Supreme Court of India
UNITED INDIA INSURANCE CO. LTD.versusSHILA DATTA & ORS.
- Citation
- 2011 INSC 759
- Decided
- 13 October 2011
- Disposal
- Reference answered
- Bench
- R V RAVEENDRAN
Holding
An insurer, when impleaded as a party‑respondent, may contest a motor accident claim on any ground and may jointly appeal with the vehicle owner, but the rights of an insurer who is merely a noticee under s.149(2) require reconsideration by a larger bench.
Summary
The Supreme Court examined whether a motor insurer can challenge a Motor Accident Claims Tribunal award on the quantum of compensation and whether it may join the vehicle owner in an appeal. The Court held that when an insurer is impleaded as a party‑respondent, it may contest the claim on any ground and may jointly appeal with the owner without losing maintainability. However, the Court noted that the position of an insurer who is only a statutory noticee under s.149(2) and not impleaded as a party was not settled and must be reconsidered by a larger bench. Accordingly, the Court answered the first two points in favour of the insurers and directed that the remaining issues be referred for further consideration. The judgment also clarified the statutory nature of claim petitions under the Motor Vehicles Act and the limited grounds available to a noticee insurer under s.149(2).
Issues considered
- Whether an insurer can contest a motor accident claim on merits, particularly the quantum, beyond the grounds specified in s.149(2) of the Motor Vehicles Act, 1988.
- Whether an insurer may prefer an appeal under s.173 of the Motor Vehicles Act against a Tribunal award questioning the quantum of compensation.
- Whether an insurer, when impleaded as a party‑respondent, is entitled to raise all grounds of defence available to a claimant.
- Whether a joint appeal by the vehicle owner (insured) and the insurer is maintainable.
- Whether an insurer who is only a noticee under s.149(2) and not impleaded as a party can contest the quantum of compensation.
Legislation cited
- Motor Vehicles Act, 1988s. 147, s. 149(1), s. 149(2), s. 149(7), s. 158(6), s. 163A, s. 165, s. 166, s. 168, s. 170, s. 173
Subjects
Motor Vehicles ActSection 149Section 170Section 173Insurer as party‑respondentNoticee insurerCompensation quantumJoint appealLarger bench referralMotor Accident Claims Tribunal
Judgment
[2011) 14 (ADDL.) S.C.R. 763
UNITED INDIA INSURANCE CO. LTD. A
V.
SHILA DATTA & ORS.
(Civil Appeal No. 6026-6027 OF 2007)
OCTOBER 13, 2011
B.
[R.V. RAVEENDRAN, H.L. DATTU AND K.S.
RADHAKRISHNAN, JJ.]
Motor Vehicles Act, 1988:
c
Claim petition under - For compensation in regard to a
motor accident - Nature of - Held: An award by the tribunal
cannot be seen as an adversarial adjudication between the
litigating parties to a dispute but a statutory determination of
compensation on the occurrence of an accident, after due 0
enquiry, in accordance with the statute.
ss. 149(2) and 170 - Claim petition - Position in cases
where the claimants implead the insurer as a respondent -
Held: Where the insurer is a party-respondent, either on
account of being impleaded as a party by the tribunal u/s. 170 E
or being impleaded as a party-respondent by the claimants
in the claim petition voluntarily, It would be entitled to contest
the matter by raising all grounds, without being restricted to
the grounds available uls. 149(2) of the Act.
F
ss. 173, 168 and 149 - Joint appeal by the owner of the
vehicle (insured) and insured - Maintainability of - Held: An
appeal which is maintainable when the owner of the vehicle
files it, does not become not maintainable merely on account
of the insurer being a co-appellant with the owner- When the G
insurer becomes a co-appellant, the owner of the vehicle does
· not cease to be a person aggrieved - So long as the owner
is an appellant and he is a. 'person aggrieved' in law, the
question whether he is independently filing the appeal, or
763 H
764 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A whether he is filing it at the instance of the insurer becomes
irrelevant - When a counsel holds vakalatnama for an insurer
and the owner of the vehicle in a joint appeal, the court cannot
say his arguments and submissions are only on behalf of the
insurer and not on behalf of the owner.
B
s. 149(2) - Claim petition - Position in cases where the
insurer is only a noticee uls. 149(2) and has not been
impleaded as a party to the claim proceedings - Held: ft is
accepted that where a notice is issued uls. 149(2), the insurer
as 'noticee' (as contrasted from a 'party') cannot 'deny' its
C liability as an insurer on grounds other than those mentioned
in Section 149(2)(a} and (b) of the Act, but nothing prevents
it as a person liable to pay the compensation, from assisting
the Tribunal in arriving at the Just' compensation - Therefore,
an insurer, without seeking to avoid or exclude its liability
D under the policy, on grounds other than those mentioned in
Section 149(2)(a) and (b), can contest the claim, in regard to
the quantum - All that Section 149(2) said that insurer cannot
raise all kinds of contentions based on the terms of policy to
avoid the contract of indemnity - .But it does not require the
E insurer to concede wrong claims or false claims or not
challenge erroneous determination of compensation - It is
only the insurer, who is required to pay the compensation
amount, is interested in fifing the appeal - It can file an
appeal by itself or it can file an appeal jointly with the owner
F - If it is denied that opportunity, there is a likelihood of huge
compensation being awarded without any correction - Act
nowhere says that the insurer is not a 'person aggrieved' with
reference to the amount of compensation awarded which he
is required to pay - Interests of justice would not be served
G by allowing obvious errors to remain uncorrected - If the owner
of the vehicle(insured) fails to file an appeal when an
erroneous award is made, he fails to contest the same and
consequently, the insurer should be able to fife an appeal, by
applying the principle underlying s. 170 - Interests of justice
H would not be served by allowing obvious errors to remain
UNITED INDIA INSURANCE CO. LTD. v. SHILA 765
DATIA & ORS.
uncorrected - Matter placed before the Chief Justice for A
constituting a larger bench to consider the said issues.
On reference by the two Judge Bench of this Court
the questions which arose for consideri:ttion before the
present three Judge Bench were wheth.er the insurer 8
could contest a motor accident claim on merits, in
particular, in regard to the quantum, in addition to the
grounds mentioned in section 149(2) of the Act for
avoiding liability under the policy of insurance; and
whether an insurer could prefer an appeal under Section C
173 of the Motor Vehicles Act, 1988, against an award of
the Motor Accident Claims Tribunal, questioning the
quantum of compensation awarded?
The insurance companies contended that they were
not barred from questioning the quantum o'f D
compensation either before the Motor Accidents Claims
Tribunal or in appeals arising from the awards of the
Tribunal on the following grounds:
(i) Where an insurer is impleaded by the claimants as E
a party, it can contest the claim on all grounds, as
there were no restrictions or limitations in regard to
contest but where an insurer is only issued a
statutory notice under Section 149(2) of the Act by
the Tribunal requiring it to meet the liability, it is
entitled to be made a party to deny the liability on the
F
grounds mentioned in Section 149(2).
(ii) When the owner of the vehicle (insured) and the
insurer are aggrieved by the award of the Tribunal,
and jointly file an appeal challenging the quantum, G
the mere presence of the insurer as a co-appellant
will not render the appeal, as not maintainable.
