Insurance Policy Deemed Transferred On Sale Of Vehicle; Karnataka State Consumer Commission Dismisses Insurer's Appeal
Pranav B Prem
The Karnataka State Consumer Disputes Redressal Commission, Circuit Bench-2, Belagavi, comprising Hon'ble Sri Ravi Shankar (Judicial Member) and Hon'ble Smt. Sunita C. Bagewadi (Lady Member), dismissed an appeal filed by Shriram General Insurance Company Ltd. and held that under Section 157(2) of the Motor Vehicles Act, 1988, an insurance policy is deemed to be transferred along with the transfer of the vehicle. The Commission held that repudiation of the insurance claim on the ground that the policy stood in the name of the previous owner was not justified. The appeal arose from an order of the District Consumer Disputes Redressal Commission, Belagavi, which had partly allowed the complaint and directed the insurer to pay compensation for the damage caused to the insured vehicle.
The original owner had insured his Toyota Etios car bearing Registration No. KA-01-AC-9783 under a “PCCV 4 Wheelers Motors Commercial Vehicle Package Policy” valid from 19 November 2020 to 18 November 2021. On 10 August 2021, the vehicle was sold to the purchaser and the Registration Certificate was transferred in his name on the same day. The purchaser had applied for transfer of the insurance policy in his name and the process was underway when the vehicle met with an accident on 14 August 2021 on NH-4 near Vantamuri Ghats, Belagavi.
The damaged vehicle was shifted to Shoda Toyota, Belagavi for repairs, where the repair cost was estimated at ₹2,66,379. The insurer appointed a surveyor who assessed the loss at ₹1,60,000. However, by letter dated 8 January 2022 the insurer repudiated the claim on the ground that the insurance policy stood in the name of the previous owner while the Registration Certificate stood in the name of the purchaser.
Aggrieved by the repudiation, the complainants approached the District Consumer Commission, Belagavi, which partly allowed the complaint and directed the insurer to pay ₹1,60,000 with interest at 6% per annum from the date of filing of the complaint till realization. The District Commission also awarded ₹5,000 towards mental agony and ₹2,000 towards litigation expenses. Challenging this order, the insurer preferred the present appeal.
The insurer contended that the policy stood in the name of the original owner while the purchaser was the registered owner of the vehicle on the date of the accident and therefore there was no insurable interest. It was further argued that Section 157 of the Motor Vehicles Act applies only to third-party claims and not to own-damage claims. The insurer also raised objections regarding discrepancies in the driver’s details and the validity of the driving licence.
The State Commission noted that it was not in dispute that the policy was valid during the relevant period, that the vehicle had been sold to the purchaser on 10 August 2021 with transfer of registration on the same day, and that the accident occurred on 14 August 2021. It was also undisputed that the insurer had appointed a surveyor who assessed the loss at ₹1,60,000.
Referring to Section 157(2) of the Motor Vehicles Act, the Commission held that the provision clearly contemplates deemed transfer of the insurance policy along with transfer of the vehicle. The Commission also relied on the decision of the Supreme Court in Surendra Kumar Bhilave v. New India Assurance Co. Ltd., wherein it was held that “upon transfer of the vehicle, the insurance policy automatically stands transfer in favour of transferee and the insurer cannot denied own damage claim on technical grounds.”
The Commission further observed that the insurer itself had initially shown readiness to settle the claim in accordance with the survey report, which indicated that the claim was otherwise genuine. It held that repudiation of the claim merely on the ground that the policy stood in the name of the previous owner was unjustified. Holding that the order passed by the District Consumer Commission was just and proper and required no interference, the State Commission dismissed the appeal and confirmed the order dated 16 November 2023 passed in CC No.1062/2023. No order as to costs was made.
Appearance
For the Appellant (Insurance Company): Sri M.D. Tigadi, Advocate
For the Respondents(complainants) : Sri Rohit N. Latur, Advocate
Cause Title: The Branch Manager, M/s Shriram General Insurance Company Ltd. v. Ashok S/o Mahalingappa Doni (deceased Rep by LRs) & Anr.
Case No: Appeal No. 1161/2024
Coram: Hon'ble Sri Ravi Shankar (Judicial Member) and Hon'ble Smt. Sunita C. Bagewadi (Lady Member)
