Vipul Ganda is an Independent Litigation Counsel with over 14 years of experience and a proven track record in Litigation and Dispute Resolution.

Surendra Kumar Bhilawe Versus The New India Assurance Company Limited

Court / Forum : Supreme Court of India
Citation : 2020 SCC OnLine SC 523; 2020 (4) ALD 247
Coram : Justice R. Banumathi and Justice Indira Banerjee
Subject : Section 23 of the Consumer Protection Act, 1986
Date of Decision : 2020-06-18

Brief Facts

  • The Appellant was the owner of a truck, which was covered by a policy of insurance issued by the Respondent, effective for a period of June 2, 2011 to June 1, 2012. On November 11, 2011, the truck was loaded with goods for delivery in Dhanbad. On November 13, 2011 at about 1:45 pm, while the truck was on its journey, it met with an accident, the truck turned turtle and fell into the river by the side of the road. Even, the goods got washed away.
  • The accident was reported in police station on November 16, 2011 and on November 25, 2011, the Appellant through Mohammad Iliyas Ansari (“Buyer”) had filed a claim with the Respondent. Thereafter, the Respondent appointed Independent Surveyor, Loss Accessor for conducing a spot survey and a Valuer, Surveyor, Loss Assessor and Investigator to conduct the final survey. As per the report, the loss recoverable from the Respondent was Rs. 4,93,000/- (Rupees Four Lacs Ninety-Three Thousand Only) (“Claim”) after deduction of salvage value.
  • The Respondent issued a show cause letter dated March 22, 2012 requiring the Appellant to show cause why the aforesaid claim should not be repudiated as the Appellant had already sold the truck to Buyer on April 11, 2008. On the date of accident, the Appellant continued to be the registered owner of the truck.
  • The truck was hypothecated to ICICI Bank and the ICICI Bank had not issued No- Objection Certificate to the Appellant for transfer of truck as the dues of ICICI Bank were not paid in full till the date of accident. But the Appellant had entered into a sale agreement with the Buyer for sale of truck.
  • Aggrieved by the action of Respondent in not releasing the claim of the Appellant, the Appellant had approached the District Consumer Disputes Redressal Forum (“District Forum”) vide complaint bearing no. 404 of 2012. The District Forum allowed the complaint and directed the Respondent to pay the Claim within a month along with interest @ 6% pa from the date of filing of complaint till the date of payment. Also, Rs. 5000/- (Rupees Five Thousand Only) were awarded for mental agony and Rs. 2,000/- (Rupees Two Thousand Only) for mental agony.
  • The Respondent had appealed before the Chhattisgarh State Consumer Dispute Redressal Commission (“State Commission”) vide appeal no. FA/14/85 which was dismissed by the State Commission vide order dated July 22, 2014. Thereafter, the Respondent filed the revision petition bearing no. 4126 of 2014 in the National Consumers Disputes Redressal Commission, New Delhi (“National Commission”). The National Commission allowed the revision petition and dismissed the complaint of the Appellant.
  • Aggrieved by the decision of the National Commission, the Appellant has filed the Appeal before the Hon'ble Supreme Court.


  1. Whether National Commission erred in dismissing complaint on ground that Appellant had sold his vehicle to another person?