(iii) When an insurer is aggrieved by the quantum of
compensation, it is not seeking to avoid or exclude H
766 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R
A its liability, but merely wants determination of the
extent of its liability, 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 would apply, only if it wants to file an appeal
B 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.
(iv) If and when an award is made by the Tribunal
c which is excessive, arbitrary or erroneous, the owner
of the vehicle has to challenge the same by filing an
appeal before the High Court. If the insured (owner
of the vehicle) fails to challenge an award even when
it is erroneous or arbitrary or fanciful, it can be
D considered that the insured has 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.
E (v) The insurer has a right, if it has reserved such a
right in the policy, to defend the action in the name
of the insured. If it opts to step into the shoes of the
insured, it can defend the action in the name of the
insured and all defences open to the insured will be
F available to it and can be urged by it. Its position
contesting a claim under section 149(2) of the Act is
distinct and different, when it is contesting the claim
in the name of or on behalf of the insured owner of
the vehicle. In cases, where it is authorized by the
policy to defend any claim in the name of the insured,
G
and the insurer does so, it can not be restricted to
the grounds mentioned in section 149(2} of the Act,.
as the defence is on behalf of the owner of the
vehicle.
H HELD: 1. The issues as regards the position in cases
UNITED INDIA INSURANCE CO. LTD. v. SHILA 767
DATTA & ORS.
where the claimants implead the insurer as a respondent A
in the claim petition; and maintainability of a joint appeal
by the owner of the vehicle (Insured) ,and Insurer, are
held in favour of the Insurers. The matters covered by the
said issues are placed before the respective benches for
consideration. Further, in view of the decision in B
*Nico/Jetta Rohtagi' s case, the issue where the insurer is
only a notice under Section 149(2) and has not been
impleaded as a party to the claim proceedings, cannot be
decided in favour of Insurers. For the aforesaid reasons,
in so far as the said issues are concerned, *Nico/Jetta c
Rohtagi requires reconsideration by a larger bench. It is
directed that these matters where the insurer alone was
the appellant before the High Court and where the insurer
was only a noticee under Section 149(2) and not an
impleaded respondent in the claim petition, to be placed
0
before the Hon'ble Chief Justice for constituting a larger
bench to consider the issues raised by the insurers. [Para
21, 22] [799-C-H]
Nature of a claim petition under the Motor Vehicles Act,
1988 E
2. A claim petition for compensation in regard to a
motor accident .(filed by the injured or in case of death,
by the dependant family members) before the Motor
Accident Claims Tribunal constituted under Section 165
of the Act is neither a suit nor an adversarial lis in the F
traditional sense. It is a proceedings in terms of and
regulated by the provisions of Chapter XII of the Act
which is a complete Code in itself. There are significant
aspects in regard to the Tribunals and determination of
compensation by Tribunals. An award by the tribunal G
cannot be seen as an adversarial adjudication between
the litigating parties to a dispute, but a statutory
determination of compensation on the occurrence of an
accident, after due enquiry, in accordance with the
statute. [Para 5] [783-C-E; 785-C] H
768 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A The position in cases where the claimants implead the
insurer as a respondent in the claim petition:
3.1. An insurer need not be impleaded as a party to
the claim proceedings and it should only be issued a
statutory notice under Section 149(2) of the Act so that it
8
can be made liable to pay the compensation awarded by
the tribunal and also resist the claim on any one of the
grounds mentioned in clauses (a) and (b) of sub-section
(2) of Section 149. Sub-sections (1 ), (2) and (7) of Section
149 clearly refer to the insurer being merely a noticee and
C not a party. Similarly, Sections 158(6), 166(4), 168(1) and
170 clearly provide for and contemplate insurer being
merely a noticee for the purposes mentioned in the Act
and not being a party-respondent. Section 170
specifically refers to impleading of insurer as a party to
D the claim proceedings. [Para 7] [787 -F-H; 788-A]
3.2. When an insurer is impleaded as a party.
respondent to the claim petition, as contrasted from
merely being a noticee under Section 149(2) of the Act,
E its rights are significantly different. If the insurer is only
a noticee, it can only raise such of those grounds as are
permissible in law under section 149(2). But if he is a
party-respondent, it can raise, not only those grounds
which are available under section 149(2), but also all other
F 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
reason, then as such respondent, the insurer will be
entitled to urge all contentions and grounds which may
G be available to it. [Para 8] [788-B-C]
3.3. If the insurer is already a respondent (having
been impleaded as a party respondent), it need not seek
the permission of the Tribunal under Section 170 of the
Act to raise grounds other than those mentioned in
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA, 769
DATTA & ORS.
Section 149(2) of the Act. The entire scheme and A
structure of Chapters XI and XII is that the claimant files
a claim petition only against the owner and driver and the
tribunal issues notice to the insurer under Section 149(2)
so that it can be made liable to pay the amount awarded
against the insurer and if necessary, deny liability under B
the policy of insurance, on any of the grounds mentioned
in Section 149(2). If an insurer is only a noticee and not a
party-respondent, having regard to the decision in
*Nicolletta Rohtagi, it can defend the claim only on the
· grounds mentioned in Section 149(2) and not any of the c
other grounds relating to merits available to the insured-
respondent. This is the position even where the claim
proceedings are initiated suo moto under Sections 149(7)
and 158(6) of the Act, without any formal application by
the claimants, as the insurer is only a noticee under D
Section 149(2) of the Act. [Para 9] [788-D-H; 789-A]
3.4. 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 E
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 F
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 qf the grounds
mentioned in section 149(2). Section 170 of the Act also G
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 H
770 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A 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 <:>f the claim, who was till then only a
notice, shall be treated as a party to the proceedings. The
B insurer so impleaded, without prejudice to the provisions
of Section 149(2), would have the right to contest the
claim on all or any of the grounds that are available to the
driver/owner. [Para 10) [789-8-F]
3.5. Where the insurer is a party-respondent, either
C 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 would be entitled to contest the matter by
raising all grounds, without being restricted to the
D 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. When a
statutory notice is issued under Section 149(2) by the
tribunal, it is clear that such notice is issued not to
E implead the insurer as a party-respondent but merely to
put it on notice that a claim has been made in regard to
a policy issued by it and that it will have to bear the liability
as and when an award is made in regard to such claim.
Therefore, it cannot, as of right, require that it should be
F impleaded as a party-respondent. But it can however be
made a party-respondent either by the claimants
voluntarily in the claim petition or by the direction of the
Tribunal under Section 170 of the Act. Whatever be the
reason or ground for the insurer being impleaded as a
G party, once it is a party-respondent, it can raise all
contentions that are available to resist the claim. [Para 11]
[789-G-H; 790-A-C]
Maintainability of a joint appeal by the owner of the vehicle
H (insured) and insured:
UNITED INDIA INSURANCE CO. LTD. v. SHILA 771
DATTA & ORS.
