MRS. NEENA SANDHU, MEMBER

1.       This is an appeal filed by the OP against order dated 9.6.2009 passed by District Consumer Disputes Redressal Forum-I, UT, Chandigarh (for short hereinafter to be referred as District Forum) passed in complaint case No. 1556 of 2008.

2.       Brief facts of the case are that on 22.10.2007 complainant purchased Hyundai Elantra Car bearing registration No. PB-08-AV-0330 from Sh.Gurmeet Sehgal (its previous owner) and got insured from the New India Assurance Company Limited (OP) in the name of previous owner as the vehicle was not insured on the date of purchase and transfer of registration in his name would have taken sometime. The complainant applied for the transfer of registration certificate of the above said vehicle in his name and the registration certificate was transferred by District Transport Officer, Mohali in his name on 31.12.2007 but unfortunately on 25.8.2008 the above said car met with an accident near Village Sarangpur, UT, Chandigarh and DDR No. 50 dated 26.8.2008 was lodged with Police Station, Sector 11, Chandigarh. The insurance company was telephonically informed on the same day i.e. 26.8.2008 regarding the loss and the claim intimation letter along with the estimate of repair from M/s Ashwani Automobiles Private Limited was given to the OP on 1.9.2008. The OP appointed M.L.Mehta & Co. as surveyors to assess the loss. The surveyor submitted his “Final Survey Report” to the OP on 11.9.2008 and assessed the loss to the tune of Rs.6,24,456/- whereas the vehicle was insured for the amount of Rs.6,00,000/-. The surveyor assessed the loss as total loss. Inspite of this, the OP did not process the claim of the complainant. The complainant visited the office of OP many times and requested the concerned officials to process his claim at the earliest but the OP repudiated the claim of the complainant by citing false and frivolous grounds. The above said act of OP amounts to deficiency in service and unfair trade practice. Hence, the complaint was filed. 

3.       Reply was filed by OP and admitted the factual aspects of the case. It was pleaded that the policy was obtained by Sh.Gurmeet Sehgal and was valid for the period from 22.10.2007 to 21.10.2008. The vehicle was purchased by the complainant during the subsistence of the policy and the registration certificate was also got transferred by the complainant in his favour on 31.12.2007. No application was received on behalf of complainant for the transfer of the policy in his name and no requisite charges were deposited for the transfer of the policy and similarly no objection was obtained from the previous owner for the said purpose. Thus there was no privity of contract and there was also violation of GR-17 of the Indian Motor Tariff. The accident took place on 25.8.2008 whereas R.C. was transferred on 31.12.2007 and thus no efforts were made to get the policy transferred within the stipulated period and as such, the OP was rightly repudiated the claim of the complainant. All other allegations leveled by the complainant in the complaint were denied and pleaded that there was no deficiency in service on its part and prayed for dismissal of the complaint.

4.       The parties led their evidence in support of their contentions.

5.       The learned District Forum allowed the complaint and directed to pay to the complainant a sum of Rs.6 lacs as compensation within 30 days from the date of receipt of copy of the order. The OP would be entitled to the salvage worth Rs.2,75,000/- which shall be handed over to the OP at the time or immediately after the payment of compensation was made by the OP to the complainant. In default of payment of compensation within the stipulated period the learned District Forum further directed the OP to pay the same along with litigation costs of Rs.10,000/- and interest @ 12% p.a. on the above amount since 11.10.2008 (one month after the report, Annexure C-6 of the surveyor) till the payment actually made to the complainant.

6.          Aggrieved by the order passed by the learned District Forum, the present appeal has been filed by the OP. Sh.R.K.Bashamboo, Advocate has appeared on behalf of appellant and Sh.Gaurav Bhardwaj, Advocate has appeared on behalf of respondent/complainant.

