Holding

An insurer cannot maintain a joint appeal with the owner or driver if it has no defence under Section 149(2); such an appeal is not maintainable.

Summary

The widow and minor children of George, who died in a motor vehicle accident, were awarded Rs.3,78,000 by the Motor Accident Claims Tribunal. The insurer, Oriental Insurance Co., and the bus owner, N.K. Raju, filed a joint appeal before the Kerala High Court under Section 173 of the Motor Vehicles Act, seeking to reduce the award, which the High Court did to Rs.2,27,320. The Supreme Court examined whether the insurer could join the owner in the appeal when it had no defence available under Section 149(2) of the Act. It held that the insurer's duty is to satisfy the award and it may only defend on the limited grounds listed in Section 149(2); absent such grounds, the insurer is not an aggrieved party and cannot appeal. Consequently, a joint appeal by the insurer and owner is incompetent unless the insurer’s defence is raised and pressed before the Tribunal. The Court set aside the High Court judgment, restored the original award, and awarded costs to the claimants.

Issues considered

Whether an insurer can maintain a joint appeal with the vehicle owner or driver when it has no defence under Section 149(2) of the Motor Vehicles Act, 1988.
Whether the High Court was justified in reducing the compensation award despite the insurer lacking a statutory ground to appeal.

Legislation cited

Motor Vehicles Act, 1988s. 146, s. 147, s. 149, s. 173

Subjects

Motor Vehicles ActSection 149Section 173insurer appealjoint appealstatutory barcompensation awardthird party risk

Judgment

A CHINNAMA GEORGE AND ORS.
v.
•
N.K. RAJU AND ANR.

APRIL 6, 2000

B [D.P. WADHWAAND D.P. MOHAPATRA, JJ.]

Motor Vehicles Act, 1988-Sections 147, 149(2), 173-Appeal under-
Statutory bar against insurer in a proceeding of claim of compensation-
Defen_ce under section 149(2) not available to the insurer-Joint appeal-
c Whether pennissible-Held, Insurer cannot maintain a joint appeal along
with the owner or the driver, if defence on any ground under Section 149 is
not available to it.

Compensation was granted by the Motor Accidents Claims Tribu-
nal. The insurer Company, alongwith the insured, filed joint appeal against
D the same, before the High Court. High Court reduced the amount of
compensation. Appellants, the claimants of the compensation preferred an
appeal to this Court.

Allowing the appeal, this Court
E
HELD: 1.1. Under Section 149 of the Motor Vehicles Act, it is the
duty of the insurer to satisfy the award against the person insured in ..i
respect of third party risks. It is not that liability of the insurer in the
present case is being disp~ted. Insurer can defend the proceedings before
the Claims Tribunal on certain limited grounds. [1052-H; 1053-A]
F
1.2. None of the grounds as given in sub-section (2) of Section 149
exist for the insurer to defend the claims petition. That being so, no right
existed in the insurer to file appeal against the award of the Claims Tribu-
nal. The validity of the appeal by the insurer cannot be approved, merely
by associating the insured. Provision of law cannot be undermined in this
G
way. Court has to give effect to the real purpose to the provision of law
relating to the award of compensation in respect of the accident arising
out of the use of the motor vehicles and cannot permit the insurer to give
him right to defend or appeal on grounds not permitted by law by a
hackdoor method. Any other interpretation will produce unjust results
H and open gates for the insurer to challenge any award. Purposive ap-
1050 .
CHJNNAMA GEORGE v. N.K. RAJU 1051
~ proach has to be adopted, which would not defeat the broad purpose of A
the Act. Court has to give effect to true object of the Act by adopting
purposive approach. [1054-F-G; 1055-B-C]

1.3. H none of the conditions as contained Jn sub-section (2) of
Section 149 exist for the insurer to avoid the policy of the imuranee, he is
legally bound to satisfy the award. He cannot be a person aggrieved by the B
award. In that case insurer will be barred from filing any appeal against
the award of the Claims Tribunal. [1055-F]

