1972 (5) TMI 70 - HC - Indian Laws

Summary

Issues Involved:
1. Whether the sale of the motor vehicle had been conclusively established.
2. Whether the insurance policy lapsed due to the sale of the vehicle.
3. Whether the insurance company could claim exoneration from liability.
4. Whether the seller was liable to pay compensation.
5. Determination of the quantum of damages to be awarded.

Detailed Analysis:

Issue 1: Whether the sale of the motor vehicle had been conclusively established

The primary question was whether a valid sale of the motor vehicle had taken place before the accident. The Tribunal initially held that the seller had sold the vehicle to the purchaser, thereby exonerating the seller and the insurance company from liability. However, the learned Single Judge held that no sale had taken place either in fact or in law on the date of the accident. The High Court affirmed this, noting the absence of documentary evidence prior to 24th July 1963. The court found it implausible that the purchaser, an employee of the Indian Standard Institute, would obtain the vehicle without any receipt or evidence of the transaction. The first intimation of the sale was made on 24th July 1963, which was not within the 14-day period required by Section 31 of the Motor Vehicles Act. Consequently, it was held that no absolute sale had taken place until 23rd July 1963, and the accident occurred while the seller still owned the vehicle.

Issue 2: Whether the insurance policy lapsed due to the sale of the vehicle

The court examined whether the sale of the vehicle caused the insurance policy to lapse. It was established that an insurance policy, being a personal contract for indemnity, lapses upon the transfer of the motor vehicle unless there is an express agreement with the insurance company to the contrary. The court cited various precedents, including Peters v. General Accident and Life Assurance Corporation Ltd., which held that the insurance policy automatically lapses upon the sale of the vehicle. Thus, the insurance policy in question lapsed when the vehicle was sold, and the insurance company was not liable to cover the risk incurred by the purchaser.

Issue 3: Whether the insurance company could claim exoneration from liability

The insurance company argued that the policy had lapsed due to the sale of the vehicle and that they were exonerated from liability. The court agreed, stating that the insurance company could raise the defense of the policy lapsing due to the sale. The court distinguished this from the case of British India General Insurance Co. Ltd. v. Itbar Singh, where only the defenses specified in sub-section (2) of Section 96 of the Motor Vehicles Act were available to the insurance company. Since the existence of a valid insurance policy was in question, the restrictions of sub-section (2) of Section 96 were not applicable.

Issue 4: Whether the seller was liable to pay compensation

Given that no sale had taken place before the accident, the seller remained the owner of the vehicle at the time of the accident. Consequently, the seller was liable to pay compensation. The insurance company, having insured the vehicle under a comprehensive policy covering third-party risks, was also liable to indemnify the seller.

Issue 5: Determination of the quantum of damages to be awarded

The Tribunal initially awarded a sum of Rs. 31,500/- against the mechanic and the garage man. The learned Single Judge modified this to include the seller and the insurance company. The High Court upheld this amount, noting that the Tribunal had given good reasons for the awarded amount, and the learned Single Judge had rightly endorsed them. The legal representatives of the deceased had not filed any appeal or cross-objection for enhancement, and thus, no enhancement of the compensation was warranted. All parties agreed that the garage man should also be included in the liability.

Conclusion:

The High Court dismissed the appeals with the modification that the garage man would also be liable to pay the amount of Rs. 31,500/- as compensation, along with the insurance company, the seller, and the mechanic. The parties were ordered to bear their respective costs of the appeals.