VERY IMPORTANT POINT
Whenever a vehicle which is covered by the insurance policy is transferred to a transferee, the liability of insurer does not cease so far as the third party - victim is concerned, even if the owner or purchaser does not give any intimation as required under Section 103-A of M.A. Act, 1939.

JUDGMENT

Khare, CJI.-On 1.3.1984, one Chinku, S/o Sukhrania and Ram Dhan 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 petition before the Motor Accident Claims Tribunal, Bhatinda claiming a sum of Rs.3,60,000/- alongwith interest under Section 110-A of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act ). Rikhi Ram and Pawan Kumar, appellants herein, while jointly denying the accident, pleaded that the motorcycle did not belong to them rather it belongs to M/s. Azad Engineering Works, Bhatinda who have been its owners. Ashok Kumar also filed a separate written statement taking identical objections. M/s. Azad Engineering Company was also added as a party to the claim petition. It was admitted that the motorcycle was got insured by M/s. Bhagwan Rai Amrit Lal, commission agents, Bhatinda. They were the registered owners of the vehicle. Subsequently, Rikhi Ram and M/s. Azad Engineering Works, appellants herein, purchased the motorcycle from its owners M/s. Bhagwan Rai Amrit Lal who did not give any intimation of the aforesaid transaction to the insurance company. It is also admitted that Ashok Kumar was an employee of M/s. Azad Engineering Works. The Tribunal found inter alia that the driver of the motorcycle was negligent and that the motorcycle was owned by M/s. Bhagwan Rai Amrit Lal, Commission Agents who subsequently transferred the same in favour of the appellants but did not give any intimation to the insurance company about the said transfer, that, consequently in absence of any intimation, the appellants were liable to pay the amount of compensation which was determined at Rs. 64,000/- and that the insurance company was not liable to pay the amount of compensation. Aggrieved, the appellants filed an appeal before the Division Bench of the High Court of Punjab and Haryana which was dismissed. It is in this way the appellants have filed the petition.

2. The question which arises in this appeal is whether in the absence of an intimation of transfer as required under Section 103-A of the Act, the liability of the insurer to pay compensation to the third party ceases. Earlier, there was a conflicting view of the High Courts as regards the question whether the insurance policy lapses and consequently the liability of insurer ceases when the insured vehicle was transferred and no intimation as prescribed under Section 103-A of the Act was given to

he insurer.

3. This Court in G. Govindan vs. New India Assurance Co. Ltd. & Ors. 1999 (3) SCC 754 has settled the controversy as regards liability of insurer to pay compensation to third party in the absence of any intimation of transfer of the vehicle to the transferee. It was held therein that since insurance against third party is compulsory, and once the insurance company had undertaken liability to third party incurred by the persons specified in the policy, the third party s right to recover any amount is not affected by virtue of the provisions of the Act or by any condition in the policy. We are of the view that said decision concludes the controversy in the present appeal. However, we would like to give further reasons that the liability of an insurer does not come to an end even if the owner of the vehicle does not give any intimation of transfer to the insurance company. Chapter VIII of the Act has been enacted following several English statutes. In England, prior to 1930, there was no law of compulsory insurance in respect of third party rights. Whenever an accident took place the victim or the injured used to take legal proceedings against an erring motorist for recovery of damages. But many a times, it was found that the owner of an offending vehicle was not always in a