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United India Insurance Co. Ltd. v/s Member, Motor Accident Claims Tribunal & Others

    Misc. Appeal (First) No. 111 of 1992

    Decided On, 22 June 1992

    At, High Court of Gauhati


    For the Appellant: M. Bhuyan, Advocate. For the Respondents: B.K. Jain

Judgment Text

U.L. Bhat, C.J.

1. In a motor vehicle accident which tools place on 12.9.90 in the National Highway near Bantow Gaon Mosque within the limits of North Lakhimpur P.S., Nomal Bora who was riding home on his bicycle was bit by a truck bearing registration No. ASM 1249 belonging to third respondent herein and driven by its driver, the fourth respondent herein, as a result of which Nomal Bora sustained fatal injuries to which he succumbed immediately. Mother of the deceased, second respondent herein filed a claim case before the Motor Accident Claims Tribunal, Lakhimpur alleging that the accident took place on account of the rash and negligent driving of the truck by the driver and claiming Rs. 3,52,410/- as compensation from the driver, owner and the insurer, respectively, the insurer being the appellant herein. The owner filed a written statement admitting the accident but denying his liability and asserting that the motor vehicle is covered by an insurance policy granted by the appellant. The insurer filed a written statement raising. certain pleas. On a consideration of the pleadings and the evidence, the Tribunal upheld the case of the claimant and awarded a sum of Rs. 2,57,000/- as compensation, holding the driver, owner and insurer jointly and severally liable and directing payment within thirty days and in default, directing payment of the amount with interest at 10%. Insurer has filed this appeal against the award and judgment passed by the Tribunal.

2. In the memorandum of appeal it is alleged that the award is not in conformity with section 168 of the Motor Vehicles Act, 1988 (for short, the Act) inasmuch as the amount due by the driver, owner and insurer is not separately shown, that the Tribunal failed to consider the plea of the insurer that in case of failure to observe the terms and conditions of the policy, or violation of the provisions of the Act, the insurer cannot be held liable, that in any event, the insurer cannot be held liable since on the date of the accident the driver had no valid driving licence, that the quantification of the compensation is vitiated by non-application of mind, that the amount awarded is excessive, unjust and unreasonable considering the age, the monthly income of the deceased and the settled methods adopted to assess compensation and that the method adopted for assessing compensation was not proper.

3. The Division Bench which considered the admission of the appeal under Order 41, Rule 11, CPC, felt that some, at any rate, of the grounds raised in the memorandum of appeal are not available to the insurer in view of section 149(2) of the Act. It was brought to the notice of the Division Bench that another Division Bench in Shri Hemendra Dutta Choudhury and anr. vs. Shri Arun Kumar Bordoloi, (1981) 2 GLR 450, has held that similar restrictions imposed in section 96(2) of the Mot

