Royal Sundaram Alliance Insurance Co ... vs Bhavnaben Jamanbhai Chovatiya & on 9 April, 2014

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Gujarat High Court

Royal Sundaram Alliance Insurance Co ... vs Bhavnaben Jamanbhai Chovatiya & on 9 April, 2014

1. By this appeal under section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as "the Act"), the appellant - insurance company has called in question the award dated 27 th September, 2013 passed by the Motor Accident Claims Tribunal (Auxiliary), Sixth Additional District Judge, Rajkot at Dhoraji, below Exhibit-5 in M.A.C. Petition No.503 of 2012 (Old No.153 of 2011).

2. Briefly stated the facts of the case are that the respondent No.1 herein filed a claim petition under section 166 of the Act before the Tribunal. In the said proceedings, the respondent No.1 filed an application under section 140 of the Act for interim compensation from the appellant and the respondent No.2 herein.

3. The Tribunal, after considering the submissions advanced by the learned advocates for the respective parties and the available record, allowed the application and ordered the appellant and the respondent No.2 herein to pay Rs.25,000/- jointly and severally as interim compensation to the respondent No.1 - claimant together with interest at the rate of 8% per annum from the date of the filing of the claim petition till realization thereof. Being aggrieved, the insurance company is in appeal.

4. Mr. Dakshesh Mehta, learned advocate for the appellant drew the attention of the court to the provisions of section 140 of the Act, to submit that the expression used therein is "owner" and not "insurer". In the present case, the cheque issued by the owner towards payment of premium had been Page 2 of 29 C/FA/3473/2013 JUDGMENT dishonoured and hence, the appellant had cancelled the insurance policy and duly intimated the owner about the same through Registered A.D. Post. Before the Tribunal, the documentary evidence in the nature of xerox copies of the cheque issued by the owner, the return memo, the advice issued by the bank stating that the reason for returning the cheque was "insufficient funds" in the account, the communication dated 2nd April, 2011 of the appellant addressed to the owner informing her about the dishonour of the cheque and consequent cancellation of the policy with a copy thereof endorsed to the Regional Transport Office as well as the acknowledgment receipt evidencing the receipt of such letter by the owner, motor insurance endorsement indicating cancellation of the policy due to dishonour of cheque, etc., had been produced. On the basis of such documents, the Tribunal formed a prima facie opinion that the policy had been cancelled. However, the Tribunal on the ground that the said facts have to be proved by the Insurance company at the stage of full-fledged trial, did not decide the issue regarding cancellation of insurance policy and allowed the application by directing the owner as well as the appellant - Insurance company to pay the interim compensation under section 140 of the Act. While admitting that it is for the Insurance company to prove that as on the date when the accident took place, the insurance policy stood cancelled, the grievance voiced by the learned advocate for the appellant is that the Tribunal did not afford any opportunity to the appellant - Insurance company to even lead summary evidence in that behalf. It was submitted that the Supreme Court in the case of Yallwwa (Smt.) and others v. National Insurance Co. Ltd. and another, (2007)6 SCC 657 , has held that one of the defences available Page 3 of 29 C/FA/3473/2013 JUDGMENT to the insurer is breach of conditions specified in the policy. When such a defence is raised, the Tribunal is required to go into the said question. Section 140 of the Act does not contemplate that an insurance company shall also be liable to deposit the amount while it has no fault whatsoever in terms of sub-section (2) of section 147 of the Act and that upon receipt of notice under section 140 of the Act, it is open for the Insurance company to plead and prove that it is not at all liable. Mr. Mehta submitted that in the facts of the present case, the appellant stands on an even stronger footing, inasmuch as, there was no insurance policy in existence on the date when the accident took place. It was emphatically argued that when it is permissible for the Insurance company to prove that it is not liable, it is incumbent upon the Tribunal to afford an opportunity to the insurer to prove the same.

4.1 It was pointed that in the facts of the present case, though the Tribunal expressed a prima facie opinion on the basis of the documents on record that the insurer was not liable, it failed to provide an opportunity to the appellant to prove the fact that the insurance policy had been cancelled by leading evidence in that regard. It was also contended that in any case, all the other documents in the nature of the first information report, medical case papers, etc. were also not proved by the claimants and hence, the Tribunal should have accepted the documentary evidence produced by the appellant which clearly shows that the insured/owner was duly informed about the dishonour of the cheque and cancellation of the policy before the accident took place, and therefore, the Tribunal on the basis thereof, could have exonerated the appellant from the liability to pay the compensation under Page 4 of 29 C/FA/3473/2013 JUDGMENT section 140 of the Act. It was argued that when the insurance policy stood cancelled prior to the occurrence of the accident, there is no obligation cast upon an insurer to indemnify the insured. The Tribunal was, therefore, not justified in directing the appellant to pay the compensation under section 140 of the Act. Reliance was placed upon the decision of the Supreme Court in the case of New India Assurance Co. Ltd. v. Rula and others, 2000 ACJ 630. Reliance was also placed upon the decision of the Supreme Court in the case of Daddappa and others v. Branch Manager, National Insurance Co. Ltd., 2008 ACJ 581, wherein the court has held that there is a distinction between the statutory liability of the insurance company vis-à-vis a third party in the context of sections 147 and 149 of the Act and its liabilities in other cases. But the same liabilities arising under a contract of insurance would have to be met if the contract is valid. If the contract of insurance has been cancelled and all concerned have been intimated thereabout, the insurance company would not be liable to satisfy the claim. A beneficial legislation as is well- known should not be construed in such a manner so as to bring within its ambit a benefit which was not contemplated by the legislature to be given to the party.

