2014 (1) TMI 1853 - HC - Indian Laws

Liability to pay the compensation - vehicle was insured by the owner with this Insurance Company - Held that - The dealer is expected to take Trade Certificate and purchase policy in respect of the period when the vehicle remains in his custody before giving delivery to purchaser. The aforesaid provisions lead to the inference that Insurance Company cannot deny the liability on the ground that Insurance Policy was purchased on the basis of Trade Certificate but the vehicle was bearing Temporary Registration Number on the date of accident; provided that the vehicle was still in the possession of dealer at the relevant time it was not yet delivered to the purchaser and the period of both Trade Certificate and the Insurance Policy had not expired. In such a case it is not open to Insurance Company to deny the liability on the ground that the vehicle was given temporary registration number and the policy covered Trade Certificate. In the present case the transfer of vehicle was not completed and MPT had not become the owner. Appeal dismissed.

Summary

Issues Involved:
1. Liability of the insurance company for compensation.
2. Validity of the Trade Certificate and Temporary Registration Certificate.
3. Ownership of the vehicle at the time of the accident.
4. Applicability of insurance coverage.

Detailed Analysis:

1. Liability of the Insurance Company for Compensation:
The appeal challenged the judgment and award of compensation by the Motor Accident Claims Tribunal (MACT) against the insurer, The New India Assurance Company Ltd., on the grounds that the vehicle was not covered under the policy due to its Temporary Registration Number. The Tribunal had directed the driver, dealer, and insurance company to pay compensation jointly and severally. The appellant argued that the vehicle, bearing a Temporary Registration Number issued by the Nashik R.T.O., was not covered under the policy issued based on the Trade Certificate.

2. Validity of the Trade Certificate and Temporary Registration Certificate:
The appellant contended that the Trade Certificate could not be used for a vehicle with a Temporary Registration Number. The court examined the Central Motor Vehicles Rules, 1989, specifically Rules 33, 35(1), 37, 39, 41(a, c, g), and 42, which outline the conditions for the exemption from registration, the grant and renewal of trade certificates, and the purposes for which a vehicle with a trade certificate may be used. The court found no force in the appellant's argument, noting that the dealer had validly obtained the Trade Certificate and insurance policy, which covered the vehicle during its possession by the dealer.

3. Ownership of the Vehicle at the Time of the Accident:
The appellant also argued that the dealer could not be treated as the owner and that the Mormugao Port Trust (MPT) was the owner due to the Sale Certificate issued by the manufacturer. The court rejected this argument, stating that the sale was not completed, and the vehicle was still in the possession of the dealer for pre-delivery inspection and trial. The court referred to Sections 19 and 21 of the Sale of Goods Act, 1930, which stipulate that the property in goods is transferred to the buyer when the parties intend it to be transferred, and specific goods must be put into a deliverable state. Since the sale was not completed, the manufacturer remained the owner.

4. Applicability of Insurance Coverage:
The court held that the insurance company could not deny liability based on the vehicle's Temporary Registration Number, provided the vehicle was still in the dealer's possession, had not been delivered to the purchaser, and the period of both the Trade Certificate and the insurance policy had not expired. The court found that the insurance policy covered the vehicle during the relevant period, and the dealer had validly purchased the insurance based on the Trade Certificate.

Conclusion:
The court concluded that the Tribunal had not erred in holding the dealer and the insurance company jointly and severally liable. The appeal was found to be devoid of merits and was dismissed. The Tribunal's decision to award compensation to the claimants was upheld, affirming the joint and several liability of the driver, dealer, and insurance company.