In a key ruling, the Allahabad High Court affirmed that an insurance company remains responsible for covering accidents, even when a vehicle’s ownership hasn’t been formally transferred. The decision came in a case involving a truck where the sale had been agreed upon but not officially recorded with the transport authorities.
The dispute began when Govind Gupta, the registered owner of the truck, sought compensation after the vehicle was damaged. New India Assurance Company, however, denied the claim, arguing that Gupta had already agreed to sell the truck to Sanjeev Kumar, who was also responsible for paying off the vehicle’s loan. When the truck, driven by Kumar’s driver, met with an accident, the insurer claimed it had no obligation to cover the damage.
The Court ruled otherwise, highlighting Section 157 of the Motor Vehicles Act (MV Act), which ensures that an insurance policy is automatically transferred to the new owner upon the sale of a vehicle. Even though Gupta had entered an agreement with Kumar, the Court emphasized that the vehicle’s official ownership transfer had not occurred, meaning the insurance contract still stood between the insurer and Gupta.
Justice Subhash Vidyarthi reinforced that the statute’s intent is to make insurance coverage accessible, even if the transfer process isn’t completed. In this light, the Court ruled that the insurance company remains liable under the original policy, upholding a previous decision by the Permanent Lok Adalat in favor of Gupta.
This ruling underscores that agreements for future transfers do not negate insurance responsibilities until formalities are concluded. The insurance company must still honor its commitment under the existing policy.