4.2 It was submitted that in the facts of the present case, the decision of the Supreme Court in the case of Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra) should be read with the decision of the Supreme Court in the case of Daddappa v. Branch Manager, National Insurance Co. Ltd. (supra) and having regard to the fact that the insurance company had duly intimated the owner about the cancellation of the policy prior to the accident, the Tribunal in terms of the decision of the Page 5 of 29 C/FA/3473/2013 JUDGMENT Supreme Court in the case of Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra) ought to have permitted the appellant to lead sufficient evidence to establish such fact. It was submitted that even otherwise, the primary liability under section 140 of the Act is of the owner and in the facts of the present case, where the insurance policy was cancelled prior to the accident, the insurance company is not liable to indemnify the owner. It was argued that in the present case, equal treatment has not been given to both the sides and the appellant has not been permitted to lead evidence in support of its contention that the insurance policy had been cancelled and as such, the matter is required to be remanded to the Tribunal for deciding the application afresh after affording due opportunity to the parties.

4.3 Next, it was submitted that the insurance company had been issued notice in the proceedings under section 140 of the Act after the owner had filed the written statement. The insurance company had controverted the claim of the owner and had prima facie proved its case. On the other hand, the claimants had not proved their case by leading any evidence to show that the accident had in fact taken place. It was argued that if the documents submitted by the insurance company could not be taken into consideration for the purpose of deciding the application under section 140 of the Act, neither could the documents submitted by the claimants be taken into consideration, inasmuch as such documents had also not been proved and exhibited.

4.4 The decision of the Supreme Court in the case of United India Insurance Company Limited v. Laxmamma and Page 6 of 29 C/FA/3473/2013 JUDGMENT others, (2012) 5 SCC 234, was cited for the proposition that where the policy of insurance is issued by an authorized insurer to cover a vehicle on receipt of the cheque paid towards premium and the cheque gets dishonoured and before the accident of the vehicle occurs, such insurance company cancels the policy of insurance and sends intimation thereof to the owner, the insurance company's liability to indemnify the third parties which that policy covered, ceases and the insurance company is not liable to satisfy awards of compensation in respect thereof.

4.5 Reliance was also placed upon the decision of the Supreme Court in the case of United India Insurance Company Ltd. v. Serjerao and others, (2008) 7 SCC 425 wherein the court keeping in view its decisions in the case of Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra) and Oriental Insurance Co. Ltd. v. Brij Mohan, (2007) 7 SCC 56, had remitted the matter to the High Court to consider the matter afresh in the light of what had been stated in the said decisions. It was submitted that following the above decision, in the present case also, the matter is required to be remanded to the Tribunal for deciding the matter afresh.

5. Vehemently opposing the appeal, Mr. MTM Hakim, learned advocate with Mr. Tushar Sheth, learned advocate for the respondent No.1 - claimant supported the impugned judgement and award, and submitted that the proceedings under section 140 of the Act are summary in nature. If such summary proceedings are converted into a full-fledged trial by permitting the parties to lead evidence, the legislative intent behind enacting section 140 of the Act would be completely Page 7 of 29 C/FA/3473/2013 JUDGMENT defeated. It was further submitted that as regards the nature of the procedure to be followed pursuant to an application under section 140 of the Act, the said issue is no longer res integra as the same stands concluded by a decision of this court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar and others, 1995 (2) GLR 1111, which view has been approved by a Full Bench of this court in the case of United India Insurance Co. Ltd. v. Kadviben Udabhai Rathwa and another, (2006) 2 GLH

106. 5.1 It was submitted that the Supreme Court in the case of Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra) has observed that upon receipt of notice of proceedings under section 140 of the Act, it is open for the insurance company to plead and prove that it is not liable at all, however, such observations are in the nature of obiter inasmuch as that was not an issue before the Supreme Court. The question before the Supreme Court was as to whether an order passed under section 140 of the Motor Vehicles Act, 1988 is an appealable one. It was submitted that the very object underlying the provisions of section 140 of the Act is to enable expeditious disposal of claim petitions thereunder. Such object would be defeated if the Tribunal is required to hold a regular hearing in the same manner as for adjudicating the claim petition under section 166 of the Act.

