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Case Number

A.A.O No. 49 and 50 of 1978

Attorney(S)

Messrs. N. Rosi Naidu and S. Vanangamudi for Applt.
M/s. S. M. Amjad Nainar, A. C. Muthanna, S. Arumainathan, M. Karthikeyan and S. Gangaram Prasad for Respts.

Judges

Ramanujam
Sengottuvelan, JJ.

Acts

SS. 103A and 105 of the Motor Vehicles Act.
Ss. 103 and 105 of the Motor Vehicles Act,
S. 110-A of the Motor Vehicles Act,
S. 103-A of the Motor Vehicles Act,
S. 105 of the Motor Vehicles Act
S. 62 of the Contract Act).
MOTOR VEHICLES ACT

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Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

On 22 August 1972 Dharmaraj (rider) and Thirumal (pillion) were travelling on a motorcycle (M.S.Q 6512) when a motor car (M.S.R 5018) coming in the opposite direction dashed into them on the Kodambakkam bridge, Arcot Road. Both motorcyclists were taken to Government Royapettah Hospital but died the same evening from their injuries.

Two claim petitions under Section 110-A of the Motor Vehicles Act were filed: O.P. No. 772 of 1972 by the widow of Dharmaraj (claiming Rs. 2,00,000) and O.P. No. 785 of 1972 by the widow and children of Thirumal (claiming Rs. 1,50,000). The petitions named as respondents the registered owner of the car (first respondent) and the insurer (second respondent). The original owner (first respondent) died before service; his widow (third respondent) was impleaded as his legal representative. A purchaser, Niranjan Roy, was impleaded as fourth respondent.

The Tribunal found the car's driver negligent, awarded compensation of Rs. 33,000 in O.P. 772 and Rs. 52,400 in O.P. 785, and held respondents 2 (insurer), 4 (transferee), and 5 (driver) liable. Respondents 4 and 5 did not appeal; the insurer (second respondent) appealed the Tribunal's finding that the insurer remained liable under the policy despite a transfer of ownership. These appeals are C.M.A. Nos. 49 and 50 of 1978.

Legal Issues Presented

Whether the motor insurance policy issued in the name of the original owner lapsed upon the transfer of ownership of the vehicle (from the original insured to the purchaser), or whether the insurer continued to be liable under the policy.
Whether Sections 103A and 105 of the Motor Vehicles Act operate to treat a certificate and policy as transferred or to imply insurer acceptance of the transferee as insured in the factual circumstances of this case.

Arguments of the Parties

Appellant (Insurance Company)

Contended that the insurance policy issued to the original owner had lapsed on the transfer of ownership of the car and therefore the insurer was not liable to pay compensation for the accident.
Argued that the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sundar does not lay down the correct law and, in any event, is not applicable to the facts of this case.
Produced a copy of the original policy on appeal and sought its admission as additional evidence to demonstrate that the policy contained an exemption clause covering lapse on variation/termination of the insured's interest.

Claimants (Widow of Dharmaraj; Widow and Children of Thirumal)

Alleged that the accident resulted from rash and negligent driving of the car and claimed substantial compensation (Rs. 2,00,000 and Rs. 1,50,000 respectively).
Relied on the Tribunal's finding (which in turn relied on the Bombay High Court decision) that the insurer continued to be liable though ownership had been transferred.

Third Respondent (Legal representative / Seller)

Admitted that she sold the car to Niranjan Roy on 14 August 1972 and informed the insurer of the transfer on the same day.
Contended that the person driving the vehicle at the time of the accident was not her employee and thus she was not vicariously liable.

Fourth Respondent (Purchaser, Niranjan Roy)

