QUEENSLAND INSURANCE COMPANY LIMITED Vs. RAJALAKSHMI AMMAL

JUDGEMENT

(1.) THE appellant, the Queensland Insurance Co. Ltd. , in these appeals, was the second defendant in the three suits, O. S. No. 132 of 1961 filed by Swaminatha Mudliar, O. S. No. 171 of 1962 filed by lakshmikanthamma, wife of the said Swaminatha Mudaliar and O. S. No. 84 of 1962 filed by the legal representatives of Sivagnana THEvar, in the Court of the subordinate Judge of Tiruchirapalli, for damages for rash and negligent driving of the motor car, MSY 4891, by one Pitchai who was employed as driver by one N. Radhakrishnan, the then owner of the car, who was impleaded as the first defendant in all the suits, resulting in a serious accident causing injuries to swaminatha Mudaliar and his wife, Lakshmikanthamma, and the death of Sivagnana thevar. It is not disputed that the driver, Pitchai, dozed off while driving the car along Tiruchirapalli-Turaiyur road and that this resulted in the car serving from the road and dashing against the culvert near the milestone indicating 17 miles 2 furlongs. THE driver of the car was prosecuted under section 304-A, Indian Penal Code, convicted and sentenced THEre is no dispute about the quantum of damages assessed and decreed by the lower court in favour of the plaintiffs in each of the suits. One M. A. M. Kasi was impleaded as the third defendant in each of the suits, but he was exonerated as he had only taken a hire purchases agreement for the loan advanced by him to N. Radhakrishnan. A plea was raised in the lower court that it had no jurisdiction to try the suits and that the claims should have been made before the Tribunal constituted under section 110-A of the Motor Vehicles Act. But as the accident in this case occurred on September 9, 1960, that is prior to the constitution of the claim tribunal under the Motor Vehicles Act, the plea of jurisdiction was not pressed in the lower courtthe appellant-insurance company put forward two contentions, namely, that the insurance policy issued by it to the original owner, T. M. Radhakrishna Chetty lapsed on his selling the car and hence the insurance company could not be called upon to indemnify the vicarious liability of the first defendant, N. Radhakrishnan, for the rash and negligent driving of the driver, Pitchai, and that, even under the terms of the policy, there could be no liability of the insurance company in view of the fact that the vehicle was hired by N. Radhakrishnan to Swaminatha Mudaliar to attend a marriage. THE learned principal subordinate judge negatived both the pleas of the appellant and decreed the suits against the appellant and the owner, N. Radhakrishnan THE appellant-company issued the policy, exhibit B-4, to the then owner of the car, A. K. Muthukumaraswamy Chetty, agreeing to indemnify the insured in respect of his liability to third parties for death or bodily injury caused to persons by rash and negligent driving of the car. But the policy does not cover the use of the car for hire. THE period of the policy was from 18th May, 1959 , to 17th May, 1960. Subsequently, A. K. Muthukumaraswamy Chetty sold the car to T. M. Radhakrishna Chetty on August 8, 1959 , and intimated the same to the appellant as evidence by exhibit B-19. T. M. Radhakrishna Chetty, in his turn, wrote the letter, exhibit B-30, to the appellant and the policy was transferred in his name, as evidenced by exhibit B-22. Subsequently, T. M. Radhakrishna Chetty renewed the policy for another year from 18th May, 1960 to 17th May, 1961 , subject to the conditions of policy already referred to in July, 1960. THE first defendant, N. Radhakrishnan, purchased the car from one M. Rajarathnam Pillai, who had purchased the car from T. M. Radhakrishna Chetty earlier on 23rd June, 1960. But he did not notify the insurance company or attempt to get any transfer of the policy in his name. In fact, even his vendor, M. Rajarathnam Pillai did not notify his purchase of the car to the appellant-companyas soon as he came to know of the accident the first defendant N. Radhakrishnan , sent the telegram, exhibit B-25, to the appellant. THE branch manager of the appellant-company tried unsuccessfully to contact T. M. Radhakrishna Chetty on the phone and subsequently sent the letter exhibit B-27. THE appellant-company sent D. W. , saunders, automobile engineer, to inspect