4.1. When an award is made by the Tribunal, the A
owner of the vehicle (insured), being a person aggrieved,
can file an appeal challenging his liability on any ground,
or challenge the quantum of compensation. An appeal
which is "maintainable" when the owner of the vehicle
files it, does not become "not maintainable" merely on B
account of the insurer being a co-appellant with the
owner. When the insurer becomes a co-appellant, the
owner of the vehicle does not cease to be a person
aggrieved. [Para 12] [ 790-E-F] .·
4.2. When a joint appeal is filed, to say that insurer is
c
not an aggrieved person and the owner of the vehicle is
also not an aggrieved person, would lead to anomalous
situation and would border on an absurdity. On account
of the insurer being a co-appellant, will not affect the
maintainability of the appeal. So long as the owner is an D
appellant and he is a 'person aggrieved' in law, the
question whether he is independently filing the appeal,
or whether he is filing it at the instance of the insurer
becomes irrelevant. When a counsel holds vakalatnama
for an insurer and the owner of the vehicle in a joint E
appeal, the court cannot say his arguments and
submissions are only on behalf of the insurer and not on
behalf of the owner. There is also no need to examine at
the threshold in a joint appeal, whether the insurer should
be deleted from the array of appellants. [Para 16] [794-G- F
H; 795-A-C]
Chinnama George & Ors. vs. N. K. Raju & Anr. 2000 (4)
SCC 130 - Partly overruled.
Narendra Kumar vs. Yarenissa 1998 (9) SCC 202 - G
referred to.
The position in cases where the insurer is only a noticee
under Section 149(2) and has not been impleaded as a
party to the claim proceedings: H
772 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A 5.1. There is considerable force in the contention that
where a notice is issued under Section 149(2) of the
Motor Vehicles Act, the insurer as 'noticee' (as contrasted
from a 'party') cannot 'deny' its liability as an insurer on
grounds other than those mentioned in Section 149(2)(a)
s and (b) of the Act, but nothing prevents it as a person
liable to pay the compensation, from assisting the
Tribunal in arriving at the 'just' compensation. The
assumption that as a noticee under Section 149(2), the
insurer cannot raise any contention other than those
c mentioned in clauses (a) and (b) of section 149(2) is
correct in so far as denial of liability under the policy is
concerned. This is because sub-section (1) of section 149
of the Act clearly provides that 'notwithstanding that the
insurer may be entitled to avoid or cancel or may have
avoided or cancelled the policy, the insurer shall subject
0
to the provisions of this section, pay to the person entitled
to the benefit.. ....... ". Therefore, an insurer, without
seeking to avoid or exclude its liability under the policy,
on grounds other than those mentioned in Section
149(2)(a) and (b), can contest the claim, in regard to the
E quantum. All that Section 149(2) said that insurer cannot
raise all kinds of contentions based on the terms of policy
to avoid the contract of indemnity. But it does not require
the insurer to concede wrong claims or false claims or
not challenge erroneous determination of compensation.
F [Para 17] [795-E-H; 796-C-F]
National Insurance Co. Ltd. v. Jugal Kishore 1988 (1)
sec 626 - referred to
G 5.2. It is only the insurer, who is required to pay the
compensation amount, is interested in filing the appeal.
It can file an appeal by itself or it can file an appeal jointly
with the owner. If it is denied that opportunity, there is a
likelihood of huge compensation being awarded without
H any correction. The fact that the compensation is not
likely to be interfered, may also encourage the Motor
UNITED INDIA INSURANCE CO. LTD. v. SHILA 773
DATIA & ORS.
Accident Claims Tribunal to make awards which may not A
be fanciful reasonable. This Court fails to see as to why
the insurance company cannot chall.enge the judgment
of the tribunal, if it is erroneous. The Act nowhere says
thatthe insurer is not a 'person aggrieved' with reference
to the amount of compensation awarded which he is B
required to pay. Interests of justice would not be served
by allowing obvious errors to remain uncorrected. [Para
18] [797-A-D]
United India Insurance Co. Ltd. vs. Bhushan Sachdeva C
2002 (2) SCC 265: 2002 (1) SCR 352; British India General
Insurance Co.Ltd. v. Captain ltbar Singh & Ors. AIR 1959 SC
1331: 1960 SCR 426 - referred to
5.3 *Nicolletta Rohtagi did not consider the issue with
reference to the situation where the insurer is enabled by D
a specific term in the ins1:1rance policy to take over and
conduct the defence of the case in the name of the
insured, presumably as the insurance policy did not have
such an enabling provision. In fact if such a contention
had been raised, the court would have noticed that the E
issue was covered by a binding three-Judge Bench
judgment in British India General Insurance. [Para 20]
[799-A-B]
*National Insurance Co. Ltd. vs i\Jicolletta Rohtagi 2002
F
(7) SCC 456: 2002 (2) Suppl. SGR 456; Shanka1rayya vs.
United Insurance Co. Ltd. 1398 (3) SCC 140; Ritu Devi vs.
New Delhi Insurance Co. Ltd. 2000 (5) SCC 113: 2000 (3)
SCR 741 - referred to
Case Law Reference: G
2002 (2) Suppl. SCR 456 Referred to Para 1
1998 (3) sec 140 Referred to Para 6
1998 (9) sec 202 Referred to Para 6
H
774 SUPREME COURT REPORTS [2011] 14 (ADDL.) S C.R.
A 2000 (4) sec 130 Referred to Para 5
2000 (3) SCR 741 Referred to Para 5
1988 (1) sec 626 Referred to Para 17
2002 (1) SCR 352 Referred to Para 18
B
1960 SCR 426 Referred to Para 18
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
6026-6027 of 2007.
c From the Judgment & Order dated 19.9.2006 of the High
Court at Calcutta in F.M.A. 363 of 2002.
WITH
SLP (C) Nos. 10164 of 2006, 14962 of 2007, 10128, 10130.
D 10131, 10132, 10133, 10211, 10217, 10269, 10315, 10390
10511, 10797, 12121, 13966, 12747, 18540 of 2006, 9302
9305 of 2005, 7905 of 2007, 8789, 16460 of 2006, C.A. Nos.
798-800 of 2006, SLP (C) No. 3556, 5073, 1891, 1889, 7108,
16066, 4917, 13916 of 2008, 6359 of 2007, 5531-5532 of
E 2009, 19472 of 2008, 29055 of 2009, 26470 of 2008, 9983
of2009, 14134of2008, 14152, 14131, 14148, 14129, 14144,
14121, 14125 of 2008, 20966 of 2006, 121 of 2009, 16018
of 2008, 6380 of 2007, 17258 of 2006, 6717 of 2004, 19275-
19285 of 2008, 25491, 2022, 5383 of 2008, 22535 of 2009,
F 21888-21889 of 2008, 19701 of 2009, 2854-2855 of 2009,
17965 of 2009, 5364 of 2006.
Atul Nanda, Rameeza, Sugandha, (for Law Associates &
Co.), Subhro Sanyal, Kiran Suri, S.J. Amith, Aparna Mattoo,
A.K. De, Udit Kumar, Rajesh Kumar, Debasis Misra, Shivam
G Sharma, Akanksha Sharma, Rishi Kesh, Dinesh Verma, Rajat
Sharma, Vishnu Mehra, Sakshi Gupta, S.N. Bhat, Abhijit P.
Medh, Shakeel Ahmed, Parmanand Gaur, Nikhilesh
Ramachandra, Manish Mani, Alok Pandey, Shantanu Singh, R.
Bhaskar, Kishore Rawat, M.K. Dua, Azim H. Laskar, Sachin
H Das, Abhijit Sengupta, Ramesh Chandra Mishra, Di. Meera
UNITED INDIA INSURANCE CO. LTD. v. SHILA 775
DATIA & ORS.
