Case Title: Annamma Raju @ Bincy & Ors v. Shalet Jose & Ors.
Summary
The Kerala High Court ruled that the requirement to notify the insurance company within 14 days of a vehicle transfer, as stipulated in Section 157(2) of the Motor Vehicles Act, 1988, is advisory and not obligatory. The court cited Rule 144 of the Central Motor Vehicles Rules, which stated that the purpose of providing this information is to facilitate insurers in making necessary modifications to their records. The court concluded that failure to comply with Section 157(2) will not affect the insurance company’s obligation to indemnify the insured for damages resulting from motor vehicle collisions. The court also ruled that the deemed transfer as defined in Section 157 cannot be applied to the claim of own damage, as that is a matter between the insurance company and the insured.
About the case
The Kerala High Court determined that the requirement to notify the insurance company within 14 days of a vehicle transfer, as stipulated in Section 157(2) of the Motor Vehicles Act, 1988, is merely advisory and not obligatory. Justice Ziyad Rahman A. A. reached this conclusion on the grounds that the Act does not specify any repercussions for failure to comply with the provision. “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” , according to the Court. Furthermore, the Court determined that this perspective was reinforced by reference to Rule 144 of the Central Motor Vehicles Rules, which was established in accordance with the Motor Vehicles Act of 1988.
Upon reviewing the aforementioned Rule 144, the Court determined that the explicit intent behind the provision of that information to the insurance company was stated therein: “It is apparent that the sole purpose of such notification is to facilitate the insurer in making requisite modifications to their records.” “Consequently, it is evident that failure to comply with subsection (2) of section 157 will not affect the insurance company’s obligation to indemnify the insured for damages resulting from the victims of the motor vehicle collision,” the observation continued. The Court in the present case was considering appeals filed against the award rendered by the Motor Accidents Claims Tribunal, Pala.
On the one hand, the Insurance Company challenged the award on the grounds that they were not obligated to provide compensation in accordance with Section 157(2) of the Motor Vehicles Act. On the other hand, petitioners 1-5 sought an increase in compensation before the Tribunal. “Own Damage” Defenses The court determined that in the absence of notification to the insurance company regarding the transfer of the vehicle, the individual transferring the vehicle would no longer possess an insurable interest in the property including the ability to assert a claim regarding the vehicle that they have already transferred.
Consequently, the insurance company’s liability for the insured’s own damages will be null and void if the insured fails to notify the insurance company in the prescribed manner of a transfer of the vehicle to another individual. “The aforementioned termination of the insurance company’s contractual liability occurs because the transferee is no longer a party to the insurance contract.” “Therefore, the deemed transfer as defined in Section 157 of the Motor Vehicles Act cannot be applied to the claim of own damage, as that is a matter between the insurance company and the insured, who are both parties to the insurance contract,” the court ruled. In MACA No. 2554/2017, Advocate A.N. Santhosh represented the appellants. Conversely, Senior Advocate George Cherian and Advocates K.S. Santhi, Joby Joseph, and Latha Susan Cherian represented the respondents.