7.       In appeal, it is submitted that the learned District Forum has erred in not appreciating the fact that Section 157 of the Motor Vehicle Act is not applicable to the facts of the case. The provisions of this section are applicable only to the third party claims under the Motor Vehicle Act and not to the own damage claims. The learned District Forum has not discussed the citations at all, which were placed on record by the appellant and with the result complaint has wrongly been allowed. The learned District Forum has of its own held that there is a insurable interest in the vehicle therefore, the company is liable. Though, this aspect of the matter is totally denied and it is submitted that there is no privity of contract between the appellant and the respondent/complainant. Even otherwise also the respondent/complainant is not a consumer. It cannot be said that respondent/complainant got the name of the previous owner added at the time of obtaining of the policy. This is just without proof. It is submitted by the appellant that if it is assumed even than is a case of misrepresentation and fraud and the policy becomes void ab initio as at no point of time it was brought to the notice of the company that the vehicle has been purchased by the complainant. Thus the learned District Forum has totally ignored the facts and the law applicable to the case. The learned District Forum has further fell in error while directing to make payment of the awarded amount within one month and the salvage is to be deposited only thereafter by the respondent/complainant. Without admitting the liability it is further submitted by the appellant that the value of the salvage deteriorates with the passage of time and at this stage no such orders should have been passed and deductions of salvage amount shall have been allowed. In any case it should have been directed to deposit the salvage first at the most. The learned District Forum has further fell in error while stipulating condition of payment within one month and in default of payment the interest @ 12% has been allowed from 11.10.2008 along with litigation expenses of Rs.10,000/-. This amounts to penalty and under the CPA, 1986 there is no scope for penalty. It is further submitted the interest awarded by the learned District Forum @ 12% is on the higher side and in any case it should not have been more than 7.5%. The whole approach of the learned District Forum is against the facts and the law applicable to the case and as such is liable to be set aside.

8.       We have heard learned counsel for the parties and also perused the record.

9.       The main point for consideration before us is whether the OP has rightly repudiated the claim of the complainant.

10.     There is no dispute regarding that the respondent/complainant purchased Hyundai Elantra Car bearing registration No. PB-08-AV-0330 on 22.10.2007 from the owner Sh.Gurmeet Sehgal. The respondent/complainant got the registration certificate transferred on his name on 31.12.2007 but the insurance policy was in the name of previous owner i.e. Gurmeet Sehgal which was valid from 22.10.2007 to 21.10.2008. It is also clear that accident of the car took place on 25.8.2008 and on this date the insurance policy was not in the name of respondent/complainant rather it was in the name of Gurmeet Sehgal (previous owner). It has been submitted by the learned counsel for the appellant that the present case is of own damage claim and it is mandatory on the part of respondent/complainant to apply for the transfer of the insurance policy in his name as per GR-17. It is further submitted that the respondent/complainant had never applied for the transfer of the policy in his name by depositing the requisite fee of Rs.50/- as per the GR-17 of India Motor Tariff dated 1.7.2002 read as under :-

GR.17. Transfers

On transfer of ownership, the Liability Only cover, either under a Liability Only policy or under a Package policy, is deemed to have been transferred in favour of the person to whom the motor vehicle is transferred with effect from the date of transfer.

The transferee shall apply within fourteen days from the date of transfer in writing under recorded deliver to the insurer who has insured the vehicle, with the details of the registration of the vehicle, the date of transfer of the vehicle, the previous owner of the vehicle and the number and date of the insurance policy so that the insurer may make the necessary changes in his record and issue fresh Certificate of Insurance.

In case of the Package Policies, transfer of the “Own Damage” section of the policy in favour of the transferee, shall be made by the insurer only on receipt of a specific request from the transferee along with consent of the transferor……..

A fresh Proposal Form duly completed is to be obtained from the transferee in respect of both Liability Only and Package Policies.

Transfer of Package Policy in the name of the transferee can be done only on getting acceptable evidence of sale and a fresh proposal form duly filled and signed. The old Certificate of Insurance for the vehicle, is required to be surrendered and a fee of Rs.50/- is to be collected for issue of fresh Certificate in the name of the transferee…….”

