RIKHI RAM AND ANR. versus SMT. SUKHRANIA AND ORS.

Citation: [2003] 1 S.C.R. 872 · Decided: 05-02-2003 · Supreme Court of India · Bench: V.N. KHARE · Disposal: Appeal(s) allowed

Cited by 1 judgment(s) · see the full citation network in Lexace

Judgment (excerpt)

A 
RIKHI RAM AND ANR. 
v. 
SMT. SUKHRANIA AND ORS. 
FEBRUARY 5, 2003 
B 
[V.N. KHARE, CJI., B.N. AGRAWAL AND ASHOK BHAN, JJ.] 
Motor Vehicles Act, 1939; Sections 94, 95, 103-A & 110: liability of 
Insurer to pay compensation to third party- -Insured vehicle transferred without 
any intimation to insurer-Effect on- Held, since compulsory insurance under 
C the Insurance Policy is for the benefit of third party/victim, liability of insurer 
c,bes not cease on the ground of no intimation to insurer either by transferor 
or transferee of such vehicle. 
-.; 
Words and Phrases: 'Third party'-Meaning of in the context of 
D Insurance of a vehicle. 
Son of the claimant-respondents died in a motor cycle accident. The 
vehicle was insured by its original owner who sold it to the present owner-
appellant, but failed to intimate the insurer. Motor Accident Claims 
Tribunal granted compensation to the parent of the deceased-respondent 
E and held that in the absence of any intimation about transfer of vehicle, 
insurer was not liable to make payment and compensation has to be paid 
by the appellants. Appeal preferred by the appellants was dismissed by 
the High Court. Hence the present appeal. 
The question which arose in the appeal was whether in the absence 
F ofan intimation of transfer, as required under Section 103-A of the Motor 
Vehicles Act, the liability of insurer to pay compensation to the third party 
ceases. 
Answering the question in negative, the Court 
G 
HELD: I.I. Provisions under Sections 94 and 95 of the Motor 
Vehicles Act do not make compulsory insurance to the vehicle or to the 
owners. It manifests that compulsory insurance is for the benefit of third 
parties. The scheme of the Act shows that an insurance policy can cover 
three kinds of risks, i.e., owner of the vehicle; property (vehicle) and third 
H party. The liability of the owner to have compulsory insurance is only in 
872 
...
., 
RIKHI RAM v. SMT. SUKHRANIA [V.N. KHARE, CJ.] 
873 
regard to the third party and not to the property. The provision of law A 
shows that it was intended to cover two legal objectives. Firstly, that no 
one who was not a party to a contract would bring an action on a contract; 
and secondly, that a person who has no interest in the subject matter of 
an insurance can claim the benefit of an insurance. Thus, once the vehicle 
is insured, the owner as well as any other person can use the vehicle with B 
the consent of the owner. Section 94 does not provide that any person who 
.,. 
will use the vehicle shall insure the vehicle in respect of his separate use • 
(875-G, ff; 876-B-C( 
G. Govindan v. New India Assurance Co. ltd. and Ors., (1999] 3 SCC 
754, relied on. 
c 
t.2. On an analysis of Sections 94 and 95, it is found that there are 
two third parties when a vehicle is transferred by the owner to a purchaser. 
The purchaser is one of the third parties to the contract and other third 
party is for whose benefit the vehicle was insured. So far, the transferee 
who is the third party in the contract, cannot get any personal benefit D 
under the policy unless there is a compliance of the provisions of the Act. 
However, so far as third party injured or victim is concerned, he can 
enforce liability undertaken by the insurer. (876-C, D] 
... 
L 
1.3. Whenever a vehicle covered by the insurance policy is 
transferred lo a transferee, the liability of insurer does not cease so far as E 
the third party/victim is concerned, even if the owner or purchaser does 
not give any intimation as required under the provisions of the Act. The 
insurer shall pay compensation to the victims with the interest from the 
dale of incident and it will be open lo the insurer to recover the said 
> 
amount either from the insured or from the transferee of the vehicle. 
-< 
(876-F, GJ F 
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1578 of 
1994. 
From the Judgment and Order dated 7.9.1993 of the High Court of 
Punjab and Haryana at Chandigarh in FAO No. 352/87. 
G 
,, 
Ashok K. Mahajan, for the Appellants. 
The Judgment of the Court was delivered by 
KHARE, CJ. On 1.3.1984, one Chinku, S/o Sukharania and Ram Ohan H 
874 
SUPREME COURT REPORTS 
[2003] l S.C.R. 
A aged about 20 years, a rickshaw puller by profession was hit by a motorcycle 
bearing Registration No. PUT 3504, .driven negligently by Ashok Kumar and 
Pawan Kumar, S/o Rikhi Ram. As a result of the aforesaid accident, Chinku 
died in the hospital. The deceased's parents filed a peti

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