1.4. Insurer cannot mAintain a joint appeal along with the owner or
the driver if defence on any grounds undet Section 149(2) is not available
to it. In that situation joint appeal will be incompetent. It is not enough if
c
the insurer is struck out from the array of the appellants. The appellate
court must also be satisfied that a defence which is permitted to be taken
by the insurer under the Act was taken in the pleadings and was pressed
before the Tribunal. On the appellate Court being so satisfied the appeal
may be entertained of the correctness or othen~ise of the judgment of the D
Tribunal on the question arising from/relating to such defence taken by
the insurer. H the appellate Court is no satisfied that any such question
was raised by the insurer in the pleadings and/or was pressed before the
Tribunal, the appeal filed by the insurer has to be dismissed as not main-
tainable. The Court should take care to ascertain this position on proper
E
consideration so that the statutory bar against the insurer in a proceeding
for compensation is not rendered irrelevant by the subterfuge of the insur-
ance company joining the insured as a co-appellant in the appeal filed by
it. This position is clear on a harmonious reading of the statutory provi-
sions in Sections 147, 149 and 173 of the Act. Any other interpretation will
defeat the provision of sub-section (2) of Section 149 of the Act and throw F
the legal representatives of the deceased or the injured in the accident to
unnecessary prolonged litigation at the instance of the insurer. (1056-C-Fl

Narendra Kumar & Anr. v. Yarenissa & Anr., (1998) 9 SCC 202, relied
on.
G
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2474 of 2000.

From the Judgment and Order dated 6.1.98 of the Kerala High Court in
M.F.A. No. 455 of 1991.

Romy Chacko and Ms. V. Mohana for the Appellants. H
1052 SUPREME COURT REPORTS [2000] 2 S.C.R.
A Joy Basu and B.K. Satija for the Respondents.

The Judgment of the Court was delivered by

D.P. WADHWA, J. Leave granted.

Appellants are widow and minor children of George who died ·in a
B
motor vehicle accident which occurred on May 28, 1989. George was riding
a scooter. It was hit by a bus driven by Mohanan, the third respondent in a
rash and negligent manner. Bus was owned by N.K. Raju, the first Respondent.
The insurer was the Oriental Insurance Co. Ltd., the second respondent..
Appellants are aggrieved by the judgment dated January 6, 1998 of the
c Division bench of the High Court of Kerala which reduced the amount of
compensation arising out of the accident from Rs.3,78,000 awarded by the
Motor Accident Claims Tribunal (for short, the 'Claims Tribunal') to
Rs.2,27 ,320.

George, the deceased was 36 years of age at the time of the accident.
D His income was Rs.2,000 per month. He was an actor-cum- secretary of a
leading drama troupe which was staging drama in India and abroad. After
deducting his personal expenses,· his income was determined at Rs.1600 per
month by the Claims Tribunal. Applying multiplier of 20, compensation
amount was fixed atRs.3,78,000 by the Claims Tribunal.The Claims Tribunal
E gave an award dated 10.1.1991 for Rs.3,78,000 with interest @ 12% per
annum from September 1, 1989 with cost. The owner of the Bus, N.K. Raju,
and the Insurer filed appeal against the order of the Claims Tribunal under
Section 173 of the Motor Vehicles Act, 1988 (for short, the 'Act'). Section 173
entitles any person aggrieved by an award of the Claims Tribunal to prefer an
appeal to the High Court.
F
In view of the decision of the Claims Tribunal, it could not be said that
N.K. Raju, the owner could be an aggrieved person for him to file any appeal
against the award. We have gone through the impugned judgment of the High
Court. There is no mention in whole body of th~ judgment as to how N.K. Raju
G felt aggrieved and what was his argument raised against the award of Claims
Tribunal. There is no challenge to the finding that the bus was being driven
by the third respondent in rash and negligent manner.