5.2 Reference was made to the Gujarat Motor Vehicles Rules, 1980 (hereinafter referred to as "the rules"), to submit that the procedure regarding compensation on the principle of no fault has been laid down under the said rules. It was submitted that Page 8 of 29 C/FA/3473/2013 JUDGMENT the said rules came up for consideration before this court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar (supra), and this court held that the type of evidence necessary for disposal of an issue which is required to be dealt with in the main petition, cannot be permitted to be led at the stage of making an order under section 140 of the Act. It was submitted that the said decision still holds the field and as such, the contention that the appellant should be permitted to lead evidence to establish its case, does not merit acceptance. The attention of the court was invited to the decision of the Supreme Court in the case of Bajaj Allianz General Insurance Co. Ltd. v. Vaishali Shetty and others, 2008 ACJ 2642, wherein the court in a similar set of facts, has held that though in a claim under section 140 of the Act of 1988, an insurer is permitted to raise the defences covered under sub-section (2) of section 149 of the Act of 1988, by reason of the insurer raising such defences, the Tribunal cannot depart from the summary procedure and the Tribunal cannot allow the proceedings under section 140 of the Act of 1988 to be converted into a full trial on par with a trial in a petition under section 166 of the Act of 1988. If the Tribunals are allowed to adopt such a course, it will completely defeat the legislative intent of providing a quick remedy by way of section 140 of the Act of 1988.

5.3 The decision of the Bombay High Court in the case of Oriental Fire & General Insurance Co. Ltd. v. Aleixo Fernandes and others, AIR 1986 Bombay 280, was relied upon, wherein the grievance voiced on behalf of the insurance company was that in spite of the defence under section 96(2) of the Act of 1939 being available and despite the duty being Page 9 of 29 C/FA/3473/2013 JUDGMENT clearly cast by the amended rule 18 of the Goa, Daman and Diu Motor Accident Claims Tribunals Rules, 1966, no inquiry of whatsoever nature was held and no opportunity was provided to the insurance company to prove their contention. The court held that this type of evidence for disposal of an issue which is required to be dealt with in the main petition cannot be permitted to be raised at the stage of the making of an order under section 92A of the Act of 1939 and accordingly, rejected the challenge to the said order. Mr. Hakim, further submitted that though it has been contended on behalf of the appellant that no opportunity to lead evidence had been granted by the Tribunal, at no stage in the proceedings under section 140 of the Act, had the appellant sought permission to lead such evidence. It was, accordingly, urged that if the contention advanced on behalf of the appellant were to be accepted, the same would frustrate the very object of the provisions of section 140 of the Act and as such, the appeal being devoid of merit, deserves to be dismissed.

6. This court has considered the submissions advanced by the respective parties and has perused the record of the case. Before adverting to the merits of the rival contentions, a brief reference may be made to the facts of the case. The respondent No.1 herein instituted proceedings under section 166 of the Act. In the said proceedings, she filed an application under section 140 of the Act on the principle of "No Fault Liability" to get interim compensation from the respondent No.2 owner and the appellant - insurance company. In the said proceedings, the respondent No.2 owner filed a reply stating that her vehicle bearing No.GJ-4-V-1152 was insured with the Royal Sundaram Alliance Insurance Co. Ltd. having policy Page 10 of 29 C/FA/3473/2013 JUDGMENT No.VC00101887000101 for the period 22.12.2010 to 21.12.2011. A copy of the said policy was produced along with a separate list of documents. It was stated that therefore, the liability to pay the compensation was of the insurance company. Pursuant thereto, a notice came to be issued to the appellant - insurance company in response to which, the appellant filed its written statement wherein it was, inter alia, stated that the cheque bearing No.358872 dated 16.12.2010 for Rs.22,236/- drawn on the Cooperative Bank of Rajkot Ltd., Kanakia Plot, Jetpur was given by the owner towards the premium of the said luxury bus bearing No.GJ-4Y-1152, which was dishonoured for the reason "funds insufficient" vide intimation dated 24.03.2011 given by the banker of the insured, viz., the Cooperative Bank of Rajkot Ltd. of Jetpur Branch through the City Bank. That on receipt of the intimation of dishonour of the cheque for payment of premium, the appellant cancelled the policy vide letter dated 02.04.2011 intimating to the insured about the dishonour of the cheque and also the ab-initio cancellation of the policy with effect from 22.12.2010 due to non-receipt of the consideration and also intimated that their Company was not at risk. The letter was sent by Registered Post A.D. with a copy to the concerned Regional Transport Office, Rajkot on 06.04.2011 as per the requirement under section 147(4) of the Motor Vehicles Act, 1988. The accident occurred on 11.05.2011. Therefore, in the absence of the receipt of premium, no policy was issued and hence, there was no valid and effective contract between the owner and the insurance company. The appellant had also submitted a list of documents together with the following documents, namely, (1) Cheque bearing No.358872 dated 16.12.2010 for Rs.22,236/-, (2) Cheque return memo of the Page 11 of 29 C/FA/3473/2013 JUDGMENT Cooperative Bank of Rajkot Ltd. dated 24.03.2011, (3) Cheque return intimation given by City Bank dated 30.03.2011, (4) Letter addressed to Arunaben N. Jaiswal, viz. the insured, intimating her about the dishonour of the cheque issued towards payment of premium and cancellation of the policy dated 02.04.2011, (5) Postal Receipt No.C-3958 for Registered A.D. Cover sent to Arunaben Jaiswal, (6) Acknowledgment of receipt of insured dated 06.04.2011, (7) Letter dated 02.04.2011 of dishonour of premium cheque and cancellation of policy sent to the R.T.O., Rajkot, (8) Postal Receipt No.5647 dated 06.04.2011 of Registered A.D., (9) Endorsement No.001 Policy No.VC00101887000101 dated 02.04.2011. Along with the said written statement, the appellant had also filed an application for deleting the appellant from the proceedings, at Exhibit-23.