Agarwal, Naveen R. Nath, Lalit Mohini Bhat, Gaurav Talukdar, A
Amrita Sharma, S.L. Gupta, Goodwill lndeevar, Ram Ashray,
Biswanath Agrawalla, Arvind Kumar Sharma, Saurabh Mishra,
Hiren Dasan, Dhirendra Kr. Sharma, Shreejata, Sarla Chandra,
F.I. Choudhury, R.P. Goyal, Anilendra Pandey, Priya Kashyap,
Laxmi Arvind, Pramod Dayal, Avijit Bhattacharjee, P.V. B
Yogeswaran, K. Rajeev, A.K. Raina, Anil Kumar Jha, Dr.
Kailash Chand, P.K. Jain, Anil Kumar Jain, Ajay Aggarwal,
R.P.S. Bhaduria, Rajiv Mehta, N. Ganp~thy, Shiv Mangal
Sharma, M.K. Dua, S. Janani, Jai Prakash Pandey, H.K. Puri,
Jatin laveri, Abhijit Sengupta, Dr. Meera Agarwal, S. Chandra c
Shekhar, P.N. Puri, Sharmila Upadhyay, 1.8. Gaur, Yash Pal
Dhingra, B.K. Satija, Manjusha Wadhwa, Sureshta Bagga,
Himanshu Shekhar, D. Mahesh Babu, Santosh Singh, Naresh
Kumar for the appearing parties.
The Judgment of the Court was delivered by D
R.V. RAVEENDRAN, J. 1. A Two Judge Bench of this
Court made the following order of reference in this case on
3.12.2007:
E
"One of the contentions raised in these appeals is the
correctness of a three-Judge Bench decision of this Court
in National Insurance Co. Ltd., Chandigarh vs. Nico/Jetta
Rohtagi and Ors., - 2002 (7) SCC 456, which is said to
be pending consideration in a large number of cases
before this Court. Assailing the correctness of the
F
aforesaid decision Mr. Atul Nanda submits that therein the
liability of the insurer to reimburse the insured on two
premises, namely, (1) just compensation; and (2) whose
liability would be to pay, as envisaged under sub-section
(1) of section 149 vis-a-vis the right of the aggrieved G
persons (Which would include the insured) to prefer an
appeal in terms of section 173 of the Motor Vehicles Act,
had not been considered in the backdrop of the history in
which sub-section (1) of section 149 was enacted.
H
776 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A Apart from the question raised by Mr. Nanda, we are of
the opinion that the matter may be considered from other
angles, namely, whether the insurer shall be wholly without
any remedy even if the amount of compensation is
determined in violation of the standard formula envisaged
B under the second schedule of the Act or in clear violation
of the ratio (s) laid down by this Court.
We, therefore, are of the opinion that it is a fit case where
the matter should be referred to larger Bench. We direct
accordingly. Let the records of the case be placed before
c Hon'ble the Chief Justice of India for appropriate orders." ·
2. On the said reference made, the following questions
arise for our consideration, in regard to the position of an
Insurer, under the Motor Vehicles Act, 1988 ('Act' for short) :
D
(i) Whether the insurer can contest a motor
accident claim on merits, in particular, in
regard to the quantum, in addition to the
grounds mentioned in section 149(2) of the
Act for avoiding liability under the policy of
E
insurance?
(ii) Whether an insurer can prefer an appeal
under section 173 of the Motor Vehicles Act,
1988, against an award of the Motor
F Accident Claims Tribunal, questioning the
quantum of compensation awarded?
3. The insurance companies have urged the following five
points for our consideration, which are independent grounds in
G support of their contention that insurance companies are not
barred from questioning the quantum of compensation either
before the Motor Accidents Claims Tribunal or in appeals
arising from the awards of the Tribunal :
(i) There is a significant difference between Insurer as a
H 'noticee' (a person to whom a notice is served as required by
UNITED INDIA INSURANCE CO. LTD. v. SHILA 777
DATIA & ORS. [R.V. RAVEENDRAN, J.]
"-section 149(2) of the Act) in a claim proceedings and an A"
insurer as a party-respondent in a claim proceedings·. Where
an insurer is impleaded by the claimants as a party, it can
contest the claim on all grounds, as there are no restrictions or
limitations in regard to contest. But where an insurer is not
impleaded by the claimant as a party, but is only issued a B
statutory notice under section 149 (2) of the Act by the Tribunal
requiring it to meet the liability, it is entitled to be made a party
to deny the liability on the grounds mentioned in section 149(2).
(ii) When the owner of the vehicle (insured) and the insurer C
. 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. When insurer is the person to pay the
compensation, any interpretation to say th;:it it is not a 'person
aggrieved' by the quantum of compensation determined, would D
be absurd and anomalous.
(iii) When an insurer is aggrieved by the quantum of
compensation, it is not seeking to avoid or exclude its liability,
but merely wants determination of the extent of its liability. The E
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 it 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 F
quantum of compensation to be paid.
(iv) Appeal is a continuation of the original claim
proceedings. Section 170 provides that if the person against
whom the claim is made, fails to contest the claim, the insurer
may be permitted to resist the claim on merits. If and when an G
award is made by the Tribunal which is excessive, arbitrary or
erroneous, the owner of the vehicle has to challenge the same
by filing an appeal before the High Court. 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 that the. H
778 SUPREME COURT REPORTS [2011) 14 (ADDL.) S.C.R.
A insured has failed to contest the same and consequently unde•
section 170, the High Court or the tribunal may permit the
insurer to file an appeal and contest the award on merits.
(v) The Motor Vehicles Act, 1988 ('Act' for short) creates
a liab: •ty upon 'he insurer to satisfy the judgments and awards
8
against ~he insured. The Act expressly restricts the right of the
insurer :o avoid the liability as insurer, only to the grounds
spec1fi :·d in section 149(2) of the Act. Though it b
impermi,..sib!e to add to the grounds mentioned in the statute,
C the insurer has a right, if it has reserved such a right in the policy,
to defend the action in the name of the insured. If it opts to step
into the shoes of the insured, it can defend the action in the
name of the insured and all defences open to the insured will
be available to it and can be urged by it. Its position contesting
a claim under section 149(2) of the Act is distinct and different,
D when it is ccntesting the claim in the name of or on behalf of
the insured owner of the vehicle. In cases, where it is authorized
by the policy to defond any claim in the name of the insured
and the insurer does so, it can not be restricted to the grounds
mentioned in section 149(2) of the Act, as the defence is en
E behalf of the owner of the vehicle.
Relevant Legal Provisions
4. We may refer to the position of an insurer and insured
F in the scheme contained in Chapters XI and XII of the Act
(4.1) Section 149 deals with the duty of insurers to satisfy
judgments and awards against persons insured in respect of
third party risks. Sub-sections (1), (2) and (7) are extracted
below:
G
"149. Duty of insurers to satisfy judgments and awards
against persons insured in respect of third party risks :
(1) If, after a certificate of insurance has been issued under
sub-section (3) of section 147 in favour of the person by
H whom a policy has been effected, judgment or award in
UNITED !NOIA INSURANCE CO. LTD. v. SHILA 779
DATTA & ORS. [R.V. RAVEENDRAN, J.]
respect of any such liability as is required to be covered A
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, then,
notwithstanding that the insurer may be entitled to avoid o B
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, c
together with any amount payable in respect of costs and
any sum payable in respect of interest on that sum by virtue
of any enactment relating to interest on judgments.
