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Judgment
DR. INDER JIT SINGH, PRESIDING MEMBER
The present Revision Petition (RP) has been filed by the Petitioner against Respondents as detailed above, under section 58(1)(b) of Consumer Protection Act, 2019 against the order dated 05.09.2023 of the State Consumer Disputes Redressal Commission, Karnataka (hereinafter referred to RP 621 OF 2024 as the 'State Commission'), in First Appeal (FA) No. 33/2023 in which order dated 29.10.2022 of District Consumer Disputes Redressal Commission, Bengaluru (hereinafter referred to as District Commission) in Consumer Complaint (CC) No. 722/2018 was challenged, inter alia praying for setting aside the order dated 05.09.2023 passed by the State Commission.
While the Revision Petitioner (hereinafter also referred to as OP/Insurance Company) was Appellant before the State Commission and Opposite Party before the District Commission, the Respondent(s) (hereinafter also referred to as Complainants) were Respondents-1 & 2 before the State Commission in FA/33/2023 and Complainants- 1 & 2 before the District Commission in Complaint No. 722/2018. Notice was issued to the Respondent(s) on 03.05.2024. Parties filed Written Arguments on 21.08.2025 (Petitioner) and 22.04.2025 (Respondent-1 & 2) respectively.
Delay in filing this Revision Petition is condoned after considering the reasons given in the application for condonation of delay and the case is taken up on merits.
Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that: -Complainant No. 1 purchased a vehicle (delivery van) from Complainant No.2 for a consideration of Rs.5,50,000/-. At the time of sale of the vehicle, Complainant No. 2 delivered the physical possession of the vehicle along with documents and insurance policy standing in the name of Complainant No.2 issued on 20.08.2016 by Opposite Party No.1 through Opposite Party No. 2, wherein value of vehicle was fixed at Rs.4 lakhs. The policy was valid from 19.08.2016 to the midnight of 19.08.2017. The vehicle in question was stolen from the parking of Complainant-1's office situated at No. 40, 9th C Cross, JP Nagar, 1st Phase, Bengaluru. Complainant filed complaint with the JP Nagar Police Station on 11.04.2017 and also lodged FIR No. 0092/2017 before the Court of IV Additional Chief Metropolitan Magistrate at Bengaluru. After getting the copy of FIR, the Complainant filed claim before the OP-2. The complainant visited the office of OP-2, where an official of OP-2 informed the complainant that the claim documents cannot be accepted since the insurance policy is not transferred to Complainant-1's name and Complainant-2 also has no insurable interest since the vehicle's Registration has already been transferred to the name of Complainant No.1. The Insurance Company repudiated the claim vide letter dated 17.08.2017. Hence, the Complainant filed complaint before the District Commission.
The claim has been repudiated by the Petitioner. Insurance Company vide repudiation letter dated 17.08.2017 on the grounds that the insured had already sold the vehicle to Shri Babu Rao Innaa (Complainant No. 1 before the District Commission/Respondent-1 herein) on 15.11.2016 and he had not got the policy transferred in his name and hence he did not have any insurable interest in the insured vehicle at the time of loss.
The District Commission, vide its order dated 29.10.2022, has allowed the Complainant with directions to the OP to pay a sum of Rs.4 lakh IDV to the Complainant with interest @9% p.a. from 17.08.2017 till realization, along with compensation and litigation cost etc. The Petitioner Insurance Company preferred an Appeal before the State Commission. The Appeal filed by the Petitioner Insurance Company was dismissed by the State Commission vide order dated 05.09.2023.
Petitioner Insurance Company has challenged the order of the State Commission mainly on following grounds:
The State Commission has passed the impugned order arbitrarily and without natural justice with material irregularity. The District Commission's finding of deficiency in service is without any reason or based on any evidence provided by the Respondent herein.
The State Commission erred in not taking into consideration that the Respondent-2's own admission that he has sold the said vehicle to Respondent-1 and the Petitioner herein was never informed about the sale of the said vehicle till the event of theft thereby Respondent No.2 forfeited his right in the said claim as no insurable interest was available.
The State Commission erred in wrongly applying the principle of third party insurance to the present claim of Respondent-1 whereby the said claim should have been decided as per the terms of the policy as agreed between the parties. The Respondent-1 and the Petitioner herein never agreed on any terms so as to cover under the definition of insurable interest.
Both District Commission and the State Commission erred while deciding the claim in favour of Respondent-1 wherein it was Respondent-2 who has filed his initial claim and the petitioner was right in repudiating the claim of the Respondent-2 when he was not the actual owner of the vehicle as per law.
