Delhi High Court – Orders
Iffco Tokio General Insurance Co. Ltd. … vs 1. Amarjit Singh Bagga S/O Rajinder … on 26 February, 2026
Author: Neena Bansal Krishna
Bench: Neena Bansal Krishna
$~20
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA 662/2022 & CM APPL. 55227/2022
IFFCO TOKIO GENERAL INSURANCE CO. LTD.
Insurance Co. Ltd.
IFFCO Tower, Plot No. 3,
Sector -29, Gurugram, Haryana. ......Appellant
Through: Mr. Shubham Janghu, Advocate
versus
1. AMARJIT SINGH BAGGA
S/o Rajinder Singh Bagga
R/o C-10, Second Floor,
Ram Pura, Hari Nagar, New Delhi,
through GPA Holder
Smt. Manju
2. SMT. MANJU LUTHRA
W/o Sh. Sandeep Luthra
R/o 12/20, Upper Ground Floor,
West Patel Nagar, New Delhi. .....Respondents
Through: Mr. Avtar Singh & Mr. Shauryanker
Kaushik Advocates for R-2.
CORAM:
HON'BLE MS. JUSTICE NEENA BANSAL KRISHNA
ORDER
% 26.02.2026
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1. The present Appeal has been preferred under Section 96 read with
Section 96 read with Section 151 CPC against the Judgment and Order dated
29.07.2022, whereby the Suit of Plaintiffs/ Respondents for recovery of
Rs.4,00,000 along with interest @ 6% p.a., has been decreed by Learned
Additional District Judge-05, Delhi.
2. The Plaintiffs/ Respondents has filed Civil Suit No. 613868/2016
for recovery of Rs.4,00,000/- along with pendent lite and future interest.
3. Learned Counsel for the Appellant, at the outset, states that since the
Respondent No.1 was the erstwhile owner of the vehicle and the vehicle
already stands transferred in the name of Respondent No.2, the Legal Heirs
of Respondent No.1 are not required to be brought on record.
4. The facts in brief as stated in the plaint, are that Plaintiff No. 1
Amarjit Singh Bagga had purchased the car of model Maruti Swift VDI BS4
bearing No. DL 12CH 3064, from Rana Motors. He got the vehicle insured
from Defendant/Appellant Company, for the period 09.04.2016 to
08.04.2017.
5. The vehicle was purchased by Plaintiff No. 2, Smt. Manju Luthra
from Appellant No.1, in the month of May 2016 and the vehicle was duly
transferred in her name by the Transport Authority, in the first week of June,
2016. However, due to inadvertence, the Insurance Policy validly existing in
the name of Plaintiff No. 1 from 09.04.2016 to 08.04.2017, could not be
transferred in the name of Plaintiff No. 2.
6. On 23.08.2016, the vehicle got stolen, about which due intimation
was given to the Police and later, FIR bearing No. 024727 dated 24.08.2016
was registered under Section 379 IPC at PS e-Police Station-M.V., Theft
District Crime Branch.
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7. The Plaintiff No. 2 thereafter, also got the stolen vehicle insured
vide Policy effective from 10.09.2016 to 09.07.2017.
8. The Police filed an Untraced Report, which was accepted by the
concerned ACMM, West District, vide Order dated 17.10.2016.
9. Thereafter, the Plaintiff No. 1 applied for the loss qua the vehicle on
account of theft and demanded amount of Rs.4,00,000/-, which was covered
under the Insurance Policy. However, the claim of Plaintiff No. 1 was
rejected by the Insurance Company/Appellant vide Letter dated 08.11.2016.
Aggrieved by such rejection, Plaintiff No. 2 had written an e-complaint to
the Chief Grievance Officer on 26.11.2016 and one complaint to
Ombudsman dated 26.11.2016, but no compensation/losses for the car theft,
was given to her.
10. The Plaintiffs asserted that there was privity of contract between
Plaintiff No. 1 and Defendant, to whom the premium had been duly paid for
the vehicle up to 08.04.2017 and the contract had not been terminated when
the vehicle was stolen. The claim has been rejected on frivolous grounds.
Hence, the Suit was filed for recovery of Rs.4,00,000 along with pendent
lite and future interest @ 18% p.a.
11. The Suit was contested by the Appellant/Defendant – Iffco Tokio
General Insurance Company, who in its Written Statement, took a
preliminary objection that the present Suit was bereft of any substance and
was frivolous as it disclosed no cause of action, in favour of the Plaintiffs. It
was asserted that there was no Agreement, since the Insurer had not
transferred the Insurance Policy in relation thereto, to the
Transferee/subsequent purchaser of the vehicle.
