Yallwwa & Ors Vs. National Insurance Co. Ltd. & Anr.  Insc 604 (16 May 2007)
S.B. Sinha & Markandey Katju
CIVIL APPEAL NO. 2674 OF 2007 [Arising out of SLP (Civil) No. 17016 of 2006]
S.B. SINHA, J :
1. Leave granted.
2. Whether an order passed under Section 140 of the Motor Vehicles Act, 1988
(for short, 'the Act') is an appealable one is the question involved in this
appeal which arises out of a judgment and order dated 04.07.2005 passed by a
learned Single Judge of the Karnataka High Court in M.F.A.
Nos. 8227 of 2004 c/w 8234 to 8237, 8239 and 8240 of 2004.
3. The basic facts of the case are not in dispute. Appellants herein are the
heirs and legal representatives of the coolies travelling from Kankanwadi to
Saundatti in the State of Karanataka in a tractor trailer. The said tractor
trailer met with an accident allegedly owing to rash and negligent driving on
the part of its driver. Out of 44 persons travelling in the said tractor
trailer, nine persons died and others received serious injuries.
4. Appellants herein filed claim petitions in terms of Section 166 of the
Act read with Section 140 thereof before the Motor Accidents Claims Tribunal
(for short, 'the Tribunal'). By reason of an order dated 13.09.2004, the
learned Tribunal directed both the owner as also Respondent No. 1 (Insurance
Company) to deposit a sum of Rs. 50,000/- each for every deceased within a
period of one month.
5. Aggrieved by and dissatisfied therewith, Respondent No. 1 herein
preferred appeals before the High Court. One of the contentions raised by the
appellants was that the appeals under Section 173 of the Act were not
maintainable, inter alia, on the premise that the said order dated 13.09.2004
was not an award within the meaning of Section 173 of the Act. In support of
the said contention, reliance was placed on a decision of the Bombay High Court
in Divisional Controller, Maharashtra State Road Transport Corporation v. Bapu
Onkar Chaudhary [(2004) ACJ 35]. The High Court, however, in view of the fact
that admittedly the deceased and the injured, who were travelling in the
tractor trailer, were unauthorised passengers and also having regard to the
decision of this Court in National Insurance Co.
Ltd. v. V. Chinnamma & Others [(2004) 8 SCC 697", opined that the
said order would be an appealable one.
6. The learned counsel appearing on behalf of the appellants would submit
that the right of appeal is a statutory right and in view of the fact that no
adjudication was required to be made by the Tribunal while passing an order
under Section 140 of the Act, the same would not come within the purview of the
definition of the term 'award'. Reliance has been placed on British India
General Insurance Co., Ltd. v. Captain Itbar Singh and Others [1960 (1) SCR
168] and Sadhana Lodh v. National Insurance Co. Ltd. and Another [(2003) 3 SCC
7. The learned counsel appearing on behalf of the respondents, on the other
hand, would support the judgment.
8. Section 140 of the Act is in Chapter X thereof provides for liability to
pay compensation in certain cases on the principle of no fault. An application
under Section 140 of the Act is maintainable by way of interim application or
otherwise in a proceeding initiated in terms of Section 166 thereof. Section
166 of the Act, on the other hand, is in Chapter XII thereof.
The said provisions read as under :
"Section 140 - Liability to pay compensation in certain cases on the
principle of no fault. - (1) Where death or permanent disablement of any person
has resulted from an accident arising out of the use of a motor vehicle or
motor vehicles, the owner of the vehicle shall, or, as the case may be, the
owners of the vehicles shall, jointly and severally, be liable to pay
compensation in respect of such death or disablement in accordance with the
provisions of this section.
(2) The amount of compensation which shall be payable under sub-section (1)
in respect of the death of any person shall be a fixed sum of [fifty thousand
rupees] and the amount of compensation payable under that sub-section in
respect of the permanent disablement of any person shall be a fixed sum of
[twenty-five thousand rupees].