The State Commission erred in applying the ratio of M/s Balwant Singh and sons V. National Insurance Company Ltd. passed by Hon'ble Apex Court in Civil Appeal No. 5998/2019 (SLP (C) No.23604/2014 wherein the said judgment has expressly stated that where the claim does not include third party, the insurance company can act as per the agreed terms of insurance policy. The State Commission wrongly held that the present case is pari materia to the facts of Balwant Singh and thus wrongly decided the appeal both on facts and on law.
Both the Fora below erred while deciding the complaint in favour of Respondent-1 without taking into consideration that whether Respondent-1 is 'consumer' or not as per definition of the Consumer Protection Act.
The main contention of the Insurance Company/reason for repudiation of the claim is that as Complainant No.1 after purchasing the vehicle from Complainant -2, has not got the insurance policy transferred in his name, hence he has no insurable interest. State Commission, while dismissing the appeal filed the Insurance Company observed as follows:
'4. Therefore, Sec. 157(1) of the Act clearly contemplates that once a transfer is affected by following the procedure contemplated in the Motor Vehicles Act, the certificate of insurance is deemed to have been transferred in favour of the transferee without any further process. Though Sub-section (2) of Section 157 provides for intimation of such transfer, since the statute is silent as to the consequence of failure in doing so, it can only be treated as directory in nature and not mandatory. Therefore, in the present case on hand OPs/appellants only contention is that the complainant no.1/R1 had not transferred the insurance policy to his name till the date of theft. But fact remained that as on 22.11.2016 the RC has been transferred in favour of complainant no.1/R1 and the theft occurred after the transfer of ownership is completed by following the provisions of the MC Act. Therefore, non-compliance of Sec.157(2) is concerned, will have no consequence as regards the liability of the Insurance company to indemnify the insured in respect of the claims since deemed transfer of policy had occurred before the theft. With such conclusion, Commission proceed to dismiss the appeal with no order as to cost."
Admittedly the policy has not been transferred in the name of Complainant No.1 at the time of theft. However, Complainants relying on judgment of Hon'ble Supreme Court in Balwant Singh and sons Vs. National Insurance Company Limited, Civil Appeal No. 5998/2019 (SLP (C) No. 23604/2014) decided on 31.07.2019 and few other judgements contended that Complainant No.1 is entitled to the reimbursement of the claim. Petitioner Insurance Company on the other hand contends that State Commission erred in holding that non-compliance of Section 157(2) will have no consequence as deemed transfer of policy had occurred before theft. It is the case of the Insurance Company that Respondent-2, who had transferred the vehicle would cease to have any insurable interest in the vehicle so as to make any claim in respect of the vehicle which is already transferred. As regards Respondent-1, the Insurance Company contends that he is not a party to the contract of Insurance. Therefore, deemed transfer as contemplated U/s 157 of MV Act cannot be made applicable in the case of own damage since the claim of own damage is between the insurer and insured, who is Respondent-2.
We have carefully gone through the orders of the State Commission, District Commission, other relevant records, rival contentions of the parties and the case laws relied upon by them. It is important to note that the Complaint before District Commission was joint by Sh. Babu Rao Innaa, the purchaser of the vehicle, who was arrayed as Complainant No.1 before the District Commission and M/s Sri Ganesh Industries, the seller, in whose name the insurance policy stands, who was arrayed as Complainant No. 2 before the District Commission, with a prayer to declare that OPs are guilty of deficiency in service and seeking directions to OPs to reimburse/pay the Complainants the sum insured. The vehicle in question being under a valid insurance policy at the time of theft is not in dispute. The Insurance Company is denying the claim to Complainant No. 2 on the ground that at the time of theft, he was not the owner of the vehicle, as the same was sold and transferred in the name of Complainant No.1, although the insurance is continuing to remain in the name of Complainant No.2 as on the date of theft. Further, Insurance Company is denying the claim to Complainant No.1 on the ground of lack of privity of contract, as the insurance was not got transferred in his name at the time of theft, although he was the owner of the vehicle at the time of theft. We are unable to accept such a stand of the Insurance Company and hold that action of the Insurance Company in repudiating the claim is unsustainable. Hence, we are in agreement with the findings of both the fora below, who have given concurrent findings of deficiency in service on the part of Insurance Company. There is no illegality or material irregularity in the orders of State Commission calling for any interference at our level. Accordingly, the order of the State Commission is upheld and Revision Petition is dismissed.
The pending IAs in the case, if any, also stand disposed off.