Under Section 149 of the Act, it is the duty of the insurer to satisfy the
award against the person insured in respect of third party risks. It is not that
H liability of the insurer in the present case is being disputed. Insurer can defend
CHINNAMA GEORGE v. N.K. RAJU [D.P. WADHWA, J.] 1053 ·

the proceedings before the Claims Tribunal on certain limited grounds. Sub- A
sections (1), (2) and (7) of Section 149 of the Act are relevant, which are as
under:

"149. Duty of insurers to saJisfy judgr:nents and awards against
persons insured in respect ofthird pany risks.- (1) If, after a certificate
of insurance has been issued under sub-section (3) of section 147 in B
favour of the person by whom a policy has been effected, judgment
or award in respect of any such liability as is required to be covered
by a policy under clause (b) of sub-section (1) of section 147 (being
a liability covered by the terms of the policy) or under the provisions
of section 163A is obtained against any person insured by the policy, c
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 this section, pay to the person entitled to
the benefit of the decree any sum not exceeding the sum assured
payable thereunder, as if he were the judgment debtor, in respect of
the liability, together with any amount payable in respect of costs and D
any sum payable in respect of interest on that sum by virtue of any
enactment relating to interest on judgment.

(2) No sum shall be payable by an insurer under sub-section (1) in
respect of any judgment or award unless, before the commencement
E
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 F
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- G
.
(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 H
1054 SUPREME COURT REPORTS [2000] 2 S.C.R.
A (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
B
(ii) a condition excluding driving by a named person or
persons or by any person who is not duly licenced, or by
any person who has been disqualified for holding or
obtaining a driving licence during the period of disquali-
fication; or
c
(iii) a condition excluding liability for injury caused or contrib-
uted 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
D non-disclosure of a material fact or by a representation of fact
which was false in some material particular.

(3) to (6) .......... .
.,,
(7) No insurer to whom the notice referred to in sub- section (2) or
E sub-section (3) has been given shall be entitled to avoid his liability
to any person entitled to the benefit of any such judgment or award
as is referred to in sub-section (1) or in such judgment as is refen-ed
to in sub-section (3) othe1wise than in the manner provided for in sub-
section (2) or in the corresponding law of the reciprocating country,
F as the case may be."

Admittedly, none of the grounds as given in sub-section (2) of Section
149 exist for the insurer to defend the claims petition. That being so, no right
existed in tlle insurer to file appeal against the award of the Claims Tribunal.
However, by adding N.K. Raju, tlle owner as co-appellant, an appeal was filed
G in the High Court which led to the impugned judgment. None of the grounds
on which insurer could defend the claims petition was ilie s~bject matter of
the appeal as far as the insurer is concerned. We have already noticed above
iliat we have not been able to figure out from ilie impugned judgment as to
how the owner felt aggrieved by ilie award of ilie Claims Tribunal. The --..
H impugned judgment does not reflect any grievance of tlle owner or even that
CHINNAMA GEORGE v. N.K. RAJU [D.P. WADHWA, J.] 1055

of the driver of the offending bus against the award of the Claims Tribunal. A
The insurer by associating the owner or the driver in the appeal when the
owner or the driver is not an aggrieved person cannot be allowed to mock at
the law which prohibit the insurer from filing any appeal except on the limited
grounds on which it could defend the claims petition. We cannot put our stamp
of approval as to the validity of the appeal by the insurer merely by associating
B
the insured. Provision of law cannot be undermined in this way. We have to
give effect to the real purpose to the provision of law relating to the award
of compensation in respect of the accident arising out of the use of the motor
vehicles and cannot permit the insurer to give him right to defend or appeal
on grounds not permitted by law by a backdoor method. Any other interpre-
tation will produce unjust results and open gates for the insurer to challenge c
any award. We have to adopt purposive approach which would not defeat the
broad purpose of the Act. Court has to give effect to true object of the Act
by adopting purposive approach.

