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United India Fire And General Insurance Co. Ltd., Indore v. Smt. Kanchanbai And Others
Factual and Procedural Background
This appeal was filed by the insurer (United India Fire and General Insurance Company Limited) under Section 110-D of the Motor Vehicles Act against an award dated 30-8-1975 by the Motor Accident Claims Tribunal, Indore (Claim Case No. 74 of 1973). The Tribunal awarded Rs. 15,500 with interest at 6% per annum and costs in favour of respondents Nos. 1, 2 and 3 (who had originally claimed Rs. 1,10,000).
Material facts (as established in the opinion): respondent No. 4, Babulal, was the registered owner of truck No. MPF-6083 and insured that truck with the appellant. On 14-3-1973 the truck, driven by respondent No. 5 Nathusingh, allegedly dashed against Devilal, who was riding a cycle; Devilal died on the spot. Devilal was aged 55 and employed at Malwa Mills, Indore, with a monthly income of Rs. 256. Respondents Nos. 1, 2 and 3 (widow, son and daughter) filed the claim petition for compensation.
Procedural posture and contested points: respondent No. 5 (driver) remained ex parte at trial and on appeal. Respondent No. 4 (owner) denied liability, asserting he had sold the truck to respondent No. 6 (M/s Mangilal Suvalal Jain) on 20-12-1972 and handed over possession on 21-12-1972, and that the driver was not his employee at the time of the accident. The insurer denied liability on the basis that its liability had ended after the alleged sale and also alleged that the driver lacked a valid licence. The Tribunal found that the accident was caused by rash and negligent driving by respondent No. 5, that there was no concluded sale to respondent No. 6, that respondent No. 4 remained the owner on the date of the accident and that respondent No. 5 was driving as respondent No. 4's servant, and awarded the compensation; only the insurer appealed.
Legal Issues Presented
- Whether the insurer (appellant) is liable to pay the award where the owner (respondent No. 4) is alleged to have sold the vehicle before the accident.
- Whether transfer of possession of the vehicle without payment of full consideration and without completion of registration transfer effects a termination of the insurance contract in favour of the insurer.
- Whether respondent No. 5 (driver) was in the employment of respondent No. 4 at the time of the accident and thus within the scope of owner's vicarious liability under the Motor Vehicles Act.
Arguments of the Parties
Appellant's Arguments
- The truck had been sold by respondent No. 4 to respondent No. 6 on 20-12-1972 (possession given on 21-12-1972), so the insurer's liability had ceased before the accident.
- At the time of the accident respondent No. 5 was not in the employment of respondent No. 4 and therefore respondent No. 4 should not be vicariously liable.
- The driver (respondent No. 5) did not hold a valid driving licence at the time of the accident.
- The Tribunal's finding that legal possession remained with respondent No. 4 was challenged.
- The appellant relied on authorities (cited in the opinion) to support the contention that sale and delivery of possession terminated insurer liability even if registration still remained in the seller's name.
Respondents Nos. 1, 2 and 3 (Claimants)
- Ex. D-1 was an agreement to sell, not a concluded sale; full consideration had not been paid and balance was payable by instalments, with registration to be transferred only after full payment.
- The evidence established that the sale was incomplete and that respondent No. 4 retained control; therefore the insurance contract had not come to an end.
- The insurer did not produce the policy and therefore could not establish policy terms (for example, any condition making a valid driving licence a condition precedent) nor show that the contract of insurance had terminated.
- Witness testimony indicated respondent No. 4 did not inform the insurer of any sale and that respondent No. 4 had engaged the same counsel as the insurer to defend the case after the accident.
Respondent No. 6 (Purchaser)
- Contended there was no complete sale on the date of the accident; respondent No. 4 retained control and acted as principal while respondent No. 6 had possession to facilitate instalment payments.
