The main legal point established in the judgment is that an insurance policy for a motor vehicle is a personal contract for indemnity and cannot be transferred without the insurer's consent, as specified under the Motor Vehicles Act, 1939.

1. This appeal is from a suit for compensation in respect of an accident involving bodily injury to the plaintiff. The accident arose out of the use of motor vehicle, a lorry with registration number K L.D. 4282, at a place called Thalayi. The accident was on 15-11-1973. At the time of the accident the Plaintiff was sitting on a bicycle on the road-side far removed from tarred-portion resting his feet on the ground. While so the lorry hit him and he was knocked down. His right mandible was fractured and he lost a number of teeth. He underwent treatment in the Medical College Hospital, Calicut from 15-11-1973 to 4-12-1973. He claimed compensation to the tune of Rs. 12.000/- against the driver of the lorry, the 1st defendant, its owner, the 2nd defendant and the National Insurance Company, the 3rd defendant who is the appellant before us. The lower court decreed the suit for Rs. 4250/- against all the defendants. The Insurance Company disputes its liability for compensation, and that is the only question that falls to be decided here.

2. There is no dispute that the vehicle originally belonged to one C. K. Kunhahamad who is not a party to the suit. It was he who insured the vehicle with the 3rd defendant insurance company. While the policy was current, Kunhahamad sold the vehicle to the 2nd defendant First defendant-driver is the 2nd defendant's employee. It is common case that though Kunhahamad transferred the ownership of the vehicle to the 2nd defendant, he did not transfer the insurance policy to the 2nd defendant. Therefore, the insurance company raised the contention that the policy has lapsed and that the insurance company is not liable to satisfy the judgment and decree against defendants 1 and 2 as provided for by S.96 of the Motor Vehicles Act, 1939. The lower court found against this contention and decreed the suit, as aforesaid, against all the defendants including the 3rd defendant insurance company.

3. Under the insurance policy what the insurance company has undertaken is to indemnify the insured, inter alia, "against any liability which may be incurred by him in respect of the death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of the vehicle in a public place". (S. 95(1) (b) (i) of the Motor Vehicles Act). The indemnification provided by the policy may also extend to any person driving the vehicle with the consent of or on the order of the insured. Admittedly the insured under the policy is C. K. Kunhahamad The insured under the policy is not the 2nd defendant, the owner of the lorry at the time of the accident, nor the first defendant who was driving the vehicle at that time, as an employee of the 2nd defendant. The contract of insurance is a contract of personal indemnity and therefore the insured cannot transfer the benefits under a policy so long as such benefits are contingent. In short an insurance policy cannot be transferred by the insured without the consent of the insurer. On the insurer agreeing to such a transfer there is a novation of the contract by which the original assured is substituted by the new assured, the transferee to whom the policy has been transferred. It follows both defendants 1 and 2 cannot look to the 3rd defendant insurance company for any indemnity on the basis of an insurance policy issued by the 3rd defendant.

4. In Peters v. General Accident. Fire and Life Assurance Corporation Ltd. (1938) 60 LI.L. Rep. 311, C. A. Sir Wilfrid Greene, M. R., said:

"It appears to me to be as plain as anything can be that a contract of that kind is in its very nature not assignable. The effect of the assignment, if it were possible to assign, was stated by Mr. Coymns Carr to be that from and after the assignment the name of Mr. Pope, the assignee, would have taken the place of Mr. Coomber in the policy, and the policy would have to be read as though Mr. Pope's name were mentioned instead of Mr. Coomber's; in other words, t