NATIONAL INSURANCE CO LTD Vs. MALLIKARJUNA

JUDGEMENT

(1.) in this reference under Section 7 of the Karnataka High Court Act, 1961, the question that arises for consideration is:

(2.) the facts of the case have been set out in the order of reference and therefore it is not necessary for me to reiterate the same. A division bench of this court in united India fire & general insurance company ltd. V chennamma (1981(1) kar. Lj. 245), held that in the case of transfer of a motor vehicle unless a notice in the prescribed form was given to the insurance company concerned under Section 103-a of the Motor Vehicles Act, 1939 (hereinafter referred to as the act) and the certificate of transfer of insurance was issued or deemed to have been issued, by the force of the said provision, the policy of insurance lapses and consequently the insurance company cannot be saddled with any liability arising out of an accident of a motor vehicle which had been transferred to some other person prior to the date of the accident. One of the learned judges (kodandaramayya, j) who constituted the full bench of the Andhra Pradesh high court in madineni kondaiah v yaseen fatima (1986 ACJ 1), took the view that when the policy of insurance obtained by the original owner of the vehicle is composite one covering the risks for his person, property and the third party claim, on passing of title, the transferee cannot enforce his claim in respect of any loss or damage to the person and the vehicle unless there is a novation, but in so far as the third party risk is concerned, the proprietory interest in the vehicle is not necessary and the principal liability continues till the transferor discharges the statutory obligation under sections 29-a and 31 read with Section 94 of the act and therefore till he complies with the requirement of Section 31 of the Act, the public liability will not cease and that constitutes the insurable interest to keep the policy alive in respect of the third party risks. The learned judge further held that it must be deemed that the transferor allowed the purchaser to use the vehicle in public place in the said transitional period and accordingly till the compliance of Section 31 of the act the liability of the transferor subsists and the policy is in operation so far as it relates to third party risks.

(3.) on the basis of this judgment the division bench which heard the matter in the first instance felt that the decision in chennamma's case (supra) may require reconsideration and referred the question set out above for our opinion.