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TMI Blog1987 (7) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... registration No. BD6556 came from the opposite direction and there was collision between the two vehicles. The incident happened at a place called Kokked. According to the petitioners, both the vehicles were driven negligently. 3. As a result of the accident, the second petitioner in MAC No. 41 of 1981 and the petitioner in MAC No. 42 of 1981 sustained serious injuries. ₹ 13,576'98 was claimed as compensation in MAC No. 41 of 1981 and ₹ 76,152 was claimed in MAC No. 42 of 1981. In MAC No. 41 of 1981 the Tribunal granted an award of ₹ 5,698 and in MAC No. 42 of 1981 a sum of ₹ 8,000 was awarded as compensation. 4. The appellant is said to be the owner of the lorry. Originally, he was not a party to the proceedings and was impleaded subsequently. The main contention of the appellant is that the accident occurred on account of the rash and negligent driving of the bus and the owner of the bus and the insurance company are liable for damages. Secondly, it was contended that even if the driver of the lorry was negligent, the liability under the statute was on the registered owner as there was no transfer of the vehicle in favour of the appellant. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R-25 is a sale deed in favour of the appellant and the insurance of the vehicle stood in the name of the registered owner of the vehicle and the appellant was not the insured under the policy issued by the insurance company and therefore the company is not liable to indemnify the loss sustained by the appellant. The insurance company further contended that the policy has lapsed upon the transfer of the motor vehicle and the transferee had not applied for transfer of the policy in his name and therefore the insurance company is not liable to pay any amount. 7. The important question that arises for consideration is whether the transfer of the vehicle in favour of the appellant by the original insured has resulted in the lapse of the insurance policy. The question as to whether an insurance policy lapses when the vehicle insured thereby is transferred without informing the insurer in the prescribed form under Section 103A of the Motor Vehicles Act had come up for consideration before several High Courts. The general view appears to be that the policy lapses when the vehicle is transferred. 8. The main contention urged by the insurance company is that the registered owner was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed in Section 31 of the Act. (See Panna Lal v. Chand Mal [1980] ACJ 233 . Therefore, it is clear that the appellant purchased the lorry in question as per exhibit R-25 and the insurance policy stood in the name of the husband of the 8th respondent, who was the original owner of the vehicle. 11. The contract of insurance is basically governed by the rules which form part of the general law of contract. In a contract of insurance, one party agrees to indemnify the loss that would be sustained by another. The first party is bound to pay the money or provide its equivalent if any uncertain event occurs. The other party, namely, the insured must have an insurable interest in the property, life or liability which is the subject of the insurance. Insurable interest is a basic requirement of any contract of insurance unless it can be, and is, lawfully waived. At a general level, this means that the party to the insurance contract who is the insured or policy-holder must have a particular relationship with the subject-matter of the insurance, whether that be a life or property or a liability to which he might be exposed. The absence of the required relationship will render the cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandra Misra [1973] ACJ 46 (Orissa), Balwani Singh v. Jhannubai [1980] ACJ 126 (MP), Oriental Fire General Insurance Co. v. Meena Sharma [l975] ACJ 335 (P H). 15. The Madras High Court in Madras Motor Insurance Co. v. Muhammed Mustafa, AIR 1941 Mad 208, took a different view and held that the right of the insurer to avoid his liability under the policy is confined to certain grounds specified in Section 96(2) and the court cannot add to those grounds for reasons of hardship. Transfer of the vehicle during the currency of a policy is one of such grounds and the policy does not lapse by such transfer. The court was of the view that even if the insurer has some ground which would entitle him, as against the insured, to avoid the policy or to have it declared as void, that will not protect the insurer from liability to pay the victim of the accident to the extent covered by the insurance and that was the sole intention to have a compulsory insurance in respect of the third party risk. However, this view of the learned single judge was subsequently reversed by a Division Bench of Madras High Court in Hema Ramaswami v. K. M. Valarence Panjani AIR 1981 Mad 174 : [1983] 54 Comp Cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is barred under Section 96(2) of the Act . 17. The facts of the case are slightly different from the case in hand. In the instant case, exhibit R-25 was executed about three months prior to the date of the accident. The appellant also knew that the registered owner of the vehicle was no more alive and therefore, no application could have been filed under Section 103A of the Act for the transfer of the certificate of insurance, and it was up to the appellant to get a fresh policy of insurance for the vehicle. The appellant has also no case that he had intimated the sale of the vehicle to the insurance company. It is true that Section 94 of the statute is enacted to give protection to a third party in respect of death or bodily injury or damage to their property while using the vehicle in a public place. Here, as already pointed out, the appellant has not taken any steps to get the insurance policy transferred in his name and he has no case that title to the vehicle has not passed. The original insured was dead and the policy was thereby terminated and even if the injured persons were third parties liable to be covered by third party insurance, the insurance company cannot have ..... 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