The liability of the insurance company for third party risks would not cease when a vehicle is transferred to a new owner and no one informs the company of the sale.
The Supreme Court Bench headed by Chief Justice V N Khare last week set aside the Punjab and Haryana High Court order which held a contrary view.
In this case (Rikhi Ram vs Sukhrania), two persons riding a motorcycle hit a rickshaw puller causing death.
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It turned out that the ownership of the vehicle had recently been transferred, but neither the seller nor the buyer informed the insurance firm of the sale.
When the claim was made by the relatives of the deceased, the tribunal awarded Rs 64,000 to them, to be paid by the new owners and held that the insurance firm was not liable to pay the amount. They moved the high court which agreed with the tribunal.
But on appeal, the Supre-me Court held the insurance company liable to pay the compensation. The apex court said the compulsory insurance of motor vehicles was for the benefit of third parties.
The object of the law is to protect their interests. The insurance firm