Denied that ownership had been transferred to him and denied liability to pay compensation.
Asserted that the car had been left for repairs with Messrs. Eswar Automobiles on 14 August 1972 and that the accident occurred while the vehicle was driven by a driver employed by that garage; sought addition of the garage partners as parties.
Also pleaded that the accident was solely due to the negligence of the motor-cycle driver and that the claimed amounts were excessive.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Smt. Gulab Bai Damodar Tapse v. Peter K. Sundar (Bombay High Court, 1975 A.C.J. 100)	Held that though generally a policy lapses on transfer, the insurer may be taken to have accepted the transferee as insured by conduct (implied acceptance), resulting in novation and insurer liability.	The Tribunal relied on this decision to hold insurer liable; this Court examined the factors relied upon there but distinguished it on the facts—specifically noting the present policy contained an express clause exempting insurer where insured's interest terminates, and that the statutory procedures (S.103A application) were not followed here.
Peters v. General Accident and Life Assurance Corporation Ltd. (Peter S. v. General Accident Fire and Life Insurance Corporation Ltd.)	Expressed the principle that a motor insurance policy is not assignable and that novation (release of original assured and acceptance of new assured) is required to substitute a new insured against the insurer's will.	The Court relied on the quoted observations to emphasize that novation (consent of all parties) is required to substitute a new assured and that handing over the policy alone does not suffice to transfer insurance coverage.
Mehtab Singh S. Jot Singh v. National Fire and General Insurance Co. Ltd. (A.I.R. 1963 Punj. 103)	Supports the established position that an insurance policy lapses upon transfer of ownership unless the insurer agrees to accept the transferee as the insured.	Listed by the Court among authorities establishing the general principle that policies lapse on transfer absent insurer's agreement to accept the transferee.
Boopathi v. Vijayalakshmi (1966 A.C.J. Mad. 1 = 1965 78 L.W. 643)	Same general proposition: policy lapses on transfer of ownership unless insurer agrees to accept transferee.	Relied on as part of the body of authority establishing the general rule concerning lapse of policies on transfer.
Oriental Fire and General Insurance Co. Ltd v. Vimal Roy (1972 A.C.J. 314)	Also cited for the proposition that insurance policy lapses upon transfer of ownership unless insurer agrees to accept the transferee.	Placed alongside other cases to show the well-established legal position adopted by the Court.
Balwant Singh v. Jhannubhai (Madhya Pradesh High Court)	Took a contrary view on analogous facts, holding that where there is no material to indicate how transfer of insurance policy should be effected and insurer has not agreed to subsist the policy post-sale, insurer cannot be held liable; emphasized that contract of insurance is personal and cannot be assigned without novation.	The Court referred to this decision as a contrary authority and relied upon its reasoning (that novation/express acceptance is required) in reaching its conclusion that the insurer was not liable on the facts before it.

Court's Reasoning and Analysis

The Court proceeded by first stating the well-established general principle: an insurance policy lapses upon transfer of ownership unless the insurer agrees to accept the transferee as insured (novation). It cited several authorities to establish this proposition.

The Court then examined the Bombay High Court decision relied on by the Tribunal (Smt. Gulab Bai Damodar Tapse). That decision found implied acceptance by the insurer based on three circumstances: (1) absence of a clause in the policy regarding transfer and non-production of insurer's records (allowing adverse inference), (2) operation of Section 103-A of the Motor Vehicles Act (deeming transfer where prescribed application is made and no refusal intimated within 15 days), and (3) Section 105 (duty on insurer to notify registering authority of cancellation/suspension), together yielding a finding of implied consent/novation.

The Court considered whether that reasoning applied here. It identified key factual distinctions and legal points:

Policy Clause: On appeal the insurer produced a copy of the policy (admitted as Ex. R10). The policy contained a general exception clause excluding liability for accidents occurring after any variation in or termination of the insured's interest in the vehicle. Because the policy here expressly covered lapse on termination of insured's interest, one of the Bombay Court's factual bases (absence of such a clause) did not exist in this case.
Application under S.103A: The Court emphasized that S.103A requires a prescribed-form application by the insured for transfer of the certificate and policy; if the insurer does not refuse within 15 days, the policy is deemed transferred. In this case the only communication was an intimation "for your information" (Ex. R4) sent by the seller; no application in the prescribed form was made by either vendor or purchaser and there was no request for transfer. Given the lack of the prescribed-form application, the deeming provision of S.103A could not be invoked.
Timing and Implied Acceptance: The accident occurred one week after the sale and the insurer had little time to reply; the Court held that the short interval and absence of an application or request meant there was no factual basis to infer implied acceptance or novation. The Court also expressed the view that S.105 (which deals with notification of cancellation or suspension) concerns positive steps of cancellation/suspension and does not extend to automatic lapsing by operation of contract terms; therefore S.105 was not available to treat insurer as having impliedly assented.
Novation Requirement: The Court reiterated the principle (quoting Peters) that novation requires agreement of all parties—consent may be inferred from conduct but must be supported by facts showing such assent. Merely handing over the policy or sending an intimation "for information" does not constitute the necessary assent for novation.
Evidence and Procedure: The Tribunal did not have the original policy; on appeal the copy was admitted as additional evidence under Order 41, Rule 27(c) CPC (Ex. R10) because it was necessary for proper adjudication. The policy's contents materially affected the legal analysis.

