United India Fire & General Insurance Company Limited vs. Smt. Kanchanbai & Ors.

In the High Court of Madhya Pradesh
Equivalent citation: AIR 1981 MP 225
United India Fire & General Insurance Company Ltd
Kanchanbai & Ors 
Decided On
25th June, 1981
Hon'ble Justice P. Muley


Every contract is an agreement but every agreement may not be a contract. For a sale to be completed it is essential that ownership is transferred and consideration is paid. In the case mentioned below, it distinguishes between agreement to sell and actual sale. 


Mr. Babulal (4th respondent) was the owner of the truck (MPF- 6083) insured his truck with the United India Fire & General Insurance Company (hereinafter referred to as the appellant). 

On 14th March 1973 Mr. Devilal died due to rash and negligent driving of a truck driven by Mr. Nathusingh. (5th respondent) Devilal was a 55 years old man, working in Malwa Mills, Indore for a monthly income of Rs.256. The family of the deceased namely widow (respondent 1), son (respondent 2), and daughter (respondent 3) filed a petition in the Tribunal claiming compensation of Rs.1,10,000 in total. 

The Motor Accident Claims Tribunal Indore, after taking in view the evidence and arguments, awarded compensation of Rs.15,500 (in total) with interest at 6%p.a. alone with costs. Aggrieved by this the Insurance Company filed an appeal in the High Court under Section 110-D of the Motor Vehicles Act. 


Whether, agreement to sell be considered as a sale

Whether Babulal (respondent 4) was the owner of the truck at the time of the accident. 

Contentions raised

The counsel for the appellant Mr. Sujan Jain contended that on 20th December 1972 Mr. Babulal had sold the said truck to M/s Magilal Suvalal Jain as per Ex.D-1 and so though the truck was insured with the appellant company, he could not be held liable for the same as the contract of insurance had already come to an end. He further stated Natusingh did not have a valid driving license and was not the employee of Mr. Babulal at the time of the accident and thereby challenged the findings of the Tribunal. 

The counsel for respondents 1, 2, and 3 contended that Ex.D-1 is an agreement to sell and not a sale. Further, it was clearly indicated by Ex.D-1 that the entire price was not paid by respondent no.6 and as stated in the Ex.D-1 the registration would only be transferred after receiving the full consideration. Also, the Insurance Company was not informed about the sale of the truck and there is no evidence to prove that the contract of insurance had ended or the driver didn’t have a driving license. 

Mr. R.C. Chhazed, counsel for respondent no.6 submitted that tge respondent was only acting as an agent of respondent no.4 as completion of sale did not take place and respondent no.4 had control over the truck even on the day of the accident. 


The Court after taking into consideration the arguments put forth by both the parties stated that on the day of the accident the sale of the truck was not completed and Ex.D-1 clearly shows that it was not a sale but an agreement to sell. 

Further, the evidence indicates that after the accident it was Babulal who approached the Insurance Company and asked them to defend the case, thereby proving to be the owner of the truck. The Court observed that as respondent no.6 turned ex-parte it became difficult to prove that he was the owner of the truck at the time of the accident. Based on the evidence and observations it’s clear that on the day of the accident Mr. Babulal was the owner of the truck and respondent no.6 drove the truck with his permission. 


The Court upheld the decision of the Tribunal and held that as the entire consideration was not made the sale remained incomplete thereby, vesting the ownership of the truck with Mr. Babulal on the day of the accident. Further, the Insurance Company was not absolved from its liability to pay compensation of Rs.15,500 to the family of the deceased. 

Edited by: Purnima Ojha


United India Fire & General Insurance Company Ltd v. Smt. Kanchanbai & Ors.

Vidhi Mehta
I am Vidhi Mehta, a fourth year law student pursuing B.L.S/LL. B from Pravin Gandhi College of Law, Mumbai. I am an enthusiastic person who believes in the idea "You must keep your mind on the objective, not on the obstacle" this helps me keep going. The Corporate Law which sets forth the relationship between consumers, community and environment excites me the most. Through law i want to assist people to recognize their rights and duties for the betterment of the society. Lastly, in my leisure time you will find me cooking or writing poems.