Liability of Insurance Company.

This is an appeal by the Madras Motor Insurance Co., Ltd., defendant 4, in an action in the Court below for damages for rash and negligent driving of a motor car, which caused a very grave accident, killing the son of the two plaintiffs, by name Mohamed Mohideen. The appellant Company apparently came into the suit as the insurer, to whom notice of the proceedings was given, and who was entitled to be made a party and to defend the action, within the scope of section 96 (2) of the Motor Vehicles Act (IV of 1939). The main defence of the appellant Company is this. The concerned vehicle (MSZ 2556) belonged to defendant 1 (Sukumar Productions) and was covered by an insurance policy with the appellant-Company, as well as by the certificate of registration in the name of the owner as required by the rules. The accident was on 13th January, 1951 at about 3 p.m. The first defendant contended in the suit that he sold this motor car to defendant 2, one Sri N. Ramakrishnan, even on 8th January, 1951, and that he also delivered the car to the transferee earlier, as well as the C Certificate, the insurance policy and other documents. The person who actually drove the vehicle at the time of the accident, one Rajagopalan (Defendant 3) was in the employment of defendant 2, and not a person employed by defendant 1. The appellant-Company affirms these facts, and maintains that, since the ownership of the car was transferred by the insured prior to the date of the accident, the insurable interest in the policy thereby disappeared, so that, in legal effect, the policy must be construed as having lapsed on the date of the accident. It is admitted that (1) the policy had to run for a considerable period further (upto August of that year), before it was due for renewal by another policy with the appellant or some other company, and (2) that the alleged transferee, defendant 2, applied for transfer of the insurance policy in his name only some days after the accident. In other words, it is not in dispute by the appellant that, on the date of the accident, the policy was valid and current ex facie, that it stood in the name of defendant 1 as the insured, and that there had been no transfer of insurance. Nevertheless, learned counsel for the appellant urges before me, mainly upon the strength of certain English authorities to which I shall refer later, that the disappearance of the insurable interest in the policy by virtue of the transfer amounts to a lapse. It is argued that, consequently the third party who sustained the injury cannot claim damages from the Insurance Company.

The learned Judge who tried the suit went into the merits of evidence whether, in actual fact, the vehicle had been transferred from defendant 1 to defendant 2 on 8th January, 1951, even prior to the accident. I may here conveniently state that the facts of the accident itself are not in dispute or the fact that the driving of the vehicle on that occasion was rash and negligent, and that it resulted in the death of the son of the plaintiffs, aged about 13, entitling the plaintiffs to claim for heavy damages. The learned Judge came to the conclusion that, for want of sufficient evidence, he could not hold that the sale was established. He therefore held that the facts amounted to the ownership vesting in defendant 1 alone on the date of the accident.

Learned counsel for the Company, Sri R. Gopalaswami Ayyangar, argues that this conclusion of the learned Judge is opposed to certain facts of the documentary record, such as the receipt, dated 8th January, 1951 (Exhibit B-4) issued by Sukumar Productions to N. Ramakrishnan (defendant 2) etc. However, the receipt does not appear to have been properly proved, and the learned Judge felt some difficulty in accepting and acting upon it. But, for purposes of the present argument, I shall assume that the car was actually sold on that date, and that defendant 2 became the owner of the car on that date, as far as defendants 1 and 2