(2) No sum shall be payable by an insurer under sub-
section (1) in respect of any judgment or award unless, D
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 E
. 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:
F
(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 organized racing and speed te~ting, or H
780 SUPREME COURT REPORTS [2011] 14 (ADDL.) 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
(ii) a condition excluding driving by a named person or
persons or by any person who is not duly licensed, or by
8
any person who has been disqualified for holding or
obtaining a driving licence during the per;od of
disqualification; or
(iii) a condition excluding liability for injury caused or
c 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 non-disclosure of a material fact or by a
representation of fact which was false in some material
D
particular.
xx xx
(7) No insurer to whom the notice referred to in sub-section
E (2) or 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 referred to in sub-section (3)
otherwise than in the manner provided for in sub-~ection
F (2) or in the corresponding law of the reciprocating country,
as the case may be."
(4.2.) Section 147 prescribes the requirements of policies
and limits of liability. The relevant portion of the said section is
extracted below:
G
"147. Requirements of policies arid limits of liability.-
(1) In order to comply with the requirements of this
Chapter, a policy of insurance must be a policy which -
(a) is issuec;t by a person who is an authorized insurer; and
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA 781
DATTA & ORS. [R.V. RAVEENDRAN, J.]
(b) insures the person or classes of persons specified in A
the policy to the extent specified in sub-section (2)-
(i) against any liability which may be incurred by him in
respect of the death of or bodily [injury to any person,
including owner of the goods or his authorized 8
representative carried in the vehicle] or damage to any
property of a third party caused by or arising out of the use
of the vehicle in a public place;
(ii) against the death of or bodily injury to any passenger
of a public service vehicle cau.sed by or arising out of the C
use of the vehicle in a public place:
Provided that a policy shall not be required-"
xxx xxx xxx
D
(4.3) Section 163A makes special provisions as to
payment of compensation on structured formula basis and is
.. extracted below :
"163A. Special provisions as to payment of E
compensation on structured formula basis.-(1)
Notwithstanding anything contained in this Act or in any
other law for the time being in force or instrument having
the force of law, the owner of the motor vehicle or the
authorized insurer shall be liable to pay in the case of F
death or permanent disablement due to accident arising
out of the use of motor vehicle, compensation, as indicated
in the Second Schedule, to the legal heirs or the victim,
as the case may be."
xxx xxx xxx G
(4.4) Section 168 relates to award of the Claims Tribunal
and the relevant portion thereof is extracted below:-
"168. Award of the Claims Tribunal.-On receipt of an H
782 SUPREME COURT REPORTS (2011) 14 (ADDL.) S.C.R.
A application for compensation made under section 166, the
Claims Tribunal shall, after giving notice of the application
to the insurer and after giving the parties (including the
insurer) an opportunity of being heard, hold an inquiry into
the claim or, as the case may be, each of the claims and,
s subject to the provisions of section 162 may make an
award determining the amount of compensation which
appears to it to be just and specifying the person or
persons to whom compensation shall be paid and in
making the award the Claims Tribunal shall specify the
c amount which shall be paid by the· insurer or owner or
driver of the vehicle involved in the accident or by all or any
of them, as the case may be:"
(4.5) Section 170 deals with impleading insurer in certain
cases and is extracted below :-
D
"170. lmpleading 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
E
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,
F 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,
G 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."
Section 173 deals with appeals and relevant part thereof is
extracted below :-
H
UNITED !NOIA INSURANCE CO. LTD. v. SHILA 783
DATTA & ORS. [R.V. RAVEENDRAN, J.]
"173. Appea!s.-(1) Subject to the provisions of sub- A
section (2) any person aggrieved by an award of a Claims
Tribunal may, within ninety days from the date of the award,
prefer an appeal to the High Court:
Provided that no appeal by the person who is required to
8
pay any amount in terms of such award shall be entertained
by the High Court unless he has deposited with it twenty-
five thousand rupees or fifty per cent of the amount so
awarded, whichever is less, in the manner directed by the
High Court:"
c
Nature of a claim petition under the Motor Vehicles Act,
1988
5. A claim petition for compensation in regard to a motor
accident (filed by the injured or in case of death, by the 0
dependant family members) before the Motor Accident Claims
Tribunal constituted under section 165 of the Act is neither a
suit nor an adversarial lis in the traditional sense. It is a
proceedings in terms of and regulated by the provisions of
Chapter XII of the Act which is a complete Code in itself. We
may in this context r~fer to the following significant aspects in E
regard to the Tribunals and determination of compensation by .
Tribunals:
(i) A proceedings for award of compensation in regard to
a motor accident before the Tribunal can be initiated either on F
an application for compensation made by the persons
aggrieved (claimants) under section 166(1) or section 163A of
the Act or suo moto by the Tribunal, by treating any report of
accident (forwarded to the tribunal under section 158(6) of the
Act as an application for compensation under section 166 (4) G
of the Act.
(ii) The rules of pleadings do not strictly apply as the
claimant is required to make an application in a form prescribed
under the Act. In fact, there is no pleading where the
H
784 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
~ proceedings are suo moto initiated by the Tribunal.
(iii) In a proceedings initiated suo moto by thb tribunal, the
owner and driver are the respondents. The insurer is not a
respondent, but a noticee under section 149(2) of the Act.
Where a claim petition is filed by the injured or by the legal
8
representatives of a person dying in a motor accident, the driver
and owner have to be impleaded as respondents. The
claimants need not inplead the insurer as a party. But they have
the choice of impleading the insurer also as a party respondent.
When it is not impleaded as a party, the Tribunal is required to
C issue a notice under section 149(2) of the Act. If the insurer is
impleaded as a party, it is issued as a regular notice of the
proceedings.
(iv) The words 'receipt of an application for compensation'
D in section 168 refer not only to an application filed by the
claimants claiming compensation but also to a suo motu
registration of an application for compensation under section
166(4) of the Act on the basis of a report of an accident under
section 158(6) of the Act.
E
(v) Though the tribunal adjudicates on a claim and
. determines the compensation, it does not do so as in an
adversarial litigation. On receipt of an application (either from
the applicant or suo motu registration), the Tribunal gives notice
to the insurer under section 149(2) of the Act, gives an
F opportunity of being heard to the parties to the claim petition
as also the insurer, holds an inquiry into the claim and makes
an award determining the amount of compensation which
appears to it to be just. (Vide Section 168 of the Act).
G (vi) The Tribunal is required to follow such summary
procedure as it thinks fit. It may choose one or more persons
possessing special knowledge of and matters relevant to
inquiry, to the assist it in holding the enquiry (vide section 169 ·
of the Act).
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA 785
DATTA & ORS. [R.V. RAVEENDRAN, J.]
(vii) The award of the Tribunal should specify the person/s A
to whom compensation should be paid. It should also specify
the amount which shall be paid by the insurer or owner or driver
of the vehicle involved in the accident or by all or any of them.
(Vide section 168 of the Act).
B
(viii) The Tribunal should deliver copies of the award to the
parties concerned within 15 days from the date of the award.
(Vide section 168 (2) of the Act). ·
We have referred to the aforesaid provisions to show that
an award by the tribunal cannot be seen as an adversarial C
adjudication between the litigating parties to a dispute, but a
statutory determination of compensation on the occurrence of
an accident, after due enquiry, in accordance with the statute.
