New India Assurance ordered to pay claim and compensation

Highlights:

1.  On transfer of a vehicle, the benefits under the policy in force will automatically accrue to the new owner.

2.   If the transferee wants to change the policy in his name, it may be done on getting evidence of sale and a proposal form duly completed. The old certificate of insurance must be surrendered to the insurance company and a new certificate of insurance can be issued by collecting a fee of Rs.15/-. If the old certificate is not surrendered, a declaration is to be taken from the new owner before issuing a new certificate

3.  Under Section 157 of the Motor Vehicle Act transfer application is to be made within a period of 14 days.

4.   It appears that in a number of cases Insurance Companies are suppressing this regulation and take undue advantage

5.  It is high time for the Insurance Companies to give information with regard to the India Motor Tariff to the insurers and not to take undue advantage of their ignorance

NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION, NEW DELHI

Shri Narayan Singh … Petitioner

Versus

New India Assurance Company Ltd. … Respondent

BEFORE :

HON’BLE MR.JUSTICE M.B. SHAH, PRESIDENT

MRS. RAJYALAKSHMI RAO, MEMBER

For the Complainant : Mr. Anup Banerjee, Advocate

For the Opp. Party : Mr. Vishnu Mehra & Ms. Sakshi Mittal, Advocates

Order Dt.22.05.2007

In 1994, a circular was been issued by the General Insurance Company with regard to the transfer of the vehicles and the transfer of insurance benefits automatically in favour of the transferee. The said regulation is part of the India Motor Tariff Regulations. The said regulation reads as under :

On transfer of a vehicle, the benefits under the policy in force will automatically accrue to the new owner. The bonus/malus already applicable for the policy would continue until expiry of the policy. On expiry or cancellation of the policy, bonus/malus will apply as per the new owner’s entitlement.

If the transferee wants to change the policy in his name, it may be done on getting evidence of sale and a proposal form duly completed. The old certificate of insurance must be surrendered to the insurance company and a new certificate of insurance can be issued by collecting a fee of Rs.15/-. If the old certificate is not surrendered, a declaration is to be taken from the new owner before issuing a new certificate.

It appears that in a number of cases Insurance Companies are suppressing this regulation and take undue advantage and contend with all force that as the Insurance policy was not transferred in favour of the new purchaser, Insurance Companies are not liable to reimburse the insurers or the transferees of the vehicle because the transferees were not having any insurable interest.

In the present case, Petitioner purchased Maruti van from his original owner on 31.5.1995. The original owner had taken insurance policy for a sum of Rs.1,40,000/- for a period between 3rd August 1994 and 2nd August, 1995. Unfortunately, within five days of its purchase, i.e. on 4.6.1995 when the Complainant alongwith his family was coming from Varanasi to Muzaffarpur, the said vehicle met with an accident on the way of Muzaffarpur at Village Moharrampur P.S. Bihta, Dist. Patna in which the said vehicle was totally damaged. Thereafter, the information regarding the accident was given to the Patna Regional Office of the Insurance Company. The Insurance Company appointed a Surveyor who assessed the loss. However, as the amount was not paid to the Complainant, the Complainant approached the Consumer District Forum, Muzaffarpur by filing Complaint Case No.187/1996. By order dated 16.9.1997, the District Forum allowed the complaint and directed the Insurance Company to reimburse a sum of Rs.1,40,000/- with interest @ 8% p.a. with further direction to pay Rs.5,000/- as compensation and costs.

Against that order the Insurance Company preferred Appeal No.590/1997 before the State Commission, Bihar. That appeal was allowed by order dated 26.12.2001 by observing that Muzaffarpur District Forum was not having territorial jurisdiction and also on the ground that Insurance policy was not transferred in favour of the Complainant.

As stated above, the second ground given by the State Commission cannot be justified in view of the India Motor Tariff Regulation. Further, on this aspect, Learned Counsel for the Petitioner has produced on record the judgement rendered by the Chattisgarh State Commission in the case of “Ajimuddin Vs. The New India Assurance Company Ltd.” reported in 2006 (2) CPR 124 wherein the Commission has observed in paragraph 7 as under :

“Learned Counsel for the Appellant submitted that GIC has issued special instructions regarding settlement of claim in case of transfer of policy. It was submitted that as per the said instructions the transfer of policy in favour of the purchaser the Complainant/Appellant should be treated as automatic. It appears that the Tariff Advisory Committee issued a circular regarding automatic transfer of the policy to the new owner/purchaser of the vehicle. In the said circular the decision of Supreme Court in Complete insulations (P) Ltd. v. New India Assurance Co. Ltd. was referred to. In the said circular it was stated that for policies issued as per revised Motor Tariff, own damage claim which fall within the purview of GR 10 provisions may be settled in full subject to the other terms and conditions of the policy.”

In this view of the matter, the Insurance Company ought not to have rejected the claim on the ground that the vehicle was not transferred in favour of the Complainant. In any set of circumstances, even under Section 157 of the Motor Vehicle Act transfer application is to be made within a period of 14 days and those 14 days were not over in the present case. Hence, in our view, it is highly improper and unjustified act on the part of the Insurance Company to reject the claim on such ground and harass the Complainant for years together.

With regard to the territorial jurisdiction of Muzaffarpur District Forum, it is to be stated that Complainant resides at Muzaffarpur and using the said vehicle at Muzaffarpur, the accident took place in District Patna and the Insurance Company is having Branch office at Muzaffarpur. In that view of the matter, it cannot be said that District Forum, Muzaffarpur was not having any territorial jurisdiction.

In the result, the Revision Petition is allowed. The order passed by the State Commission is set aside and the order passed by the District Forum is restored. The Insurance Company is directed to pay the sum of Rs.1,40,000/- with interest @12% p.a. from 1st January, 1996, i.e. after six months from the date of the accident to the Complainant within six weeks from today.

Because such stand is taken by the Insurance Company in number of cases, Insurance Company is directed to pay punitive costs of Rs.1 lakh under Section 14(1) (d) for taking unjustified stand in not disclosing the India Motor Tariff Regulation which was applicable in the present case. The said amount shall be deposited with the Registrar of this Commission, who in turn, shall transfer the same in the Consumer Legal Aid Account.

It is further directed that Insurance Companies would be careful in not taking such stand which is contrary to the regulations framed by the India Motor Tariff and Insurance Regulatory Development Authority.

It is high time for the Insurance Companies to give information with regard to the India Motor Tariff to the insurers and not to take undue advantage of their ignorance as the regulations framed under the India Motor Tariff are binding to the Insurance Companies.

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