(3) In any claim for compensation under sub-section (1), the claimant shall
not be required to plead and establish that the death or permanent disablement
in respect of which the claim has been made was due to any wrongful act,
neglect or default of the owner or owners of the vehicle or vehicles concerned
or of any other person.
(4) A claim for compensation under sub-section (1) shall not be defeated by
reason of any wrongful act, neglect or default of the person in respect of
whose death or permanent disablement the claim has been made nor shall the
quantum of compensation recoverable in respect of such death or permanent
disablement be reduced on the basis of the share of such person in the
responsibility for such death or permanent disablement.
[(5) Notwithstanding anything contained in sub-section (2) regarding death
or bodily injury to any person, for which the owner of the vehicle is liable to
give compensation for relief, he is also liable to pay compensation under any
other law for the time being in force:
Provided that the amount of such compensation to be given under any other
law shall be reduced from the amount of compensation payable under this section
or under section 163 A."
"Section 166 - Application for compensation 1) An application for
compensation arising out of an accident of the nature specified in sub-section
(1) of section 165 may be made- (a) by the person who has sustained the injury;
or (b) by the owner of the property; or (c) where death has resulted from the
accident, by all or any of the legal representatives of the deceased; or (d) by
any agent duly authorised by the person injured or all or any of the legal representatives
of the deceased, as the case may be:
Provided that where all the legal representatives of the deceased have not
joined in any such application for compensation, the application shall be made
on behalf of or for the benefit of all the legal representatives of the
deceased and the legal representatives who have not so joined, shall be
impleaded as respondents to the application.
[(2) Every application under sub-section (1) shall be made, at the option of
the claimant, either to the Claims Tribunal having jurisdiction over the area
in which the accident occurred or to the Claims Tribunal within the local
limits of whose jurisdiction the claimant resides or carries on business or
within the local limits of whose jurisdiction the defendant resides, and shall
be in such form and contain such particulars as may be prescribed:
Provided that where no claim for compensation under section 140 is made in
such application, the application shall contain a separate statement to that
effect immediately before the signature of the applicant.] [***] [(4) The
Claims Tribunal shall treat any report of accidents forwarded to it under
sub-section (6) of section 158 as an application for compensation under this
9. It is not in dispute that an award of the Tribunal is to be made in terms
of Section 168 of the Act. For the said purpose, the Tribunal is required to
issue a notice to the insurer and give the parties an opportunity of being
heard. While making an award in terms of Section 168 of the Act, the procedure
laid down under Section 166 of the Act are required to be complied with. The
proviso appended to Section 168 of the Act, however, lays down that where such
application makes a claim for compensation under Section 140 in respect of the
death or permanent disablement of any person, such claim and any other claim
(whether made in such application or otherwise) for compensation in respect of
such death or permanent disablement shall be disposed of in accordance with the
provisions of Chapter X of the Act. Section 140, as noticed hereinbefore,
provides for no fault liability. It uses the words "accident arising out
of the use of a motor vehicle", the owner of the vehicle and when more
than two vehicles are involved, "the owners of the vehicles" shall,
jointly and severally, be liable to pay compensation.
10. The said provision, therefore, makes the owners of the vehicles liable
but not the insurer per se. Irrespective of the fact whether a claim petition
is required to be adjudicated under Chapter X or Chapter XII of the Act, it is
permissible to raise a defence in terms of sub-section (2) of Section 149 of
the Act. Even it is possible for the owner of the vehicle to raise a contention
that his vehicle being not involved in the accident, he is not liable to pay
any amount in terms of Section 140 of the Act.
11. One of the defences available to the insurer is breach of conditions
specified in the policy. When such a defence is raised, the Tribunal is
required to go into the said question. Section 140 of the Act does not
contemplate that an insurance company shall also be liable to deposit the
amount while it has no fault whatsoever in terms of sub-section (2) of Section
147 of the Act.
