The Jammu and Kashmir and Ladakh High Court has ruled that compulsory risks covered under the policy of insurance get automatically transferred to the transferee of a vehicle even though the certificate of insurance has not been transferred in his favour. This was made while hearing an appeal filed by the insurance company against the award of Commissioner under Employee’s Compensation Act whereby granting an amount of Rs. 7,60,651/- as compensation to claimants/respondents No.1 to 3, on account of death of deceased. The appellants contended that since the deceased was not the employee of the insured as such, the insurance company cannot be held liable to satisfy the award. The insurance company argued that it had no statutory and legal obligation to indemnify the respondent-Sunita Kumari, with whom it was claimed that the deceased was having a relationship of employment. Justice Dhar observed that it is an admitted fact that the policy of insurance in respect of the vehicle in question had not been transferred from the name of insured Sutanter Singh to the name of Sunita Kumari.
Section 157 of the Motor Vehicles Act is clear that when a person transfers the ownership of a vehicle to another person, the certificate of insurance and the policy described in the certificate is deemed to have been transferred in favour of the person to whom the motor vehicle has been transferred with effect from date of its transfer. This means that a certificate of insurance to the extent it covers compulsory risks is automatically transferred in the name of transferee of the vehicle. The court observed that the compulsory risks prescribed under the Motor Vehicles Act include risks against any liability which may be incurred in respect of death of or bodily injury to any person including owner of the goods or his authorized representative carried in the motor vehicle or damage to any property of a third party. Therefore, the certificate of insurance to the extent it covers compulsory risks would get automatically transferred to the transferee upon transfer of a vehicle by the original insurer. The court found the petition devoid of any merit and dismissed the same.
