1. The appellant, the Queensland Insurance Co., Ltd in these appeals, was the second defendant in the three suits, O. S. No 132 of 1961 filed by Swaminatha Mudaliar O.S. No. 171 of 1962 filed by Lakshmikanthamma, wife of the said Swaminatha Mudaliar, and O. S. No. 84 of 1962 filed by the legal representatives of Sivagnana Thevar, in the Court of the Subordinate Judge of Tiruchirapalli, for damages for rash and negligent driving of the motor car, MSY 4891 by one Pitchai, who was employed as driver by one N. Radhakrishnan, the then’ owner of the car, who was impleaded as the first defendant in all the suits, resulting in a serious accident causing injuries to Swaminatha Mudaliar and his wife, Lakshmikanthamma and the death of Sivagnana Thevar. It is not disputed that the driver, Pitchai dozed off while driving the car along Tiruchirapalli-Turaiyur road and that this resulted in the car swerving from the road and dashing against the culvert near the milestone indicating 17 miles 2 furlongs. The driver of the car was prosecuted under Section 304-A, Indian Penal Code, convicted and sentenced.
2. There is no dispute about the quantum of damages assessed and decreed by the lower Court in favour of the plaintiffs in each of the suits. One M.A.M. Kasi was impleaded as the third defendant in each of the suits, but he was exonerated as he had only taken a hire-purchase agreement for the loan advanced by him to N. Radhakrishnan. A plea was raised in the lower Court that it had no jurisdiction to try the suits and that the claims should have been made before the Tribunal constituted under Section 110-A of the Motor Vehicles Act. But as the accident in this case occurred on 9th September 1960 that is, prior to the constitution of the Claims Tribunal under the Motor Vehicles Act, the plea of jurisdiction was not pressed in the lower Court.
3. The appellant-insurance company put forward two contentions, namely that the insurance policy issued by it to the original owner, T.M. Radhakrishna Chetty, lapsed on his selling the car and hence the insurance company could not be called upon to indemnify the vicarious liability of the first defendant, N. Radhakrishnan for the rash and negligent driving of the driver, Pitchai, and that, even under the terms of the policy, there could be no liability of the insurance company in view of the fact that the vehicle was hired by N. Radhakrishnan to Swaminatha Mudaliar to attend a marriage. The learned principal Subordinate Judge negatived both the pleas of the appellant and decreed the suits against the appellant and the owner N. Radhaknshnan.
4. The appellant-company issued the policy, Exhibit B-4, to the then owner of the car, A. K. Muthukumaraswamy Chetty, agreeing to indemnify the insured in respect of his liability to third parties for death or bodily injury caused to persons by rash and negligent driving of the car. But the policy does not cover the use of the car for hire. The period of the policy was from 18th May, 1959 to 17th May, 1960. Subsequently, A. K. Muthukumaraswamy Chetty sold the car to T. M. Radhakrishna Chetty on 8th August, 1959, and intimated the same to the appellant, as evidenced by Exhibit B-19. T. M. Radhakrishna Chetty, in his turn, wrote the letter Exhibit B-30, to the appellant and the policy was transferred in his name, as evidenced by Exhibit B-22. Subsequently, T. M. Radhakrishna Chetty renewed the policy for another year from 18th May, 1960, to 17th May, 1961, subject to the conditions of policy already referred to in July, 1960. The first defendant, N. Radhakrishnan, purchased the car from one M. Rajarathnam Pillai, who had purchased the car from T. M. Radhakrishna Chetty earlier on 23rd June, 1960. But he did not notify the insurance company, or attempt to get any transfer of the policy in his name. In fact, even his vendor, M. Rajarathnam Pillai, did not notify his purchase of the car to the appellant-company.
