MANU/CF/0083/2007

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION

NEW DELHI
Decided On: 22.05.2007
Appellants: Narayan Singh
Vs.
Respondent: New India Assurance Company Ltd.
Hon'ble Judges/Coram:
M.B. Shah, J. (President) and Rajyalakshmi Rao, Member
ORDER
1. Heard the Learned Counsel for the parties.
2 . It is highly deplorable on the part of the Insurance Company to take undue
advantage of the ignorance of the consumers. In 1994, a circular has been issued by the
General Insurance Company with regard to the transfer of the vehicles and the transfer
of insurance benefits automatically in favour of the transferee. The said regulation is
part of the India Motor Tariff Regulations. The said regulation reads as under:
Transfers:
On transfer of a vehicle, the benefits under the policy in force will
automatically accrue to the new owner. The bonus/malus already
applicable for the policy would continue until expiry of the policy. On
expiry or cancellation of the policy, bonus/malus will apply as per the
new owner's entitlement.
If the transferee wants to change the policy in his name, it may be
done on getting evidence of sale and a proposal form duly completed.
The old certificate of insurance must be surrendered to the insurance
company and a new certificate of insurance can be issued by collecting
a fee of Rs. 15/-. If the old certificate is not surrendered, a declaration
is to be taken from the new owner before issuing a new certificate.
3 . It appears that in a number of cases Insurance Companies are suppressing this
regulation and take undue advantage and contend with all force that as the Insurance
policy was not transferred in favour of the new purchaser, Insurance Companies are not
liable to reimburse the insurers or the transferees of the vehicle because the transferees
were not having any insurable interest.
In the present case, it is apparent that Insurance Company has relied on some
judgements of this Commission as well as the judgements of the Apex Court in support
of its contention that the transferee was not entitled to get the relief in case of
contemplated peril as the policy was not transferred in favour of the transferee.
4 . In this case, fortunately the Learned Counsel has pointed out the said tariff,
therefore, by our order dated 4th December, 2006, we requested the Learned Counsel
Mr. Mehra, who is appearing on behalf of the Insurance Company, to verify and file a
clarificatory affidavit with regard to the said regulation on the automatic transfer of the
policy in case of transfer of vehicle. No affidavit is filed till today and Learned Counsel

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for the Insurance Company is not in a position to justify contrary to what is provided
under the India Motor Tariff.
We Hope that in future the Insurance Company would be fair and not exploit the
ignorance in dealing with the claims of the insurers in such cases.
5 . In the present case, Petitioner purchased Maruti van from his original owner on
31.5.1995. The original owner had taken insurance policy for a sum of Rs. 1,40,000/-
for a period between 3rd August 1994 and 2nd August, 1995. Unfortunately, within five
days of its purchase, i.e. on 4.6.1995 when the Complainant alongwith his family was
coming from Varanasi to Muzaffarpur, the said vehicle met with an accident on the way
of Muzaffarpur at Village Moharrampur P.S. Bihta, Dist. Patna in which the said vehicle
was totally damaged. Thereafter, the information regarding the accident was given to
the Patna Regional Office of the Insurance Company. The Insurance Company appointed
a Surveyor who assessed the loss. However, as the amount was not paid to the
Complainant, the Complainant approached the Consumer District Forum, Muzaffarpur by
filing Complaint Case No. 187/1996. By order dated 16.9.1997, the District Forum
allowed the complaint and directed the Insurance Company to reimburse a sum of Rs.
1,40,000/- with interest @ 8% p.a. with further direction to pay Rs. 5,000/- as
compensation and costs.
6. Against that order the Insurance Company preferred Appeal No. 590/1997 before the
State Commission, Bihar. That appeal was allowed by order dated 26.12.2001 by
observing that Muzaffarpur District Forum was not having territorial jurisdiction and
also on the ground that Insurance policy was not transferred in favour of the
Complainant.
7 . As stated above, the second ground given by the State Commission cannot be
justified in view of the India Motor Tariff Regulation. Further, on this aspect, Learned
Counsel for the Petitioner has produced on record the Judgment rendered by the
Chattisgarh State Commission in the case of Ajimuddin v. The New India Assurance Co.
Ltd. reported in 2006 (2) CPR 124 wherein the Commission has observed in paragraph 7
as under:
Learned Counsel for the Appellant submitted that GIC has issued special
instructions regarding settlement of claim in case of transfer of policy. It was
submitted that as per the said instructions the transfer of policy in favour of the
purchaser the Complainant/Appellant should be treated as automatic. It appears
that the Tariff Advisory Committee issued a circular regarding automatic
transfer of the policy to the new owner/purchaser of the vehicle. In the said
circular the decision of Supreme Court in Complete insulations (P) Ltd. v. New
India Assurance Co. Ltd. was referred to. In the said circular it was stated that
for policies issued as per revised Motor Tariff, own damage claim which fall
within the purview of GR 10 provisions may be settled in full subject to the
other terms and conditions of the policy.
8 . In this view of the matter, the Insurance Company ought not to have rejected the
claim on the ground that the vehicle was not transferred in favour of the Complainant.
In any set of circumstances, even under Section 157 of the Motor Vehicle Act transfer
application is to be made within a period of 14 days and those 14 days were not over in
the present case. Hence, in our view, it is highly improper and unjustified act on the
part of the Insurance Company to reject the claim on such ground and harass the
Complainant for years together.

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9 . With regard to the territorial jurisdiction of Muzaffarpur District Forum, it is to be
stated that Complainant resides at Muzaffarpur and using the said vehicle at
Muzaffarpur, the accident took place in District Patna and the Insurance Company is
having Branch office at Muzaffarpur. In that view of the matter, it cannot be said that
District Forum, Muzaffarpur was not having any territorial jurisdiction.
In the result, the Revision Petition is allowed. The order passed by the State
Commission is set aside and the order passed by the District Forum is restored. The
Insurance Company is directed to pay the sum of Rs. 1,40,000/- with interest @12%
p.a. from 1st January, 1996, i.e. after six months from the date of the accident to the
Complainant within six weeks from today.
Because such stand is taken by the Insurance Company in number of cases, Insurance
Company is directed to pay punitive costs of Rs. 1 lakh under Section 14(1)(d) for
taking unjustified stand in not disclosing the India Motor Tariff Regulation which was
applicable in the present case. The said amount shall be deposited with the Registrar of
this Commission, who in turn, shall transfer the same in the Consumer Legal Aid
Account.
It is further directed that Insurance Companies would be careful in not taking such
stand which is contrary to the regulations framed by the India Motor Tariff and
Insurance Regulatory Development Authority.
It is high time for the Insurance Companies to give information with regard to the India
Motor Tariff to the insurers and not to take undue advantage of their ignorance as the
regulations framed under the India Motor Tariff are binding to the Insurance Companies.
The Registrar is directed to send a copy of this order to Shri C.S. Rao, Chairman,
Insurance Regulatory Development Authority (I.R.D.A.) for taking appropriate action.

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