The decision in NICOLLETTA ROHTAGI D
6. In National Insurance Co. Ltd. vs. Nicolletta Rohtagi -
2002 (7) SCC 456, a three Judge Bench of this Court
considered the following two questions :
(i) Non-filing of an appeal by the insured amounted to E
failure to contest the claim and that the right to contest included
the right to file an appeal against the award of the Tribunal.
(ii) Where despite the existence of the facts postulated in
section 170 of the MV Act, 1988, the Tribunal does not implead
F
the insurance company to contest the claim on grounds
available to the insured or the persons against whom claim has
been made, or in such a situation rejects the insurer's
application for permission to contest the claim on merit or
where the claimant has obtained an award by playing fraud, in G
such cases the insurer has a right of appeal to contest the
award on merits.
The three Judge Bench, after referring to the decisions in
Shankarrayya vs. United Insurance Co. Ltd. - 1998 (3) SCC
140, Narendra Kumar vs. Yarenissa - 1998 (9) SCC 202, H
786 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A Chinnamma George vs. N. K. Raju - 2000 (4) SCC 130, ad
Ritu Devi vs. New Delhi Insurance Co. Ltd. - 2000 (5) SCC
113, held as under :
"It was urged by learned counsel appearing for the
insurance company that if an insured has not filed any
B
appeal, it means he has failed to contest the claim and that
the right to contest include the right to contest by filing c.n
appeal against the award of the Tribunal as well, and in
such a situation an appeal by the insurer questioning the
quantum of compensation would be maintainable.
c
We have earlier noticed that motor vehicle accident claim
is a tortious claim directed against tort-feasors who are
the insured and the driver of the vehicle and the insurer
comes to the scene as: a result of statutory liability created
D under the Motor Vehicles Act. The legislature has ensured
by enacting Section 149 of the Act that the victims of motor
vehicle are fully compensated and protected. It is for that
reason the insurer cannot escape from its liability to pay
compensation on any exclusionary clause in the insurance
E policy except those specified in Section 149(2) of the Act
or where the condition precedent specified in Section 170
is satisfied.
For the aforesaid reasons, an insurer if aggrieved against
an award, may file an appeal only on those grounds and
F no other. However, by virtue of Section 170 of the 1988
Act, where in course of an 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
G has been made has failed to contest the claim, the tribunal
may, for reasons 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
H been made. Thus, unless an order is passed by the tribunal
UNITED INDIA INSURANCE CO. LTD. v. SHILA 787
DATTA & ORS. [R.V. RAVEENDRAN, J.]
permitting the insurer to avail the grounds available to an A
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 B
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 c
vehicle even if the insured has not filed any appeal against
the quantum of compensation. Sections 149, 170 and 173
are ::iart of one Scheme and if we give any different
.nte. P• etation to Section 172 of the 1988 Act, the same
would go contrary to the scheme and object of the Act."
D
A careful reading of the said decision shows that issues (i) and
:ii) raised before us did not arise for consideration in Nicolletta
Rohtagi, nor were they considered therein.
Re· Point No.(i) : The position in cases where the claimants E
implead the insurer as a respondent in the claim petition.
7. The scheme of the Motor Vehicles Act, 1988 as
contained in Chapters XI (Insurance of Motor Vehicles against
Third Party risks) and XII (Claim Tribunals) proceeds on the
basis that an insurer need not be impleaded as a party to the F
claim proceedings and it should only be issued a statutory
notice under section 149(2) of the Act so that it can be made
liable to pay the compensation awarded by the tribunal and also
resist the claim on any one of the grounds mentioned in clauses
(a) and (b) of sub-section (2) of section 149. Sub-sections (1), G
(2) and (7) of section 149 clearly refer to the insurer being
merely a noticee and not a party. Similarly, sections 158(6),
166(4), 168(1) and 170 clearly provide for and contemplate
insurer being merely a noticee for the purposes mentioned in
the Act and not being a party-respondent. Section 170 H
788 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
·A specifically refers to impleading of insurer as a party to the·
claim proceedings.
8. When an insurer is impleaded as a party :- respondent
to the claim petition, as contrasted from merely being a noticee
under section 149(2) of the Act, its rights are significantly
8
different. If the insurer is only a noticee, it can only raise such
of those grounds as are permissible in law under section
149(2). But if he is a party-respondent, it can raise, not only
those grounds which are available under section 149(2), but
also all other grounds that are available to a person against
C whom a claim is made. It therefore follows that if a claimant
impleads the insurer as a party-respondent, for whatever
reason, then as such respondent, the insurer will be entitled to
urge all contentions and grounds which may be available to it.
D 9. The Act does not require the claimants to implead the
insurer as a party respondent. But if the claimants choose to
implead the insurer as a party, not being a noticee under
section 149(2), the insurer can urge all grounds and not
necessarily the limited grounds mentioned in section 149(2) of
E the Act. If the insurer is already a respondent (having been
impleaded as a party respondent). it need not seek the
permission of the Tribunal under section 170 of the Act to raise
grounds other than those mentioned in section 149(2) of the
Act. The entire scheme and structure of Chapters XI and XII is
F that the claimant files a claim petition only against the owner
and driver and the tribunal issues notice to the insurer under
section 149(2) so that it can be made liable to pay the amount
awarded against the insurer and if necessary, deny liability
under the policy of insurance, on any of the grounds mentioned
in section 149(2). If an insurer is only a noticee and not a party-
G respondent, having regard to the decision in Nicol/etta Rohtagi,
it can defend the Claim only on the grounds mentioned in section.
149(2) and not any of the oth_er grounds relating to merits
available to the insured-respondent. This is the position even
where the claim proceedings are initiated suo moto under
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA 789
DATTA & ORS. [R.V. RAVEENDRAN, J.]
sections 149(7) and 158(6) of the Act, without any formal A
application by the claimants, as the insurer is only a noticee
under section 149(2) of the Act.
10. Section 170 of the Act does not contemplate an insurer
making an application for impleadment. Nor does it
8
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 C
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 D
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 E
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 F
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.
11. Therefore, where the insurer is a party- respondent, G
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 H
SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
790
A driver without impleading the insurer as a party. When a
statutory notice is issued under section 149(2) by the tribunal,
it is clear that such notice is issued not to implead the insurer
as a party-respondent but merely to put it on notice that a claim
has been made in regard to a policy issued by it and that it will
s have to bear the liability as and when an award is made in
regard to such claim. Therefore, it cannot, as of right, require
that it should be impleaded as a party-respondent. But it can
however be made a party-respondent either by the claimants .
voluntarily in the claim petition or by the direction of the Tribunal
c under section 170 of the Act. Whatever be the reason or ground
for the insurer being impleaded as a party, once it is a party-
respondent, it can raise all contentions that are available to
resist the claim.
Re : Point (ii) : Maintainability of a joint appeal by the owner of
D the vehicle (Insured) and Insurer
12. There is no dispute that when an award is made by
the Tribunal, the owner of the vehicle (insured}, being a person
aggrieved, can file an appeal challenging his liability on any
E ground, or challenge the quantum of compensation. An appeal
which is "maintainable" when the owner of the vehicle files it,
does not become "not maintainable" merely on account of the
insurer being a co-appellant with the owner. When the insurer
becomes a co-appellant, the owner of the vehicle does not
F cease to be a person aggrieved.
