The Allahabad High Court recently ruled that an insurance company remains liable in a motor accident case even if the transfer of ownership of the vehicle has not been officially recorded with transport authorities [The New India Assurance Company vs Permanent Lok Adalat and Another].
Justice Subhash Vidyarthi highlighted that under Section 157 of the Motor Vehicles Act (MV Act), the insurance certificate and policy are deemed transferred to the new owner from the date of vehicle transfer, regardless of whether the transfer has been formally documented.
“The statutory deeming provision implies that, even if the insurance policy has not been officially transferred, the insurer remains liable to the new vehicle owner. This legislative intent ensures that the insurer’s responsibility extends to the transferee, even if the transfer has not yet been recorded with the transport office. The law aims to include transferees rather than exclude them,” the Court stated.
The case arose when the New India Assurance Company Limited challenged a Permanent Lok Adalat’s decision regarding a truck accident claim. Govind Gupta, the registered owner of the truck, filed a claim after repairs, but the insurance company denied it, arguing the vehicle had been transferred to Sanjeev Kumar, who was driving the truck at the time of the accident. The insurance company claimed that since the transfer was not yet official, Gupta was not entitled to the claim.
The Lok Adalat ruled in favor of Gupta, stating that the transfer agreement did not impact the claim adjudication. The insurance company appealed to the High Court, asserting that Gupta could not claim insurance for a vehicle already transferred.
The High Court noted that Gupta had only entered into a transfer agreement, with ownership to be officially transferred after the loan for the vehicle was repaid. Section 157 of the MV Act applies when vehicle ownership is transferred, though this had not occurred officially in this case.
The Court referenced a Supreme Court ruling where an insurer was held liable to indemnify the transferee despite the policy not being transferred in their name. The High Court affirmed that since Gupta remained the registered owner and had a valid insurance contract, the insurer was liable under this contract.
The Court upheld the Lok Adalat’s decision to grant Gupta’s claim. Advocate Asit Srivastava represented the New India Assurance Company, while Advocate Ashok Kumar represented Govind Gupta.
