through impugned order dated 19.9.08 had allowed the complaint of complainant respondent no.2 as stated above inter alia holding that since on the date of accident the vehicle in question was insured in the name of complainant respondent no.2, therefore, Insurance Co. was under obligation atleast to indemnify the loss of the vehicle that had taken place due to accident to complainant respondent no.2 and case of purchaser for indemnify the loss of the vehicle on account of accident was rejected.


Aggrieved from the said order dated 19.9.08 passed by the District Forum, Udaipur, this appeal has been filed by the appellants Insurance Company.


3. In this appeal the main contention of the learned counsel for the appellants Insurance Co. is that since prior to accident of the vehicle in question on 17.6.03 its ownership was transferred by complainant respondent no.2 in favour of complainant respondent no.1 on 29.1.03 and since on the date of accident the registered owner of the vehicle in question was complainant respondent no.1 and not the complainant respondent no.2 and since complainant respondent no.2 had sold the vehicle in question to complainant respondent no.1, therefore, neither the complainant respondent no.2 was having insurable interest on the date of accident nor the complainant respondent no.1. It was further argued that even in this case since no survey report was produced by the appellants and since the District Forum had passed a decree for a sum of Rs.54,300/- on the basis of the bills produced by complainant respondent no.2 and since while making the assessment of the damage to the vehicle , the District Forum had not taken into

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consideration the aspect of depreciation value, therefore, from that point of view the decree for a sum of Rs.54,300/- was not justified and thus the findings recorded by the District Forum by which complaint of complainant respondent no.2 was allowed on the ground that he was the insured person on the date of accident , are liable to be quashed and set aside . and it was prayed that appeal be allowed.


4. On the other hand, the learned counsel appearing for the complainants respondents has supported the impugned order of the District Forum.


5. We have heard the learned counsel for the appellants as well as of the respondents and gone through the entire materials available on record.


6. There is no dispute on the point that the vehicle in question was insured by the complainant respondent no.2 from the appellants Insurance Co. for the period from 23.7.02 to 22.7.03 for a sum of Rs. 1,25,000/- .


7. There is no dispute on the point that the vehicle in question was sold by complainant respondent no.2 to complainant respondent no.1 and the same was transferred in the name of complainant respondent no.1 on 29.1.03 in the registration certificate.


8. There is no dispute on the point that the vehicle in question had met with an accident on 17.6.03 as a result of which the vehicle in question was damaged.


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9. There is no dispute on the point that surveyor was appointed by the appellants Insurance Co. but no survey report was produced even at the appellate stage.


10. There is also no dispute on the point that on the date of accident , in papers of the appellants the name of complainant respondent no.2 stood as insured person and policy of complainant respondent no.2 was never cancelled by the appellants Insurance Company.


11. Thus, the question for consideration is whether in the facts and circumstances just narrated above, the findings recorded by the District Forum by which complaint of complainant respondent no.2 was allowed could be sustained or not or whether on the date of theft he was having insurable interest in the vehicle in question or not.


12. So far as the findings recorded by the District Forum by which complaint of complainant respondent no.1 was rejected are concerned, it may be stated here that since complainant respondent no.1 was not having privity of contract with the Insurance Company, therefore, from every point of view the complaint of complainant respondent no.1 was not maintainable at all against the appellants Insurance Co. and thus these findings of the District Forum are liable to be confirmed one.


13. It may be stated here that if the vehicle was purchased by a person , from the original insured person and even if it was transferred in the name of purchaser ( complainant respondent no.1 ) and that vehicle was stolen away or damaged in an accident, in such a situation the complaint by the original owner ( insured )

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is maintainable and it could be held that he had insurable interest in the vehicle as the vehicle in question was insured in his name on the date of theft.


14. The following observations of Hon'ble Supreme Court in the case of G. Govndan Vs. The New India Assurance Company Ltd. & ors. (AIR 1999 SC 1398 = (1999) 3 SCC 754 ) may be reproduced here -


" (i) The transferee who is a third party to the contract cannot secure any personal benefit under the policy

unless there is a novation, i.e. the insurance company the transferor of the vehicle, and the transferee of the vehicle must agree that the policy must be assigned to the transferee so that the benefit derivable, or deserved under the policy by the original owner of the vehicle, the policy holder, can be secured by the transferee. Thus, it is clear under a composite policy, covering the risk of property, person and third party risks, the transferee cannot enforce the policy without the assignment in his favour so far as the policy covers the risk of the person and property. He has no remedy against the insurance company.


(ii) The insurable interest in such case is not the proprietary interest but the public liability, not to run the vehicle without insurance, also to notify the transfer of the vehicle to the registering authority. So long as such obligation continues notwithstanding the cessation of proprietary interest, the insurable interest which is the foundation for the continuance of the

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operation of the policy stands.


