LIABILITY OF INSURANCE COMPANY ON TRANSFER OF OWNERSHIP OF VEHICLE UNDER MOTOR VEHICLES ACT.

 

LIABILITY OF INSURANCE COMPANY ON TRANSFER OF OWNERSHIP OF VEHICLE UNDER MOTOR VEHICLES ACT.

Suppose a vehicle is insured with an insurance company, and the owner of the vehicle sells the vehicle to some other person, what will be the effect of transfer of ownership? The answer is certificate of insurance deemed to be transferred in favour of transferee from the date of transfer. Vehicle being covered b insurance on date of accident, insurer liable to pay compensation and not transferee/owner.

This aspect has been clearly explained in 2018 (1) TNMAC 641  Lakshmi Vs Viswanathan and another.

The brief of the case is as follows:

Claimants are the appellants. First appellant is the wife of the deceased and second & third appellants are the minor children.

On 29.9.2006, while the deceased was employed as a driver in a lorry bearing regn.no. TN 23 Q 6633 the said vehicle met with an accident and the deceased suffered death during the course of employment. On his death, the appellants filed a claim petition before the authority under the workmen compensation at. The first respondent admitted that the deceased was employed under him as a driver and was receiving a sum of Rs.4000/pm, as salary. The vehicle was covered by an insurance policy, valid from 18.4.2006 to 17.4.2007. Therefore, it is contended that the insurance company is liable to pay compensation. The insurance company denied the averments made in the claim petition.

In order to prove the claim, on the side of the appellants/claimants, the first appellant was examined herself as pw1 and EXs. A1 to A6 were marked. On the side of respondents, none was examined and no documents were also marked.

After considering the evidence, both oral and documentary, the authority came to the conclusion that the deceased employee was working as a driver on the date of accident under the first respondent / opposite party and that he suffered death during the course of employment and thereby the appellants are entitled to compensation. The age of the deceased was fixed as 32 years on the basis of EX A5, and his income was fixed on the basis of his employment. Since the insurance policy reflected the name of one Sathyan and it did not stand in the name of the first opposite party, the liability was fastened on the owner of the vehicle. The total compensation was arrived at by the authority at Rs.4,12,898.

Learned counsel for the appellant would contend that as per EX A3, insurance policy was transferred from the previous owner, namely sathyan to the first respondent namely, Viswanathan; the accident had taken place on 29.9.2006; the age of the deceased was 25 years as per EX A4, driving license, and, therefore, the award passed by the authority has to be enhanced.

 

The appeal was admitted on the following substantial question of law.

1.     Whether the decision of the deputy commissioner of labour in absolving the insurance company from paying compensation is sustainable in law?

2.     Whether the deputy commissioner of labour has to follow the settled procedures in order to assess the just compensation payable to the claimants?

From the contention of the parties, the issue to be decided in this case is, with regard to quantum of compensation and the liability to pay the same. As per Ex A 4, driving license, the date of birth of the deceased employee was shown as 3.4.1982. The authority has also recorded the date of birth of the deceased employee as 3.4.1982. However, while deciding the quantum of compensation, the authority relied on EX A 5, post mortem certificate, and fixed the age of the deceased as 32 years. In the considered opinion of this court, driving license is a valid document, issued y the transport authority, and the age mentioned therein shall be given preference over the assessment of the doctors during post-mortem. Therefore, the age of the deceased is fixed as 25 years and the corresponding multiplier factor as 216.91. In view of the change in age, the compensation is reworked as under.

Rs.4,051 x 50/100 x 216.91 = Rs.4,39,352.

With regard to liability to pay compensation, as per section 157 of the motor vehicles act,1988, insurance goes along with the vehicle and the certificate of insurance shall be deemed to have been transferred in favour of the person, to whom the motor vehicle is transferred, with effect from the date of its transfer.

On perusal of Ex A 3, insurance policy, it is seen, that the vehicle was transferred in the name of the first respondent with effect from 1.8.2006. The date of accident is 29.9.2006 and the insurance was in force between 18.4.2006 & 17.4.2007. In that case, the vehicle was covered by insurance and the 2^nd respondent – insurer is liable to pay compensation and not the 1^st respondent – owner of the vehicle, as held by the authority. Therefore it was held that second respondent – insurance company is liable to pay compensation.