5. As soon as he came to know of the accident, the first defendant, N. Radha-krishaan, sent the telegram, Exhibit B-25, to the appellant. The branch manager of the appellant-company tried unsuccessfully to contact T. M. Radhakrishnan Chetty on the phone and subsequently sent the letter, Exhibit B-27. The appellant-company sent D. W. 3, Saunders, automobile engineer, to inspect the vehicle and make local enquiries. T. M. Radhakrishaa Chetty seat the letter, Exhibit B-28, to the appellant stating that he had sold the car to M. Rajarathnam Pillai even on 23rd June 1960, and handed over the insurance policy along with the other documents to the buyer and that the entire risk was on the buyer. D. W. 3, Saunders, contacted the first defendant, N. Radhakrishnan, and learnt from him that he had lent the car on hire to the occupants of the car at the time of the accident.
6. The learned Advocate for the appellant relied on the Bench decision of this Court in Bhoopathy v. Vijayalakshmi , where it has been held, overruling the earlier decision of a single Judge in Madras Motors Insurance Co., Ltd v. Mohamed Mustafa Badsha , that the insurer is not liable to the transferee for damages awarded to a third party for injuries caused by rash and negligent driving of the car on a date subsequent to the transfer of ownership’. Sri R. Ramamurthi Iyer appearing for the respondents-plaintiffs urged that the Bench decision is only obiter as the policy in that case had expired prior to the date of the accident and an attempt to renew the policy was made only a day after the accident. But the principles enunciated in that decision are correct and there is no reason to doubt the same.
7. It is clear from paragraph 855 at page 373 of Chitty on Contracts, Volume 2 that a contract of insurance will normally be construed at a contract of indemnity. It is clear from paragraph 913 of the same volume 2 at page 403 that the main cover will usually be by reference to a specified car, owned by the policy-holder and the whole policy will then only remain effective while ho retains an interest in that car. It is stated that even if it contains an extension in respect of the use by the policy-holder of any car being used at the time of the accident, “instead of the insured car”, this extension will cease to be effective once he has parted with the car insured. This statement of the law is based on Roger son v. Scottish Automobile & General insurance Co. Ltd. (1931) All E.R. 606 : 48 T.L.R. 17 Lord Macmillan has pointed out in the decision that the assured cannot, within the meaning of the policy, use another car instead of the insured car after he has parted with the property in the insured car. He has observed that if the assured has parted with the property in the insured car and buys another car, he cannot be said to be using his new purchase instead of the car he has sold and that he is, using the new car in succession to the insured car, not instead of it. It is clear from, paragraph 913 of Chitty on Contracts, volume 2, referred to above, that a complete? change of ownership of a vehicle will put an end to the policy. In Peters v. General Accident fire & Life Assurance Corporation Ltd. (1937) 4 All E.R. 628, it has been held that when the vendor sold the car, the insurance policy automatically lapsed. It is clear from the decision that an insurance policy is a contract of personal indemnity and the insurers cannot be compelled to accept responsibility in respect of a third party who may be quite unknown to them. The following passage at page 634 of the judgment is relevant for the present discussion:
I have no doubt, therefore, that you cannot assign a motor policy in the way that it is suggested it was done here. If you sell your car, you cannot, merely by handing over your car and saying : ‘ Take this policy and do what you can with it : I assign it to you ‘, put the underwriters under an obligation to indemnify the purchaser, when they have agreed only to indemnify the vendor. Consequently, on all grounds here the action, in my opinion, fails. Sorry as I am for Mr. Peters, he is thus left with an award of damages and costs amounting to some £500, and only somebody who has not 500s. to proceed against. In this case, I cannot say that the person who injured him was insured- The fact was that he was driving an uninsured car. Whether he knew it or not, I do not know. I should think he probably did know it, inasmuch as his vendor gave him a form to fill in. However, that is not a matter with which the defendants are concerned. They are quite entitled to say, and do say : ‘ We know nothing of Mr. Pope. He is not on our books, and, so far as we are concerned, he is an uninsured person.
8. It is clear from the facts of this case that the appellant gave the policy only to T. M. Radhakrishna Chetty agreeing to indemnify him in respect of any liability that he may incur to third parties by reason of rash or negligent driving of the car. Neither the first defendant, N. Radhakrishnan, nor even the prior owner, M. Rajarathnam Pillai, made any attempt to get a transfer of the policy. The first defendant, N. Radhakrishnan, did not get a transfer of the policy in his favour at any time prior to the accident. Even the prior owner, M. Rajarathnam Pillai, did not attempt to get the policy transferred in his name, though it was handed over to him by the previous owner, T. M. Radhakrishna Chetty, as seen from Exhibit B-28. But the mere handing over of the policy cannot impose any liability on the appellant and this is clear from the passage quoted above.