7. The Tribunal, after hearing the learned advocates for the respective parties and considering the evidence produced on record by the appellant as well as the decision of the Supreme Court in the case of Daddappa and others v. Branch Manager, National Insurance Co. Ltd. (supra) as well as the other decisions cited at the bar, observed that it is well settled that if the cheque for premium is dishonoured, then it can be said that the insured has failed to pay the premium as promised. In such circumstances, the insurance company can cancel the insurance policy after giving notice of intimation to the insured as well as to the Regional Transport Office. The Tribunal was of the view that, prima facie, the present case was one of dishonour of the cheque for premium, inasmuch as, the insurance company had issued the notice for intimation and informed the insured as well as the R.T.O. and thus, Page 12 of 29 C/FA/3473/2013 JUDGMENT cancelled the policy before the occurrence of the accident. But the said facts have to be proved by the insurance company at the stage of full-fledged trial. Thus, it is a matter of evidence and in such circumstances, at this juncture, while deciding an application under section 140 of the Act, the facts as to cancellation of insurance policy cannot not be decided. The Tribunal, accordingly, allowed the application under section 140 of the Act by holding the appellant as well as the respondent No.2 - owner to be jointly and severally liable to pay the compensation awarded thereunder.

8. Section 140 of the Act makes provision for liability to pay compensation in certain cases on the principle of no fault and reads thus :

"140. Liability to pay compensation in certain cases on the principle of no fault - (1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section.

(2) The amount of compensation which shall be payable under sub-section (1) in respect of the death of any person shall be a fixed sum of fifty thousand rupees and the amount of compensation payable under that sub-section in respect of the permanent disablement of any person shall be a fixed sum of twenty five thousand rupees.

(3) In any claim for compensation under sub-section (1), the claimant shall not be required to plead and establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act, neglect or default of the owner or owners of the vehicle or vehicles concerned or of any Page 13 of 29 C/FA/3473/2013 JUDGMENT other person.

(4) A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall the quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basis of the share of such person in the responsibility for such death or permanent disablement.

(5) Notwithstanding anything contained in sub-section (2) regarding death or bodily injury to any person, for which the owner of the vehicle is liable to give compensation for relief, he is also liable to pay compensation under any other law for the time being in force:

Provided that the amount of such compensation to be given under any other law shall be reduced from the amount of compensation payable under this section or under section 163A."

9. Section 168 of the Act bears the heading "Award of the Claims Tribunal" and provides that where an application is made for a claim for compensation under section 140 in respect of the death or permanent disablement of any person, such claim and any other claim (whether made in such application or otherwise) for compensation in respect of such death or permanent disablement shall be disposed of in accordance with the provisions of Chapter X. Therefore, insofar as an application under section 140 of the Act is concerned, the same is required to be disposed of in terms of Chapter X of the Act. The State of Gujarat, in exercise of powers conferred under the relevant provisions of the Motor Vehicles Act, 1988 and all powers enabling it in this behalf, has enacted the Gujarat Motor Vehicles Rules, 1989 (hereinafter referred to as "the rules"). Rule 231 thereof lays down the procedure Page 14 of 29 C/FA/3473/2013 JUDGMENT regarding compensation on the principle of no fault. The said rule opens with a non-obstante clause and states that notwithstanding anything contained in rules 211 to 230 and 232 in the case of a claim for compensation under Chapter X, the procedure shall be as laid down thereunder. Thus, the procedure in respect of an application under section 140 of the Act is governed by rule 231 and not rules 211 to 230 and rule 232 of the rules, which are applicable in case of the applications made under section 166 of the Act. Sub-rule (1) of rule 231 of the rules lays down that an application for compensation shall be made to the Claims Tribunal in Form CWF, in triplicate, and shall contain the particulars specified in that form. Sub-rule (2) of rule 231 of the rules, inter alia, lays down that the application shall be accompanied by the documents enumerated thereunder. Such documents are:

(i) First Information Report;

(ii) Injury Certificate or Post-mortem report in case of death;

(iii) Heirship certificate in case of death;

(iv) Certificate from the registering authority regarding the ownership of the vehicle involved in the accident;

(v) Particulars of insurance of the vehicle involved in the accident.

Sub-rule (4) of rule 231 of the rules provides that the Claims Tribunal shall dispose of the application for compensation within six weeks from the date of receipt of such application. Sub-rule (5) thereof postulates that for the purpose of adjudicating and awarding the claim, the Claims Tribunal shall follow the procedure of summary trial as contemplated in Chapter XXI of the Code of Criminal Procedure, 1973. Sub-rule (7) of rule 231 of the rules says that for the purpose of Page 15 of 29 C/FA/3473/2013 JUDGMENT adjudicating and awarding the claim, the Claims Tribunal shall obtain whatever information and document considered necessary by it from the police, medical and other authorities. Sub-rule (9) of rule 231 of the rules postulates that the Claims Tribunal shall proceed with the application for compensation on the basis of -

          (i)          First Information Report;
           (ii)        Injury Certificate or Post-mortem report in
                       case of death;
          (iii)        Registration Certificate of the motor vehicle
                       involved in the accident;
          (iv)         Cover Note, certificate of insurance or the

policy relating to the insurance of the vehicle against third party risks;

(v) The nature of the treatment given by the medical officer who has treated the victim.

