Holding

The claimant must be heard; the High Court erred in not issuing notice, and the appeal is allowed to the extent of setting aside that order.

Summary

Mam Chand filed a claim petition under Section 166 of the Motor Vehicles Act, 1988 for injuries caused by a motorcycle driven by Mohinder Pal. The Motor Accident Claims Tribunal held National Insurance Co. liable to pay Rs.60,000. The insurer appealed, contending that the vehicle was not insured at the time of the accident and therefore it should not bear liability. The Punjab and Haryana High Court dismissed the appeal as to the claimant, holding that the dispute was only between the insurer and the driver and that no notice to the claimant was required. The Supreme Court set aside that order, holding that the claimant’s right to be heard is inseparably linked to the question of liability, and remitted the matter to the High Court for hearing of the claimant. The appeal was allowed in part, with no order as to costs.

Issues considered

Whether the claimant must be given notice and an opportunity to be heard in an appeal challenging the fixation of liability under Section 166 of the Motor Vehicles Act.
Whether an insurer can escape liability when the vehicle was not the subject of insurance at the time of the accident.

Legislation cited

Motor Vehicles Act, 1988s. 166

Subjects

Motor Vehicles ActSection 166insurance liabilityclaim petitionnoticeMotor Accident Claims Tribunalappealfixation of liabilityclaimant hearing

Judgment

NATIONAL INSURANCE CO.LTD. A
v.
MAM CHAND AND ANR.

FEBRUARY I, 2007

[DR. ARIJIT PASA YAT AND S.H. KAPADIA, JJ.] B

Motor Vehicles Act, 1988:

S. 166-Motor accident claim-Appeal-Parties for adjudication of
liability-Claim petition by injured against insurer and owner of vehicle- C
Allowed by Tribunal and insurer held liable to pay claim-amount-Appeal
by insurer challenging fixation of liability and arraying claimant and owner
of vehicle as respondents-High Court holding that claimant need not be
issued notice-Held, since the controversy in th~ matter is linked with
entitlement of claimant to receive the amount from insurer, the claimant is D
required to be heard.

Respondent no. 1 filed a claim petition under s.166 of the Motor Vehicles
Act, 1988 claiming compensation for the injuries said to have been caused to
him by the motor cycle which was being driven by respondent no. 2. The Motor
Accident Claims Tribunal held the appellant-insurer liable to pay the E
compensation. The appellant challenged fixation of the liability on it before
the High Court, which held that even if the vehicle was not ensured at the
relevant time that was a dispute between the appellant and respondent no. 2

. and there was no need to issue notice to the claimant. Aggrieved, the insurer
filed the appeal.
F
\
' Allowing the appeal, the Court

HELD: In the appeal before the High Court the appellant was questioning
the fixation of liability so far as it is concerned. A specific stand has been
taken that since vehicle was not the subject matter of insurance, the appellant
cannot be saddled with any liability. This question is intimately linked with G
the entitlement of respondent no. 1 to receive the amount from the appellant.
~, In that sense it cannot be said that respondent No. 1 was not required to be
heard and the appeal was to be dismissed so far as he is concerned. Since
respondent No. 1 is represented in this Court, without further notice let him

- 111 H
112 SUPREME COURT REPORTS [2007] 2 S.C.R.

A appear before the High Court. [Paras 7-81 [113-D-F[
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 412 of2007.

From the interim Judgment and Order dated 25.10.2004 of the High Court
of Punjab and Haryana at Chandigarh in F.A.O No. 1556/2004.
B Ravinder Singh, Sudhir Kumar Gupta, Anurag Pandey Mihir Kumar and
Saumya Sharma for the Appellant.

Dr. Kailash Chand for the Respondents.

The Judgment of the Court was delivered by
c
DR. ARIJIT PASAYAT, J. I. Leave granted.

2. Challenge in this appeal is to the order passed by a Division Bench
of the Punjab and Haryana High Court at Chandigarh. By the impugned order
the High Court dismissed the appeal, so far as related to the respondent No.
D I-Mam Chand and issued notice only to the driver cum owner i.e. respondent
No.2.

3. Background facts in a nutshell are as follows:

Respondent No. I (hereinafter referred to as the 'claimant') filed a claim
E petition in terms of Section 166 of t~e Motor Vehicles Act, 1988 (in short the
'Act'} claiming compensation for alleged injuries caused to him by the
offending vehicle on 31.10.2001. The allegation was that the respondent No.
2- Mohinder Pal i.e. the driver and owner of the offending vehicle, a motor
cycle No. HROIC-1531 was driving the same in rash and negligent manner.
The same dashed against the scooter which the claimant was riding causing
..
F multiple injuries. Adjudicating the claim petition the Motor Accident Claims
Tribunal, Jagadhari (hereinafter referred to as the 'Tribunal') held that claimant
respondent No. 1 was entitled to compensation of Rs.60,000/- with interest at
the rate of 9°/o from the date of filing of the claim petition till realization and
cost of the petition. The appellant was held to be liable to pay the
G compensation amount. Tribunal rejected the plea of the appellant that the
offending vehicle was not the subject matter of insurance on the date of
accident. The fixation of liability on the appellant was challenged by it by
filing the appeal before the High Court. By the impugned order, the High
Court held that even if a vehicle was not insured at the relevant time that was
a dispute between the appellant and the respondent no. 2 and there was no
H need for issuing notice to respondent No. I. ...
NATIONAL INSURANCE CO. LTD. v. MAM CHAND [PASAYAT,J.] 113
4. In support of the appeal, learned counsel for the appellant submitted A
that challenge was to the fixation of liability so far as the appellant is concerned.
In the absence of the claimant, dispute cannot be effectively adjudicated if
the appeal is dismissed in the manner done. The result would be that the
appellant would be required to pay to the respondent No. I even though it
has no liability.
B
5. In response, learned counsel for the respondent No. I submitted that
the appellant in any event has to pay the claimant and if really the vehicle
-/· was not the subject matter of insurance, it would be open to the appellant
to recover the amount from the respondent no. 2 i.e. the driver cum owner
of the offending vehicle. But it cannot avoid its liability to pay so far as the C
respondent no. I is concerned.

6. We find that the High Court has held that the only question related
to the dispute between the appellant and the driver cum owner of the offending
vehicle i.e. respondent No.2 and the respondent no. I was not concerned with
the said dispute. · D
7. In the appeal before the High Court the appellant was questioning
the fixation of liability so far as it is concerned. A specific stand has been
taken that since vehicle was not the subject matter of insurance, it cannot be
saddled with any liability. This question is intimately linked with the
entitlement of the respondent no. I to receive the amount from the appellant. E
In that sense it cannot be said that the respondent No. I was not required
to be heard and the appeal was to be dismissed so far as he is concerned.

8. Therefore, we set aside the order of the High Court. Since the
respondent No. I is represented in this Court, without further notice let him
·~ appear before the High Court. The matter shall be taken in the High Court F
after a period of four weeks from today for disposal in accordance with law.
The appeal has been admitted qua respondent No.2. Now respondent No. I
is to be also heard. It is to be further noted that the matter was directed to
be placed before the Lok Adalat after completion of service. It shall be open
to the parties to bring to the notice of the Court as to whether they want the G
matter to be settled by the Lok Adalat or not. About that aspect we expressed
no opinion. Appeal is allowed to the aforesaid extent but without any orders
as to costs.

R.P. Appeal allowed.
H