UNITED INDIA INSURANCE CO. LTD., SHIMLA versus TILAK SINGH AND ORS.

Citation: [2006] 3 S.C.R. 758 · Decided: 04-04-2006 · Supreme Court of India · Bench: B.N. SRIKRISHNA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
UNITED INDIA INSURANCE CO. LTD., SHIMLA 
v. 
TILAK SINGH AND ORS. 
APRIL 4, 2006 
B 
[B.N. SRIKRISHNA AND LOKESHWAR SINGH PANTA, JJ.] 
Motor Vehicles Act, 1988: 
ss. 147--Statutory insurance polic;r--Gratuitous passenger-Liability 
C of insurance company-Held, insurance company owed no liability towards 
injuries suffered by deceased, a pillion rider, as insurance policy was a 
statutory policy and it did not cover the risk of death or bodily injury to 
gratuitous passenger-Motor Vehicles Act, 1939-s. 95. 
D 
s.157-Failure of transferor to notifY the insurer of facts of transfer of 
ownership of insured vehicle-Reid, situation is nut different whether u/s 
103-A of 1939 Act or uls 157 of 19fl8 Act, in so far as liability towards a 
third person is concerned-s.157 provides that certificate of insurance and 
the policy "shall be deemed to have been transferred in favour of the persons 
to whom vehicle is transferred w.ej the date of its transfer- Motor Vehicles 
E Act, 1939--ss. 94, 95 and 103-A. 
Transfer of Vehicle-Motor accident· --Claim petition-Applicability of 
provisions of relevant Act--Held, it is not transfer of vehicle but the accident 
which furnishes the cause of action-Since accident took place after 1988 
F Act came into force, the same would govern the situation. 
Respondent No. I purchased a scooter from respondent No. 5 on 
23.3.1989. Though registration certificate was transferred in the name of 
respondent No. I, no notice to appellant-insurance _company was given for 
transfer of insurance policy and insurance certificate. On 31.10.1989 while 
G respondent No. 1 was driving the scooter, it met with an accident and as a 
result the pillion rider died. Legal heirs filed claim petition arraying inter 
a/ia respondent No. 1, respondent No. 5 and the insurance company. The 
Tribunal held the claimants entitled to Rs. 3,89,000/- holding respondent No. 
1 only liable for payment of compensation and absolved the insurance company 
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UNITED INDIA INSURANCE CO. LTD., SHIMLA 1•. TILAK SINGH 
759 
of the liability on the ground that no notice of the transfer of the vehicle had A 
been given to the insurer as prescribed by the Motor Vehicles Act, 1939. On 
appeal by respondent No. 1, the High Court held that the insurance company 
was severally and jointly liable along with respondent No. 1 for payment of 
the compensation awarded. Aggrieved, the insurance company filed the appeal. 
It was contended for the appellant that the law applicable in determining B 
the liability of the insurance company would be 1939 Act and not the 1988 
Act; that since the transferor of the vehicle did not apply to the insurance 
company for transfer of insurance policy and insurance certificate in terms 
of s.103-A of 1939 Act, insurer was absolved from the liability; and that 
since deceased was a pillion rider, and risk of death or disability of pillion C 
rider i.e. a gratuitous passenger, was not covered under the insurance policy, 
the insurance company was not liable. 
Allowing the appeal, the Court 
HELD: 1. It is not the transfer of the vehicle but the accident which 
furnishes the cause of action for the claim petition before the tribunal. D 
Undoubtedly, the accident took place after the Motor Vehicles Act, 1988 had 
come into force. Hence it is the 1988 Act which governs the situation. 
(765-D] 
2.1. The situation in law which arises from the failure of the transferor 
to notify the insurer of the fact of transfer ofownership of the insured vehicle E 
is no different, whether under section 103-A of the Motor Vehicles Act, 1939 
or under section 157 of the Motor Vehicles Act, 1988 in so far as the liability· 
towards a third party is concerned. Thus, whether the old Act applies to the 
facts or the new Act applies, as far as the deceased third party was concerned, 
the result would not be different. Section 157 of the 1988 Act, which F 
corresponds to the earlier section 103-A of the 1939 Act provides that upon 
the transfer of ownership of the motor vehicle in respect of which such 
insurance was taken together with the policy of insurance relating thereto, 
the certificate of insurance and the policy described in the certificate "shall 
be deemed to have been transferred in favour of the person to whom the motor 
vehicle is transferred with effect from the date of its transfer". The explanation G 
to the section makes it clear that such deem!:d transfer shall include transfer 
of rights and liabi
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