It may be significant to note that the statute itself, therefore, provides for taking into consideration the above documents while deciding an application under section 140 of the Act.

10. Insofar as the interpretation of rule 231 of the rules is concerned, this court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar (supra) has held thus :

"8. The question that falls for consideration is as to at what stage the Tribunal is to inquire into objection raised by the Insurance Company under the Act. Should such objections be treated as preliminary issue and be decided by the Tribunal in the first instance which in the nature of things would result in delay in regard to the payment of amount under section 140 of the Act to the Page 16 of 29 C/FA/3473/2013 JUDGMENT claimant and defeat the very purpose underlying the enactment of the provision? The object underlying enactment of section 140 is to make available to the claimant compensation amount to the extent of Rs.12,000/- in case of permanent disablement as expeditiously as possible and the said award has to be made before adjudication of the claim under section 168 of the Act. It must be seen that section 140 of the Act speaks of peremptory awards in cases of permanent disablement or death. The object underlying this consideration is the immediate relief to the disabled victim of accident in case of permanent disability. Provision of section 140 is a piece of beneficial and ameliorative legislation providing for an immediate aid to the hapless and helpless victims of the motor vehicles. The objects for which section 140 of the Act is enacted would be defeated if the Claims Tribunal is required to hold regular trial in the same manner as for adjudicating a claim made in a petition filed under section 168 of the Act. Having regard to the purpose underlying the enactment of the said provision, I am of the opinion that the defences raised by the insurer or other objections of the insurer or the owner should be examined later when the claims petition is decided on merits. The Claims Tribunal would be entitled to make award under section 140 of the Act as soon as it comes to the conclusion that the owner of the vehicle was involved and insured. The persons primarily responsible to pay compensation or damages for the accident to the injured or the heirs or legal representatives of the deceased are normally driver and owner of the offending vehicle. The liability of the insurer is spelled out qua the person or classes of persons specified in the policy that is qua the insured under section 147(1) of the Act; and also qua the claimant of compensation under section 147(2) and 149(1) of the Act. If an award is given against insured holding him liable to pay certain amount as compensation or damages in regard to the claim arising out of an accident with his motor vehicle, then the liability of insurer is absolute and the insurer cannot question its liability on the ground that the amount is awarded on the principle of no fault liability. Moment either it is admitted by the owner of the vehicle that his vehicle is involved in the accident or from the evidence adduced on the record, the Tribunal positively holds that the vehicle of the owner in question was Page 17 of 29 C/FA/3473/2013 JUDGMENT involved in that accident, then the Tribunal without inquiring into correctness of other objections that may be raised by the Insurance company would be entitled to make the award under section 140 and require the Insurance company to pay specified amount to the claimants forthwith and thereafter investigate and inquire into the correctness or otherwise of the other objections that are raised either by the Insurance company or by the owner of the offending vehicle at the time of deciding main claim petition.

9. From sub-rule (5) of Rule 231 of the Gujarat Motor Vehicles Rules, 1989, it is clear that a summary trial is contemplated for making an award or order under section 140 of the Act. The defence as presently raised by the insurer is naturally an issue in the main petition and it will have to be disposed of in that petition and perhaps by elaborate evidence. This type of evidence necessary for disposal of an issue which is required to be dealt with in the main petition cannot be permitted to be led at the stage of making an order under section 140 of the Act and in this view of the matter, I am unable to accept Mr. Makwana's challenge to the impugned order. Ultimately, if the defence of the insurer is upheld, the insurer would be entitled to claim the amount awarded against it from others, i.e., from driver and owners, but not from the claimants."

The above decision came to be approved by a Full Bench of this court in the case of United India Insurance Co. Ltd. v. Kadviben Udabhai Rathwa (supra).

11. At this juncture, it may be apposite to refer to the decision of the Supreme Court in the case of Shivaji Dayanu Patil and another v. Vatschala Uttam More (Smt.), (1991) 3 SCC 530, which has been rendered in the context of section 140 of the Act read with the relevant rules under the Bombay Motor Vehicles Rules, 1989. At the outset, it may be noted that rule 291A of the Bombay Rules is in pari materia with sub-rules (1) and (2) of rule 231 of the Gujarat Rules and Page 18 of 29 C/FA/3473/2013 JUDGMENT rule 306-B of the Bombay Rules is in pari materia with sub-rule (9) of rule 231 of the Gujarat Rules. The Supreme Court held thus:

"44. Rule 306-C prescribes the procedure of disbursement of compensation under section 92-A to the legal heirs in case of death. The submission of Shri Sanghi is that inspite of the aforesaid amendments which have been introduced in the Rules after the enactment of section 92-A, the Claims Tribunal is required to follow the procedure contained in the other rules before awarding compensation under section 92-A of the Act. In other words, it must proceed to adjudicate the claim after the opposite party is afforded an opportunity to file the written submission under rule 298, by framing issues under rule 299 and after recording evidence in accordance with rules 300 and 301 and that it is not permissible for the Claims Tribunal to make an order purely on the basis of the documents referred to in rules 291-A, 306-A and 306-B. In our opinion, the said submission of Shri Sanghi cannot be accepted. The object underlying the enactment of section 92-A is to make available to the claimant compensation amount to the extent of Rs.15,000/- in case of death and Rs.7500/- in case of permanent disablement as expeditiously as possible and the said award has to be made before adjudication of the claim under section 110-A of the Act. This would be apparent from the provisions of section 92-B of the Act. Section 92-B(2) of the Act provides that a claim for compensation under section 92-A in respect of death or permanent disablement of any person shall be disposed of as expeditiously as possible and where compensation is claimed in respect of such death or permanent disablement under section 92-A and also in pursuance of any right on the principle of fault, the claim for compensation under section 92-A shall be disposed of as aforesaid in the first place. With a view to give effect to the said directive contained in section 92-B of the Act, the Maharashtra Government has amended the Rules and has inserted special provisions in respect of claims under section 92-A in Rules 291-A, 291-B, 297(2), 306(A), 306(B), 306(C) and 306(D) of the Rules. The object underlying the said provisions is to enable Page 19 of 29 C/FA/3473/2013 JUDGMENT expeditious disposal of a claim petition under section 92-A of the Act. The said object would be defeated if the Claims Tribunal is required to hold a regular trial in the same manner as for adjudicating a claim petition under section 110-A of the Act. Moreover, for awarding compensation under section 92-A of the Act, the Claims Tribunal is required to satisfy itself in respect of the following matters:

(i) an accident has arisen out of the use of a motor vehicle;

(ii) the said accident has resulted in permanent disablement of the person who is making the claim or death of the person whose legal representative is making the claim;

(iii) the claim is made against the owner and the insurer of the motor vehicle involved in the accident;

45. The documents referred to in Rules 291-A and 306-B will enable the Claims Tribunal to ascertain the necessary facts in regard to these matters. The panchnama and the first information report will show whether the accident had arisen out of the use of the motor vehicle in question. The injury certificate or the post mortem report will show the nature of injuries and the cause of death. The Registration Certificate and Insurance Certificate of the motor vehicle will indicate who is the owner and insurer of the vehicle. In the event of the Claims Tribunal feeling doubtful about the correctness or genuineness of any of these documents or if it considers it necessary to obtain supplementary information or documents, Rules 306-A empowers the Claims Tribunal to obtain such supplementary information or documents from the police, medical or other authorities. This would show that Rules 291-A, 306-A and 306-B contain adequate provisions which would enable the Claims Tribunal to satisfy itself in respect of the matters necessary for awarding compensation under section 92-A of the Act and in view of these special provisions which were introduced in the Rules by the amendment in 1984, the Claims Tribunal is not required to follow the normal procedure prescribed under the Act and the Rules with regard to adjudication of a claim under section 110-A of the Act for the purpose of making an order on a claim petition under section 92- A of the Act."

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C/FA/3473/2013 JUDGMENT

12. Thus, the Supreme Court, in the above decision, has laid down that the above rules contain adequate provisions which would enable the Claims Tribunal to satisfy itself in respect of the matters necessary for awarding compensation under section 92-A of the Act of 1939 (section 140 of the Act of 1988) and in view of this special provision which was introduced in the rules, the Claims Tribunal is not required to follow the normal procedure prescribed under the Act and the rules with regard to the adjudication of a claim under section 110-A of the Act of 1939 (section 166 of the Act of 1988) for the purpose of making an order on a claim petition under section 92A of the said Act.

13. While it is true that in Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra), the Supreme Court has observed that when a separate application is filed in terms of section 140 of the Act, in terms of section 168 thereof, an insurer has to be given notice in which event, it goes without saying that, it would be open to the insurance company to plead and prove that it is not liable at all, as has been held by the Bombay High Court in the case of Bajaj Allianz General Insurance Co. Ltd. v. Vaishali Shetty (supra), while deciding the case of Yallwwa (Smt.) v. National Insurance Co. Ltd. (supra), the Supreme Court has not dealt with the procedure which is required to be followed while deciding a petition under section 140 of the Act of 1988. In fact, the issue regarding the nature of the procedure to be followed and the nature of the inquiry in a claim application under section 140 did not arise for consideration in the said case. The ratio of the decision in the case of Yallwwa (Smt.) v. National Insurance Co. Ltd.

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C/FA/3473/2013 JUDGMENT (supra) is that an order passed under section 140 of the Act is an award within the meaning of section 173 of the Act, and it is open for the insurance company to raise defence covered by sub-section (2) of section 149 of the Act of 1988. It lays down that it is also open for the insurer to contend that there was no valid policy covering the liability arising out of the vehicle involved in an accident. The court further held that in a given case while defending a claim under section 140 it is open for an insurer to raise a defence which is covered by sub-section (2) of section 149 of the Act of 1988. However, that does not mean that the Tribunal is required to hold a full trial permitting the parties including the insurer to lead oral evidence. This court is in full agreement with the above view of the Bombay High Court.