Sections 146, 147, 149 and 173 are in the scheme of the Act and when
read together mean : (1) it is legally obligatory to insure the motor vehicle
D
against third party risk. Driving an uninsured vehicle is an offence punishable
with an imprisonment extending up to three months or the fine which may
extend to Rs.1,000 or both; (2) Policy of insurance must comply with the
requirements as contained in Section 147 of the Act; (3) It is obligatory for
the insurer to satisfy the judgments and awards against the person insured in E
respect of third party risks. These are sub-sections (1) and (7) of Section 149.
Grounds on which insurer can avoid his liability are given in sub-section (2)
of Section 149.

If none of the conditions as contained in sub-section (2) of Section 149
exist for the insurer to avoid the policy of insurance he is legally bound to F
satisfy the award. He cannot be a person aggrieved by the award. In that case
insurer will be barred from filing any appeal against the award of the Claims
Tribunal.

The question that arises for consideration is : can the insurer join the
G
owner or the driver in filing the appeal against the award of the Claims
Tribunal as driver or owner would be the person aggrieved as held by this
Court inNarendra Kumar & Am: v. Yarenissa & Ors., [1998] 9 SCC 202? This
Court has held that appeal would be maintainable by the driver or the owner
and not by the insurer and, thus, a joint appeal when filed could be
maintainable by the diiver or the owner. This is how the Court held: - H
(
1056 SUPREME COURT REPORTS (2000] 2 S.C.R.
A "For the reasons stated above, we are of the opinion that even in the
case of a joint appeal by insurer and owner of offending vehicle if
an award has been made against the tortfeasors as well as the insurer
even though an appeal filed by the insurer is not competent, it may
not be dismissed as such. The tortfeasor can proceed with the appeal
after the cause-title is suitably amended by deleting the name of the
B
insurer."

There is no dispute with the proposition so laid by this Court. But the
insurer cannot maintain a joint appeal along with the owner or the driver if
defence on any ground under Section 149(2) is not available to it. In that
c situation joint appeal will be incompetent. It is not enough if the insurer is
struck out from the array of the appellants. The appellate court must'\lso be
satisfied that a defence which is permitted to be taken by the insurer under
the Aft ~as taken in the pleadings and was pressed before the Tribunal. On
the appellate court being so satisfied the appeal may be entertained for
examination of the correctness or otherwise of the judgment of the Tribunal
D
on the question arising from/relating to such. defence taken by the insurer.
If the appellate court is not satisfied that any such question was raised by
the insurer iti the pleadings and/or was pressed before the Tribunal, the
appeal filed by the insurer has to be sJismissed as not maintainable. The court
should take care to ascertain this position~bn proper consideration so that the
E .statutory bar against the insurer in a proceeding of claim of compensation
is not rendered irrelevant by the subterfuge of the insurance company joining
the insured as a co7appellant in the appeal filed by it. This position is clear
on a harmonious reading of the statutory provisions in Sections 147, 149 and
173 of the Act. Any other interpretation will defeat the provision of sub-
F section (2) of Section 149 of the Act and throw the legal representatives of
the deceased or the injured in the accident to unnecessary prolonged
litigation at the instance of the insurer.

In the present case we do not find any argument addressed on behalf
of the owner of the offending vehicle and the only argument, which the High
G Court noticed, was that of the counsel for the insurer. That argument was on
the quantum of compensation granted to the appellants. That groUiJ.d is
certainly not available to the insurer for the purpose of filing the appeal. We,
therefore, hold that the present appeal by the insurer by joining the owner was
not competent, as there was no ground available to the insurer to defend the
H claim petition.
CHINNAMA GEORGE v. N.K. RAJU [D.P. WADHWA, J.] 1057
We, therefore, set aside the impugned judgment of the High Court and A
restore that of the Claims Tribunal. Appellants shall be entitled to cost which
we quantify at Rs.10,000.

Accordingly, the appeal is allowed.

K.K.T. Appeal allowed. B