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Judgment
By this order, the preliminary objection raised in S.B. Civil Misc. Appeal Nos. 3367/17, 3371/17 and 3372/17 by learned counsel for the claimants is
being decided.
The claimants have raised a preliminary objection that the Insurance Company has filed appeal against the impugned award dated 22.06.2017 passed
by the Motor Accident Claims Tribunal, Jodhpur in case No.13/2015 and also challenged the quantum of compensation award by the Tribunal in
favour of the claimants but the appellant Insurance Company has not obtained permission to file appeal under the provisions of Section 170 of the
Motor Vehicle Act and without permission being granted, the appeal filed by the Insurance Company is not maintainable.
Learned counsel for the respondent-claimants relied upon the following judgments which are as under:
(1) British India General Insurance Co.Ltd. Bs. Captain Itbar Singh and others reported in 1958-65 ACJ 1 (SC);
(2) National Insurance Co. Ltd. Vs. Nicolletta Rohtagi and others reported in (2002) ACJ 1950 (SC);
(3) Josphine James Vs. United India Insurance Co. Ltd. & Anr. reported in MACD (2013) (SC) 309;
(4) ICICI Lombard Gen. Ins. Co. Ltd. Vs. Raj Kumar and Ors. reported in 2015 (1) WLN 38 (Raj.);
(5) United India Insurance Co. Ltd. Vs. Veerendra Sen & Ors. reported in MACD 2015(3) (All.) 1431;
(6) New India Assurance Company Vs. Indu Bala & Ors. reported in II (2017) ACC 817 (HP P)er contra, learned counsel for the appellant-
Insurance Company submitted that the claimants impleaded the Insurance Company as respondent No.3 in the claim petition, which participated in the
trial and hence it has a right to file an appeal against the impugned award passed by the Tribunal without obtaining permission as contemplated in the
Section 170 of the Motor Vehicle Act. In the said claim petition, the claim was awarded against the insured as well as insurance company. He further
submitted that the position would have been different, if the claim petition was filed only against the Driver and the owner of the vehicle and thereafter
the Tribunal might have issued a statutory notice to the appellant-Insurance Company, then, in that case, the permission under Section 170 of the
Motor Vehicle Act was required to be obtained before filing the appeal against the impugned award. But in the case in hand, no such statutory notice
was given by the learned Tribunal instead of the claimants himself impleaded the appellant-Insurance Company as party respondent.
In support of his arguments, learned counsel for the appellant relied upon the judgments of Hon'ble the Apex Court rendered in the case of United
India Insurance Company Limited Vs. Shila Datta and Others reported in (2011) 10 SCC 50 9and Central Board of Dawoodi Bohra Community and
Another Vs. State of Maharashtra and Another reported in (2005) 2 SCC 673.
Heard and perused the judgments relied upon by the learned counsel for the parties.
Section 170 of the Motor Vehicle Act reads as under:-
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.
The question came for consideration before the Apex Court is as to whether the insurance company can file an appeal against the award without
obtaining permission from the Tribunal under the provisions of Section 170 of the Motor Vehicle Act. The Apex Court in the case of National
Insurance Co. Ltd. Vs. Nicolletta Rohtagi and others reported in 2002 ACJ 1950, held in para 26 and 27 as under:
An insurer if aggrieved against an award, may file an appeal only on those grounds and no other. However, by virtue of Section 170 of the 1988
Act, where in course of any enquiry the Claims Tribunal is satisfied that (a) there is a collusion between the person making a claim and the person
against whom the claim has been made or (b) the person against whom the claim has been made has failed to contest the claim, the tribunal may, for
reason to be recorded in writing, implead the insurer and in that case it is permissible for the insurer to contest the claim also on the grounds which are
available to the insured or to the person against whom the claim has been made. Thus, unless an order is passed by the tribunal permitting the insurer
to avail the grounds available to an insured or any other person against whom a claim has been made on being satisfied of the two conditions specified
in Section 170 of the Act, it is not permissible to the insurer to contest the claim on the grounds which are available to the insured or to a person
against whom a claim has been made. Thus where conditions precedent embodied in Section 170 is satisfied and award is adverse to the interest of
the insurer, the insurer has a right to file an appeal challenging the quantum of compensation or negligence or contributory negligence of the offending
vehicle even if the insured has not filed any appeal against the quantum of compensation. Sections 149, 170 and 173 are part of one Scheme and if we
give any different interpretation to Section 172 of the 1988 Act, the same would go contrary to the scheme and object of the Act.