(iii) On passing of title, the transferee cannot enforce his claim in respect of any loss or damage to his person and vehicle unless there is a novation. So far as the third party risk is concerned, the proprietary interest in the vehicle is not necessary and the public liability continues till the transferor discharges the statutory obligation under sections 29A and 31 of the Act. The public liability will not cease and that constitutes the insurable interest to keep the policy alive in respect of

third party risks are concerned. It must be deemed that the transferor allowed the purchaser to use the vehicle in a public place in the said transitional period and accordingly till the compliance of section 31, the liability of the transferor subsists and the policy is in operation so far as it relates to the third party risks.


(iv) The third party here will not include a transferee whose transferor has not followed the procedure for transfer of policy."


15. In our considered opinion, the ratio laid down by the Hon'ble Supreme Court in the case of G.Govindan (supra ) was especially in respect of third party claim and it does not nullify the law laid down by the Hon'ble National Commission in the case of Banowarilal Agarwalla Vs. National Insurance Co. Ltd. & ors. (IV (2005) CPJ 110 (NC ) ) and this State Commission in the case of Jai Pal Singh & anr. Vs. National Insurance Co. Ltd. & anr. (I (2007) CPJ 423 ). Furthermore, the ratio laid down in the case of

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G. Govindan (supra ) nowhere debars the original owner and the policy holder from claiming the damages to his vehicle.


16. Thus, in view of the law laid down by the Hon'ble National Commission in the case of Banowarilal Agrawalla (supra ) and this State Commission in the case of Jai Pal Singh (supra ), though vehicle in question was sold by the complainant respondent no.2 to complainant respondent no.1 prior to alleged incident of accident and the same was transferred in the name of complainant respondent no.1 on 29.1.03 in the registration certificate and since insurance papers were not transferred in the name of complainant respondent no.1, therefore complainant respondent no.2 had insurable interest in the vehicle as the vehicle in question was insured in his name on the date of accident.


17. It may further be stated here that this Commission had taken the somewhat view in the case of National Insurance Co. Ltd. Vs. Shrawan Bhati ( Appeal No. 1223/2007 decided on 1.11.07 ) reported in (II ) 2008 CPJ 364, and a revision petition was filed before the Hon'ble National Commission against that order and that revision petition was dismissed by the Hon'ble National Commission through order dated 2.4.06 inter alia holding that " One could appreciate if they took stand to pay to one of them."


18. From that point of view also, the appellants Insurance Co. are under obligation atleast to pay the amount for the loss of the vehicle in question to the complainant respondent no.2, the original insured person.


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19. In this case the learned counsel for the appellants has placed reliance on a judgment of the Hon'ble National Commission in the case Madan Singh Vs. United India Insurance Co. Ltd. & anr. ( I (2009 ) CPJ 158 and that judgment does not help to the appellants Insurance Co. in the manner that in that case the right of the purchaser to claim was denied and in the present case also in respect of right of the purchaser i.e. complainant respondent no.1, it has been held that he has no insurable interest but the case of complainant respondent no.2, the insured person stands on different footings.


20. It may further be clarified here that the vehicle was insured not only either by complainant respondent no.1 or complainant respondent no.2. Therefore, if any damage is done to the vehicle and if on the date of accident/ theft, the vehicle was insured in once name, that person is entitled to make claim in respect of damage/theft of the vehicle.


21. Thus , it is held that the appellants Insurance Co. was not justified in denying the claim of complainant respondent no.2 and it amounted to deficiency in service on the part of the appellants and the District Forum has rightly observed so. The appellants Insurance Co. was under legal obligation to indemnify the loss of vehicle to the complainant respondent no.2 only as it was insured in his name and not to complainant respondent no.1, purchaser, who had no privity of contract with the appellants Insurance Co. and therefore, the District Forum was right in decreeing the claim of the complainant respondent no.2 holding that the complainant respondent no.2 was having insurable interest in the vehicle in question. The findings of the District Forum in this respect are based on correct appreciation of entire materials and evidence

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available on record and they do not suffer from any basic infirmity or illegality or perversity. Hence, no interference is called for with the same and the appeal filed by the appellants deserves to be dismissed.


On point of compensation


22. It may be stated here that looking to the fact that no survey report has been produced by the appellants and the claim had been decreed by the District Forum on the basis of the bills submitted by the complainants and taken into consideration the aspect of depreciation value, atleast 10% depreciation value should be allowed to the appellants Insurance Co. from the amount of the bills submitted by complainant respondent no.2 and thus the complainant respondent no.2 is entitled to a sum of Rs.48,870/- in place of Rs.54,300/- and to that extent the impugned order dated 19.9.08 stands modified and the appeal deserves to be partly allowed.


Accordingly, the appeal filed by the appellants Insurance Company is partly allowed in the manner that the appellants would pay a sum of Rs.48,870/- in place of Rs.54,300/- to the complainant respondent no.2 and to that extent the impugned order dated 19.9.08 passed by the District Forum, Udaipur stands modified and rest order is maintained.



(Vimla Sethia) (Justice Sunil Kumar Garg)

Member President