Supreme Court: Insurance Liability Denied When Vehicle Ownership Not Transferred.


26 September 2025 Insurance >> Personal Law  

The Supreme Court has rejected an appeal made by a car buyer demanding indemnity from ICICI Lombard General Insurance Company following a crash, holding that non-conversion of ownership in the registration certificate and non-renewal of the insurance policy disentitles the buyer from recovery.

The appeal was filed after the appellant, Reema Khanna, had bought a vehicle on 26 September 2008. But she never passed the ownership of the vehicle in the registration certificate or procured a new insurance policy in her name. On 13 May 2009, the vehicle met with an accident.


 

 
 
 

The High Court had previously held that as there was no valid contract of insurance between the appellant and the insurer, liability would fall on the owner of the vehicle. But for the protection of third-party claimants' interests, the High Court ordered ICICI Lombard to compensate and recover the same from the appellant.

Challenging the judgment, the appellant was banked upon the ruling of the Supreme Court in United India Insurance Company Ltd. v. Santro Devi (2009), wherein the legal heirs of an owner who died were awarded indemnity even though they did not pass on ownership. The appellant contended that the same principle should be followed in her case.

A division bench of Justice K. Vinod Chandran and Justice N.V. Anjaria, however, marked a difference between the two cases. The Court observed that in Santro Devi, the failure to transfer ownership was inadvertent and had taken place due to the death of the original owner and the heirs succeeding to the estate. In the instant case, the buyer had willfully not registered the transfer of ownership and had failed to take adequate insurance coverage.

Calling it a clear default, the Court declined to grant indemnity and rejected the appeal, noting that there was "absolutely no reason" to intervene with the High Court's decree.

With this judgment, the liability continues to be on the appellant, but the insurer does have the right to recover the compensation it has incurred for the accident victims.