12. There cannot be any doubt that an appeal is a creation of a statute.
13. It may be noted that Chapter X of the Act provides for no forum for
enforcement of the right under Section 140. The only forum available is in
Chapter XII. The right under Section 140 can only be enforced under Section 168
as an award. An appeal, therefore, lies under Section 173 against such an award
seeking to enforce the right under Section 140.
14. In P. Ramanatha Aiyar's Law Lexicon 3rd Edn. 2005 at page 428, it is
""Award" means an arbitration award [Arbitration Act (10 of
1940, S. 2(b)] "Award" means an interim or a final determination of
any industrial dispute or of any question relating thereto by any Labour Court,
Industrial Tribunal or National Industrial Tribunal and includes an arbitration
award made under S. 10-A. (Industrial Disputes Act (14 of 1947, S. 2(f).]"
15. In Oriental Insurance Co. Ltd. v. Mohiuddin Kureshi alias Md. Moya and
Others [(1994) ACJ 74], a Division Bench of the Patna High Court observed :
"7. Section 140 of the Motor Vehicles Act
which is in Chapter X of the said Act provides for liability to pay
compensation on the principle of no fault. An owner of a vehicle thus would be
liable to pay compensation in case death or permanent disablement to any person
has resulted from an accident arising out of use of a motor vehicle or vehicles
and the amount of such compensation in terms of Section 140 (2) is fixed as Rs.
25,000/- in case of death and Rs. 12,000/- in case of permanent disablement.
Sub-section (3) of Section 140 postulates that the claimant shall not be
required to plead and establish that the death or permanent disablement in
respect of which claim was made was due to any wrongful act, neglect or default
of the owner or owners of the vehicle or vehicles concerned or of any other
xxx xxx xxx
9. Section 141 of the said Act, however, provides that right to claim in
terms of Section 140 shall be in addition to any other right under the
provisions of the said Act or any other law for the time being in force.
Sub-sections (2) and (3) of Section 141 of the said Act read thus:
(2) A claim for compensation under Section 140 in respect of death or
permanent disablement of any person shall be disposed of as expeditiously as
possible and where compensation is claimed in respect of such death or
permanent disablement under Section 140 and also in pursuance of any right on
the principle of fault, the claim for compensation under Section 140 shall be
disposed of as aforesaid in the first place.
(3) Notwithstanding anything contained in Sub-section (1), where in respect
of the death or permanent disablement of any person, the person liable to pay
compensation under Section 140 is also liable to pay compensation in accordance
with the right on the principle of fault, the person so liable shall pay the
first- mentioned compensation and (a) if the amount of the first-mentioned
compensation is less than the amount of the second-mentioned compensation, he
shall be liable to pay (in addition to the first-mentioned compensation) only
so much of the second-mentioned compensation as is equal to the amount by which
it exceeds the first-mentioned compensation;
(b) if the amount of the first-mentioned compensation is equal to or more
than the amount of the second- mentioned compensation, he shall not be liable
to pay the second-mentioned compensation.
xxx xxx xxx
11. From a conjoint reading of the aforementioned provisions, there cannot
be any doubt that an application under Section 140 of the said Act can be filed
However, Section 166 of the said Act contemplates filing of a composite
application, as is evident from the proviso appended to Sub-section (2) of
Section 166 of the said Act."
16. The question which is required to be considered is what would be the
meaning of the term 'award' when such a contention is raised. Although in a
given situation having regard to the liability of the owner of the vehicle, a
claim Tribunal need not go into the question as to whether the owner of the
vehicle in question was at fault or not, but determination of the liability of
the insurance company, in our opinion, stands on a different footing. When a
statutory liability has been imposed upon the owner, in our opinion, the same
cannot extend the liability of an insurer to indemnify the owner, although in
terms of the insurance policy or under the Act, it would not be liable
17. In a given case, the statutory liability of an insurance company,
therefore, either may be nil or a sum lower than the amount specified under
Section 140 of the Act. Thus, when a separate application is filed in terms of
Section 140 of the Act, in terms of Section 168 thereof, an insurer has to be
given a notice in which event, it goes without saying, it would be open to the
insurance company to plead and prove that it is not liable at all.