- It was not suggested to respondent No. 4 that he had received the entire consideration or that he had ceased control of the truck on the date of the accident.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| 1980 Ace CJ 126 (Madh-Pra) Balwant Singh v. Jhannubai | Cited by appellant to support the submission that sale and delivery of possession terminated the insurer's liability even if registration remained in seller's name. | The Court treated the principles as generally valid but found the authority distinguishable on the facts of the present case and did not accept it as excusing the insurer from liability. |
| 1980 Ace CJ 377 (Kant) (Sundaram Finance Ltd. Madras v. D. G. Naniappa) | Cited by appellant for the proposition that transfer/possession may effect transfer of liability away from the previous owner/insurer. | The Court found this authority distinguishable on the facts and did not apply it to absolve the appellant of liability. |
| 1979 Ace CJ 503 (AIR 1979 Madh Pra 85) State of Madhya Pradesh v. Premabai | Cited by appellant in support of the contention that an alleged sale prior to the accident ended the prior owner's insurance liability. | The Court considered the principle but held it distinguishable on the facts and did not apply it to relieve the insurer. |
| 1966 Ace CJ 382 (Puni) (Jupiter General Insurance Co. Ltd. v. Gurcharan Singh) | Cited by respondents to support the proposition that an agreement to sell (incomplete sale) does not terminate the insurer's liability; the insurer remains liable where full consideration was unpaid and control retained by seller. | The Court regarded authorities cited by respondents as supportive of its conclusion that the transaction was an agreement to sell and that the insurer remained liable; the respondents' line of authority was treated as consistent with the facts. |
| 1980 Ace CJ 189 (AIR 1980 Andh Pra 1431) J. C. Chennaravudu v. N. Lakshmamma | Cited by respondents for the same general proposition that incomplete sale/agreement to sell does not absolve insurer liability. | The Court considered this authority supportive of the respondents' position and found it consistent with the evidence that sale was incomplete. |
| 1967 Ace CJ 155 (F. C. Mala) Nanyang Insurance Company Ltd. v. Salbiah | Cited by respondents to support the view that insurer remains liable where sale is not complete and owner retains control. | The Court found this authority aligned with the factual conclusion that no absolute sale had occurred and relied on the principle in reaching its decision. |
| 1976 Ace CJ 1 (AIR 1976 Rai 71) | Cited by respondents as authority relevant to insurance liability where ownership/possession disputes exist (as cited in the opinion). | The Court treated the principle as part of the body of authorities supporting respondents' contention that incomplete sale does not terminate insurance; it applied the reasoning to the facts. |
| 1971 Ace CJ 49 (Orissa) Orissa Co-operative Ins. Society Ltd. v. Bhagaban Sahu | Cited by respondents to support the proposition that incomplete sale/agreement to sell does not necessarily end insurer liability. | The Court regarded this precedent as supportive of the respondents' position and consistent with the factual findings (that sale was incomplete and the insured remained owner). |
Court's Reasoning and Analysis
The Court's analysis proceeded from the evidentiary record and focused on whether a concluded sale had taken place prior to the accident such that the insurer's contract of insurance would have terminated.
Key evidentiary and legal points the Court relied upon (as stated in the opinion):
- The appellant did not produce a copy of the insurance policy nor call for the original policy through respondent No. 4 (who was examined as D.W.1).
- There was no evidence on record to establish that respondent No. 5 did not hold a valid driving licence on the date of the accident.
- The evidence of D.W.1 (Babulal), D.W.2 (Sunderlal) and the tenor of Ex. D-1 indicated that Ex. D-1 was only an agreement to sell and not an absolute sale; full consideration remained unpaid and registration transfer was to follow completion of payment.
- The Court acknowledged that registration transfer under the Motor Vehicles Act is not necessary to effect a sale, but emphasized that along with delivery of possession payment of full consideration is necessary to effect a concluded sale. On the date of the accident the sale consideration had not been fully paid.
- Additional facts supporting continued ownership by respondent No. 4 included that respondent No. 4 approached and dealt with the insurance company after the accident and employed the same counsel who acted for the insurer in defending the case.
- Respondent No. 6 was not examined to prove that he had become the owner before the accident or that he had become sole owner by 14-3-1973; this lack of evidence weighed against the appellant's contention.
- The Court accepted that the general principles in the authorities cited by the appellant could not be disputed in law, but found those authorities distinguishable on the specific facts of this case and therefore not determinative in favour of the appellant.