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r Vehicles Act, 1939 (corresponding to section 149(2) of the Act) would not apply at the stage of appeal. The Division Bench felt that the decision requires reconsideration. The Division Bench accordingly referred to a larger Bench the question whether such an appeal is maintainable and whether insurer can raise defences not contemplated under this provision. We beard learned counsel appearing for the appellant as well as several other counsel who are interested in this question.4. We will first refer to the decisions of this court placed before us. The earliest decision of this court is the one in The Premier Insurance Co. Ltd. v. The Member, Motor Accident Claims Tribunal, Jorhat and ors., AIR 1973 Gau. 97, in which Baharul Islam, J. (as he then was) following the principle baid down in British India General Insurance Co. Ltd. v. Captain Itbar Singh and ors., AIR 1959 SC 1331, held that the plea of the appellant insurer must be limited to section 96(2) of the Motor Vehicles Act, 1939 and the insurer cannot in appeal impugn the decree on pleas which are not available to it. In M/S United India Fire & General Insurance Co. v. Smt. Malati Bala Dutta (1985) 1 GLR 443, a Division Bench of this Court consisting of T.N. Singh, J. and Manisana Singh, J. held that the insurer cannot in appeal challenge the award on grounds other than those enumerated in section 96(2) of the 1939 Act and the restriction in section 96(2) operates even in appeal and is not limited to trial, that is because the bar is at the threshold and also total. Another Division Bench consisting of Hansaria, J. (as he than was) and T.N. Singh, J. in Hemchandra Choudhury and ors. vs. Dr. Harmohan Pathak, (1985) 2 GLR 297, held that the owner and driver cannot prefer appeal and approach to appellate forum is confined to the insurer, that in such a situation the court cannot examine issues relating to negligence and quantum, on which alone the appellants counsel wanted to address, since these aspects are not covered by section 96(2). It is significant to notice that the appeal dismissed by that judgment was filed jointly by the driver, owner and the insurer. In Ananda Ram Saikia vs. Nurul Haque and anr., (1986) 2 GLR 131, T.C. Das, J. held that right of the insurer to resist the claim is restricted to those enumerated in sub-clauses (a) to (c) of section 96(2) of the Motor Vehicles Act, 1939 and this right cannot be extended by invoking the provisions of section 110-C of the Act. The insurer was a respondent in the appeal and sought exoneration on certain grounds not available to it under section 96(2). In M/S National Insurance Co. Ltd. vs. Mrs. Zakia Rasul and Anr., (1987) 1 GLR 432, Hansaria, J. (as he then was) held that the insurer is restricted to the defence enumerated in section 96(2) and before section 110-C(2-A) can be invoked, there must be specific order of the Tribunal recording reasons as to why insurer was being allowed to be impleaded as a party and only an insurer so impleaded can take alt defences available to an owner. The last two decisions do not specifically consider whether the restriction in section 96(2) would apply at the appellate stage though in effect and substance the appeals were disposed of on that ground. 5. In Hemendra Dutta Choudhury and Anr. vs. Arun Kumar Bordoloi, (1987) 2 GLR 450, decided by a Bench consisting of Hansaria, J. (as he then was) and Sangma, J., the Court had to consider the maintainability of joint appeal filed by the insurer and owner of a vehicle. It was held that where the entire compensation amount is directed to be paid by the insurer, the insurer alone is a person aggrieved and entitled to file an appeal under section 110-D of the Motor Vehicles Act, 1939 and the owner of the vehicle is not a person aggrieved and is not entitled to maintain an appeal, but the joining of the owner of the vehicle as a co-appellant would not render the insurer's appeal non-maintainable. It was further held that the restriction in section 96(2) operates only in regard to the defences available to an insurer in the Tribunal and does not apply to the grounds available to the insurer in the appellate forum. In order to arrive at this conclusion the Court sought support from section 110-C(2-A) taking the view that fair play in action does demand a fair hearing of the insurer whose right to file appeal would really provide no remedy if it is denied the opportunity to assail all the findings. The court took the view that the Supreme Court in Itbar Singh's case (AIR 1959 SC 1331) did not have occasion to consider about the restriction at the appellate stage. The court also declined to follow three Full Bench decisions of the three High Courts, namely. Madhya Pradesh in Mangilal vs. Parasram and ors., 1970 ACJ 86, of Orissa in National Insurance Co. Ltd. vs. Maqikhia Das and ors., 1976 ACJ 239 and of Jammu and Kashmir High Court in United India Fire and General Insurance Co. Ltd. and anr. v. Lakshmi Shori Ganjoo and ors., 1983 TAC 249. The Division Bench held that the decision in Hem Choudhury's case (1985) 2 GLR 297) proceeded on concession and the decision in Ananda Ram Saikia's case, (1986) 2 GLR 131, did not lay down the correct law. The Division Bench did not consider the other decisions of this court adverted to earlier, including Malati Bala Dutta's case (1985) 1 GLR 443. Hemendra Dutta Choudhury's case, (1987) 2 GLR 450 has been followed by another Division Bench consisting of Phukan, J. and Homchoudhuri, J. in Oriental Insurance Co. Ltd. v. Smt. Kailash Mehta and ors., 1992 (1) GLJ 442.6. We notice that almost all the High Courts have more or less uniformly held that the restriction in section 96 (2) would operate on the insurer at the appellate stage also. See the three Full Bench decisions referred to earlier and also Kantilal and Bros. v. Ramaraju, AIR 1979 Cal 152, United India Fire and General Ins. Co. Ltd. and anr. v. Gulab Chandra Gupta, 1985 AC J 245 (Allahabad High Court), New India Assurance Co. Ltd. & ors. v. Shakuntala Bai and ors., 1987-1 ACJ 224 (Madhya Pradesh High Court, Gwalior Bench, Dr. T.N. Singh, J.) General Assurance Society Ltd v. Jayalakasmi Animal and ors. AIR 1975 Madras 198, Abdulkadar Ebrahim Sura and anr. v. Kashinath Moreswar Chandani and ors., AIR 1968 Bom. 267. The United Fire and General Ins. Co. Ltd. v. P. Parvathamma, AIR 1981 AP 227, United India Fire and General Insurance Co. Ltd. v. Smt. Kayani and ors., AIR 1982 Kerala 315, Hindustan General Insurance Society Ltd. v. Satish Chandra Paul and ors., AIR 1972 Tripura 9, New India Assurance Co. Ltd. and anr. v. Smt. Nathiben Chatrabhuj and ors., AIR 1982 Gujarat 116 (Full Bench). The Northern India General Insurance Co. Ltd v. L. Krishnan and ors., AIR 1973 Mysore 107, M/S Vanguard Co. Ltd. v. Rabinder Kaur and ors., AIR 1988 Punjab & Haryana 250, Mst. Kamala Devi v. Navm Kumar and anr., AIR 1973 Raj. 79.7. If the language of the provision of the statute under consideration is plain, clear and unambiguous, the language must guide the court and determine the meaning and content. If however there is a case fit interpretation, the court must certainly consider the provision in such a manner as to subserve the object of the enactment. See New Asiatic Insurance Co. Ltd. v. Pessumal Dhanamal Aswini and ors., AIR 1964 SC 1736. This has been amply made clear by the Supreme Court in Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan and ors., AIR 1987 SC 1184. In that decision the Supreme Court was considering the exclusion clause in the policy prohibiting driving by persons other than one holding driving licence. The driver in the case had a licence. He left the car with the ignition key in the lock. In the absence of the driver the cleaner moved the car and that resulted in an accident. Section 96(2)(b)(ii) refers, inter alia, to a condition excluding driving by a person who is not duly licensed. Referring to the statutory mandate contained in section 94 requiring a person using a motor vehicle in a public place to insure against third party risk, the court observed:"Surely the obligation has not been imposed in order to promote the business of the insurers engaged in the business of automobile insurance. The provision has been inserted in order to protect the members of the community travelling in vehicles or using the roads from the risk attendant upon the user of motor vehicles, on the roads. The law may provide for compensation to victims of the accidents who sustain injuries is the course of an automobile accident or compensation to the dependants of the victims in the case of a fatal accident. However, such protection would remain a protection on paper unless there is a guarantee that the compensation awarded by the Courts would be recoverable from the persons held liable for the consequences of the accident."Referring to the possibility of the driver and owner not having resources to pay the compensation, the court observed:"To overcome this ugly situation the legislature has made it obligatory that no motor vehicle shall be used unless a third party insurance is in force."Referring to the right of the insurer to stipulate conditions in the policy, the Supreme Court observed:"The insurance policy might provide for liability walled in by conditions which may be specified in the contract of policy. In order to make the protection real, the legislature has also provided that the judgment obtained shall not be defeated by the incorporation of exclusion clauses other than those authorised by S. 96 and by providing that except and save to the extent permitted by S. 96 it will be the obligation of the Insurance Company to satisfy the judgment obtained against the persons insured against third party risks, (vide Section 96). In other words, the legislature has insisted and made it incumbent on the user of a motor vehicle to be armed with an insurance policy covering third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured victims of automobile accidents or the dependents of the victims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that in the modern age the use of motor vehicles notwithstanding the attendant hazards, has become an inescapable fact of life, has to be interpreted in a meaningful manner which serves rather than defeats the purpose of the legislation. The provision has therefore to be interpreted in the twilight of the aforesaid perspective. (Emphasis supplied).Accordingly, the court held that the provision regarding infringement of the condition really means wilful infringement or violation. In that case the insured was not at fault and the driver was negligent. The insurer was held liable. The court further observed:"It is the statutory provision defining the conditions of exemption which is being interpreted. These must therefore be interpreted in the spirit in which the same have been enacted accompanied by an anxiety to ensure that the protection is not nullified by the backward looking interpretation which serves to defeat the provision rather than to fulfil its life-aim. To do otherwise would amount to nullifying the benevolent provision by reading it with a non-benevolent eye and with a mind not tuned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the Court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision impotent.................When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependents on the one Land and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice."8. The provisions in Chapters XI and XII of the 1988 Act are more or less similar to those in Chapter VII of the 1939 Act.9. Section 149 of the Act deals with the duty of the Insurer to satisfy judgment and awards against persons insured in respect of third party risks. Sub-section (1) states, inter alia, that when judgment or award is obtained against an insured then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of the section, pay the claimant any sum not