9. It should be noted that the policy issued by the appellant does not specifically provide for transfer, though such transfers are usually done by the company at the request of the policy-holder on payment of the prescribed fee.
10. Shri R. Ramamurthi Iyer relied on the decision in Bir Singh v. S.M. Hashi Rashi where an insurance company was made liable both on the ground that it had failed to prove that there was a clause in the policy requiring the insured to obtain the assent of the insurer of the change of ownership of the vehicle and also on the ground that the insurer failed to prove by producing the necessary documents that the transfer was notified and recorded by it. The actual decision proceeds on the basis that the insurer kept back the register of policies, and that it should therefore be presumed that the transfer of ownership had been notified to the insurer and it had admitted the same. It is clear from the decision that the policy issued to cover third party risks is a policy of indemnity of the person named in the policy. In other words, the concluding words of Sub-section (5) of Section 95 of the Motor Vehicles Act refer to indemnity only of the person or classes of persons specified in the policy and the nature of the policy of guarantee depends upon the terms of the contract read along with the provisions of the Act. It has been held in the above decision, that if there be in the policy a provision which requires a transfer of ownership of the vehicle to be assented to by the insurer and only on proof of such a fact the cover will enure to the benefit of the transferee from the owner who had taken out the policy, such a provision will not militate against any of the existing provisions of the Motor Vehicles Act and that the law does not make any provision to counteract the effect of such a clause. It has been further held in that decision that if such a restrictive clause as regards the rights of a transferee from the previous owner of the motor vehicle is found in a third party insurance policy, and no approval of a transfer is obtained from the insurer but the motor vehicle is registered by the transport authorities, the result is that the vehicle runs without the cover of a policy. This decision does not lay down that in the case of policies issued to a particular person containing indemnity clause in his favour alone and not providing specifically for transfer with the assent of the insurer, the policies will not lapse by transfer of ownership of the car of the assured. If it purports to lay down such a principle, it will be clearly wrong.
11. Sri R. Ramamurthi Iyer relied on the decision in Vanguard Fire and General Insurance Co., Ltd. v. Sarla Devi I L.R. (1959) Punj. 714 : (1959) 61 Punj. L.R. 683 : A.I.R. 1959 Punj. 297, and the decision of the Supreme Court in British India General Insurance Co. v. Captain Itbar Singh , in support of his contention that an insurer is entitled to depend only on those grounds mentioned in Sub-section (2) of Section 96 of the Motor Vehicles Act, and no other. It is clear from Section 95 (5) of the Motor Vehicles Act that a person issuing a policy of insurance under the section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. Section 96 of the Moor Vehicles Act refers to the duty of insurers to satisfy judgments against persons insured in respect of third party risk. Thus, if the appellant-company had been impleaded as one who had issued an insurance policy to the first defendant in respect of third party risk, it would be entitled to put forward only the defences mentioned in Section 96 (2) of the Act. But the appellant in this case has not issued any such insurance policy to the first defendant and it is certainly open to the appellant-company to plead that it has not issued any policy to cover the liability of the first defendant, N. Radhakrishnan, and that the policy issued by the company to T. M. Radhakrishna Chetty had lapsed and cannot be availed of by the first defendant. It follows that the policy issued by the appellant-company to T. M. Radhakrishna Chetty had lapsed and it cannot be availed of by the first defendant to indemnify the claim made against him by the plaintiffs in these suits.