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12. Therefore, the Insurer was not liable to make good the damage to
the vehicle, as per Section 157(1) of the Motor Vehicle Act, 1988
(hereinafter referred to as the “MV Act“), which provides that deemed
transfer of insurance which can be assumed, after compliance of the
condition of 14 days, as mentioned in Section 157 (2) MV Act.
13. Moreover, Section 157 is a part of Chapter XI MV Act, which deals
with the third-party claims and is not applicable to the present case.
Moreover, GR-17 of India Motor Tariff Regulations, imposes a duty on the
subsequent purchaser/Plaintiff No. 2, to make an Application within 14 days
of acquiring the ownership of the vehicle, failing which the subsequent
purchaser would not be eligible to get the claim for the theft of the vehicle.
14. Therefore, Plaintiff No. 1 having sold the car in May 2016, had
ceased to be the owner of the vehicle, and the Plaintiff No. 2, though had
purchased the car, but had not got the Insurance Policy transferred in her
name. Therefore, the Plaintiffs had no claim under the Insurance Policy and
the Suit was liable to be rejected.
15. No formal Replication was filed by the Plaintiffs to the Written
Statements.
16. Issues were settled on 20.09.2017 as under:
“(1) Whether the suit of the Plaintiff is not
maintainable as the Plaintiffs failed to inform the
Defendant regarding the transfer of the vehicle within
the stipulated period of 14 days? OPD(2) Whether the Plaintiffs are entitled for recovery of
Rs.4 lacs as prayed for? OPPThis is a digitally signed order.
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(3) Whether the Plaintiffs are entitled for interest on
the aforesaid amount, if so, at what rate and for which
period? OPP
(4) Relief.”
17. The PW1 / Plaintiff No. 2 Smt. Manju Luthra tendered her evidence
by way of Affidavit as Ex. PW-1/A. She deposed that Plaintiff No. 1 had
executed the Power of Attorney as Ex. PW1/1 in her favour and that she
was competent to institute the Suit and to depose in regard to the facts of the
case.
18. PW2 / Plaintiff No. 1 Sh. Amarjt Singh Bagga, the original owner
of the vehicle tendered his evidence by way of Ex. PW2/A and corroborated
the evidence of PW1.
19. PW3 Head Constable Sombir Singh proved the certified copy of
the FIR bearing No. 024727 dated 24.08.2016 under Sec 379 IPC which was
exhibited as Ex.PW3/A. The copy of untraceable report dated 17.10.2016
was exhibited as Ex.PW3/B.
20. The Appellant/Defendant examined DW1 Sh. Amit Kumar, AR of
the Defendant Company, who deposed on similar lines, as the assertions
made in the Written Statement.
21. The learned Additional District Judge while referring to Section
157 MV Act, observed that there was a valid Insurance Cover of the stolen
vehicle on the date of its theft and even thereafter, a fresh Insurance Policy
in respect of the same vehicle, had been issued on 05.09.2016. The learned
Additional District Judge had relied heavily on Section 157 MV Act, to
observe that once there was a valid Insurance Policy which was neither
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cancelled nor revoked even after the theft of the car, its benefit could not be
denied to Respondent No. 2/ Plaintiff No. 2/ the subsequent purchaser.
22. Reliance was placed on M/s Complete Insulation (P) Ltd. vs. New
India Insurance Company Ltd. (1996) 1 SCC 221 and Mallamma vs.
National Insurance Co. Ltd. (2014) 14 SCC 137, to conclude that the benefit
of the Insurance Policy shall also be transferred to the new owner and
accordingly, the instant insurance policy benefits would also be available to
the subsequent purchaser of the vehicle.
23. The Suit of the Plaintiff was accordingly, decreed vide impugned
Judgement and Decree dated 29.07.2022 for Rs.4,00,000/- along with
interest @ 6% p.a.
24. Aggrieved by the said Judgment, the present Appeal has been
preferred by the Insurance Company.
25. The grounds of challenge are that Respondent No. 1/ Sh. Amarjit
Singh Bagga had no insurable interest left after the sale of the car to
Respondent No. 2. Moreover, there was no privity of contract between the
Appellant and Respondent No. 2. Both the Plaintiffs / Respondents had
violated the principle of utmost good faith, in the facts and circumstances of
the case.
26. Pertinently, Respondent No. 2/ Transferee was required to seek
novation of contract in her favour, but the same was not done. Without there
being any express contract between Respondent No. 2 and the Insurance
Company, the Suit could not have been decreed.
27. It is further submitted that the learned ADJ grossly erred in holding
that the previous Policy was continued, in the light of purchase of
subsequent policy. Such finding has been given without appreciating that on
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the date of inception of Second Policy which is 05.09.2016, the vehicle had
already been stolen. The Insurance Policy had been taken by Plaintiff No. 2
through online portal, without disclosing that the vehicle had already been
stolen.
