Important Point
A victim or the legal representatives of the third party victim cannot be denied the compensation by the insurer on the ground that the policy was not transferred in the name of the transferee. The third party here will not include a transferee whose transferor has not followed procedure for transfer of policy.

Judgment

K. Venkataswami, J.-An important question of law under the Motor Vehicles Act, 1939 (hereinafter called ‘the Act’) has arisen for our consideration in this appeal.

2. The question is whether the Insurance Policy lapses and consequent­ly the liability of the insurer ceases when the insured vehicle was transferred and no application/intimation as prescribed under Section 103A of the Act was made/given.

3. We find from the case law cited before us at the bar that there are conflicting views among the High Courts on this issue. Three different High Courts’ Full Bench judgments were brought to our notice. The High Courts of Delhi and Karnataka had answered the issue in the affirma­tive while the High Court of Andhra Pradesh (all Full Bench judgments) had answered the issue in the negative. Brief facts are the following:-

The appellant herein had purchased the motor vehicle (bus) from the fourth respondent on 15.8.74. However, neither the appellant (transfer­ee) nor the fourth respondent (transferor) intimated the sale transaction to the first respondent-insurer as required under Section 103-A of the Act. Nevertheless, the finding of the Motor Accident Claims Tribunal (for short ‘Claims Tribunal’) was to the effect that the insurer knew about the transfer. The accident, which gave rise to the claim for compensation by the respondents 2 and 3, took place on 18.5.75. It is the finding of the Claims Tribunal that even after the date of the accident and knowing that the fourth respondent had sold the bus to the appellant, the insurer received the premium for subse­quent periods, namely, 18.11.75 to 17.11.76, 30.11.76 to 29.11.77 and from 30.11.77 to 29.11.78. This finding of the Claims Tribunal was not disturbed by the High Court while deciding the appeal against the order of the Claims Tribunal.

4. The Claims Tribunal, after finding that the insurer had knowledge of the transfer held, that having received the premium it cannot repudiate its liability to pay the compensation. We are not concerned here with the quantum of compensation. We are concerned only with the liability of the insurer to pay the compensation. The Claims Tribunal found that the insurer as well as the appellant are liable to pay the compensation to the claimants.

5. Aggrieved by the decision of the Claims Tribunal, the insurer (first respondent herein) preferred an appeal to the High Court. The Division Bench of the Madras High Court, reversing the view taken by the Claims Tribunal, held as follows:-

“Knowledge by itself is of no use. There ought to have been an appli­cation for transfer in the prescribed form or atleast a request there­for. .........We are unable to sustain the finding of the Tribunal in the instant case that merely because the Insurance Company, the appel­lant herein, had knowledge of the transfer of the ownership of the vehicle, its liability under the Policy, which never got transferred in favour of the transferee, viz., the fourth respondent herein, must be deemed to have continued, so as to bear the liability of compensa­tion.”

6. Accordingly, the High Court allowed the appeal and discharged the liability of the insurer from payment of compensation.

7. The appellant-transferee, aggrieved by the Order of the High Court, has preferred this appeal by special leave.

8. In Madineni Kondaiah & Ors. etc. v. Yaseen Fatima & Ors. etc.1 a Full Bench of the Andhra Pradesh High Court had occasion to consider an identical question. The leading judgment was by Raghuvir, J. Kodan­daramayya, J., in his separate concurring judgment, had also analysed the relevant provisions of the Act, compared the provisions of the Act with the provisions in English Act and after noticing the judgments of the Courts in India and England, held as follows:-

“A perusal of Section 94 clearly discloses that the statute intended to give protection to a third party in respect of death or bodily injury or damages to their property while using the vehicle in a public place. Hence the ins