The transfer of ownership of a vehicle terminates the insurance policy and the insurance company is no longer liable to indemnify the insured or any other person for third-party liability arising from the use of the vehicle.

( 1 ) A learned single Judge of this Court, agreeing with the decision of the Full Bench of the Andhra Pradesh High Court in Madinenikondaiah and others v. Yaseenfatima and others, AIR 1986 AP 62, which was in. conflict with the Division Bench decision of this Court in Oriental Fire and General insurance Co. Ltd. v. Vimal Roy, AIR 1973 Delhi 115 has referred the following question of law for decision of the Full Bench:-

"whether the third party liability of Insurance Company comes to an end on transfer of vehicle by the insured to someone else ?"

( 2 ) THE facts leading to the reference, briefly stated, are these. Shri A. N. Wadhwa (for short wadhwa ) was the owner of a two wheeler scooter registration No. DLO-7451. It was insured with M/s. Vangaurd Insurance Co. Ltd. (for short the Insurance Company ) for the period from 27-9-68 to 26-9-69. Wadhwa sold the scooter to P. P. Khurana (for short khurana ) on 27-11-68 and delivered the possession thereof. Final receipt was to be given after getting permission from the Ministry of Rehabilitation where he was employed. Permission was granted on 7-12-68 and final receipt indicating the sale of scooter with delivery of possession for Rs. 2200. 00 was issued on 15-12-68. The scooter was registered with the registering Authority in the name of Wadhwa. This continued, even after the sale. In other words, ownership in the name of Khurana was not transferred in the records of the registering Authority under the Motor Vehicles Act (for short the Act ) till the date of accident. It was so transferred after the accident. In lieu of the certificate of insurance No. 671183 for the period 27-9-68 to 26-9-69 in favour of Wadhwa, another certificate No. 710154 for the period 1-3-69 to 26-9-69 was issued by the Insurance Company in favour of Khurana.

( 3 ) ON 3-1-69 at about 9. 00 A. M. Anand Sarup Sharma, the appellant, it is stated, was going towards Nangal Rai from Gopi Nath Bazar on foot when Khurana driving this scooter came from behind and hit him resulting in fracture of shafts of tibia and fabula.

( 4 ) ON 1-3-69 Sharma brought a petition under Section IIO-A of the Act against Khurana, Wadhwa and the Insurance Company claiming a sum of Rs. 50,000. 00 as compensation. The amount was claimed from Wadhwa and the Insurance Company on the ground that though Wadhwa had sold the scooter to Khurana he was still a registered owner and was, therefore, liable to pay compensation. Consequently his insurer was liable to satisfy the award.

( 5 ) THE Motor Accidents Claims Tribunal vide its judgment dated 27-10-75 recorded the following findings :-

1. Sharma was injured as a result of rash and negligent driving of the scooter by Khurana.

2. Wadhwa had transferred the scooter in question in favour of Khurana before the date of the accident ?

3. Wadhwa had no insurable interest in the scooter on the date of the accident. The Insurance Company, therefore, was not liable to pay any compensation.

4. The petition was not bad for want of notice ; and

5. The petitioner, Sharma, was entitled to recover Rs. 3850. 00 as compensation.

( 6 ) ON these findings he awarded a sum of Rs. 3850. 00 with costs and future interest if the amount was not paid within two months of the date ofthe award, against Khurana only. The application against Wadbwa and the Insurance Company was dismissed.

( 7 ) FEELING aggrieved Sharma filed an appeal praying for enhancement of the compensation and for awarding the compensation against all the respondents.

( 8 ) AT the time of arguments before the learned single Judge, learned counsel appearing for the appellant, relied on the Full Bench decision of Andhra Pradesh High Court in Kondaiah s case (supra), where it was held that the Insurance Company could not raise the defence that the policy bad lapsed because of the sale of vehicle and that the insurable interest continued, so far as third party risk was concerned, so long the obligation under statute as stipulated under Secti