28. It is further asserted that admittedly, there was no transfer of
Insurance Policy in favour of Plaintiff No. 2 / Respondent No. 2 and
therefore, the second Insurance Policy cannot be considered to be valid.
29. The Respondent No. 2 had no insurable interest in the present
circumstances, on account of failure to intimate the Appellant Insurance
Company about the transfer of ownership and to seek transfer of certificate
of insurance, till the date of occurrence of the theft.
30. The Respondents do not fall under Section 157 MV Act, as it is
applicable only to third party risk and cannot be extended to the Plaintiffs,
who fall within the realm of contract; without there being any novation in
favour of Respondent No. 2, their claim could not have been decreed.
31. The GR-17 Motor Tariff Regulation mandated the transfer of
vehicle, which has not been complied with. For an Insurance Contract, there
has to be a prior meeting of minds and unequivocal terms of offer and
acceptance. Since there was no such Agreement between the Insurance
Company and Respondent No. 2, who was the transferee owner of the stolen
vehicle, the claim could not have been allowed. It is, therefore, submitted
that the impugned Judgement is liable to be set aside.
32. The Plaintiffs in their reply to the Appeal, have reaffirmed the
assertions made in their Plaint and have submitted that the Suit of the
Plaintiffs has been rightly decreed. It is denied that there was no privity of
contract between the Insurance Company and Respondent No. 2. The mere
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fact that there was a continuation of the Insurance Policy as Respondent No.
2 took second Insurance Policy, it clearly makes them entitled to the benefit
under the Insurance Policy. It is denied that there was no valid Insurance
Policy on the date of theft of the vehicle, i.e. 23.08.2016. The Suit has been
rightly decreed in favour of the Respondents and the Appeal is liable to be
dismissed.
33. The Appellants in their Rejoinder, have reaffirmed the assertions as
made in the Appeal.
Submissions heard and record perused.
34. It is an undisputed fact that the stolen car had been purchased by
Respondent No. 1 / Plaintiff No. 1, vide Invoice Ex.PW1/2 issued by Rana
Motors. It is further not in dispute that the vehicle was duly insured with the
Insurance Policy vide first Insurance Policy for the period 09.04.2016 to
08.04.2017, in the name of the Respondent No. 1, Sh. Amarjit Singh Bagga,
Mark Y.
35. It is further an admitted fact that the vehicle was thereafter,
purchased by Respondent No. 2 in May 2016 and the name of the
subsequent purchaser/ Respondent No. 2 was duly endorsed in the Transport
Authority, in the first week of June 2016. Undeniably, while the requisite
transfer had been recorded in the Transport Authority, the Insurance Policy
was not transferred and it continued to be in the name of Respondent No. 1 /
Plaintiff No. 1. As the fate would have it, the vehicle got stolen on
23.08.2016 in respect of which an e-FIR under Section 379 IPC, Ex.PW3/A
was registered on 24.08.2016. After due investigation, an Untraced Report
Mark X3 dated 17.10.2016, which was duly accepted by the concerned
ACMM.
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36. The Respondent No. 2 thereafter, got the stolen vehicle re-insured
afresh vide the second Insurance Policy for the period 05.09.2016 till
04.09.2017.
37. The Respondent No. 2/ Plaintiff No. 2 who is also the attorney
holder of Respondent No. 1/ Plaintiff No. 1, submitted the claim of
Rs.4,00,000 for which the vehicle was insured, under the first Insurance
Policy in the name of Plaintiff No. 1, which was repudiated by the Insurance
Company, leading to the present litigation.
38. The sole question which arises is whether the Plaintiff No.2/
Subsequent purchaser, is entitled to the claim under the Insurance Policy
in the name of original purchaser of the stolen car.
39. The main contention of the Appellant is that Section 157 MV Act
forms part of Chapter XI under the Motor Vehicles Act, which deals with
insurance of motor vehicles against third party risk and since it is the loss of
the car to the owner herself, Section 157 MC Act cannot be invoked. It is
further contended that the Insurance Contract between Respondent No. 2
and Appellant, came within the realm of contract and there being no privity
of contract between the Respondent No. 2/ Plaintiff No. 2 and the Insurance
Company, no benefit of the Insurance Policy could have been granted to
Respondent No. 2 / Plaintiff No. 2.
40. The first aspect which requires to be high-lighted, is that the Motor
Vehicle Act is a beneficial legislation and the provision for Insurance has
been made only to provide a cover the insured, in case of damage or injury
to not only the owner, but also to the third parties. While Section 157 MV
Act is a part of Chapter XI, which is essentially dealing with third party
rights, but it being a beneficial legislation, its provisions cannot be denied,
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especially when Section 157(2) MV Act itself recognizes that merely
because the vehicle has been transferred, the benefit cannot be denied to the
transferee. To say that in every situation, it should be limited to the third
parties, would in fact be against the letter and spirit of the Insurance
Contract. In each case, the facts and circumstances, need to be considered.
