Chinnama George & Ors Vs. N.K.
Raju & ANR [2000] INSC 199 (6 April 2000)
D.P.Wadhwa, D.P.Mohapatro
D.P. WADHWA,J.
Appellants are widow and minor children of
George who died in a motor vehicle accident which occurred on May 28, 1989.
George was riding a scooter. It was hit by a bus driven by Mohanan, the third
respondent in a rash and negligent manner. Bus was owned by N.K. Raju, the
first Respondent. The insurer was the Oriental Insurance Co. Ltd., the second
respondent. Appellants are aggrieved by the judgment dated January 6, 1998 of
the Division bench of the High Court of Kerala which reduced the amount of
compensation arising out of the accident from Rs.3,78,000/- awarded by the
Motor Accident Claims Tribunal (for short, the 'Claims Tribunal') to Rs.2,27,320/-.
George, the deceased was 36 years of age at the time of the accident.
His income was Rs.2,000/- per month. He was
an actor-cum- secretary of a leading drama troupe which was staging drama in
India and abroad. After deducting his personal expenses, his income was
determined at Rs.1600/- per month by the Claims Tribunal. Applying multiplier
of 20, compensation amount was fixed at Rs.3,78,000/- by the Claims Tribunal.
The Claims Tribunal gave an award dated
10.1.1991 for Rs.3,78,000/- with interest @ 12% per annum from September 1,
1989 with cost. The owner of the Bus, N.K. Raju, and the Insurer filed appeal
against the order of the Claims Tribunal under Section 173 of the Motor
Vehicles Act, 1988 (for short, the 'Act'). Section 173 entitles any person
aggrieved by an award of the Claims Tribunal to prefer an appeal to the High
Court. In view of the decision of the Claims Tribunal, it could not be said
that N.K. Raju, the owner could be an aggrieved person for him to file any
appeal against the award. We have gone through the impugned judgment of the
High Court. There is no mention in whole body of the judgment as to how N.K.
Raju felt aggrieved and what was his argument raised against the award of
Claims Tribunal. There is no challenge to the finding that the bus was being
driven by the third respondent in rash and negligent manner. Under Section 149
of the Act, it is the duty of the insurer to satisfy the award against the
person insured in respect of third party risks. It is not that liability of the
insurer in the present case is being disputed. Insurer can defend the
proceedings before the Claims Tribunal on certain limited grounds. Sub-sections
(1), (2) and (7) of Section 149 of the Act are relevant, which are as under :
"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 whom a policy has been effected, judgment or award in respect of any
such liability as is required to be covered by a policy under clause (b) of
sub-section (1) of section 147 (being a liability covered by the terms of the
policy) or under the provisions of section 163A is obtained against any person
insured by the policy, then, notwithstanding that the insurer may be entitled
to avoid or cancel or may have avoided or cancelled the policy, the insurer
shall, subject to the provisions of this section, pay to the person entitled to
the benefit of the decree any sum not exceeding the sum assured payable
thereunder, as if he were the judgment debtor, in respect of the liability,
together with any amount payable in respect of costs and any sum payable in
respect of interest on that sum by virtue of any enactment relating to interest
on judgment. (2) No sum shall be payable by an insurer under sub- section (1)
in respect of any judgment or award unless, before the commencement of the
proceedings in which the judgment or award is given the insurer had notice
through the Court or, as the case may be, the Claims Tribunal of the bringing
of the proceedings, or in respect of such judgment or award so long as
execution is stayed thereon pending an appeal, and an insurer to whom notice of
the bringing of any such proceedings is so given shall be entitled to be made a
party thereto and to defend the action on any of the following grounds,
namely:- (a) that there has been a breach of a specified condition of the
policy, being one of the following conditions, namely:- (i) a condition
excluding the use of the vehicle (a) for hire or reward, where the vehicle is
on the date of the contract of insurance a vehicle not covered by a permit to
ply for hire or reward, or (b) for organised racing and speed testing, or (c)
for a purpose not allowed by the permit under which the vehicle is used, where
the vehicle is a transport vehicle, or (d) without side-car being attached
where the vehicle is a motor cycle; or (ii) a condition excluding driving by a
named person or persons or by any person who is not duly licenced, or by any
person who has been disqualified for holding or obtaining a driving licence
during the period of disqualification; or (iii) a condition excluding liability
for injury caused or 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 particular. (3) to (6) ........... (7) No
insurer to whom the notice referred to in sub- section (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-section (2) or in the corresponding law of the
reciprocating country, as the case may be." Admittedly, none of the
grounds as given in sub-section (2) of Section 149 exist for the insurer to
defend the claims petition. That being so, no right existed in the insurer to
file appeal against the award of the Claims Tribunal. 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 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
the award of the Claims Tribunal. The insurer by associating the owner or the
driver in the appeal when the owner or the driver is not an aggrieved person
cannot be allowed to mock at the law which prohibit the insurer from filing any
appeal except on the limited grounds on which it could defend the claims petition.