exceeding the sum assured, as if he were the judgment debtor. This duty laid down on the insurer is subject to sub-section (2), according to which the insurer shall not be liable in respect of any judgment or award unless before the commencement of the proceedings the insurer had notice through the Tribunal of the bringing of the proceedings. Sub-section (2) further states that an insurer to whom notice of bringing of any such proceeding is given, shall be entitled to defend the action on any of the grounds set out in clauses (a) and (b).10. It is necessary to bear in mind that a contract of insurance is practically a contract of indemnity. To effectuate the contract of indemnity, a decree has to be first obtained against the insured and thereupon the liability of the insurer to discharge the decree arises. A contract of insurance is a contract by which the insurer promises to save the insured from the loss caused to him by the conduct of any other person. By virtue of section 125 of the Indian Contract Act, 1872, the promisee, acting within the scope of his authority, is entitled to recover from the promisor all damages which he may be compelled to pay in any suit in respect of any matter to which the promise to indentify applies. The expression "compelled to pay" does not mean that be should have already paid. It is this principle which is incorporated in section 149. of the Act. Under the Common Law an insurer has no right to be made a party to the action by the injured person against the insured. But such a right has been given to the insurer under section 96(2) of the 1939 Act. It is a right created by statute and its content necessarily depends on the provisions of the statute. The Supreme Court in Itbar Singh's case (AIR 1959 SC 1331) considered the right of the insurer to raise defences and held that section 96(2) clearly provides that when an insurer is made a party in an action he is not entitled to take any defence which is not specified in it. The Supreme Court also indicated that section 96(2) deals with defences other than those based on the conditions of policy. The Supreme Court observed:"The Statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it. It is not for us to add to those grounds and therefore to the statute for reasons of hard-ship. We are further more not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do. Secondly, if he has been made to pay something which on the conduct of the policy he was not bound to pay, he can under the proviso to sub-sec. (3) and under sub-sec. (4) recover it from the assured. It was said that the assured might be a man of straw and the insurer might not be able to recover anything from him. But the answer to that it that it is the insurer's bad luck.......... The loss had to fall on some one and the statute has thought fit that it shall be borne by the insurer."Thus, it is clear that the insurer can raise only those defences which are permitted under section 96(2) (section 149 of the 1988 Act) unless the insurer has in the policy reserved the right to defend the action in the name of the insured, in which case all defeases open to the insured are open to the insurer also.11. It is no doubt true that section 149 speaks of notice by the Tribnual to the insurer of the bringing of the proceedings and the right of the insurer to be made a party thereto and to defend the action on any of the enumerated grounds. It is argued for the appellant that this restriction on the right of the insurer to raise defences is applicable only as long as the proceedings are pending in the Tribunal and the restriction will not apply to the contentions, which the insurer can raise in the appellate forum. We are unable to find any reason or logic in this contention. It is axiomatic that an appeal is a continuation of the original proceedings. See, Mahangu Prasad Sah and anr. v. Pravag Sah and ors., AIR 1975 Gau. 40, per Baharul Islam, J. (as he then was). If restriction is imposed on the right of the party to raise contentions in the trial forum, the restriction must necessarily operate on the right of the party in the appellate forum also; otherwise it would mean that such a limited right of a party to raise defences in the trial forum would become enlarged and extended in the appellate forum, which, certainly does not stand to reason. The restriction imposed on the insurer in the matter of raising defences, as explained by the Supreme Court in Itbar Singh's case (AIR 1959 SC 1331) and Kokilaben Chandravadan's case (AIR 1987 SC 1184), is purposeful and that purpose must be served not only in the trial forum but also in the appellate forum, as otherwise the purpose would be totally frustrated. It is true, as pointed out in Hemendra Dutta Choudhury's case (1987) 2 GLR 450, the Supreme Court in Itbar Singh's case (AIR 1959 SC 1331) did not consider the right of the insurer to raise contentions in the appellate forum; but the restriction on the right in the appellate forum flows naturally from the restriction on the right in the trial forum, which has been considered in Itbar Singh's case (AIR 1959 SC 1331).12. In Hemendra Dutta Choudhury's case (1987) 2 GLR 450, a view was taken that the insured who is indemnified by the insurer is not a "person aggrieved" within the meaning of section 110-D of the 1939 Act (section 173 of the 1988 Act) and hence could not file an appeal challenging the findings regarding the negligence or the quantum of compensation and if the insurer is held to have no right of appeal, it would amount to denial of fair play in action and a fair bearing to the insurer and it is necessary that the insurer must have a remedy and that the protection of the law itself, which expresses the will of the people, should be available in such a case instead of the matter being left to bilateral agreement between the parties. We are afraid, we are unable to agree with these reasons. We are not in agreement with the view expressed that the insured, who is completely