18. Furthermore, it is not in dispute that there can be more than one award
particularly when a sum paid may have to be adjusted from the final award.
Keeping in view the provisions of Section 168 of the Act, there cannot be
any doubt whatsoever that an award for enforcing the right under Section 140 of
the Act is also required to be passed under Section 168 only after the parties
concerned have filed their pleadings and have been given a reasonable
opportunity of being heard. A Claims Tribunal, thus, must be satisfied that the
conditions precedent specified in Section 140 of the Act have been
substantiated, which is the basis for making an award.
19. Furthermore, evidently, the amount directed to be paid even in terms of
Chapter X of the Act must as of necessity, in the event of non-compliance of
directions has to be recovered in terms of Section 174 of the Act. There is no
other provision in the Act which takes care of such a situation. We, therefore,
are of the opinion that even when objections are raised by the insurance
company in regard to its liability, the Tribunal is required to render a
decision upon the issue, which would attain finality and, thus, the same would
be an award within the meaning of Section 173 of the Act.
20. In British India General Insurance Co. Ltd. (supra), the question which
arose for consideration was as to whether an insurer should be joined as a
party in a proceeding under the Act apart from the provisions of the statute.
Therein, the court was considering a claim under the Motor Vehicles Act, 1939.
It was held therein:
"17. Again, we find the contention wholly unacceptable.
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 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 him and there is no other defence that he claims
to be entitled to urge. He can thus avoid all hardship if any, by providing for
a right to defend the action in the name of the assured and this he has full
liberty to do. Secondly, if he has been made to pay something which on the
contract of the policy he was not bound to pay, he can under the proviso to
sub-section (3) and under sub-section (4) recov er it from the assured. It was
said that the assured might be a man of straw and the insurer might not be able
to recover anything from him. But the answer to that is that it is the
insurer's bad luck. In such circumstances the injured person also would not
have been able to recover the damages suffered by him from the assured, the
person causing the injuries"
21. In National Insurance Co. Ltd. v. Jethu Ram and Others [(1999) 9 SCC
62], this Court while construing the provisions of Section 92-A and 92-B of the
Act, 1939, opined :
"2. On a close scrutiny of the aforesaid provisions, we do not find
anything contained therein which would suggest that the liability which accrues
under the provisions of Section 92-A has to be borne by the insurer even if it
is ultimately held that under the policy of insurance, the insurer is not
liable to pay the compensation in question.
In our considered opinion, the Tribunal and the High Court have misread the
aforesaid provisions of the Motor Vehicles Act.
In the aforesaid premises, the impugned judgments of the Tribunal and the High
Court cannot be sustained so far as they relate to the liability of the insurer
arising under Sections 92-A and 92-B of the Act."
22. The decision of this Court in United India Insurance Co. Ltd. v. Lehru
and Others [(2003) 3 SCC 338] is not of much assistance in this case. The
question which arose for consideration therein was as to whether in a case
where the licence of the driver of the motor vehicle involved in the accident
was fake, the court can direct the insurance company to pay the amount of the
compensation and recover the same from the owner, as the insurance company is
liable to satisfied the award.
23. Lehru (supra) has been taken into consideration in a subsequent decision
of this Court in National Insurance Company Ltd. v. Swaran Singh and Others
(2004) 3 SCC 297], which has in turn been considered in National Insurance Co.
Ltd. v. Laxmi Narain Dhut [2007 (4) SCALE 36] and The Oriental Insurance
Company Ltd. v. Meena Variyal & Ors. [2007 (5) SCALE 269].
24. The recent decisions of this Court are authorities for the proposition
that the insurance company would not be liable in cases where passengers of a
vehicles are not third parties.