41. Having said this, it is significant also to refer to the Insurance Policy
in the name of Respondent No. 1 w.e.f. 09.04.2016 to 08.04.2017, Mark Y.
The bare perusal of the Insurance Policy shows that it covered not only third
party premium in the sum of Rs.2,387/-, but also own damage premium had
also been paid, in the sum of Rs.7,222.60/-. A total premium of
Rs.11,002.98/- was thus, paid. It would, therefore, not be appropriate for the
Insurance Company, to claim that the own damage/loss was not covered in
the Insurance Policy.
42. The next aspect which is of significance is that the Section 1 of
Insurance Policy dealt with loss or damage to the vehicle insured. Clause 2
of Section 1 specified that the Insurance Company shall indemnify the
insured against loss or damage to the vehicle on account of burglary,
housebreaking or theft.
43. From the terms of the Insurance Policy itself, it is evident that there
was a premium paid for own damage, which covered the theft of the car.
44. It is also pertinent to refer to Clause 3 of the Insurance Policy,
which read as under:
“3. The Company may at its own option repair
reinstate or replace the vehicle or part thereof and/or
its accessories or may pay in cash the amount of theThis is a digitally signed order.
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loss or damage and the liability of the Company shall
not exceed:
a) for total loss/constructive total loss of the vehicle
– the Insured’s Declared Value(IDV) of the vehicle
{including accessories thereon as specified in the
Schedule less the value of the wreck.
b) for partial losses, i.e. losses other than Total
loss/Constructive Total loss of the vehicle- actual
and reasonable costs of repair and/ or replacement
of parts lost/ damaged subject to depreciation as per
limits specified.”
45. Clause 5 further provided that the Insurance Company may cancel
the Policy by sending 07 days’ Notice by recorded delivery to the insured, at
insured’s last known address and in such event, shall return to the insured
the premium paid less the pro rata portion thereof, for the period the Policy
had been in force or the Policy may be cancelled at any time by the insured,
by giving 07 days’ Notice.
46. It may also be noted that Clause 1 of the conditions provided in the
Insurance Policy provided that Notice shall be given in writing to the
Company immediately, upon the occurrence of any accidental loss or
damage and also if any impending prosecution, inquest or fatal inquiry in
respect of any incident, which may give rise to a claim under this Policy.
47. In the present case, it is not disputed that immediately when the car
was stolen, the Insurance claim was filed by the Respondent No. 2 on
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24.08.2016. Despite being informed about the theft and the transfer, the
Insurance Policy was not cancelled by the Appellant.
48. From the terms of the Insurance Policy as discussed above, it is
evident that the Insurance Company had an option to cancel the Insurance
Policy if not before, at least on being informed about the theft of the vehicle
and of it being transferred to Respondent No. 2/ Plaintiffs No. 2. Neither has
been done by the Insurance Company.
49. Furthermore, Clause 9 provided that in the event of death of the
insured, the Policy would not lapse immediately, but would remain valid for
a period of 03 months from the date of death of the insured or until the
expiry of this policy (whichever is earlier).
50. From this Clause 9 of the Insurance Policy, it emerges that the
Policy itself recognized that validity of the Insurance Policy for 03 months,
in case of demise of the insured.
51. In the present case, situation was similar, where the first insured
cease to exist, on account of sale. Applying the same analogy, the Insurance
Policy can be deemed to be valid, at least for 03 months from the date of
sale of vehicle, in May, 2016 and its transfer in the records of Transport
Authority, in first week of June, 2016. The theft happened on 23.08.2016,
i.e. within three months of transfer of the vehicle, in the name of the Plaintiff
No2 and in terms of the Insurance Policy, it is held to be valid on the date of
theft.
52. It cannot be pleaded that the Insurance Policy automatically came to
an end, when it is a settled proposition of law that the Insurance Policy
travels with the vehicle and not with the insured. It is, therefore, evident
from the terms of the Insurance Policy and the own damage premium that
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has been paid by the Insured, that the theft of the vehicle, was very well
covered within the terms of the Insurance Policy.
53. From the aforementioned discussion, it emerges that the vehicle was
duly insured with the Insurance Company at the time of the vehicle’s theft
dated 23.08.2016, and the Respondents/ Plaintiffs were entitled to the
recovery of Rs.4,00,000, i.e., the insured IDV value of the stolen car.
54. The Suit has therefore, been rightly decreed in favour of the Plaintiffs/
Respondents.
55. There is no merit in the present Appeal, which is hereby, dismissed
along with pending Application.
NEENA BANSAL KRISHNA, J
FEBRUARY 26, 2026/va/N
This is a digitally signed order.
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