Page 26 - Insurance Times June 2019

Although Section 42 CMV Rules, 1989, categorically forbids rupees, as may be prescribed under sub-section (13);
a holder of a trade certificate to deliver a motor vehicle to Provided that action under section. Thus, we find that the
a purchaser without registration, whether temporary or provision of MV Act only levies some punitive fine.
permanent, the provisions under section 47 of CMV Rules
1989, allows applicant to apply for registration of a motor Take another scenario, a new vehicle was stolen from the
vehicle before the registering authority within a period of garage of the purchaser which was not a public place in any
seven days from the date of taking delivery of such vehicle, case. Can we deny the claim just because there was no
excluding the period of journey. certificate of registration? The answer is no.

The dealers take advantage of this exemption and use the It may be noted here that mere violations of MV Act
leeway of seven days from the date of delivery to apply for provisions in many cases, do not jeopardize an insurance
registration. What would happen to a motor claim that claim. Certain MV Act provision like section 147 has been
arises in the interim period when in the first place, an incorporated in the certificate of insurance to safeguard the
application has been made to a Registering Authority but interests of victims of road accidents in arising out of
no certificate of Registration has been issued or in the accidents.
second place, no application is made at all due to holidays
or for some other reasons, although the vehicle has already Even cases, involving the violation of Limitation to Use
been sold? which states that the company shall not be liable under this
policy in respect of 3(a) being used otherwise than in
As per Section 48 CMV Rules, 1989, which deals with the accordance with the Limitation As to Use, some claims can
issue of certificate of registration - the registering authority be paid by way of a compromise settlement.
may take a period 30 days or less on receipt of an
application under rule 47 and after verification of the A close look of condition 8 of Motor policy which states,"
documents furnished with it to issue a certificate of The due observance and fulfillment of the terms, conditions
Registration. Therefore, the issuance of certificate of and endorsements of this policy in so far as they relate to
Registration is not spontaneous and takes time. No claim be done or complied with by the insured and the truth of
can be denied just because, there is no certificate of the statements and answers in the said proposal shall be
registration in the interim period. condition precedent to any liability of the company to make
any payments under this policy" makes the above payment
In any case this is a violation of provisions of MV Act,1988
possible.
under section 41(11) which stipulates that if the owner fails
to make an application under sub-section (1) of the above The implication of this condition is that it makes all terms,
section, or, as the case may be, under sub-section (8) within conditions and endorsements condition precedent to liability.
the period prescribed, the registering authority may, having It means it only makes that particular claim voidable without
regard to the circumstances of the case, require the owner affecting other claims or the policy. If the violation is
to pay, in lieu of any action that may be taken against him substantially material, the claim is not payable at all but the
under section 177, such amount not exceeding one hundred same lapse is materially insignificant, as matter of good
commercial practice, should be paid with compromise
settlement without prejudice (without creating a precedent).

Reference:-
1. THE CENTRAL MOTOR VEHICLES RULES, 1989-http://
www.tn.gov.in/sta/Cmvr1989.pdf
2. THE MOTOR VEHICLES ACT, 1988-http://www.tn.gov.in/
sta/Mvact1988.pdf
3. Principles of Risk Management and Insurance, 13th
Edition; George E. Rejda, Emeritus; University of Nebraska
and Michael McNamara, Washington State Universit,
©2017 , Pearson;https://www.pearson.com/us/higher-
education/program/Rejda-Principles-of-Risk-Management-
and-Insurance-13th-Edition/PGM86481.html
26 The Insurance Times, June 2019