Patna High Court
Oriental Insurance Co. Ltd. vs Chandra Kala Devi And Ors. on 19 September, 2000
Equivalent citations: 2002ACJ692
JUDGMENT S.K. Chattopadhyaya, J.
1. When this appeal was taken up for hearing under Order XLI, Rule 11 of the Code of Civil Procedure (in short 'the Code'), Mr. Shukla, learned Counsel for the claimants-respondents, had taken a preliminary objection regarding maintainability of the appeal in view of the decisions of the Supreme Court in the case of Shankarayya v. United India Insurance Co. Ltd. 1998 ACJ 513 (SC) and in the case of Rita Devi v. New India Assurance Co. Ltd. 2000 ACJ 801 (SC). On such objection being raised counsel for the parties were heard at length for deciding first the question of maintainability of the appeal.
2. It was contended by respondents' counsel that admittedly the insurance company did not seek any permission of the Tribunal under Section 170 of the Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') for challenging the claim of the respondents on merits and, as such, it is debarred from impugning the award by filing an appeal before this Court.
3. On the other hand, Mr. Ajay Kumar, learned Counsel appearing on behalf of the appellant company, has urged that preliminary objection raised by the respondents has no merit because in the present appeal the appellant neither challenges the award on merits nor the quantum as such but it only attacks the principles evolved by the Tribunal in granting the said compensation. According to him if the insurance company confines its argument only on statutory defence as contemplated under Section 149(2) of the Act, it is not required to take permission as envisaged under Section 170. Where the owner, the learned Counsel continues, either does not appear to contest the claim or even after filing the written statement does not appear, the insurance company cannot be precluded from agitating the matter in appeal on the ground that the principle adopted by the Claims Tribunal in granting compensation is illegal only because it had not filed an application under Section 170 of the Act.
4. To resolve this conflict one has to look to different provisions of the Act. Under Section 149(2) the defences available to the insurance company are as follows:
(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 a 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 licensed, 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 nondisclosure of a material fact or by a representation of fact which was false in some material particular.
5. In this background the facts of the instant case are required to be seen.
One Pradeep Kumar Rawat having died in a bus accident, his heirs filed the claim case for compensation of Rs. 7,00,000. Admittedly, though the owner and driver of the vehicle filed their respective written statement but they did not contest the claim by pressing the same. In their written statement the owner and driver challenged the claim on the ground that the claim was bad for non-joinder and misjoinder of the parties, no cause of action arose and the claim made by the claimant was imaginary and exaggerated. They further denied the very factum of accident caused by bus No. BR 06 P 5551. Their case was that the bus was validly insured with the insurance company and hence liability, if any, accrued, the insurance company is liable to make the payment.
On the other hand, the insurance company in its written statement denied the age, occupation and the income of the deceased and also took the stand that the deceased himself was guilty of negligence. Denying its liability the company asserted that the claim was exaggerated. Besides this, usual stands were taken by the insurance company.
The Tribunal after considering the evidence on record has come to the conclusion that the claimants were entitled to a sum of Rs. 2,55,334 and as the bus was duly insured with the company, the appellant company was liable to make payment of the said amount.
Thus, it appears that in the instant case the owner and the driver after filing of written statement did not contest the matter but the appellant company resisted the claim.
6. Section 170 of the Act reads as follows:
170. Impleading insurer in certain cases.-Where in the course of any inquiry, the Claims Tribunal is satisfied that-
(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.
From the provisions aforesaid it appears that the Claims Tribunal by recording reasons may direct the insurer to be included as party to the proceeding when the Tribunal is satisfied that either there is a collusion between the claimant and the person against whom the claim is made or he has not contested the claim. It further contemplates that the insurer so impleaded shall have right to contest the claim on all or any of the grounds, which are available to the person against whom the claim has been made. This right to contest on all the grounds is irrespective of its statutory rights under Section 149(2) of the Act. Thus, it appears that if the owner and/or the driver of the vehicle does not contest the claim or even after filing of their written statements fails to appear before the Tribunal, permission can be given to the insurance company by the Tribunal suo motu to agitate the matter on all grounds and in such cases the insurer is not required to confine its defence only as provided under Section 149(2) of the Act.
However, in the case of Shankarayya 1998 ACJ 513 (SC), while interpreting the provisions of Section 170, their Lordships have observed in para 4 as follows:
(4) It clearly shows that the insurance company when impleaded as a party by the court can be permitted to contest the proceedings on merits only if the conditions precedent mentioned in the section are found to be satisfied and for that purpose the insurance company has to obtain order in writing from the Tribunal and which should be a reasoned order by the Tribunal. 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. It is true that the claimants themselves had joined respondent No. 1, insurance company in the claim petition but that was done with a view to thrust the statutory liability on the insurance company on account of the contract of the insurance. That was not an order of the court itself permitting the insurance company which was impleaded to avail of a larger defence on merits on being satisfied on the aforesaid two conditions mentioned in Section 170. Consequently, it must be held that on the facts of the present case, respondent No. 1 insurance company was not entitled to file an appeal on merits of the claim which was awarded by the Tribunal.
The same principles have been reiterated by their Lordships in the case of Rita Devi, 2000 ACJ 801 (SC).
7. Learned counsel for the appellant does not dispute this principle of law but he contends that in the instant case the appellant is not challenging the award on merits but is challenging the principles adopted by the Tribunal in fixing quantum of compensation. According to him, under law the Tribunal is required to pass a 'just award' and if the very principle on which the compensation is awarded is illegal or erroneous, the insurer is entitled to challenge the same before the High Court.
8. Learned counsel for the claimants-respondents is not in a position to controvert these submissions.
9. In the case of Oriental Fire & Genl. Ins. Co. Ltd. v. Laxman Mahto 1985 ACJ 775 (Patna), precisely same question was raised before the Division Bench. Explaining the provisions of Section 96(2) of the old Act, which is equivalent to Section 149(2) of 1988 Act, their Lordships have held as follows:
...Challenging the amount claimed or awarded is not the same thing as denying the liability altogether. Similar point was raised in Hindustan General Insurance Society Ltd. v. Daya Nath Jha (1970) 40 Company Cases 796. It was observed that an insurer may escape liability if he proves one or other of the grounds mentioned in Section 96(2), but that does not deter the insurer from asking the court or the Tribunal not to pass a decree or an award of the exorbitant amount to which the claimant is not entitled in law...
In my view, this decision supports the contention of Mr. Ajay Kumar that in the appeal before this Court the insurer can definitely urge that the Tribunal adopting wrong principle of multiplier has awarded an exorbitant amount to the claimants as compensation.
10. Considering the argument of the contesting parties and keeping in mind the principles laid down by the Supreme Court and Division Bench I am of the view that though it is true that the insurance company cannot challenge the quantum of compensation on merits if it fails to seek a permission by filing an application before the Tribunal as required under Section 170, but the insurer cannot be debarred from filing an appeal, if in fixing the quantum the Tribunal has committed error on the very principles itself. By wrongly applying the principle as to whether the learned Tribunal in the instant case has committed any such error, that has to be seen while hearing the appeal on merits.
11. Thus, I find that preliminary objection raised by Mr. Shukla is devoid of merit and I hold that the present appeal is maintainable.
12. Let this case be listed again for hearing under Order 41, Rule 11 of the Code on 22.9.2000.