Insurance liability for vehicle damage is tied to the policy holder's name; indemnity depends on policy transfer.

1 A Maruti Car with registration No. CHK-9253 was purchased in the name of Mrs. Archana Wadhwa for which the respondent, M/s. New India Assurance Company Ltd., had issued a comprehensive insurance policy. The premium for the insurance was paid by the appellant company in whose favour the car was transferred. The registration of the car was transferred to the appellant on 15-6-1989. On 26-6-1989, the appellant intimated the transfer of registration and asked for transfer of the insurance policy. A reminder was sent on 24-7-1989. The respondent did not reply to the two letters. On 17-9-1989 the car met with a serious accident in which the Managing Director of the appellant suffered serious injuries and his sister died. On 11-10-1989 the appellant asked for the assessment of the damages as the car was a total loss. The respondent did not respond. A reminder dated 26-12-1989 met the same fate. The appellant got a notice issued to which the respondent replied that the appellant had no insurable interest in the car. The appellant filed the complaint before the Consumer Disputes Redressal Commission, Chandigarh, which directed the respondent to pay Rs. 83,000/- i. e. the insured value of the vehicle, as the vehicle was a total loss, along with costs and interest. The National Consumer Disputes Redressal Commission set aside the order of the Commission at Chandigarh, dismissed the complaint and granted cost of the appeal. Hence the appeal.

2. The moot question involved in the case is whether on the above facts, without the insurance policy being transferred in the name of the appellant, it was entitled to be indemnified by the insurer. The National Consumer Disputes Redressal Commission held that under S.157 of the Motor Vehicles Act , 1988, (hereinafter called 'the New Act') a certificate of insurance is deemed to have been transferred in favour of the person to whom the vehicle is transferred but that the said provision applied only in relation to third party risk and did not apply to policy covering risk of damage to the vehicle or person of the insured. The National Commission placed reliance on a judgment of the High Court of Andhra Pradesh in Madinani Kondaiah v. Yaseen Fatima , AIR 1986 Andh Pra 62 (FB).

3. Before proceeding further it is necessary to examine the provision of S.103-A of the Motor Vehicles Act , 1939, hereinafter called the 'Old Act' and S.157 of the New Act, in juxtaposition :

4. On a plain reading of S.103A it is obvious that the insurer could in a given case refuse to transfer the certificate of insurance and the policy described therein. It is only if the insurer fails to convey the refusal within fifteen days that the deeming clause comes into operation. However, S.157 of the New Act makes the transfer of the Certificate of Insurance along with the insurance policy described therein automatic along with the transfer of the motor vehicle together with the policy of insurance to the purchaser. This is clearly an improvement over the previous provision on the subject.

5. Thus under the Old Act the insured was requiring to apply in the prescribed form to the insurer for transfer of the certificate of insurance and the policy described therein. Once such an application was made the insurer had to communicate its refusal within fifteen days of the receipt of the application for transfer failing which the certificate of insurance and the policy described therein "shall be deemed to have transferred" in favour of the transferee. This shows that the insurer had the right to refuse transfer of the certificate of insurance and