Based on these findings, the Court concluded that the instrument Ex. D-1 did not create a concluded sale and that respondent No. 4 retained property and control of the truck at the time of the accident; therefore the contract of insurance with respondent No. 4 had not come to an end and the insurer remained liable.
Holding and Implications
Holding: The appeal is dismissed with costs; the Tribunal's award is maintained.
Direct consequences:
- The award of Rs. 15,500 (with interest at 6% per annum and costs) in favour of respondents Nos. 1, 2 and 3 stands and the insurer remains liable to satisfy that award as previously framed by the Tribunal.
- Counsel's fee to be paid according to the schedule, if certified (as directed by the Court).
Broader implications: The opinion does not announce any novel legal principle; it applies established principles distinguishing concluded sale from agreement to sell on the facts. No new precedent is set beyond the Court's application of those principles to the facts before it.
1. This appeal filed by the Insurance Company under Section 110-D of the Motor Vehicles Act, is directed against an award dated 30-8-1975 given by the Motor Accident Claims Tribunal, Indore, in Claim Case No. 74 of 1973, awarding compensation of Rs. 15,500/- with interest at 6 per cent per annum alone with costs, in favour of respondents Nos. 1, 2 and 3, who had initially claimed Rs. 1,10,000/- as total compensation.
2. The facts giving rise to this appeal which are no lonser in dispute and also Droved are as under: That respondent No. 4 Babulal was the owner of truck Number MPF-6083, the registration of which stood in his name. The said truck was insured by him with the appellant United India Fire and General Insurance Company Limited. On 14-3-73 the said truck MPF (5083 was driven by respondent No. 5 Nathusingh, who was the driver of the said truck. On that date while Devilal. the deceased was coming from the left hand side of the road on his cycle, from the overbridge side, the said truck which was being driven at an excessively high speed in a rash and negligent manner dashed against him due to which Devilal died on the spot, who was 55 years old at the time of his death and was working in Malwa Mills, Indore. his monthly income being Rupees 256/- D. m. Respondents Nos. 1, 2 and 3 who happen to be the widow, son and daughter respectively therefore, filed the present claim petition claiming total compensation of Rs. 1,10.000/-under different heads as detailed in the application.
3. Respondent No. 5 Nathusingh, the driver remained ex parte in the trial Court as also he has remained ex parte in this Court. Respondent No. 4 Babulal denied his liability on the ground that he had sold the truck to respondent No. 6 M/s. Mangilal Suvalal Jain on 20-12-72 as per Ex. D-1, of which possession was handed over on 21-12-72 and that respondent No. 5 Nathusingh was not his driver at the time of the accident. He also denied the allegations regarding the manner in which the accident occurred and thus also denied the quantum of damages claimed. Respondent No. 6 M/s. Mangilal Suvalal Jain appeared initially, but later remained ex parte. The appellant Insurance Company also denied its liability as according to them their liability had ceased as soon as respondent No. 4 Babulal had transferred the truck to respondent No. 6 M/s. Mangilal Suvalal Jain. They also alleged that respondent No. 5 Nathusingh did not hold any valid driving license.
4. The learned Member of the Tribunal on the basis of the pleadings of the parties, after framing issues and after recording evidence thereon, found that on 14-3-73 the accident occurred on account of the rash and negligent driving of the truck by respondent No. 5 Nathusingh due to which Devilal. who was proceeding on the GSTI Road on his cycle was fatally knocked down. He also found that on the date of the accident the said truck was not sold by respondent No. 4 Babulal to resnondent No. 6 M/s. Mangilal Suvalal Jain, that on 21-12-72 the said truck was in the possession of respondent No. 6. that on the date of the accident respondent No. 4 was the owner of the said truck, that respondent No. 5 Nathusingh was driving the said truck on the day of the accident in the capacity of a servant of respondent No. 4 Babulal. So far as quantum of compensation is concerned it has been found on evidence that respondents Nos. 1, 2 and 3 are entitled to total compensation of Rs. 15,500/-with costs and interest. Accordingly it save an award against the appellant as also against respondents Nos. 4, 5 and 6 as stated above. However, except the appellant, respondents Nos. 4, 5 and 6 have not filed any appeal against the award.