On these bases the Court concluded there was neither an application in the prescribed form nor any implied agreement by the insurer to accept the transferee as insured; thus the Tribunal's finding that the insurance company continued to be liable under the policy was erroneous.

Holding and Implications

HOLDING: The appeals by the Insurance Company (C.M.A. Nos. 49 and 50 of 1978) are allowed and the Tribunal's finding that the insurer continued to be liable under the policy despite the transfer of ownership is set aside.

Implications / Consequences:

The award to the extent it was made against the appellant (insurance company) is set aside.
No order as to costs was made by the Court.
The Court refused leave to appeal to the Supreme Court on the ground that although the case involves interpretation of Sections 103A and 105 of the Motor Vehicles Act, those sections were held not to be applicable on the special facts of this case; accordingly leave was denied.
Regarding interim deposits: the insurer had deposited Rs. 45,500 pursuant to an interim order; because the insurer succeeded in the appeal, it may withdraw that deposit. The Court refrained from ordering restitution of interest already withdrawn by respondents 1 to 4, observing they would in any event be entitled to interest if the sixth respondent deposits compensation with interest; when the insurer withdraws the deposited sum it can withdraw that portion representing interest.
In C.M.A. 50 of 1978 the insurer had deposited Rs. 16,500, which claimants stated had been withdrawn after furnishing security; the insurer may approach the Tribunal for restitution of that amount.
No broader operative precedent beyond the decision on the specific facts is articulated by the Court; the judgment distinguishes the Bombay decision on its facts and emphasizes the importance of the policy terms and statutory-form application under S.103A for treating a transfer as effecting a transfer of insurance benefits.

Note: This summary is based exclusively on the information contained in the provided opinion. No facts or conclusions beyond those expressly stated in the opinion have been added.

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Calcutta Insurance, Madras, Now Known As National Insurance Co., Ltd. v. Thirumalai Ammal Alias Mookammal And Others

JUDGMENT

Ramanujam, J.

1. These two appeals arise out of two claim petitions filed under S. 110-A of the Motor Vehicles Act, by the widow of one Dharmaraj and the widow and children of one Thirumal, both of whom died in a motor vehicle accident.

2. On 22nd August, 1972 at about 12 50 p.m, the said Dharmaraj and Thirumal were going in a Motor cycle M.S.Q 6512, Dharmaraj riding it and Thirumal sitting on the pillion. When they were going on the Kodambakkam bridge in Arcot Road, the motor car M.S.R 5018, which was coming in the opposite direction, suddenly dashed on the motor cycle as a result of which the right leg of Dharmaraj was cut off below the knee, and thrown to a distance of 12 feet and both the legs of the pillion rider, Thirumal, were fractured. Both the injured were taken to the Government Royapettah Hospital, but in the evening of the same day both of them succumbed to the injuries. On the ground that the accident was due to the rash and negligent driving of the motor car, M.S.R 5018 by its driver, the widow of Dharmaraj filed O P. No. 772 of 1972, claiming a compensation of Rs. 2,00,000, while the legal representatives of Thirumal filed O.P No. 785 of 1972 claiming a compensation of Rs. 1,50,000. Both the claim petitions had been filed against the respondents 1 and 2 who are respectively the owner of the car and the Insurance company with which the car had been insured.

3. First respondent, the original owner of the car died even before the summons were served and his widow, third respondent, was brought on record as his legal representative. The second respondent, the insurer of the car, contended that the owner of the car to whom an insurance policy had been issued died on 10th July, 1972, that the third respondent, his widow, had sold the said car on 14th August, 1972, to one Niranjan Roy, that on such transfer of the ownership of the car, the policy issued in the name of the first respondent had lapsed even before 22nd August, 1972, the date of the accident and that, therefore, it is not liable to pay any compensation. The third respondent in both the claim petitions, who came on record as the legal representative of the first respondent contended that she sold the said car to Niranjan Roy for a valuable consideration on 14th August, 1972, that she had informed about the transfer of ownership of the car to the Insurance company on the same day, that the person who drove the vehicle at the time of the accident was not her employee and that, therefore, she is not vicariously liable to pay any compensation. On taking note of the defence taken by the third respondent, the purchaser Niranjan Roy had been impleaded as the fourth respondent. He contended that there was no transfer of ownership of the said car to him and that therefore, he was not liable to pay any compensation. He also contended that the said car had been left for repairs with Messrs. Eswar Automobiles on 14th August, 1972, that the accident having occurred while the car was driven by the driver employed by the said automobiles the partners of the said automobiles are to be added as parties as they are liable to pay any compensation. He also pleaded that the accident was caused solely due to the negligence of the motor cycle driver and that, therefore, no compensation is payable by him in respect of the said accident, and that in any event, the compensation claimed in both the claim petitions is excessive.