                    A critical reading of this GR17 indicates that the automatic transfer of insurance cover on sale of vehicle is only relevant to the “Liability Only Cover”, which in other words means “Third Party Risk”. It has been clearly stipulated in GR-17 that with regard to the transfer of “Own Damage Liability”, the following is to be done: -

(a)     The transferee has to apply within fourteen days from the date of transfer in writing under recorded deliver to the insurer who has insured the vehicle giving him various details as stated above.

(b)     Only on receipt of specific request from the transferee along with consent of the transferor, the own damage section of the policy is to be transferred in favour of the transferee.

(c)     The transferee has to provide acceptable evidence of sale and a fresh proposal form duly filled and signed.

11.     It is submitted by the learned counsel for the appellant that there is violation of provision of GR-17 of the Indian Motor Tariff Act.  It is further submitted that even the respondent/complainant had not obtained no objection from the previous owner for the said purpose. Therefore, there is no insurable interest of the complainant and further more there is no privity of contract between the insurance company and the respondent/complainant and the learned District Forum has ignored these facts and wrongly allowed this complaint. 

12.     On the other hand, learned counsel for the respondent/complainant placed reliance on the case of Hon’ble National Commission in the case of Sh.Narain Singh Vs. New India Assurance Company Limited reported as 2008(1) CPC 257 wherein the Hon’ble National Commission has held that the transfer of the insurance was automatic on sale of the vehicle. The learned counsel therefore, emphatically submitted that there was no legal infirmity in the impugned order and prayed the same be sustained and the appeal be dismissed. 

13.     From the foregoing discussion we have come to the conclusion that as per the provision GR-17 the complainant has to apply for the transfer of the insurance policy in his name within a stipulated period which he failed to do so and it is also apparent that at the time of accident the insurance policy was in the name of the previous owner i.e. Sh.Gurmeet Sehgal which was duly signed by Sh.Gurmeet Sehgal. Although the address on the policy shows that the name of the insured is Mr.Gurmeet Sehgal with address C/o S.Balbir Singh. From this inference cannot be drawn that the insurance policy is in the name of respondent/complainant or the respondent/complainant got his name added in the insurance policy along with the previous owner while obtaining the policy. Therefore, there is no privity of contract between the appellant and the respondent/complainant. Not only this, it is also on the file that the respondent/complainant had not applied for the transfer of the insurance policy in his name, which is mandatory as per GR-17. Hence, it has been established that the fault is on the part of respondent/complainant by not applying for the transfer of the insurance policy in his name. Moreover, there is nothing on record to show that the respondent/complainant has taken no objection from the previous owner in this regard.  Therefore, in our opinion, the respondent/complainant has no insurable interest as held by the learned District Forum. Therefore, he is not entitled for the compensation for the damages because at the time of accident, the insurance policy was not in the name of respondent/complainant. The Hon’ble National Commission in the Revision Petition No. 2299 of 2009 decided on 20.10.2009 titled as Oriental Insurance Company limited Vs. Reeta has held that the petitioner-insurance company is not liable to pay compensation for the damages to the vehicle at the time of accident of the vehicle, the vehicle of the respondent/complainant was not insured with the insurance company. 

14.     In view of the aforesaid law settled by the Hon’ble National Commission, in the present case the respondent/complainant is not entitled for the claim amount as the insurance policy had not been transferred in the name of the respondent/complainant on the date of accident. In our opinion, there is no deficiency in service on the part of appellant by repudiating the claim of the respondent/complainant.  The impugned order passed by the learned District Forum does not stand legal, scrutiny and the same is set aside. Consequently, the order passed by the learned District Forum is dismissed and the appeal is allowed. However, keeping in view the peculiar circumstances of the case, the parties are left to bear their own costs of litigation.

15.            Copies of this order be sent to the parties, free of charge.

Pronounced.

6^th August, 2010.