5. The learned counsel for the appellant Shri Sujan Jain did not and could not challenge the factum of accident and the manner in which it took place resulting in the death of Devilal as a result of rash and negligent driving of the said truck by the driver respondent No. 5 Nathusingh who was found to be in the employment of respondent No. 4 Babulal. The learned counsel for the appellant also did not dispute the quantum of compensation assessed by the learned Member of the Tribunal.
6. However, the learned counsel for the appellant contended that though the said truck was got insured by respondent No. 4 Babulal with the appellant Company, still the same having been sold by respondent No. 4 Babulal to resoondent No. 6 M/s. Mangilal Suvalal Jain on 20-12-72 as per Ex. D-1, the appellant could not be held liable especially when at the time of the accident possession of the said truck was also with respondent No. 6 right from 21-12-72. He also submitted that at the time of the accident respondent No. 5 Nathusingh was not in the employment of respondent No. 4 Babulal and that the respondent No. 5 did not have a valid driving licence at the time of the accident. He also challenged the finding of the Tribunal that the leeal possession of the truck was with respondent No. 4 at the time of the accident.
7. It may be noted at the outset that the appellant did not file any copy of the Insurance Policy nor the original was got produced through Babulal who has been examined as D. W. 1. Besides, there is no evidence on record to indicate that respondent No. 5 Nathusingh did not hold a valid license to drive the truck on the date of the accident. That apart, respondents Nos. 4. 5 and 6 have not filed any appeal against the said award. It was therefore, submitted that after the sale of the said truck by respondent No. 4 to respondent No. 6, the contract of insurance had already come to an end and consequently the learned Tribunal has committed an error in awarding compensation against the appellant also.
8. The learned counsel for the appellant took me through the evidence of D. W. 1 Babulal and also placed reliance on Ex. D-1 and contended that the said truck having already been sold by respondent No. 4 to respondent No. 6 who was also given possession thereof on 21-12-72, respondent No. 4 Babulal had ceased to be the owner of the said truck with the result that respondent No. 5 Nathusingh could not be said to be in the employment of respondent No. 4 as his driver. According to the learned counsel as possession of the truck was actually handed over to respondent No. 5 on 21-12-72. thereafter respondent No. 5 was the employee of respondent No. 6. with whom there was no contract of insurance, the same having come to an end on 21-12-72 itself when Babulal had sold the truck by actually delivering its possession to respondent No. 6 even though the registration certificate under the Motor Vehicles Act continued to remain in the name of respondent No. 4 on the date of the accident also and m support of this submission he placed reliance on the decisions reported in 1980 Ace CJ 126 (Madh-Pra) Balwant Singh v. Jhannubai: 1980 Ace CJ 377 (Kant) (Sundaram Finance Ltd. Madras v. D. G. Naniappa) and 1979 Ace CJ 503: (AIR 1979 Madh Pra 85) (State of Madhva Pradesh v. Premabaai).
9. As against this Shri B. K. Sam-dhani. learned counsel for respondents Nos. 1. 2 and 3 submitted that Ex. D-1 is not a sale, but an agreement to sell and the evidence of D. W. 1 Babulal as also the tenor of Ex. D-1 clearly indicates that full price as agreed to between the parties was not paid by respondent No. 6 to respondent No. 4 when the possession of the truck was delivered to him and that even according to the terms mentioned in Ex. D-1 the balance amount was to be paid by instalments and it is only after the receipt of the full consideration it was agreed that the registration of the truck would be transferred in the name of respondent No. 6. He further submitted that D. W. 2 Sunderlal. who has been examined as a witness on behalf of the appellant has stated that Babulal had never informed the Insurance Company that he had sold the said truck to respondent No. 6. He has further admitted that respondent No. 4 Babulal was asked by Shri Bantia, the Officer of the said Company to contact Shri Suian Jain who was also the counsel for the Insurance Company in this case. It was, therefore, contended that the appellant has not led any evidence to prove that the contract of insurance had come to an end when the accident occurred or that it was a condition precedent under the terms of the policy that the driver must have a driving licence and in absence of the production of the Insurance policy on record, the argument advanced by the learned counsel for the appellant cannot be allowed to stand.