the vehicle and make local enquiries. T. M. Radhakrishna Chetty sent the letter, exhibit B-28, to the appellant stating that he had sold the car to M. Rajarathnam Pillai even on 23rd June, 1960, and handed over the insurance policy along with the other documents to the buyer and that the entire rush was not the buyer. D. W. 3, Saunders, contracted the first defendant, N. Radhakrishnan, and learnt from him that he had lent the car on hire to the occupants of the car at the time of the accident THE learned advocated for the appellant relied on the bench decision of this court in Bhoopathy v. Vijayalakshmi 1965 (2) MLJ 466), where it had been held overruling the earlier decision of a single judge in madras Motor Insurance Co. Ltd. v. Mohamed Mustafa Badsha 1960 (2) MLJ 202), that the insurer is not liable to the transferee for damages awarded to a third party for injuries caused by rash and negligent driving of the car on a date subsequent to the transfer of ownership. Sri R. Ramamurthi Iyer appearing for the respondents-plaintiffs urged that the Bench decision is only obiter as the policy in that case had expired prior to the date of the accident and an attempt to renew the policy was made only a day after the accident. But the principles enunciated in that decision are correct and there is no reasons to doubt the same It is clear from paragraph 855 at page 373 of Chitty on contracts (volume 2), that a contract of insurance will normally be construed as a contract of indemnity. It is clear from paragraph 913 of the same volume 2 at page 403 that the main cover will usually be by reference to a specified car, owned by the policy-holder and the whole policy will then only remain effective while he retains an interest in that car. It is stated that even if it contains an extension in respect of the use by the policy-holder of any car being used at the time of the accident, "instead of the insured car", this extension will cease to be effective once he has parted with the car insured. This statement of the law is based on Rogerson v. Scottish Automobile and General Insurance Co. Ltd. 1931 ALLER 606. Lord Macmillan has pointed out in the decision that the assured cannot, within the meaning of the policy, use another car instead of the insured car after he has parted with the property in the insured car. He has observed that if the assured has parted with the property in the insured car and buys another car, he cannot be said to be using his new purchase instead of the car he has sold and that he is using the new car in succession to the insured car, not instead of it. It is clear from paragraph 913 of Chitty on Contracts, volume 2, referred to above, that a complete change of ownership of a vehicle will put an end to the policy. In peters v. General Accident & Life Assurance Corporation Ltd. 1973 (4) ALLER 628, it has been held that when the vendor sold the car, the insurance policy automatically lapsed. It is clear from the decision that an insurance policy is a contract of personal indemnity and the insurers cannot be compelled to accept responsibility in respect of a third party who may be quite unknown to them.

(2.) THE following passage at page 634 of the judgment is relevant for the present discussion "i have no doubt, therefore, that you cannot assign a motor policy in the way that it is suggested it was done here. If you sell your car, you cannot, merely by handing over your car and saying :'take this policy and do what you can with it; I assign it to you', put the underwriters under an obligation to indemnify the purchaser, when they have agreed only to indemnify the vendor. Consequently, on all grounds here the action in my opinion, fails. Sorry as I am for M. Peters, he is thus left with an award of damages and costs amounting to some Pounds 500, and only somebody who has not 500s. to proceed against. In this case, I cannot say that the person who injured him was insured. THE fact was that he was driving an uninsured car. Whether he knew it or not, I do not know. I should think he probably did know it inasmuch as his vendor gave him a form to fill in. However, that is not a matter with which the defendants a re concerned. THEy are quite entitled to say, and do say :'we know nothing of Mr. Pope. He is not on our books, and, so far as we are concerned, he is an uninsured person'. " *