The Kerala High Court on Thursday ruled that the stipulation under Section 157(2) of the Motor Vehicles Act 1988 to inform about the transfer of a vehicle to the insurance company within of 14 days from this transfer is only of a directory nature, and not mandatory.
Judge Ziyad Rahman AA reached this conclusion based on the reasoning that no consequences for non-compliance with the provision were stipulated in the Act.
“Although subsection (2) of section 157 provides for notice of such transfer, since the statute is silent as to the consequences of failure to do so, it can only be treated as directive in nature and not required”, said the court.
The Court also found that this view was reinforced by Rule 144 of the Central Motor Vehicle Rules, made under the provisions of the Motor Vehicles Act 1988.
Going through said Rule 144, the Court concluded that the purpose of this information provided to the insurance company was clearly stated therein:
“It is obvious that such notification is intended to allow the insurer to make the necessary changes to its records and nothing beyond. Therefore, it is clear that with regard to the non-compliance with the section 157(2), it shall have no consequence with regard to the liability of the insurance company to indemnify the insured in respect of claims arising from the victims of the road accident”, it was observed.
In this case, the Court had dealt with appeals against the award made by the Motor Accidents Claims Tribunal, Pala, by the insurance company on the one hand, challenging the award that they were not obliged to provide compensation under Section 157.(2) Motor Vehicle Act, and Claimants 1 to 5 before the Tribunal on the other hand, seeking improvement of compensation.
Claims “Personal damages”
The Court found that when the transfer of the vehicle is completed and the transfer is not reported to the insurance company, the person transferring the vehicle would cease to have any insurable interest in the property in order to make a claim. with respect to the vehicle, which he has already transferred. Consequently, the responsibility of the insurance company, with regard to the own damages of the insured, will cease to have any effect, when the vehicle is transferred to another person and he fails to suggest such transfer. in the prescribed manner.
“The aforementioned termination of the contractual liability of the insurance company is due to the fact that the transferee is not a party to the insurance contract. Therefore, the deemed transfer as contemplated under section 157 of the Motor Vehicle Act cannot be made applicable in the personal damage case since the personal damage claim is something between the company of insurance and the insured, who are parties to the insurance contract,” He held.
Lawyer AN Santhosh appeared on behalf of the appellants in MACA No. 2554/2017, while Senior Attorney George Cherian and Lawyers KS Santhi, Joby Joseph, and Latha Susan Cherian appeared on behalf of the respondents.
Case title: Annamma Raju @ Bincy & Ors against Shalet Jose & Ors.
Quote: 2022 LiveLaw (Ker) 555
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