14. As observed by the Supreme Court in the case of Shivaji Dayanu Patil and another v. Vatschala Uttam More (Smt.), (supra), the provisions of section 140 of the Act are intended to provide immediate succour to the insured or the heirs and legal representatives of the deceased. Hence, normally a claim under section 140 of the Act is made at the threshold of the proceeding and the payment of compensation under section 140 is directed to be made by an interim award of the Tribunal which may be adjusted if in the final award, the claimants are entitled to any larger amount. In New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar (supra), this court has held that section 140 of the Act speaks of peremptory awards in cases of permanent disablement or death. The object underlying this consideration is the immediate relief to the disabled victim of accident in case of permanent disability. Provision of section 140 is a piece of Page 22 of 29 C/FA/3473/2013 JUDGMENT beneficial and ameliorative legislation providing for an immediate aid to the hapless and helpless victims of the motor vehicles. The object for which section 140 of the Act is enacted would be defeated if the Claims Tribunal is required to hold regular trial in the same manner as for adjudicating a claim made in a petition filed under section 168 of the Act. Having regard to the purpose underlying the enactment of the said provision, the court was of the opinion that the defences raised by the insurer or other objections of the insurer or the owner should be examined later when the claims petition is decided on merits. The Claims Tribunal would be entitled to make award under section 140 of the Act as soon as it comes to the conclusion that the owner of the vehicle was involved and insured.

15. The facts of the present case are required to be examined in the light of the principles enunciated in the above decisions.

16. As noted hereinabove, the case of the appellant is that the cheque issued by the respondent No.2, owner of the offending vehicle for payment of premium had been dishonoured and due intimation thereof as well as of the cancellation of the insurance policy had been given to the respondent No.2 prior to the occurrence of the accident. Therefore, as on the date of the accident, there was no insurance policy in existence. Such contention was raised before the Tribunal and the Tribunal on the basis of the documentary evidence produced on record, was of the prima facie view that the policy had been cancelled prior to the occurrence of the accident. However, according to the Page 23 of 29 C/FA/3473/2013 JUDGMENT Tribunal, the said facts have to be proved by the insurance company at the stage of a full-fledged trial. According to the learned counsel for the appellant, sufficient documentary evidence had been produced by the insurance company to establish that as on the date of the accident the policy stood cancelled and hence, the Tribunal was not justified in holding that such facts have to be proved at the stage of full-fledged trial. It was pointed out that for the purpose of considering the application under section 140 of the Act, the Tribunal had taken into consideration the documentary evidence produced by the claimants without the contents thereof being proved, to contend that if the documentary evidence, as produced by the claimants, can be taken into consideration for the purpose of deciding the application under section 140 of the Act, the documents produced by the insurance company in its defence, also ought to have been taken into consideration without the insurance company having to lead any evidence to prove the same. Alternatively, it was argued that since it is permissible for the insurance company to plead and prove its defences in view of the decision of the Supreme Court in the case of Yallwwa (Smt.) and others v. National Insurance Co. Ltd. and another (supra), the Tribunal ought to have afforded an opportunity to the appellant to lead evidence in this regard.

17. Insofar as the first contention is concerned, it may be noted that the documents on which reliance had been placed on behalf of the claimant in support of her claim under section 140 of the Act, are documents which under the provisions of rule 231 of the rules, are required to be considered by the Claims Tribunal while considering an application for Page 24 of 29 C/FA/3473/2013 JUDGMENT compensation under section 140 of the Act, namely, first information report, injury certificate, registration certificate of the motor vehicle involved in the accident, cover note, certificate of insurance or the policy relating to the insurance of the vehicle against third party risk, nature of the treatment given by the medical officer. The proceedings under section 140 of the Act, being in the nature of summary proceedings, the Tribunal is required to take into consideration the documents enumerated under rule 231 of the rules, and in view of the provisions of sub-rule (7) of rule 231, the Tribunal can also call for information and documents considered necessary by it from the police, medical and other authorities. Thus, as held by this court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar (supra), while deciding an application under section 140 of the Act, the procedure which is required to be followed in a full- fledged trial is not required to be adopted. In Shivaji Dayanu Patil v. Vatschala Uttam More (Smt.) (supra), the Supreme Court, in the context of rules 291-A and 306-B of the Bombay Motor Vehicles Rules, 1989, had held that the object underlying the said provisions is to enable expeditious disposal of a claim petition under section 92-A of the Act of 1939. The said object would be defeated if the Claims Tribunal is required to hold a regular trial in the same manner as for adjudicating a claim petition under section 110-A of the Act of 1939. The court has categorically held that the documents referred to in rules 291-A and 306-B [which are in pari materia with sub-rule (2) of rule 231 and sub-rule (9) of rule 231 of the Gujarat Motor Vehicles Rules, 1989], will enable the Claims Tribunal to ascertain the necessary facts in regard to these matters. The panchnama and the first information report will show whether Page 25 of 29 C/FA/3473/2013 JUDGMENT the accident had arisen out of the use of the motor vehicles in question. Injury certificate or the postmortem report will show the nature of injuries and the cause of death. The registration certificate and the insurance certificate of the motor vehicle will indicate who is the owner and insurer of the vehicle. In the event the Claims Tribunal feeling doubtful about the correctness or genuineness of any of these documents or if it considers it necessary to obtain supplementary information or documents, rule 306-A [which is in pari materia with sub-rule (7) of rule 231], empowers the Claims Tribunal to obtain such supplementary information or documents from the police, medical or other authorities. The Supreme Court was of the view that this would show that rules 291-A, 306-A and 306-B contain adequate provisions which would enable the Claims Tribunal to satisfy itself in respect of the matters necessary for awarding compensation under section 92-A of the Act of 1939 [section 140 of the Act of 1988] and in view of these special provisions which were introduced in the rules by the amendment in 1984, the Claims Tribunal is not required to follow the normal procedure prescribed under the Act and the rules with regard to adjudication of a claim under section 110- A of the Act of 1939 [section 166 of the Act of 1988] for the purpose of making an order on a claim petition under section 92-A of the Act.

