Case Study 24 - Insurer liable till vehicle owner's name is in register

The Supreme Court held last week that the insurance company will be liable to pay compensation for road accident death even if the owner had sold the vehicle so long as his name is the official register. The previous owner might have handed over possession of the vehicle to the buyer, but he and his insurer continued to be liable to pay compensation to third parties if the insurance policy is in his name. In this case, Pushpa vs Shakuntala, the owner sold the truck to another person. But the vehicle was insured by Oriental Insurance Company in the previous owner's name. There was an accident killing three persons. Their dependents moved the motor accident claims tribunal against Oriental and the previous owner. The tribunal and the Himachal Pradesh high court held that the previous owner had no liability as he was no longer the owner of the vehicle. They ruled that the new owner alone was liable to pay. The dependents appealed to the Supreme Court.
The insurance company argued in the Supreme Court that the liability should entirely be that of the new owner as the old owner had lost control of the vehicle after the sale.
Reversing this view, the Supreme Court made the insurance company liable to pay the compensation amount.