insurance company refusing Transfer of motor insurance

Posted on reddit by u/speckinadot , reposted for reference

The insurance company has refused to transfer the ownership of motor insurance after the vehicle was sold. New RC has been issued by RTO. The insurance company after asking for the required documents did an online vehicle inspection. It asked to upload the pictures of vehicle. It rejected the vehicle inspection on the grounds that there are dent/scratches in body and in one of the picture full body of vehicle is not visible. There is no dent or scratch (vehicle is 3.5 years old, some wear is expected but not something requiring repairs). Though some paint peeled in small space. I want to ask, can insurance company refuse to transfer the insurance to new owner. Since the insurance is valid for next 6 months, how can they refuse to transfer the ownership, in effect deny coverage which they are obligated to. Thanks