4. The parties adduced evidence to substantiate their respective pleas and after analysing the evidence the Tribunal held that the accident had occurred due to the rash and negligent driving of the car, M.S.R, 5018, by its driver that a fair and reasonable compensation payable in respect of O.P 772 of 1972, will be Rs. 33,000, as against the claim of Rs. 2,00,000, and a sum of Rs. 52,400 will be fair and reasonable in O.P 785 of 1972, as against the claim for Rs. 1,50,000. On the question as to who among the respondents are liable to pay the said compensation, determined in the two claim petitions, the Tribunal held that respondents 2, 4 and 5 in both the claim petitions are liable to pay the compensation awarded. Respondents 4 and 5, the transferee and the driver of the car, have not appealed against the award passed by the Tribunal and the award as against them has become final. The second respondent, Insurance Company, has alone filed these two appeals against the award passed by the Tribunal in O.P 772 and 785 of 1972.

5. Even before the Tribunal, the Insurance Company, appellant herein, had contended that on the transfer of ownership of the vehicle, by the third respondent, the policy in respect of the vehicle had lapsed and that therefore, the Insurance company is not liable to pay any compensation. This contention has been overruled by the Tribunal relying on a decision of the Bombay High Court in Smt, Gulab Bai Damodar Tapse v. Peter K. Sundar . 1975 A.C.J 100.

6. In these appeals filed by the Insurance company the finding of the Tribunal that the Insurance company continues to be liable under the policy even after the ownership of the car, is challenged. The learned counsel for the appellant contends that the decision of the Bombay High Court in Smt Gulab Bai Damodar Tapse v. Peter K. Sundar, does not lay down the correct position of law and that in any event the said decision will not apply to the facts of the present case. Thus the only question that arises for consideration in these appeals is whether the policy taken by the first respondent had lapsed with the transfer of ownership of the car, as urged by the appellant.

7. It is well established that the Insurance policy lapses upon the transfer of the ownership of the motor vehicle unless the Insurance company agrees to accept the transferee as the insured in relation to the vehicle either at the instance of the insured or the transferee. The following cases will clearly establish the above position: Peters v. General Accident and Life Assurance Corporation Ltd.,2 Mehtab Singh S. Jot Singh v. National Fire and General Insurance Co Ltd . A.I.R 1963 Punj. 103., Boopathi v. Vijayalakshmi . 1966 A.C.J Mad. 1. = 1965 78 L.W 643., and Oriental Fire and General Insurance Co. Ltd v. Vimal Roy . 1972 A.C.J 314,.. Even the decision in Smt, Gulab Bai Damodar Tapse v. Peter K. Sundar referred by the Tribunal and relied on by the claimants accepts the said well-established proposition.

8. However, the learned Judges of the Bombay High Court in the last noted case proceeded on the basis that the conduct of the Insurance company indicated that it has accepted impliedly the transferee as the insured of the vehicle, that, the Insurance company having accepted the transferee as the insured, there is a novation of the original contract by a fresh contract of indemnity between the Insurance company and the transferee and therefore, the Insurance company has to indemnify the transferee in relation to the accident caused by the said vehicle. After pointing out that as the law stands today the Insurance policy would lapse upon the transfer of the ownership of the motor vehicle unless, of course, the Insurance company agrees to accept the transferee as the insured person in relation to the vehicle, the Court proceeded to find out whether the Insurance company has agreed to accept the transferee as the insured person in relation to the vehicle in that case. After considering the evidence in detail, the Court held that the Insurance company had impliedly agreed to accept the transferee as the insured in respect of the vehicle, because of the following three circumstances:—(1) There was no clause in the policy with regard to the transfer of the policy to a purchaser of the car to which it related, and the Insurance Company did not lead evidence or even produce the original records which would have shown as to what was the correct state of affairs and on the facts adverse inference could be drawn against the Insurance company for non-production of the necessary materials before the court and even in the written statement filed by the Insurance company there was no averment to the effect that the Insurance company informed the transferee about the lapse of insurance policy. (2) Under S. 103-A of the Motor Vehicles Act, the Insurance company is bound to transfer the benefits of the insurance policy to the transferee, if an application is made to that effect and that the notice of transfer given by the owner of the vehicle in that case can be taken to be an application for transfer of the policy. (3) S. 105 of the Act had imposed a duty on the Insurer to notify the registering authority of cancellation or suspension of the policy and the insurance company not having notified such cancellation or suspension of the policy to the registering authority, it should be taken that the Insurance company impliedly assented to transfer the benefits of the policy in favour of the transferee. The question is whether the decision in that case applies to the case on hand.

