TRANSFER formalities at the regional transport office on purchase/sale of vehicles can take time. While the process is pending, the insurance policy continues in the name of the seller. What happens if the vehicle meets with an accident or is stolen during this period? If the buyer lodges a claim, the insurer refuses to indemnify him as the policy is not in his name. If the seller lodges the claim on behalf of the buyer, the insurer contends once the vehicle is sold, he ceases to have an insurable interest, and, hence, is not entitled to lodge aclaim. Thus, though the premium has been collected, the claim is paid neither to the seller nor the buyer. Is this permissible? Narayan Singh purchased asecond-hand Maruti van, insured for `1,40,000 by the original owner. Within five days, it met with an accident while Singh and his family were travelling from Varanasi to Muzaffarpur. The vehicle was totally damaged. As the claim was not settled, Singh filed a complaint before the Muzaffarpur District Forum, which ruled in his favour and directed the company to reimburse 1,40,000 with an eight-per cent interest per annum, plus `5,000 as compensation and cost.
The insurer appealed to the Bihar State Commission, which set aside the forum's order and dismissed the complaint, stating the Muzaffarpur District Forum did not have the territorial jurisdiction and, also, because the policy had not been transferred in Singh's favour.
Singh then approached the National Commission. With regard to policy transfer, the commission said the view taken by the State Commission was erroneous and could not be justified in view of Section 157 of the Motor Vehicles Act, which provides that an application for transfer has to be made within 14 days of the vehicle's purchase. In this case, the accident had occurred within five days, much before the expiry of this period. Also, India Motor Tariff Regulations say that upon a vehicle's transfer, the benefits under the policy would automatically accrue to the new owner. So, the rejection was unjustified.
Regarding the objection to the territorial jurisdiction of the Muzaffarpur District Forum, the commission observed that Singh resided at Muzaffarpur and was using the vehicle there. Even as the accident took place in Patna district, the insurance company had a branch at Muzaffarpur. Hence, the commission ruled the Muzaffarpur District Forum could entertain the dispute.
Accordingly, it set aside the State Commission's order and upheld the decision given by the District Forum in Singh's favour. It also increased the rate of interest from 8 to 12 per cent a year.
The commission came down heavily on the insurance company for adopting an unjustified stand and suppressing the relevant India Motor Tariff Regulation in several cases. As a deterrent and penal measure, it levied a punitive cost of `1lakh on the insurer, payable to the Consumer Legal Aid Account. The commission warned insurers to be careful about not taking a stand contrary to the regulations framed by the India Motor Tariff and the Insurance Regulatory Development Authority. The order copy was also sent to the latter's chairman . [Shri Narayan Singh v/s New India Assurance – IV (2007) CPJ 289 (NC)].
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