18. The principles laid down in the above decision would be squarely applicable to the facts of the present case. Of course, it would have been a different matter if the documents produced by the insurance company were admitted by the other side or were official/Government documents which may not be required to be proved, in which case it would be Page 26 of 29 C/FA/3473/2013 JUDGMENT permissible for the Tribunal to rely upon the same without evidence being led to prove the same and exonerate the insurance company even at the stage of the application under section 140 of the Act on the ground that there was no policy in existence on the date of the accident. However, in a case where such facts are required to be established by leading evidence, the same cannot be decided at the stage of an application under section 140 of the Act and would be required to be decided during the course of a full-fledged trial under section 166 of the Act. The documents on which reliance has been placed by the appellant-insurance company, not being documents which are statutorily required to be considered by the Tribunal for the purpose of deciding an application under section 140 of the Act, the contention that if the documents produced by the claimants could be taken into consideration so also the documents produced by the appellant should have been taken into consideration without leading evidence to prove the same, does not merit acceptance.

19. In the present case, the documentary evidence produced by the appellant is in the nature of xerox copies of the cheque which has allegedly been dishonoured, the cheque return memo, advice of City Bank indicating that the cheque was dishonoured on account of "insufficient funds", communication addressed by the appellant to the respondent No.2 owner informing her about dishonour of the cheque as well as cancellation of the policy, and the motor insurance endorsement cancelling the policy on account of dishonour of the cheque. Insofar as the service of the said communication regarding cancellation of the policy is concerned, a copy of an acknowledgment receipt dated 06.04.2011 has been placed on Page 27 of 29 C/FA/3473/2013 JUDGMENT the record of the Tribunal which shows that the same has been received by one Poonam Jaiswal. Having regard to the fact that the respondent No.2-insured is one Arunaben Jaiswal, it would be for the appellant to prove before the Tribunal by leading evidence on record to establish that the communication dated 2nd April, 2011 had, in fact, been served upon the respondent No.2 prior to the date of the accident and that she was duly intimated about the cancellation of the policy. On the face of the documents on record, at this stage, it is not possible to state as to whether or not such communication had, in fact, been served upon the respondent No.2. Under the circumstances, no infirmity can be found in the observations made by the Tribunal that though prima facie it appears that the policy had been cancelled prior to the occurrence of the accident, the same is required to be proved at the stage of full- fledged trial.

20. For the reasons stated hereinabove, namely, that the proceedings under section 140 of the Act are in the nature of summary proceedings wherein the issues are required to be decided on the basis of the documents enumerated under rule 231 of the rules, the alternative argument advanced by the learned counsel for the appellant that the matter is required to be remanded to the Tribunal for the purpose of enabling the appellant to lead evidence in this regard, does not merit acceptance. If any issue is required to be decided by leading evidence in that regard, the same can be done only by way of a full-fledged trial in the proceedings under section 166 of the Act. Besides, the Tribunal has taken due care to protect the interest of the appellant-insurance company by holding that in case at the time of the final adjudication of the claim petition, Page 28 of 29 C/FA/3473/2013 JUDGMENT if the insurance company is held not liable to pay the compensation, it would be entitled to recover the amount paid under the no fault liability from the owner.

21. In the light of above discussion, the court is of the view that there is no infirmity in the impugned award passed by the Tribunal so as to warrant interference. The appeal is, accordingly, dismissed.

22. It is, however, clarified that this court has not made any observations on the merits of the application under section 166 of the Act and any observations made in this order touching the merits of the case, are only prima facie observations made only for the purpose of deciding the present appeal and the same shall in no manner prejudice the case of either of the parties in the proceedings under section 166 of the Act. It would be open for the appellant to raise all defences before the Tribunal during the course of the proceedings under section 166 of the Act, including the defence with regard to cancellation of the insurance policy prior to the date of the accident, and the bar of constructive res judicata shall not be invoked against the appellant on the ground that such contention had been raised in the proceedings under section 140 of the Act.

23. The Registry shall forthwith send back the record and proceedings of the case.

(HARSHA DEVANI, J.) parmar* Page 29 of 29

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Gujarat High Court