Insurer remains liable despite the policy continuing in the previous owner’s name after vehicle transfer.

On 22 June 2000, the appellant-claimant was walking towards Village Vadagam when a Fiat car bearing registration no. GJ-09-B-3664, allegedly driven rashly and negligently by respondent no.1, struck him and caused multiple injuries, including fractures.

The Motor Accident Claims Tribunal partly allowed the claim petition and awarded compensation of ₹85,549 with interest at 7.5% per annum, but exonerated respondent no.4-insurance company from liability.

The insurance policy, produced at Exh.30, stood in the name of Rajnikant Revashankar Upadhayay, whereas the vehicle had been transferred in the registration records to Balabhai Revabhai Patel on 11 March 1999, before the accident.

The claimant challenged only the exoneration of the insurance company.

Whether the insurance company could be exonerated from satisfying the motor accident compensation award merely because the insurance policy stood in the name of the previous owner, while the vehicle had been transferred to a new registered owner before the accident?

Whether the insurance company was entitled to recover the compensation amount from the new registered owner, Balabhai Revabhai Patel, if it was directed to satisfy the award?

The Court applied the principle that a valid contract of motor vehicle insurance is not rendered void merely because the policy continues in the name of the previous owner, unless fraud in obtaining the policy is pleaded and proved, relying on United India Insurance Co. Ltd. v. Santro Devi, (2009) 1 SCC 558.

It distinguished Dr. T.V. Jose v. Chacko P.M. @ Thankachan, (2001) 8 SCC 748, which concerned liability between the actual and registered owners under an Act-only policy and held that the registered owner remained liable to third parties.

The Court further applied the principle that receipt of the insurance premium and the continued validity of the policy prevent the insurer from avoiding liability solely on account of the change in ownership.

The Court accepted that the vehicle stood registered in Balabhai Revabhai Patel’s name on the date of the accident, while the policy remained in Rajnikant Revashankar Upadhayay’s name.

However, it held that this discrepancy did not, by itself, invalidate the insurance contract or absolve the insurer from satisfying the award.

Relying on Santro Devi, the Court noted that no fraud had been pleaded or proved in relation to the insurance contract.

It distinguished Dr. T.V. Jose because that decision addressed the liability of the registered owner and did not establish that an insurer could avoid liability where the policy remained valid and the premium had been received.

Since the insurance company had already received the premium from the previous owner, the Court also rejected its request for a recovery right against the new owner.

The Tribunal’s award was modified to the extent that respondent no.4-insurance company was directed to deposit the entire compensation of ₹85,549 with accrued interest within six weeks.

The Tribunal was directed to disburse the amount to the claimant after due verification and deduction of any deficit court fee.

The insurance company was not granted any right to recover the amount from Balabhai Revabhai Patel, and there was no order as to costs.