  • The Hon'ble Supreme Court held that the National Commission ignored various factual findings of the lower forums such as: Even after the purported sale agreement, the Appellant continued to pay instalments to ICICI Bank. ICICI Bank had neither released the truck from hypothecation nor it had granted no-objection for the sale. Even though, three years had passed since the purported sale agreement, the Appellant paid the premium and took the policy in his own name. No steps were taken by the Buyer to transfer the registration of the said truck. Furthermore, even after 3 years of purported sale agreement, the permit for operating the truck was still in the name of the Appellant. In the present matter, there is no material evidence relying upon which, the National Commission could have reversed the decision.
  • The Hon'ble Supreme Court opined that sections 19 and 20 of the Sale of Goods Act, 1930 which deals with the stage when property in movable goods passes to the buyer is of no assistance to the Respondent. The property is transferred to buyer when the parties to the contract intend it to be transferred provided that such property is capable of being transferred. If there is an impediment to transfer such as ‘No Objection' from the ICICI Bank in the present matter, there could be no question of transfer till the time such impediment is removed. Further, such transfer should also comply with statutory requirements for transfer of motor vehicle under Motor Vehicle Act, 1988 (“MV Act”) and the rules framed thereunder. Otherwise, such transfer would be void under section 10 read with section 23 and 24 of the Indian Contract Act, 1872.
  • The Hon'ble Supreme Court held that finding of the National Commission that fact of registration of truck in the name of Appellant is inconsequential is not sustainable in law. Section 2(30) of the MV Act defines owner as a person in whose name motor vehicle stands registered. If in the present matter, ownership of the truck was intended to be transferred forthwith, the registration would have transferred in the name of the Buyer and the permit to operate the said truck for carriage of goods. It cannot be accepted that a person who transferred ownership on receipt of consideration did not report or apply for such transfer and continued to incur risks and liabilities of the ownership of vehicle under various laws. Further, even if the ownership is transferred, why would a person go on paying the loan amount, take insurance policies or otherwise discharge obligations of ownership. Similarly, it is incredible that the transferee who has purchased the vehicle would not insist on transfer of permit and would thereby expose himself to penal consequences of operating goods vehicle without permit.
  • Further, section 157 of the MV Act provides that if a person in whose name certificate of insurance has been issued under Chapter XI of the MV Act, transfers the ownership in the motor vehicle in respect of which the insurance was taken together with the insurance policy, the certificate of insurance and policy is deemed to be transferred to the transferee from the date of transfer. Also, explanation to aforesaid section 157 provides that such deemed transfer would include transfer of rights and liabilities of the said certificate of insurance and policy of insurance. The transferee may within 14 days from the date of transfer, apply to the insurer for making necessary changes and recording the factum of transfer of insurance. No reason, why a transferee will not apply for such endorsement when insurance covering third party insurance is mandatory for using a vehicle.
  • In any case, there could be no reason for the Appellant to take insurance cover in his own name, if the Appellant had transferred the ownership in April 2008. Further, the Buyer is also taking a risk of operating a vehicle owned by him, without taking an insurance policy covering third party risks in his name and going against the mandate of section 146 of the MV Act.
  • A registered owner continues to remain owner and when the vehicle is insured in the name of the registered owner, the insurer would remain liable notwithstanding any transfer, would apply equally in the case of claims made by the insured himself in case of an accident. If the insured continues to remain the owner in law in view of the statutory provisions of the MV Act, the Respondent cannot evade its liability in case of an accident.
  • Furthermore, in the present matter, F.I.R. was lodged within 3 days of accident and in such cases, a slight delay in lodging the F.I.R. cannot defeat the legitimate claim of the Appellant. In our view, there is no delay in lodging the F.I.R. In case of a serious accident in an inter-state transportation of goods, delay of 20 days in lodging the claim is also no delay at all. Also, the claim application filed by the Appellant was not time barred. In Om Prakash vs. Reliance General Insurance and Anr. [(2017) SCC 1 724], this Hon'ble Court had held that delay in intimation of accident, or submission of documents due to unavoidable circumstances, should not bar settlement of genuine claims.
  • Therefore, the Appellant continued to remain the owner of the vehicle on the date of accident and Respondent cannot avoid its liability for the loss suffered by Appellant on the ground of transfer of ownership to the Buyer.
  • Accordingly, the Hon'ble Supreme Court allowed the Appeal and increased the rate of interest to 9 % pa along with enhancing the costs and compensation for mental agony to Rs. 1,00,000/- (Rupees One Lacs Only).

Vipul Ganda is a Delhi based Advocate practicing largely at the Delhi High Court. His practice focus is Dispute Resolution and Litigation and his practice areas include Arbitration, Commercial, Civil, Constitutional, Corporate and Criminal Litigation.