This matter may be examined from another angle. The right of appeal is not an inherent right or common law right, but it is a statutory right. If the
law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged on the premises that the insured or the
persons against whom a claim has been made has not filed any appeal. Section 149(2) of 1988 Act limits the insurer's appeal on those enumerated
grounds and the appeal being a product of the statute, it is not open to an insurer to take any other plea other than those provided in Section 149(2) of
1988 Act. The view taken in United India Insurance Co. Ltd. v. Bhushan Sachdeva and Ors. (supra) that a right to contest would also include the
right to file an appeal is contrary to well established law that creation of a right to appeal is an act which requires legislative authority and no court or
tribunal can confer such right, it being one of limitation or extension of jurisdiction. Further, the view taken in United India Insurance (supra) that since
the insurance companies are nationalised and are dealing with public money/fund and to deny them the right of appeal when there is a collusion
between the claimants and the insured would mean draining out or abuse of public fund is contrary to the object and intention of the Parliament behind
enacting Chapter XI of 1988 Act. The main object of enacting Chapter XI of 1988 Act was to protect the interest of the victims of motor vehicle
accidents and it is for that reason the insurance of all motor vehicles has been made statutorily compulsory. Compulsory insurance of motor vehicle
was not to promote the business interest of insurer engaged in the business of insurance. Provisions embodied either in 1939 or 1988 Act have been
purposely enacted to protect the interest of travelling public or those using road from the risk attendant upon the user of motor vehicles on the roads. If
law would have provided for compensation to dependants of victims of motor vehicle accident, that would not have been sufficient unless there is a
guarantee that compensation awarded to an injured or dependant of the victims of motor accident shall be recoverable from person held liable for the
consequences of the accident. In Skandia Insurance Co. Ltd v. Kokilaben Chandravadan and Ors. - : (1987)2SCC645 , it was observed thus:
In other words, the legislature has insisted and make 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 dependants 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 light of the aforesaid perspective.
Relying upon the judgment of the Apex Court passed in the case of Nicolletta Rohtagi (supra), this Court also has taken the same view in the case of
National Insurance Company Limited, Calcutta Vs. Manni Bai (Smt.) & Ors. reported in 2004 RAR 193 (Raj.) and held that the insurance company
can neither challenge the point of negligency, nor the quantum of compensation unless the permission is sought from the tribunal.
This view of the Apex Court was followed in various other cases holding that the appeal filed by the insurance company is not maintainable unless
permission under Section 170 of the Motor Vehicle Act is taken.
On the contrary, the learned counsel for the appellant-
Insurance Company cited a three Judge Bench judgment of the Apex Court in the case of Shila Datta (supra), dealt with the similar controversy. In
Shila Datta's case, five points were raised before the Apex Court by the appellant-insurance company, which are as under:-
there is a difference between an insurer as a noticee under Section 149(2), MV Act, 1988 and an insurer as a party-respondent; in the latter case, it
can contest the claim on all grounds, and in the former case it is entitled to be made a party to deny the liability on the grounds mentioned in Section
149(2);
when the owner of the vehicle (the insured) and the insurer are aggrieved by the award of the Tribunal, and jointly file an appeal challenging the
quantum, the mere presence of the insurer as a co- appellant will not render the appeal, as not maintainable;
the restrictions imposed upon the insurers to defend the action by the claimant or file an appeal against the judgment and award of the Tribunal will
apply, only if the insurer wants to file an appeal to avoid liability and not when it admits its liability to pay the amount awarded, but only seeks proper
determination of the quantum of compensation to be paid;
if the insured (owner of the vehicle) fails to challenge an award even when it is erroneous or arbitrary or fanciful, it can be considered to have
failed to contest the same and consequently under Section 170, the High Court or the Tribunal may permit the insurer to file an appeal and contest the
award on merits; and
in case where the insurer is authorised by the policy to defend any claim in the name of the insured, and the insurer does so, it cannot be restricted
to the grounds mentioned in Section 149(2) of the Act, and all defences open to the insured will be available to it and can be urged by it.' The Apex
Court after considering the judgment passed in Nicolletta Rohtagi's case and other judgments of the Apex Court, decided point No.1 and 2 in favour of
the insurer and with regard to the point No.3 to 5 the matter was referred to a Larger Bench of the Apex Court. It was observed that the issue No.1
and 2 raised before the Court did not arise for consideration in Nicolletta Rohtagi's case nor were considered therein.
