Full Judgment Text
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CASE NO.:
Appeal (civil) 6295 of 2003
PETITIONER:
United India Insurance Co. Ltd.
RESPONDENT:
Jyotsnaben Sudhirbhai Patel & Ors.
DATE OF JUDGMENT: 11/08/2003
BENCH:
K.G. Balakrishnan & P. Venkataramma Reddi.
JUDGMENT:
J U D G M E N T
(Arising out of SLP[C] No. 13002 of 2002)
K.G. BALAKRISHNAN, J.
Leave granted.
Aggrieved by the order passed by the Division Bench of the Gujarat High
Court, the United India Insurance Company has come up in appeal by way of
special leave. The appellant was the third respondent in a motor accident claim
preferred by respondents 1 to 3 herein, who are legal heirs of one Sudhirbhai
Jayrambhal Patel who died in a motor accident on 27.8.1994. Respondents 1 to
3 claimed a total compensation of Rs.80 lacs and the Motor Accident Claims
Tribunal (Special), Vadodra, passed an award for RS.32,50,000/- with interest at
the rate of 12% per annum from the date of application till realisation. From the
impugned judgment of the Tribunal dated 15.5.1999, it appears that the first
respondent, the driver of the offending vehicle and the second respondent, the
owner of the vehicle appeared before the Tribunal, but did not file any written
statement refuting the allegations made in the petition. The Tribunal has stated
that these respondents did not step into the witness box to explain the
circumstances and the manner in which the actual mishap took place. It was
further stated that in view of that, the Tribunal was compelled to draw an adverse
inference against them. These observations have been made in paragraph 18
of the judgment of the Tribunal.
Before the Tribunal, the appellant Insurance Company filed a petition
under Section 170 of the Motor Vehicles Act, 1988 (hereinafter referred to as ’the
Act’) praying that the appellant herein be allowed to contest the proceedings.
That application was granted by the Tribunal by a cryptic order; "Granted as
prayed for". After the award was passed by the Tribunal, the appellant filed an
appeal before the Gujarat High Court impleading the legal heirs of the deceased
and also the driver and owner of the offending vehicle as respondents. When the
appeal came up for consideration, the Division Bench was of the view that in
view of Section 149(2) of the Act, the appeal under Section 170 was not
maintainable, especially in view of the observations made by this Court in
Shankarayya vs United India Insurance Co. Ltd. AIR 1998 SC 2968,
and the appeal preferred by the appellant was dismissed. Aggrieved by the
same, the present appeal is filed by the United India Insurance Company
Limited.
We heard the appellant’s counsel and also counsel for the respondents.
The short question that arises for consideration is whether the appeal
preferred by the appellant before the High Court was maintainable or whether it
was barred by the provisions of the Motor Vehicles Act. It is now a settled
position that an insurer can contest the proceedings before the Motor Accident
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Claims Tribunal only on any of the grounds prescribed under Section 149 (2) of
the Act and unless a specific order is passed by the Tribunal under Section 170,
the insurer cannot contest the claim on grounds other than the grounds
mentioned in sub-section (2) of Section 149 of the Act. It is relevant to extract
Section 149 and 170 of the Motor Vehicles Act. Sub-section (2) of Section 149 of
the Motor Vehicles Act, 1988 reads as under:
"(2) No sum shall be payable by an insurer under sub-section (1) in
respect of any judgment or award unless, before the
commencement of the proceedings in which the judgment or award
is given the insurer had notice through the Court or, as the case
may be, the Claims Tribunal of the bringing of the proceedings, or
in respect of such judgment or award so long as execution is
stayed thereon pending an appeal; and an insurer to whom notice
of the bringing of any such proceedings is so given shall be entitled
to be made a party thereto and to defend the action on any of the
following grounds, namely:-
(a) that there has been a breach of specified condition of the
policy, being one of the following conditions, namely:-
(i) a condition excluding the use of the vehicle---
(a) for hire or reward, where the vehicle is on the date of the
contract of insurance a vehicle not covered by a permit to ply for
hire or reward, or
(b) for organised racing and speed testing, or
(c) for a purpose not allowed by the permit under which the
vehicle is used, where the vehicle is a transport vehicle, or
(d) without side-car being attached where the vehicle is a motor
cycle; or
(ii) a condition excluding driving by a named person or persons or
by any person who is not duly licenced, or by any person who has
been disqualified for holding or obtaining a driving licence during
the period of disqualification; or
(iii) a condition excluding liability for injury caused or contributed to
by conditions of war, civil war, riot or civil commotion, or
(b) that the policy is void on the ground that it was obtained by the
non-disclosure of a material fact or by a representation of fact
which was false in some material particular."
