Veeraswami, J.

(1) The appeal and the Memorandum of Cross objections raise a question of importance as to accident liability to third party under motor insurance and come before us on a reference by Ramakrishnan, J. The precise point for our decision is whether the insurer of a motor car is not liable to a third party on a comprehensive policy of insurance on account of an accident to him by the negligence of the assured's driver, because the accident took place after the assured, the owner of the car, had sold it to another and before the purchaser got an extension of the cover to him or obtained a fresh policy. The Court below allowed as it was bound to, Madras Motor Insurance Co. Ltd. v. Mohammed Mustafa Badsha, AIR1961Mad208 and held against the insurer. Ananthanarayanan, J. was there of the view that a policy of insurance did not lapse the moment the insured parted with the ownership of the insured vehicle and that notwithstanding such transfer and ownership, the insurer, having regard to the terms of S. 96 of the Motor Vehicles Act, could not escape his liability on the policy in respect of third party risks.

The lower Court decreed the suit against defendants 1 and 3