10. While distinguishing the authority cited on behalf of the appellant, the learned counsel for respondents Nos. 1, 2 and 3 submitted that the evidence on record leads only to this conclusion that there was no concluded sale of that truck but only an agreement to sell and consequently though this contract would be governed by the Sale of Goods Act, still the sale being incomplete and Babulal respondent No. 4 having retained his control over the said truck by not getting the registration transferred till the whole consideration as agreed to was paid to him by respondent No. 6, it cannot be held that the Insurance Company is absolved from its liability to pay the compensation and in support of this submission he placed reliance on the decisions reported In 1966 Ace CJ 382 (Puni) (Jupiter General) Insurance Co. Ltd. v. Gurcharan Singh), 1980 Ace CJ 189 : (AIR 1980 Andh Pra 1431 (J. C. Chennaravudu v. N. Lakshmamma); 1967 Ace CJ 155 (F. C. Mala) Nanyang Insurance Company Ltd. v. Salbiah); 1976 Ace CJ 1: (AIR 1976 Rai 71) and 1971 Ace CJ 49 (Orissa) (Orissa Co-operative Ins. Society Ltd. v. Bhagaban Sahu).
11. Shri R. C. Chhazed, learned counsel for the respondent No. 6 contended that as there was not a complete sale of the truck on the day of the accident, the respondent No. 4 had retained his control over the said truck and that he was acting and working on behalf of respondent No. 4 as his agent and it is only to facilitate the payment of instalments which were to be paid by him to respondent No. 4 that possession of the truck was with respondent No. 6, but the possession could not be said to be on the basis of concluded sale as even according to Ex. D-1 certain amount was yet to be paid by respondent No. 6 to respondent No. 4. He further submitted that it is not at all suggested to Babulal that on the date of the accident he had received the entire full consideration as agreed to in Ex. D-1 or that he had ceased to have any control over the said truck on the date of the accident.
12. After cerefully considering the arguments of the learned counsel for the parties and after some through the evidence adduced by the parties as also the case law cited, I am of opinion that the contentions advanced on behalf of the appellant cannot be accepted. The evidence of D. W. 1 Babulal, D. W. 2 Sunderlal and a bare reading of Ex. D-1 clearly, indicates that there was no concluded sale of the truck, but it was only an agreement to sell. It is no doubt true that for effecting such a sale transfer of the registration certificate under the Motor Vehicles Act is not necessary, but along with the delivery of possession payment of full consideration as agreed to is necessary, In the present case as has emerged from evidence on record on the date of the accident a pact of the sale consideration was yet to be paid by respondent No. 6 to respondent No. 4 and in these circumstances, in my opinion, Ex. D-1 being only an agreement to sell cannot be treated to be an absolute sale. It is, therefore, difficult to agree with the learned, counsel for the appellant that on 21-12-72 when possession of the truck was handed over to respondent No. 6, there was a concluded sale and that respondent No. 4 had ceased to have any interest or control over the said truck with the result that the eon-tract of insurance with Babulal respondent No. 4 had come to an end. The evidence of Babulal and Sunderlal further indicates that it was Babulal who after the accident approached the Insurance Company to defend the case that it was Babulal who defended the case by engaging the same counsel who also was the counsel for the appellant Insurance Company. All this further goes to show that Babulal still continued to be the owner of the said truck. Besides, respondent No. 6 has not been examined as witness to prove that he had become the owner of the said truck on 21-12-72 itself and that even on the date of the accident he was the sole owner of the said truck. It is therefore, clear that the property in the said truck still vested with Babulal respondent No. 4 and the truck was also being driven by respondent No. 6 with his permission, respondent No. 5 Nathusingh being the driver. Therefore, though the principles enunciated in the authorities cited on behalf of the appellant cannot be disputed still they are distinguishable on facts, when applied to the facts of the present case.
13. In the result this appeal fails and is dismissed with costs. The award is maintained. Counsel's fee according to schedule, if certified.
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