Section 170 of the Motor Vehicles Act reads as under:
"170. Impleading insurer in certain cases. â\200\223 Where in the
course of any inquiry, the Claims Tribunal is satisfied that â\200\223
(a) there is collusion between the person making the claim and
the person against whom the claim is made, or
(b) the person against whom the claim is made has failed to contest
the claim, it may for reasons to be recorded in writing, direct that
the insurer who may be liable in respect of such claim, shall be
impleaded as a party to the proceeding and the insurer so
impleaded shall thereupon have, without prejudice to the provisions
contained in sub-section (2) of section 149, the right to contest the
claim on all or any of the grounds that are available to the person
against whom the claim has been made.
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This Court in Shankarayya’s case (supra) held that the Insurance
Company when impleaded as a party by the Tribunal can be permitted to contest
the proceedings on merits only if the conditions precedent mentioned in Section
170 are found to be satisfied and for that purpose the Insurance Company has
to obtain order in writing from the Tribunal which should be a reasoned order by
the Tribunal and unless that procedure is followed the Insurance Company
cannot have a wider defence on merits than what is available to it by way of
statutory defence.
In a series of other decisions too, the same view was taken. In Rita Devi
(Smt.) & Ors. vs. New India Assurance Co. Ltd. & Anr. (2000) 5
SCC 113, this Court held that if the Insurance Company had not obtained leave
from the Tribunal before filing the appeal, the appeal preferred by the Insurance
Company before the High Court would not be maintainable in law.
In Chinnama George & Ors. vs. N. K. Raju & Anr. (2000) 4
SCC 130, it was held that the insurer can defend the proceedings before the
Claims Tribunal only on certain limited grounds mentioned in Section 149(2) of
the Act and if these grounds are not available to the insurer, then a joint appeal
by the owner of the motor vehicle and the Insurance Company may not be of any
avail and the Insurance Company is legally bound to satisfy the award and it
cannot be termed as ’a person aggrieved by the award’ and therefore the insurer
would be barred from filing an appeal against the award of the Tribunal.
H.S. Ahammed Hussain & Anr. vs. Irfan Ahammed & Another
(2002) 6 SCC 52 was a case where the insurer and the insured jointly filed an
appeal. This Court held that even though the appeal filed by the Insurer was not
maintainable, the appeal need not be dismissed and the insured may proceed
with the appeal. This Court stated as under :
"Thus, the decision of this Court in the case of Chinnama Gerorge
can be of no avail to the appellant and we do not find any merit in
the submission that joint appeal by the insurer as well as the
insured was not maintainable. In such an eventuality, the course
which a court should adopt is as noticed in the case of Narendra
Kumar to delete the name of the insurer from the cause title and
proceed with the appeal of the insured and decide the same on
merit."
The lone dissenting view was expressed by this Court in United India
Insurance Co. Ltd. vs. Bhushan Sachdeva & Ors. (2002) 2 SCC 265.
There, it was held that it is open to the Insurance Company to invoke the right
under Section 173 of the Act and maintain an appeal against the award made by
the Tribunal. It was held that the insurer shall be treated as a person
aggrieved by the award as the amount of compensation is to be paid by the
Insurance Company. The Court also went on to observe that failure to file an
appeal by the insurer would amount to ’failed to contest’ and therefore, the
Insurer can maintain an appeal under Section 173 of the Act.
