Privity of contract in insurance requires timely policy transfer; failure to comply extinguishes benefits.

JUDGMENT

The petitioners, the legal representatives of late Adarsh, challenge Ext.P4 award dated 7.11.2022, passed by the Permanent Lok Adalat, whereby their claim for compensation under the personal accident cover attached to the policy was rejected on the ground that the certificate of insurance continued to stand in the name of the previous owner even at the time of the accident.

2. It is submitted that the deceased Adarsh had purchased the motorcycle bearing Registration No.KL-21-H-6280 from its prior owner, Sri.Sudheesh Kumar, in May 2021. The registration certificate was duly transferred to the name of the deceased on 13.05.2021, several months before the accident which occurred on 12.11.2021. Ext.P3 Certificate of Insurance issued by the 2^nd respondent stood in the name of the previous owner of the vehicle, and the personal accident cover of Rs.15 lakhs under the policy remained in force at the time of the deceased’s accident. The petitioners staked a claim for the amount, and as there was no reply from the 2^nd respondent, they approached the 1^st respondent by filing Ext. P1.

3. The Permanent Lok Adalat, while rejecting the claim through Ext.P4 award, held that since the insurance policy had not been transferred into the name of the deceased, who was the registered owner of the vehicle at the time of the accident, there existed no privity of contract between the insurer and the owner.

4. It is contended that General Regulation 17 of the Indian Motor Tariff, which allows 14 days for policy transfer, does not operate as a substantive bar to insurance rights, particularly when the policy was valid, the premium paid, and the insurer’s liability had already commenced. The deemed transfer of insurance to the transferee upon change of ownership is not time-bound, nor does the Regulation prescribe any consequence for failure to transfer the Certificate of Insurance within 14 days. It is further argued that the deceased held a valid licence for LMV and motorcycles without gear and cannot be treated as unlicensed. Hence, Ext.P4 is impugned as vitiated by patent illegality and misapplication of statutory provisions and the Indian Motor Tariff.

5. In the counter affidavit filed by the 2^nd respondent, it is contended that the personal accident claim is wholly untenable, since the policy continued to stand in the name of the previous owner even on the date of the accident, and there existed no privity of contract between the deceased and the insurer. The respondent asserts that although the vehicle was transferred to the deceased's name on 13.05.2021, the policy was renewed on 23.07.2021, still in the name of the prior owner. The deceased did not apply for transfer of the policy within the 14 days mandated under General Regulation 17 of the Indian Motor Tariff, and failure to effect such transfer extinguishes all contractual rights under the policy. The deceased could not have claimed personal accident benefits under a policy that continued to stand in the name of another person. Even after the transfer of ownership, neither the petitioners nor the deceased took steps to have the policy corrected or transferred into the deceased’s name, and the policy was renewed in the name of the previous owner. Consequently, the deceased never became the insured person under the contract, and no personal accident coverage could legally accrue to him.

6. The respondent also submits that the deceased was not holding a valid licence to drive the vehicle involved in the accident, as he possessed only a licence for “motorcycle without gear”, whereas he was riding a motorcycle with a gear. This amounts to a