25. In Sadhana Lodh (supra), this Court was concerned with a case where an application
was filed under Articles 226 and 227 of the Constitution of India, despite the
fact that an appeal was maintainable against the award and in that view of the
matter, the court opined that when an insurer has a right to prefer an appeal
on limited grounds available under Section 149 of the Act, the grounds of
challenge cannot be enlarged by filing a petition under Articles 226 and 227 of
the Constitution of India. It was observed therein:
"7. The supervisory jurisdiction conferred on the High Courts under
Article 227 of the Constitution is confined only to see whether an inferior
court or tribunal has proceeded within its parameters and not to correct an
error apparent on the face of the record, much less of an error of law. In
exercising the supervisory power under Article 227 of the Constitution, the
High Court does not act as an appellate court or the tribunal. It is also not
permissible to a High Court on a petition filed under Article 227 of the
Constitution to review or reweigh the evidence upon which the inferior court or
tribunal purports to have passed the order or to correct errors of law in the
26. The said decision has also no application to the facts of the present
case. So far as the decision of the Bombay High Court in Bapu Onkar Chaudhari
(supra) is concerned, the High Court proceeded on the basis that in terms of
the rules framed by the State of Maharashtra under the Motor Vehicles Act,
an order passed under Section 140 would not come within the purview of the term
27. In Bapu Onkar Chaudhari (supra), the Bombay High Court appears to have
placed strong reliance on Kaushnuma Begum and Others v. New India Assurance Co.
Ltd. and Others [2001 ACJ 428 : (2001) 2 SCC 9]. In Kaushnuma Begum (supra),
this Court was concerned with the question as to whether the amount of
compensation to be paid under Section 140 of the Act can be deducted from the
final amount awarded by the Tribunal and while doing so, opined :
"20 . "No fault liability" envisaged in Section 140 of the MV
Act is distinguishable from the rule of strict liability.
In the former, the compensation amount is fixed and is payable even if any
one of the exceptions to the rule can be applied. It is a statutory liability
created without which the claimant should not get any amount under that count.
Compensation on account of accident arising from the use of motor vehicles
can be claimed under the common law even without the aid of a statute. The
provisions of the MV Act permit that compensation paid under "no fault
liability" can be deducted from the final amount awarded by the Tribunal.
Therefore, these two are resting on two different premises. We are, therefore,
of the opinion that even apart from Section 140 of the MV Act, a victim in an
accident which occurred while using a motor vehicle, is entitled to get
compensation from a Tribunal unless any one of the exceptions would apply.
The Tribunal and the High Court have, therefore, gone into error in
divesting the claimants of the compensation payable to them."
28. In Bapu Onkar Chaudhary (supra), the High Court of Bombay observed :
"19. A different phraseology is used in rules 273 and 281. The Claims
Tribunal in passing orders, is required to record concisely in a judgment the
findings of each of the issues framed and the reasons for such findings and
make an award specifying the amount of compensation to be paid by the insurers
and the owners of the vehicle, who may be found vicariously responsible for
causing the accident and also the person or persons to whom compensation shall
29. The Bombay High Court posed unto itself a wrong question and, thus,
misdirected itself in arriving at the said decision. Its endeavour to draw
sustenance of its finding from the proposition that an order passed under
Section 140 of the Act is not an award having regard to Rule 281 of the
Maharashtra Motor Vehicles Rules, 1989 suffers from a manifest error as the
Rule lays down the procedure for filing of an appeal and, thus, by reason
thereof substantive right of appeal vested in a person under a legislative Act
cannot be taken away.
30. In our considered opinion, the said decision does not state the law
correctly. In our opinion, an order of the Tribunal awarding compensation under
Section 140 of the Act is appealable under Section 173 as it amounts to an
award under Section 173.
31. For the reasons aforementioned, there is no merit in this appeal, which
is dismissed accordingly. However, in the facts and circumstances of the case,
there shall be no order as to costs.