13. This question came up for consideration of a Two
Judge Bench of this Court with reference to the provisions of
the Motor Vehicles Act, 1939 ('Old Act' for short) in Narendra
Kumar vs. Yarenissa - 1998 (9) SCC 202. This Court held :
G
"The question, however, is if such a joint appeal is
preferred must i( be dismissed in toto or can the tortfeasor,
the owner of the offending vehicle, be permitted to pursue
the appeal while rejecting or dismissing the appeal of the
H insurer. If the award has gone against the tortfeasors it is
UNITED INDIA INSURANCE CO. LTD. v. SHILA 791
DATTA & ORS. [R.V. RAVEENDRAN, J.]
difficult to accept the contention that the tortfeasor is not A
"an aggrieved person" as has been held by some of the
High Courts vide Kantilal & Bros. v. Ramarani Debi, 1980
ACJ 501, New India Assurance Co. Ltd. v. Shakunt/a Bai,
1987 ACJ 224, Nahar Singh v. Manohar Kumar, (1993)
1 ACJ 269, Radha Kishan Sachdeva v. Fit, Lt. L. D.
•
s
Sharma, (1993) 27 DRJ 18 (Del) merely because under
the scheme of Section 96 if a decree or award has been
made against the tortfeasors the insurer is liable to answer
judgment "as if a judgment-debtor". That does not snatch
away the right of the tortfeasors who are jointly and c
severally liable to answer judgment from preferring an
appeal under Section 110-D of the Act. If for some reason
or the other the claimants desire to execute the award
against the tortfeasors because they are not in a position
to recover the money from the insurer the law does not D
preclude them from doing so and, therefore, so long as the
award or decree makes them liable to pay the amount of
compensation they are aggrieved persons within the
meaning of Section 110-D and would be entitled to prefer
an appeal. But merely because a joint appeal is preferred
E
and it is found that one of the appellants, namely, the
insurer was not competent to prefer an appeal, we fail to
see why the appeal by the tortfeasor, the owner of the
vehicle, cannot be proceeded with after dismissing or
rejecting the appeal of the insurer. To take a view that the
owner is not an aggrieved party because the Insurance F
Company is liable in law to answer judgment would lead
to an anomalous situation in that no appeal would lie by
the tortfeasors against any award because the same logic
applies in the case of a driver of the vehicle. The question
can be decided a little differently. Can a claim application G
be filed against the Insurance Company alone if the
tortfeasors are not the aggrieved parties under Section
110-D of the Act? The an5*"1er would obviously be in the
negative. If that is so, they are persons against whom th~
claim application must be preferred and an award sought: H
792 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R.
A for otherwise the insurer would not be put to notice and
would not be liable to answer judgment as if a judgment-
debtor. Therefore, on first principle it would appear that the
contention that the owner of a vehicle is not an aggrieved
party is unsustainable.
B
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
c dismissed as such. The tortfeasor can proceed with the
appeal after the cause-title is suitably amended by deleting
the name of the insurer."
14. When the issue again came up for consideration
D before another Two Judge bench of this Court in Chinnama
George & Ors. vs. N. K. Raju & Anr. - 2000 (4) SCC 130, with
reference to the provisions of the Motor Vehicles Act, 1988, this
Court agreed with Narendra Kumar that the owner of the
vehicle is an aggrieved person, but held that a joint appeal
E would not be maintainable. This Court held :
"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 the insurer to
file appeal against the award of the Claims Tribunal.
F However, by adding N.K. Raju, the owner as co-appellant,
an appeal was filed in the High Court which led to the
impugned judgment. None of the grounds on which insurer
could defend the claims petition was the subject matter of
the appeal as far as the insurer is concerned. We have
G already noticed above that we have not been able to figure
out from the impugned judgment as to how the owner felt
aggrieved by the award of the Claims Tribunal. The
impugned judgment does not reflect any grievance of the
owner or even that of the driver of the offending bus against
H the award of the Claims Tribunal. The insurer by
UNITED INDIA INSURANCE CO. LTD. v. SHILA 793
DATIA & ORS. [RV. RAVEENDRAN, J.]
associating the owner or the driver in the appeal when the A
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 B
merely by associating 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 c
to give him right to defend or appeal on grounds not
permitted by law by a backdoor method. Any· other
interpretation will produce unjust results and open gates
for the insurer to challenge any award. We have to adopt
purposive approach whic~ would not defeat the broad D
purpose of the Act. Court has to give effect to true object
of the Act by adopting purposive approach.
There is no dispute with the proposition so laid by this E
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 situation joint
appeal will be incompetent. It is not enough if the insurer
is struck out from the array of the appellants. The appellate F
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 for examination of the G
correctness or otherwise of the judgment of the Tribunal
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 in the pleadings
and/or was pressed before the Tribunal, the appeal filed H
794 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A by the insurer has to be dismissed as not maintainable.
The court should take care to ascertain this position on
proper consideration so that the statutory bar against the
insurer in a proceeding of claim of compensation is not
rendered irrelevant by the subterfuge of the insurance
B 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 provisions 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
c throw the legal representatives of the deceased or the
injured in the accident to unnecessary prolonged litigation
at the instance of the insurer."
This issue did not arise for consideration of the Three Judge
Bench decision in Nicol/etta Rohtagi, as the question therein
D was whether an insurer could file an appeal.
15. On a careful consideration, we are of the view that the
decision in Chinnamma George to the extent it holds that a
joint appeal is not maintainable, does not lay down the correct
E law. As observed in Narendra Kumar, the owner of the vehicle
does not cease to be an aggrieved person, merely because
the insurer is ultimately liable under the terms of the policy or
under section 149 of the Act. If the owner by himself, can file
an appeal as an aggrieved person and such appeal is
F maintainable, we fail to understand how the presence of the
insurer as a co-appellant would make the appeal not
maintainable. Whether the owner joins the insurer or the insurer
joins the owner, makes no difference to the fact that owner
continues to be a person aggrieved.
G 16. When a joint appeal is filed, to say that the insurer is
not an aggrieved person and the owner of the vehicle is also
not an aggrieved person, would lead to an anomalous situation
·and would border on an absurdity. Without entering upon the
question whether an insurer is an aggrieved person (which
H requires to be considered separately), we make it clear that
UNITED INDIA INSURANCE CO. LTD. v. SHILA 795
DATTA & ORS. [R.V. RAVEENDRAN, J.]
on account of the insurer being a co-appellant, will not affect A
~he maintainability of the appeal. So long as the owner is an
appellant and he is a 'person aggrieved' in law, the question
whether he is independently filing the appeal, or whether he is
filing it at the instance of the insurer becomes irrelevant. When
a counsel holds vakalatnama for an insurer and the owner of 8
the vehicle in a joint appeal, the court cannot say his arguments
and submissions are only on behalf of the insurer and not on
behalf of the owner. There is also no need to examine at the
threshold in a joint appeal, whether the insurer should be deleted
from the array of appellants.
c
Re : Points (iii) to (v).
