Third-party Insurance is Deemed to be Transferred in a Vehicle Hire agreement: Supreme Court
It was reiterated by the apex court recently that the third-party coverage would also be deemed to be transferred along with the vehicle when a transport corporation hires a motor vehicle from its registered owner. And according to the apex court, they also said that any person who has command and control in the vehicle then they would be regarded as the owner. And as we know that along with the vehicle the insurance policy is also deemed to be remains transferred fie the period of the hire as agreed. The judgment of the Allahabad high court was overturned by the supreme court based on this reasoning. Then the reliance was placed on Uttar Pradesh state road corporation vs J Kulson and or by the court.
These observations were made by a bench of honorable justices at the time. Krishna Murari and the Supreme Court of India S Abdul Naseer was considering whether an insured vehicle plying under an agreement with the Corporation on a route as per a permit granted in the Corporation's favor would be liable for compensation if an accident occurred during that period and whether the insurance company or the owner or Corporation would be liable.
Background of the case-
A bus was hired by the UPSRTC and that bus had met with an accident in which a person died. Then after the person has died a claim was raised by the legal heirs of the deceased before the Motor Accident Claim Tribunal, Bahraich, UP. But the corporation had stated that it had the contract with the owner of the bus and at the same with the insurance company in its written statement.
After the claim was raised then the insurance company is liable and it was held by the tribunal and also the tribunal directed it to pay 1822000/- with the interest of 6%.
And when it was held by the tribunal that the insurance company is liable and has to pay the directed amount then the appeal was again filed in the Allahabad high court and in that it was ruled that the insurance company was not liable to pay any amount. Now, after all these things happened then the corporation has approached the supreme court.
Supreme Court's findings and order-
The Allahabad judgment was overturned by the top court and also at the same time ruled that the corporation was liable. The court relied on the case of UP State Road Corporation vs Kulsum & Ors, wherein it was also held that the real test of ownership was the effective control and the command. so, therefore, under a hire agreement, the insurance policy of the vehicle is deemed to be transferred along with the vehicle.
The liability of the insurance policy was affixed by the apex court, by relying on the 2011 judgment. And it was also directed by the court to the insurance company to deposit Rs- 1,82,000 and with the interest of Rs- 6% from the date of claim filing till the date the amount is released.