The judgment establishes the legal principles of privity of contract and insurable interest in the context of insurance law, as interpreted from relevant case law and legal provisions.

Valmiki J Mehta, J.

The challenge by means of this Regular First Appeal u/s 96 of the Code of Civil Procedure, 1908 is to the impugned judgment and decree dated 17.3.2001 whereby the suit of the Respondent/Plaintiff/insured against the Appellant/Defendant/insurance company was decreed.

2. Before the Trial Court and before this Court, there were two principal issues on which arguments were addressed. The first was with respect to the stand of the Appellant of lack of privity of contract of the Respondent/Plaintiff with the Appellant and the second was of the Respondent/Plaintiff being not the owner of the insured vehicle and hence not having an insurable interest in the vehicle with respect to which claim was filed.

3. The facts of the case are that the Respondent/Plaintiff a finance company, entered into a lease agreement with one Mr. Jagdish Prashad for a Bajaj Matador Tempo No. DL-1L-A-7297 (make 1994) vide agreement dated 17.2.1994 and thereby financed the vehicle. According to the insured/Respondent/Plaintiff since lease installments were not being paid by Sh. Jagdish Prashad, the vehicle was taken back from him and thereafter given to the Respondent No. 2, Sh. Prempal Kashyap under a hire- purchase agreement dated 5.4.1995 and which has been exhibited as Ex. P5. The vehicle was involved with an accident on 28.4.1995 resulting in a total loss of the vehicle. The Respondent/Plaintiff therefore preferred the claim against the Appellant/insurance company/Defendant and which having been rejected, the Respondent/Plaintiff filed the subject suit.

4. The Trial Court after completion of pleadings framed the following issues:

1. Whether there is no privity of contract between the Defendant No. l as per submission made in paras 2 and 3 of the preliminary objection of the WS of Defendant No. 1 ? OPD

2. Whether the Plaintiff is a Ltd. Company, the suit has been signed & verified by a duly authorised person? OPP

3. To what amount is the Plaintiff entitled? OPP

4. Whether the Plaintiff is entitled to any interest, if so, at what rate and to what amount? OPP

5. Relief.

5. With respect to the issue of privity of contract, the Trial Court has held as under:

The onus of this issue is on the Defendant and Ld. counsel for the Defendant has stated that there is no privity of contract between the Plaintiff and answering Defendant No. l in respect of the suit amount in question and the Plaintiff has no locus standi to file the suit against the Defendant No. 1 in respect of the amount claimed and due against Defendant No. 2. The Defendant No. 2 is the insurer of the Plaintiff in respect to the insurance policy in question and counsel for Defendant No. 2 has not challenged the repudiation of the insurance claim and has also not filed any suit challenging the said repudiation of the insurance claim within 12 months from the date of the said repudiation of the insurance claim, the Plaintiff has no legal right or authority to challenge the repudiation of the insurance, claim on any ground and he has drawn the attention on document Ex.D Wl/5 i.e. letter written by the Plaintiff to Defendant No. 1 dated 25.8.95 and Ex.DW2/l in which it is stated that vehicle was found registered in the name of Sh. Prem Pal Kashyap S/o Sh. Chottey Lal and Ex.D Wl/2 and Ex.D Wl/3 and D1 i.e. claim form filed by Sh. Prempal Kashyap.

On the Ors. hand Ld. counsel for the Plaintiff has strongly opposed the arguments of the Ld. counsel for the Defendant and stated that the Plaintiff is a Finance Company and vehicle in question was given to one Sh. Jagdish but due to non payment of the installment, Jagdish Prasad handed over the vehicle to the Plaintiff vide Ex.P Wl/4 and thereafter the said vehicle was given to Sh. Prempal Kashyap vide hire purchase agreement Ex.P Wl/5 and he has drawn the attention on the said hire purchase agreement clauses 12 & 13 and also drawn the attention on the Ex.P6 i.e. schedule of repayment of the hire purchase agreement & undertaking which was given