We cannot put our stamp of approval as to the validity of the appeal by the
insurer merely by associating the insured. Provision of law cannot be
undermined in this way. We have to give effect to the real purpose to the
provision of law relating to the award of compensation in respect of the
accident arising out of the use of the motor vehicles and cannot permit the
insurer to give him right to defend or appeal on grounds not permitted by law
by a backdoor method. Any other interpretation will produce unjust results and
open gates for the insurer to challenge any award. We have to adopt purposive
approach which would not defeat the broad purpose of the Act. Court has to give
effect to true object of the Act by adopting purposive approach. Sections 146,
147, 149 and 173 are in the scheme of the Act and when read together mean : (1)
it is legally obligatory to insure the motor vehicle against third party risk.
Driving an uninsured vehicle is an offence punishable with an imprisonment
extending up to three months or the fine which may extend to Rs.1,000/- or
both; (2) Policy of insurance must comply with the requirements as contained in
Section 147 of the Act; (3) It is obligatory for the insurer to satisfy the
judgments and awards against the person insured in respect of third party
risks. These are sub-sections (1) and (7) of Section 149. Grounds on which
insurer can avoid his liability are given in sub-section (2) of Section 149.
If none of the conditions as contained in
sub-section (2) of Section 149 exist for the insurer to avoid the policy of
insurance he is legally bound to satisfy the award. He cannot be a person
aggrieved by the award. In that case insurer will be barred from filing any
appeal against the award of the Claims Tribunal. The question that arises for
consideration is : can the insurer join the owner or the driver in filing the
appeal against the award of the Claims Tribunal as driver or owner would be the
person aggrieved as held by this Court in Narendra Kumar & Anr. vs.
Yarenissa & Ors. [(1998) 9 SCC 202]? This Court has held that appeal would
be maintainable by the driver or the owner and not by the insurer and, thus, a
joint appeal when filed could be maintainable by the driver or the owner. This
is how the Court held: - "For the reasons stated above, we are of the
opinion that even in the case of a joint appeal by insurer and owner of
offending vehicle if an award has been made against the tortfeasors as well as
the insurer even though an appeal filed by the insurer is not competent, it may
not be dismissed as such. The tortfeasor can proceed with the appeal after the
cause-title is suitably amended by deleting the name of the insurer."
There is no dispute with the proposition so laid by this Court. But the insurer
cannot maintain a joint appeal along with the owner or the driver if defence on
any ground under Section 149(2) is not available to it. In that situation joint
appeal will be incompetent. It is not enough if the insurer is struck out from
the array of the appellants. The appellate court must 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
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 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 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 throw the legal representatives of the deceased or
the injured in the accident to unnecessary prolonged litigation at the instance
of the insurer.
In the present case we do not find any
argument addressed on behalf of the owner of the offending vehicle and the only
argument, which the High Court noticed, was that of the counsel for the
insurer. That argument was on the quantum of compensation granted to the
appellants. That ground is certainly not available to the insurer for the
purpose of filing the appeal. We, therefore, hold that the present appeal by
the insurer by joining the owner was not competent, as there was no ground
available to the insurer to defend the claim petition.
We, therefore, set aside the impugned
judgment of the High Court and restore that of the Claims Tribunal.
Appellants shall be entitled to cost which we
quantify at Rs.10,000/-.
Accordingly, the appeal is allowed.
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