9. Before we proceed to deal with the facts of this case to find out whether the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sundar is applicable we like to refer to a decision of the Madhya Pradesh High Court in Balwant Singh v. Jhannubhai which has taken a contrary view on more or less similar facts, of course, without referring to the decision of the Bombay High Court. In that case the vehicle was owned originally by Dr. Joshi, who had transferred the vehicle to one Gyarsilal and the accident occurred after the transfer of the ownership of the car. The controversy between the parties centred round the questioa whether the Insurance policy held by Dr. Joshi in respect of the vehicle was or was not transferred to Gyarsilal, for, the transfer has not been accepted and registered by the Motor vehicles authorities. After resolving the dispute by holding that the transfer of ownership of the car does not depend on its registration and that the registration of the motor vehicle is not a condition precedent for a transfer of the vehicle the court proceeded to decide the further question as to whether the purchaser, Gyarsilal, can claim the benefit of the insurance policy taken by the vendor in respect of the said car. On the question the court took the view that as there was no statutory provision either under the Motor Vehicles Act or under the Insurance Act, about the transferee's right under the motor insurance policy, the contract of insurance being a contract of personal indemnity, cannot be assigned when it is transferred, though there can be a novation of the contract by which the original assured is released and a new assured is accepted. On the facts of that case, when the Insurance policy was also handed over by the vendor to the purchaser and the transfer was also notified to the Insurance company, the court was of the view that as there is no material on record to indicate how, after the sale of a vehicle, the transfer in the insurance policy is to be effected in the name of the new purchaser and what formalities are required to be undertaken and complied with by the parties concerned for giving due effect to the transfer of the insurance policy in the name of the purchaser and that the insurance company had agreed to keep the policy subsisting after its sale, the insurance company cannot be held liable under the policy for payment of compensation. In this context, it is also pertinent to refer to the following observations of Goddard, J. (as he then was) in Peter, S. v. General Accident Fire and Life Insurance Corporation Ltd., while dealing with the question whether when a motor car insurance policy is transferred by the owner-vendor to a purchaser, there is an assignment of the policy.’

“I do not think that you can assign a policy of this nature at all…You cannot thrust a new assured upon company against its will. If you do that you must have a novation. You must have the release of the assured and the acceptance of a new assured.”

These observations make it very clear that when a question is raised as regards the transfer of a motor insurance policy containing a clause regulating its transfer to the purchaser of the car then what is to be seen and determined is whether there has been a novation of the contract of personal indemnity in terms of the clause. The requisites for the novation of a contract are well known (See S. 62 of the Contract Act). One of the requisites is that there must be agreement of all the parties to the new contract on the principles generally applicable to the formation of contracts, and it cannot be disputed that the consent of parties to a novation may be established by circumstances showing such assent as well as by express words. It is true that whether there was an agreement to substitute a new contract or not is a question of fact depending on the intention of the parties and one must look to the substance of the matter and not to the mere form. The handing over of the policy by the vendor to the purchaser on the sale of a car does not by itself constitute a transfer of the policy to the purchaser.

10. Coming to the facts established in this case it is not in dispute that the original owner of the car died on 10th July, 1972, the car was sold on 14th August, 1972, and the accident occurred on 22nd August, 1972. The third respondent, wife of the insured, had reported on 14th August, 1972 to the Insurance company about the death of her husband on 10th July, 1972. Since much turns upon the notice of intimation, dated 14th August, 1972, the same is extracted below—

“I regret to report the death of Sri K.R Lakshminarayanan, my husband, owner of the captioned car on 10th July, 1972. On his death, the car was transferred to my name, being the legal heir and on 14th August, 1972 the car was sold by me to Mr. Niranjan Roy, No. 7, Cenotaph Road, Teynampet, Madras-18. This is for your information”.