indemnified, is not a "person aggrieved". The expression "person aggrieved" is nowhere defined and must be construed by reference to the context of the enactment in which it appears and other relevant/circumstances. See, Halsbury's Laws of England, Third Edn., Vol. 25, page 293 foot-note "h". Though the Advocate General vis-a-vis proceedings under section 37(1) of she Advocates Act 1961, would not come within the meaning of the expression "person aggrieved" Supreme Court in Adi Pherozshah Gandhi v. H.M. Seervai, AIR 1971 SC 385, held that he is a person aggrieved by the decision of the Bar Council in the matter of misconduct of an advocate. It was held that the State Bar Council is a "person aggrieved" to maintain an appeal under the provisions of the Advocates Act, 1961 in Bar Council of Maharashtra vs. M.V. Dabholkar etc., AIR 1975 SC 2092. The court took the view that the words "person aggrieved" in the Act are of wide import in the context of the purpose and provisions of the statute. The words "person aggrieved" may have several meanings. One of the meanings is that a person will be held to be aggrieved by a decision if that decision is materially adverse to him. A person is aggrieved if a legal burden is imposed on him. Sometimes the expression is given a restricted meaning in certain statutes which provide remedies for the protection of private legal rights. A more liberal approach is required in the background of statutes which do not deal with property rights but deal with professional conduct and morality.13. In an action for damages arising from injuries caused by a motor vehicles accident on account of negligence of the driver, the primary liability under the Common Law is on the driver, the owner of the vehicle is constructively liable. When there is a contract of insurance between the owner and the insurer, the insurer is the indemnifier. When the tribunal passes an award holding that the owner is liable to pay the compensation, the owner suffers an adverse judicial decision. The fact that he will be indemnified by the insurer does not obliterate the adverse decision rendered by the Tribunal against him. The possibility of the insurer, on account of insolvency or otherwise, being unable to indemnify also requires to be taken into consideration. The possibility of the owner being deprived of no claim bonus in certain types of insurance contract is also relevant. The mere fact that the insurance policy in a given case covers the amount ordered to be paid as compensation will not take away the grievance of the owner who suffers an adverse decision. We therefore do not agree with the view taken in Hemendra Dutta Choudhury's case (1987) 2 GLR 450, that the owner is not a person aggrieved. It is open to him to file an appeal and raise all defences open to him. The insurer who is actually made liable to pay also has a right of appeal, but the right is circumscribed by the provisions of the Act, such as section 179. With respect, we are also unable to agree with the line of reasoning in Hemendra Dutta Choudhury's case (1987) 2 GLR 459 that public interest requires that the insurer should be given the right of hearing on all grounds in the appellate forum. The insurer certainly should have the right to approach the appellate forum and raise defences appropriate to its status. If denial to the insurer of the right to raise all defences before the Tribunal is not a denial of right of hearing and denial of fair play in action, we fail to see how it would be so when the restriction operates in the appellate forum also.14. Hemendra Dutta Choudhury's case (1987) 2 GLR 450, seeks support from section 110-C(2-A) of the 1939 Act, The parallel provision in the 1988 Act is section 170, Section 170 reads thus: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 reason 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."15. The above provision enables the Tribunal under certain circumstances and for reasons to be recorded in writing to direct that the insurer shall be impleaded as a party to a proceeding. Thereupon the insurer shall have the right to contest the claim on all or any of the grounds that are available to the insured. The circumstances are, collusion between the claimants and the insured and failure of the insured to contest the claim. It is unnecessary to take a hyper-technical view of section 170 and hold that the provision can be invoked only where the insurer was not originally a party and the Tribunal has not already issued notice to the insurer. Section 170 contemplates two matters, namely, impleadment of the insurer and the right of the insurer to raise grounds available to the insured. Even where notice has already been issued to the insurer or the insurer was already a party, the Tribunal can invoke Section 170 and thereupon the insurer will be able to raise defences contemplated therein. This provision is intended to prevent the abuse of the process of the Tribunal in appropriate cases. It is a special device incorporated by the legislature to meet specific contingencies, In our opinion this provision cannot help the court to come to the concision that in the appellate forum the insured has an unrestricted right to raise defences.16. In view of what is indicated above we hold that Hemendra Dutta Choudhury's case (1987) 2 GLR 450, does not lay down good law and the insurer is bound by section 96(2) (section 149 of 1988 Act) in the appellate forum also and the right of appeal is restricted to raising contentions/enumerated in section 149 of the Act unless, of course, the Tribunal has passed an order under section 170 of the Act, or unless the insurer has reserved in the policy the right to contest the claim on behalf of the insured. The reference is answered accordingly.17. It is contended by the appellant that the insurance policy contains such a reservation. That is a matter for the Bench considering the appeal on admission to decide.

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