Under the Motor Vehicles Act and the Workmen’s Compensation Act, if a motor vehicle met an accident and has been transferred to another person, the insurance company is liable to pay compensation to third parties. In the case of Firdaus vs Oriental Insurance Company, Parvez Khan — who was driving a vehicle —vehicle-driver was killed as and when hit by a truck. The deceased person was employed by the owner and entitled to compensation.
The insurance company appealed to the Allahabad High Court, arguing that the vehicle had been transferred to another person and therefore it was not liable to pay compensation, which was accepted byt he High Court. On appeal by the widow, the Supreme Court emphasised that “even if it is assumed for the sake of argument that vehicle was transferred to another person there will be no consequence with regard to liability of Oriental Insurance to pay compensation”. The court further explained that Section 157 of the Motor Vehicles Act was clear on the liability of the insurer and it did not matter who owned the vehicle at the time of the accident.