A copy of the said letter has also been sent to Niranjan Roy. The third respondent was also examined as R.W.2 Her deposition indicates that all the papers relating to the said vehicle had been handed over to the purchaser. The accident had occurred on 22nd August, 1972, within one week from the date of transfer of the ownership of the vehicle. In this case, it is true that the Insurance company had not sent any reply to the letter of intimation sent by the third respondent before the accident took place. In this case, within one week from the date of intimation of the transfer, the accident had happened and whatever the Insurance company might say after the date of the accident may not be material for deciding the question as to whether it had impliedly agreed for any novation and to substitute the purchaser as an insured under the policy taken by the first respondent with reference to the vehicle. It is significant to note that the two claim petitions were not preceded by any notice to the insurance company and therefore, it had no opportunity to put forward its case as to whether the Insurance policy has lapsed on the transfer of the vehicle or not. The have, in fact, filed counter statement in both the claim petitions, contending that the policy lapsed on the transfer of the ownership of the vehicle. In this case the original insurance policy was not filed before the Tribunal. As the original policy was either with the third defendant or with the fourth defendant, the Insurance company could not produce the original policy before the Tribunal. However, they have produced a copy of the Insurance policy issued in this case with an application to receive the same as additional evidence in this appeal. Though the said application for reception of the copy of the policy as an additional evidence is opposed by the contesting respondents on the ground that the same had not been produced at the time of enquiry before the tribunal and that no explanation has been offered as to why it has not been produced before the Tribunal at the stage of inquiry, we are of the view that the copy of the policy is necessary for a proper adjudication of the disputes between the parties in these appeals and therefore, a copy of the policy could be accepted as an additional evidence under O. 41, R. 27 (c), C.P.C We, therefore, allow the said petition for reception of additional document and mark the same as Ex. R10. A perusal of the policy indicates that it contains a clause regarding the transfer of the vehicle under the head of ‘general exceptions’. It is stated that the company shall not be liable under the policy in respect of (1)…(4) any accident, loss, damage and/or liability caused sustained or incurred after any variation in or termination of the insured's interest in the motor car/vehicle/cycle. This exempts the insurance company from liability in respect of any accident, loss or damage occurring after the insured's interest in the vehicle has ceased. Therefore, one of the reasons given by the Bombay High Court in Golab Bai Damodar Tapse v. Peter K. Sundar cannot be applied to this case. In that case, the Bombay High Court specifically found that there is no clause in the policy dealing with the transfer of the vehicle; but in this case we have got a specific clause providing for an exemption for the insurance company from liability in respect of an accident after the insured has ceased to have any interest in the vehicle.