The view taken in the above decision was not accepted by a three Judge
bench of this Court in National Insurance Co. Ltd., Chandigarh vs. Nicolletta
Rohtagi & Ors. (2002) 7 SCC 456, which considered the question elaborately
and held that the right of appeal is not an inherent right and as the Insurance
Company is permitted to contest only on the grounds stated in Section 149(2) of
the Motor Vehicles Act, the insurer cannot file an appeal on any other ground,
except in accordance with the procedure prescribed under Section 170 of the
Act. In that case, this Court observed as follows :
"The aforesaid provisions show two aspects. Firstly, that
the insurer has only statutory defences available as provided in
sub-section (2) of Section 149 of the 1988 Act and secondly, where
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the Tribunal is of the view that there is a collusion between the
claimant and the insured, or the insured does not contest the claim,
the insurer can be made a party and on such impleadment the
insurer shall have all defences available to it. Then comes the
provision of Section 173 which provides for an appeal against the
award given by the Tribunal. Under Section 173, any person
aggrieved by an award is entitled to prefer an appeal to the High
Court. Very often the question has arisen as to whether an insurer
is entitled to file an appeal on the grounds available to the insured
when either there is a collusion between the claimants and the
insured or when the insured has not filed an appeal before the High
Court questioning the quantum of compensation. The consistent
view of this Court had been that the insurer has no right to file an
appeal to challenge the quantum of compensation or finding of the
Tribunal as regards the negligence or contributory negligence of
offending vehicle."
In view of the aforesaid decisions on the point and on a consideration of
the relevant provisions under the Motor Vehicles Act, it is plain and clear that the
Insurance Company can contest the claim preferred before the Tribunal only on
the statutory grounds prescribed under Section 149(2) of the Act, but, if there is
collusion between the person making the claim and the person resisting the claim
or if the person against whom the claim is made has failed to contest the claim,
the Insurance Company can step in and seek permission of the Tribunal and
make a prayer for getting itself impleaded as a party to the proceeding and
the insurer so impleaded can then contest the proceeding on grounds other
than the grounds enumerated in sub-section 2 Section 149 of the Act. This is an
enabling provision in the event of a collusion between the claimant and the
insured or the tortfeaser.
In the instant case, the Insurance Company was impleaded as third
respondent. The driver and owner of the vehicle, though appeared before the
Tribunal, did not contest the proceedings. They did not file the written statement
nor did they choose to give evidence before the Tribunal. Admittedly, the
appellant filed an application under Section 170 of the Act seeking permission of
the Tribunal to contest the proceedings giving the necessary details. The award
passed by the Tribunal also evidently shows that pursuant to this permission, the
counsel for the appellant-Insurance Company cross-examined the witnesses
produced by the claimant to prove the negligence of the offending vehicle.
Unfortunately, however, the Tribunal, while passing its orders on the petition filed
under Section 170 of the Act only stated that the prayer was granted, though the
mandate of Section 170 (b) of the Motor Vehicles Act states that the Tribunal
while passing an order shall record its reasons. This Court in Shankarayya’s
case (supra) had emphasised this aspect. But it is very much evident in this
case that the driver and the owner of the motor vehicle did not file the written
statement and failed to contest the proceedings. The Tribunal could have
merely recorded that fact while allowing the application. In a situation
contemplated by clause (b) of Section 170, nothing more was required than
recording that indisputable fact. For failure to do so, the appellant shall not
suffer prejudice. Therefore, the appellant-Insurance Company was justified in
contesting the proceedings on the grounds other than those enumerated under
sub-Section (2) of Section 149 of the Act, pursuant to the permission granted by
Court. For the same reason, the Insurance Company can be legitimately
considered to be ’person aggrieved’ within the meaning of Section 173 of the Act.
Having regard to the above facts, we are constrained to hold that the High
Court should not have dismissed the appeal on the sole ground that the appellant
had not obtained reasoned order permitting it to contest under Section 170 of the
Act. In the result, we allow this appeal, set aside the judgment and order
passed by the Division Bench of the High Court and remand the matter to the
High Court. We request the High Court to hear and dispose of the appeal on
merits in accordance with law.
There will be no order as to costs.
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