In Shila Datta' case it was held that:
Section 170 of the Act does not contemplate an insurer making an application for impleadment. Nor does it contemplate the insurer, if he is
already impleaded as a party Respondent by the claimants, making any application seeking permission to contest the matter on merits. Section 170
proceeds on the assumption that a claim petition is filed by the claimants, or is registered suo moto by the tribunal, with only the owner and driver of
the vehicle as the Respondents. It also proceeds on the basis that in such a proceeding, a statutory notice would have been issued by the tribunal to the
insurer so that the insurer may know about its future liability in the claim petition and also resist the claim, on any of the grounds mentioned in Section
149(2).
Section 170 of the Act also assumes that the tribunal will hold an inquiry into the claim, where only the claimants and the owner and driver will be
the parties. Section 170 provides that if during the course of such inquiry, the tribunal finds and satisfies itself that there is any collusion between the
claimant and the owner/driver or where the owner/driver has failed to contest the claim, the tribunal may suo moto, for reasons to be recorded in
writing, direct that the insurer who may be liable in respect of the claim, who was till then only a notice, shall be treated as a party to the proceedings.
The insurer so impleaded, without prejudice to the provisions of Section 149(2), will have the right to contest the claim on all or any of the grounds that
are available to the driver/owner.
Therefore, where the insurer is a party- respondent, either on account of being impleaded as a party by the tribunal under Section 170 or being
impleaded as a party-respondent by the claimants in the claim petition voluntarily, it will be entitled to contest the matter by raising all grounds, without
being restricted to the grounds available under Section 149(2) of the Act. The claim petition is maintainable against the owner and driver without
impleading the insurer as a party.
Both the judgments in the cases of Nicolletta Rohtagi and Shila Datta were rendered by the three Judges Bench of the Apex Court and point Nos.1
and 2 raised before the Apex Court decided in the case of Shila Dutta were not considered in Nicolletta Rohtagi case and also in the case of Josphine
James case, constituting of two Judges Bench, so controversy decided by the Apex Court in Shila Dutta's case still holds the field.
The upshot of the law laid down by the Apex Court in Shila Datta's case is that under the scheme of the Act, the claimant is not required to implead
the insurance company as party to the claim petition and only a statutory notice under Section 149 of the Act is required so that the insurance
company can be made liable to pay compensation awarded by the tribunal and also resist the claim on any one of the ground mentioned in sub Section
(a) or (b) of sub-section (2) of Section 149 but when an insurer is impleaded as party respondent to the claim petition, its rights are significantly
different. If the insurer is only a noticee, it can raise only those grounds as are permissible in law under Section of the Act but if it is a party-
respondent, it can raise not only those grounds which are available under Section 149 (2) of the Act but also all the other grounds that are available to
a person against whom a claim is made. It, therefore, follows that if a claimant impleads the insurer as a party-respondent, for whatever reasons, then
as such respondent, the insurer will be entitled to urge all contentions and grounds which may be available to it.
Herein this case, the insurance company was impleaded as party-respondent before the learned tribunal who had given opportunity to contest the
claim petition along with other respondent so in the light of point No.1 decided in Shila Datta's case, the insurance company has a right to file an
appeal against the award and no permission under the provision of Section 170 of the Motor Vehicle Act is required to be obtained. Hence, the
objection raised by the claimants-respondents is not sustainable and is hereby rejected.
List the matter along with connected matter on 04.12.2019 for final disposal at admission stage.