11. Coming to the other reason given by the Bombay High Court, based on Ss. 103 and 105 of the Motor Vehicles Act, that Court specifically found that the conduct of the Insurance company was such as to imply the acceptance of the transferee of the insured in the place of the original insured. But, the facts of this case are not such as to lead any such inference. The transfer had taken place just one week before the accident and the Insurance company had practically no time to send any reply to the intimation of transfer given by the third respondent. Apart from this, we do not see how a mere intimation of transfer as to the ownership of the car will attract the provision in S. 103-A of the Act. That section says where an insured proposes to transfer to another person the ownership of the motor vehicle in respect of which such insurance was taken together with the policy of insurance relating thereto, he may apply in the prescribed Form to the insurer for the transfer of the certificate of insurance and the policy described in the certificate in favour of the person to whom the motor vehicle had been transferred and if within 15 days of the receipt of such application by the insurer, the insurer has not intimated the insured and such other person his refusal to transfer the certificate and the policy to the other person, the certificate of insurance and the policy described in the certificate 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. In this case admittedly, except the intimation of transfer, there was no application in the prescribed Form sent either by the insured or by the purchaser for the transfer of the certificate of insurance and the policy as contemplated in S. 103-A. Even if an application for transfer of the certificate of insurance and the policy in the prescribed Form is not made, at least a request could have been made to that effect either by the third respondent or by fourth respondent. In this case, admittedly there is not even a request for transfer of the certificate of insurance or the policy and the letter (Ex. R4) of the third respondent intimating the transfer has merely been sent ‘for information’. We do not see how such a letter as Ex. R4 will amount to an application for transfer of the Insurance policy and the certificate as contemplated under S. 103A of the Act. As already pointed out, since the accident took place a week after the transfer of the ownership of the motor vehicle, even if an application for the transfer has been made, the deeming provision contained in S. 103A of the Act could not have been invoked against the Insurance company as it had time to consider the question of transfer till 29th August, 1972. We are therefore, of the view that S. 103A of the Act cannot be invoked in this case for substituting to infer an implied agreement by the Insurance company, the purchaser, as the insured in the place of the original insured with reference to the policy taken in respect of the vehicle. Similarly, S. 105 of the Motor Vehicles Act cannot be invoked in this case—apart from the fact that the said section relates to the cancellation or suspension of the policy and not a case of automatic lapse of the policy on the transfer of the vehicle. Having regard to the short interval between the date of the transfer and the date of the accident, there is no possibility of the insurer intimating about the factum of lapse of the policy on the transfer to the registering authority. Though the judgment of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sundar, has proceeded on the basis that S. 105 of the Act will impose a duty on the insurer to inform the registering authority about the lapsing of the policy, with respect, we are not inclined to agree with this view. Cancellation or suspension is different from the automatic lapse of the policy in pursuance of its terms. Normally, cancellation or suspension is a positive step taken by the insurer with reference to the policy. But, lapsing of the policy as a result of its terms will not be such a positive step. When the Legislature in S. 105 have specifically stated that only in cases of cancellation or suspension, a duty is cast on the insurer to notify such cancellation or suspension, it is not possible for us to invoke that section even in the case of lapsing of the policy.

12. Thus, on a due consideration of the matter, we hold that as there was neither an application for transfer of the certificate of insurance and the policy in the prescribed Form nor at least a request therefor there is no question of any implied agreement by the Insurance company to accept the transferee, the fourth respondent, as an insured in the place of the first respondent under the terms of the policy and that the Tribunal is in error in holding that there is such an implied acceptance by the Insurance company based on the decision of the Bombay High Court in Smt. Gulab Bai Damodar Tapse v. Peter K. Sundar. In this view of the matter, we have to set aside the finding of the Tribunal that the Insurance company continues to be liable under the terms of the policy in respect of an accident, notwithstanding the fact that the original insured transferred the insurance policy in favour of the fourth respondent. Therefore, the award passed as against the appellant herein will stand set aside. C.M.A Nos. 49 and 50 of 1978 are allowed. However, we make no order as to costs.

13. The learned counsel for the respondent in C.M A. 49 of 1978 and the third respondent in C.M.A 50 of 1978, seek leave to appeal to the Supreme Court against the judgment just now pronounced by us on the ground that the case involves an interpretation of SS. 103A and 105 of the Motor Vehicles Act. However, having regard to the fact that we have held that the said sections are not applicable on the special facts of this case, we do not think that this is a fit and proper case for the grant of leave. The request for leave is rejected.

14. By an interim order of this Court, the Insurance company was directed to deposit a sum of Rs. 45,500 and the respondents 1 to 4 in C.M.A 49 of 1978, were permitted to withdraw the interest accrued thereon. The learned counsel for the respondents 1 to 4 submits that there need not be any direction for the restitution of the said sum received by them by way of interest from the court as they will, in any event, be entitled to the said interest in the event of the 6th respondent in C.M.A 49 of 1978 depositing that compensation with interest. Having regard to the fact that respondents 1 to 4 will, in any event, be entitled to interest on the compensation amount payable by the sixth respondent, we refrain from making any direction for refund of the amount of interest drawn by the respondents 1 to 4. However, when the compensation along with interest is deposited by the sixth respondent in C.M.A No. 49 of 1978 as per the award of the Tribunal as modified by us the Insurance company can withdraw that portion of the amount which represents interest. Since the Insurance company has succeeded in the appeal, the sum of Rs. 45,500, deposited by it in pursuance of an interim direction by the court can be withdrawn by the insurance company.

15. In C.M.A 50 of 1978 the Insurance company has deposited a sum of Rs. 16,500, and the same is said to have been withdrawn by the claimants after furnishing security. The Insurance company can approach the Tribunal for restitution of the said amount.

VCS

Calcutta Insurance, ... v. Thirumalai Ammal Ali...