12. The only other point urged in these appeals is that even under the terms of the policy, the appellant cannot be made liable as the car had been hired by the first defendant to Swaminatha Mudaliar, who travelled in the car at the time of the accident. The learned Subordinate Judge did not accept the plea of the appellant that the first defendant had hired the car to P. W. 2, Swaminatha Mudaliar. It is difficult to expect the appellant to adduce direct evidence to prove that the first defendant, N. Radhakrishnan, hired the car to Swaminatha Mudaliar. But, in our opinion, the learned Subordinate Judge has not given due weight to the admission of the first defendant spoken to by D. W. 3 and the strong pieces of circumstantial evidence supporting the claim of the appellant. The first defendant, N. Radhakrishnan, admitted in cross-examination that he was a bus conductor in V. T. Transport, Tiruchi, on a basic salary of Rs. 55 and a monthly allowance of Rs. 35. He does not own any immovable property and he is residing in his mother ‘s house. He ceased to be a conductor only six months prior to his giving evidence on 15th December, 1962, that is long after the occurrence in this case. He is employed temporarily to drive cars. According to him, he borrowed Rs. 6,500 from the third defendant, under a hire-purchase agreement, and with a sum of Rs. 3,000 kept by him purchased a car from M. Rajarathnam Pillai. In respect of the said loan taken under the hire purchase agreement, he made two payments of Rs. 355 each under Exhibits B-l and B-2 in August and September, 1960. He claims to have discharged the loan under the hire-purchase agreement by paying Rs. 4,500 by the sale of the car after the accident. He was paying Rs. 60 per month as salary for the driver of the car. Having regard to the above facts, it is highly probable that he used the car by letting it out for hire, though he denied the suggestion. He denied the suggestion that he gave the car on hire to P. W. 2. In his chief examination he stated that as P. W. 2 was well-known to him, he lent the car and that he did not give it to him for hire or reward. But his plea in his written statement in O. S. No. 84 of 1962 is totally different. In the other two suits he merely pleaded that the lower Court had no jurisdiction to try the suit. In his written statement in O. S. No. 84 of 1962 he has stated that on 8th May, 1962, he directed that the driver Pitachi, to take the car to workshop as it was consuming lot of oil and that the driver unauthorisedly appears to have taken Swaminatha Mudaliar and his family car to Thuraiyur and that on the way the car met with the accident. Thus his plea is that the accident having a resulted during a trip undertaken by Pitachi contrary to the express direction given by him to take the car to the workshop , he cannot be held liable at the instance of Swaminatha Mudaliar or his wife or the plaintiffs in O.S. No. 84 of 1962.
13. P.W. 2 Swaminatha Mudaliar , the plaintiff in O.S.No. 132 of 1961 , on the file of the Lower Court, has stated in his written statement that he is the O.S.No. 132 of 1961, on the file Messrs. Peacock & Co., a high class cigar manufactory at Woriyur, that he is the proprietor of lord and a honorary magistrate of the town Bench Court at Tiruhcirapalli vice-president of the Woriyur Cigar Manufacturers Association and a member of the Tamil Chamber of Commerce, Madras and that he is an income-tax and a member of It is difficult to believe that he had freely taken the car form a conductor to attend a marriage at Thuraiyu.. Thus the circumstantial evidence strongly to attend to attend to the lender in instalments a! he was not in affluent circumstances and that he had hired the car to the persons who were occupants of the car at the time of the accident. It is true D. W. 1, N. Radhakrishnan was not specifically the tune of the accident. whether he made any of the admissions to D.W.3, Saunders as spoken latter. But suggestions have been made to D. W 1 that he used to let the car on hire and that he gave the car to Swaminatha Mudaliar for hire D W.3 Saunders a respectable witness and we see no reason for not accepting his evidence.
14. Thus, on the admission of the first defendant to D. W. 3, Saunders, and the pieces of circumstantial evidence referred to above, we have no hesitation in finding other that the first defendant had hired the car MSY. 4891 Swaminatha Mudaliar the plaintiff in O. S. No. 132 of 196l to enable him o go to Thuraiyar to attend a marriage. Thus, even if the first defendant could claim the benefits under the policy given by the appellant to the prior owner , T.M. Radhakrishna Chetty , the terms of the the policy prohibiting the hiring of the vehicle will disentitle him to any indemnity.
15. In the result, the decree and judgment of the learned principal Subordinate Judge in so far as it makes the appellant liable for the claims in the three suits are incorrect and they are set aside and the appeals are allowed with costs. It is needless to state that we do not interfere with the decree and judgment of the lower Court made against the first defendant in all the suits.