17. We may next consider the cases where the insurer is
only a noticee under section 149(2) and has not been
impleaded as a party to the claim proceedings. The basic o
premises in Nicolletta Rohtagi is that the insurer can contest
a motor-accident claim for compensation only on the grounds
mentioned in section 149(2) of the Act. The contention of
Insurance Companies is that an Insurer can deny liability under
the policy only on the grounds mentioned in section 149(2) of E
the Act (even though several other grounds may be available
.under the tenns of the policy); and where it does not deny liability
or avoid liability under policy of insurance, it can certainly assist
the Tribunal in arriving at the just compensation, by contesting
any unjust or illegal or erroneous claim by the claimants. We
F
find considerable force in the contention that where a notice is
issued under section 149(2) of the Act, the insurer as 'noticee'
(as contrasted from a 'party') can not 'deny' its liability as an
insurer on grounds other than those mentioned in section
149(2)(a) and (b) of the Act, but nothing prevents it as a person
liable to pay the compensation, from assisting the Tribunal in G
arriving at the 'just' compensation. In this context, we may rely
upon the observation of this Court in National Insurance Co.
Ltd. v. Juga/Kishore - 1988 (1) sec 626, referring to section
96(6) of the old Act (Motor Vehicles Act, 1939):
H
796 SUPREME COURT REPORTS [2011] 14 (ADDL.) S.C.R.
A ".... Secondly, from the words "to avoid his liability" used
in Sub-section (6) of Section 96 it is apparent that the
restrictions placed with regard to defences available to the
insurer specified in Sub-section (2) of Section 96 are
applicable to a case where the insurer wants to avoid his
B liability. In the instant case the appellant is not seeking to
avoid its liability but wants a determination of the extent of
its liability which is to be determined, in the absence of any
contract to the contrary, in accordance with the statutory
provision contained in this behalf in Clause (b) of Sub-
section (2) of Section 95 of the Act..."
c
The assumption that as a noticee under section 149(2), the
insurer cannot raise any contention other than those mentioned
in clauses (a) and (b) of section 149(2) is correct in so far as
denial of liability under the policy is concerned. This is because
D sub-section (1) of section 149 of the Act clearly provides that
'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......... ". Therefore, an insurer,
E without seeking to avoid or exclude its liability under the policy,
on grounds other than those mentioned in section 149(2)(a) and
(b), can contest the claim, in regard to the quantum. All that
section 149(2) says is that insurer cannot raise all kinds of
contentions based on the terms of policy to avoid the contract
F of indemnity. But it does not require the insurer to concede
wrong claims or false claims or not challenge erroneous
determination of compensation.
18. Let us take by way of example, a case where the
deceased was aged 20 years and the annual loss of
G dependency was Rs.1,00,000/- to the dependants. ...._ The
multiplier applicable would be 18 and the compensation would
be Rs.18 lakhs. But if the tribunal holds that as the life
expectancy of the deceased was 70 as per evidence ·and
therefore, it would apply a multiplier 0,fSO (that is 70-20), instead
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA 797
DATTA & ORS. [R.V. RAVEENDRAN, J.]
of 18 and as a consequence, awards Rs.50 lakhs as A
compensation, should the insurer be without remedy if the owner
and driver do not care to file an appeal, as the liability under
the Act is that of the insurer. It is only the insurer, who is required ·
to pay the compensation amount, is interested in filing the
appeal. It can file an appeal by itself or it can file an appeal B
jointly with the owner. If it is denied that opportunity, there is a
likelihood of huge compensation being awarded without any
correction. The fact that the compensation is not likely to be
interfered, may also encourage the Motor Accident Claims
Tribunal to make awards which may not be fanciful reasonable. c
We fail to see why the insurance company cannot challenge the
judgment of the tribunal, if it is erroneous. The Act nowhere says
that the insurer is not a 'person aggrieved' with reference to
the amount of compensation awarded which he is required to
pay. It is difficult to countenance the submission that a person
0
who is required to a sum of money, from his pocket, has no
right even to say : "Look here, the calculation of the amount
claimed is wrong". Interests ofjustice will not be served by
allowing obvious errors to remain uncorrected.
19. The Insurers submit that if the owner of the vehicle E
(Insured) fails to file an appeal when an erroneous award is
made, he fails to contest the same and consequently, the
insurer should be able to file an appeal, by applying the
pri!'Jciple underlying section 170 of the Code. In this behalf, they
relied upon the decision in United India Insurance Co. Ltd. vs. F
Bhushan Sachdeva - 2002 (2) SCC 265, (held to be not good
law in Nicol/etta Rohtag1) wherein a two Judge Bench of this
Court held thus :
"The person against whom the claim is made is normally
the insured of the vehicle involved in the accident. When G
he failed to contest that c1aim made against him the insurer
gets the opportunity to contest such claim on all or any of
the grounds available to the insured. Such a provision was
absent in the Motor Vehicles Act, 1939 initially and the
Parliament inserted it therein only in March 1970. The right H
798 SUPREME COURT REPORTS (2011] 14 (ADDL.) S.C.R
A of the insured to contest a claim does not stop with the end
of the proceedings before the Tribunal.
What is meant by the words "failed to contest"? Those
words must be interpreted in a realistic manner. Right to
contest would include the right to contest by filing an
B appeal against the award of the Tribunal as well. Hence
the insured can continue to context the claim by filing an
appeal as provided under Section 173 of the Act. If the
insured fails to prefer an appeal that also would amount
to failure to contest that claim effectively. Quite often the
c . insured would lose the desire to contest the claim once he
is told that he would not be mulcted with the liability as the
same is siphoned off to the insurer. It means that insured
had dropped out from contesting a claim midway. In such
an eventuality the Act enables the insured to contest it on
D all grounds available to the insured."
20. In British India General Insurance Co.Ltd. v. Captain
ltbar Singh.& Ors. -AIR 1959 SC 1331, a three Judge Bench
of this Court held as under:
E ".... 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
F hardship. We are furthermore 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
G
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 f~ll liberty to do ... ."
(emphasis supplied}
H
UNITED INDIA INSURANCE CO. LTD. v. SHILA 799
DATTA & ORS. [R.V. RAVEENDRAN, J.]
. Nicolletta Rohtagi did not consider the issue with reference to A
the situation where the insurer is enabled by a specific term in
the insurance policy to take over and conduct the defence of
the case in the name of the insured, presumably as the
insurance policy did not have such an enabling provision. Ir. fact
if such a contention had been raised, the court would have B
noticed that the issue was covered by a binding three-Judge
Bench judgment in British India General Insurance. Be that as
it may.
21. However, in view of the decision in Nicolletta Rohtagi,
we cannot decide points (iii) to (v) in favour of the Insurers. For C
the aforesaid reasons, in so far as issues (iii) to (v) are
concerned, we are of the view that Nicol/etta Rohtagi requires
reconsideration by a larger bench.
Conclusion D
22. We accordingly answer the points arising from the.
reference as under:
(i) Points (i) and (ii) are held in favour of the Insurers. The
matters covered by points (i) and (ii) are to be placed before E
the respective benches for consideration accordingly.
(ii) Points (iii) to (v) which may come in conflict with
Nicolletta Rohtagi, are referred to a larger Bench. We
accordingly direct these matters (that is, cases where the F
insurer alone was the appellant before the High Court and
where the insurer was only a noticee under section 149(2) and
not an impleaded respondent in the claim petition), to be placed
before the Hon'ble Chief Justice for constituting a larger bench
to consider points (iii), (iv) and (v) raised by the insurers. G
20. The parties to file memos indicating whether their
cases are covered by points (i) and (ii) or under points (iii) to
(iv) to enable the Registry to place the matters appropriately.
N.J. Reference answered. H
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