Motilal And Anr. v. Issrani Bus Service And Ors. — 1992 DIGILAW 856 (MP)

JUDGMENT K.L. Issrani, J. 1. The present revision petition is filed against the order dated 5.1.1991, passed by the Claims Tribunal, Hoshangabad, in Execution Case No. 14 of 1978 in which it has been held that the execution of the award of recovery cannot be made from non-applicant No. 4, National Insurance Co. Ltd., Bhopal, as it was not a party to the original proceedings in which the award was passed. 2. It is admitted position that in claim petition filed by the applicants-claimants, non-applicant No. 4, National Insurance Co. Ltd., was not a party to the proceedings and the non-applicant Nos. 1 to 3, owners and driver, were ex parte and an ex parte award of Rs. 21,000/- was passed against the non-applicant Nos. 1 to 3 only on 11.4.1981. None of the parties challenged this award. 3. It is only in execution application that the applicants-claimants filed an application for recovery of the amount awarded against the insurance company. According to the claimants, the bus which caused the accident was insured with it on the date of accident, in which death of their son Raju was caused by rash and negligent driving of the bus by Kishanlal (non-applicant No. 3). The bus is owned by the non-applicant No. 1, Issrani Bus Service, Bhopal, of Narayandas (non-applicant No. 2). The notice was issued to the non-applicant No. 4, insurance company, which admitted the position that the bus in question was insured with it at the time of incident, but it denied its liability to pay the compensation as it was neither noticed nor party to the award. 4. Learned counsel for the applicants-claimants has placed reliance on Sub-section (1) of Section 96 of the Motor Vehicles Act, 1939, which was applicable at that time and submits that even if the insurance company was not impleaded as a party in the claim petition, it is of no consequence. It is statutory liability of the insurance company to make the payment of the award under Sub-section (1) of Section 96 of the Act, which has been passed by the competent court of law. According to the claimants, since the other non-applicants remained absent even after the notice, an ex pane award was passed against them. They had no opportunity to ask the particulars of insurance company from them. According to the claimants, since the other non-applicants remained absent even after the notice, an ex pane award was passed against them. They had no opportunity to ask the particulars of insurance company from them. Since no right is conferred on insurance company without being impleaded as a party, it is the duty of the insurance company to honour the award and pay the amount because insurance company is only an indemnifier. No right is conferred on it for contesting the claim on merits. Their technical objection deserves to be rejected as in the case of no fault liability. Learned counsel for the applicants-claimants has relied on the principles laid down in Abdulkadar Ebrahim v. Kashinath Moreshwar Chandani 1968 ACJ 78 (Bombay); Madhya Pradesh State Road Trans. Corpn. v. Jahiram 1969 ACJ 3 (MP); New India Assurance Co. Ltd. v. Naroti Devi 1977 ACJ 485 (P&H) and Guru Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC). 5. Non-applicant Nos. 1 to 3 are not contesting this revision petition and are ex pane in this Court also in spite of notice to them. 6. Learned counsel for the non-applicant No. 4, insurance company, has refuted the contentions of the learned Counsel for the applicants-claimants. He relies on Sub-section (2) of Section 96 of the Act of 1939 and submits that it is only when in the judgment or award in which insurance company had notice then alone the insurance company can be made liable to honour or to pay the amount of award. He also submits that under Sub-section (2-A) of Section 110-C of Motor Vehicles Act, 1939 in case of collusion or absence of the owner and driver, the insurance company gets full right to contest the claim of the claimants on merits also besides its limitations to contest under Section 96 of the Act. According to him, under Rule 277 of the M.P. Motor Vehicles Rules, 191 A, insurance company was a necessary party to the claim proceedings itself. In case it was not chosen by the claimants to make the insurance company a party or the court had not issued notice to the insurance company, the insurance company cannot be made liable to make payment of the award. He also relies on the ruling in M.P.S.R.T. Corpn. In case it was not chosen by the claimants to make the insurance company a party or the court had not issued notice to the insurance company, the insurance company cannot be made liable to make payment of the award. He also relies on the ruling in M.P.S.R.T. Corpn. v. Jahiram 1969 ACJ 3 (MP), relied by the learned Counsel for the applicants-claimants, in which it has been held that the insurance company was a necessary party to the proceedings. According to him, had the insurance company been a party to the proceedings it had a right to contest the claim on merits also as the non-applicant Nos. 1 to 3 colluded with the claimants and remained ex parte even after notice. 7. In Abdulkadar Ebrahim v. Kashinath Moreshwar Chandani 1968 ACJ 78 (Bombay), relying on the principles laid down in British India General Insurance Co. Ltd. v. Captain Itbar Singh, 1958-65 ACJ 1 (SC), it has been held that under Sub-section (2) of Section 96 of the Motor Vehicles Act, 1939, it is the duty of the court to issue a notice of the proceeding to the insurance company and on such notice being issued to it, the insurer is entitled to be made a party and defend the action only on the ground that the policy stood cancelled on grounds stated in the sub-section. It is only on the limited grounds that the insurer is entitled to contest the proceeding. This ruling does not deal with the fact of issuing no notice under Sub-section (1) of Section 96. In New India Assurance Co. Ltd. v. Naroti Devi 1977 ACJ 485 (P&H), it has been held that Section 96 only clarifies that if an award is made, it would be the duty of the insurance company to meet the claim. It nowhere lays down that if the insurance company is (Sic. not) allowed to contest the liability in the absence of the insured it should not be held liable. This ruling does not deal with the rules framed under the 1939 Act for filing the claim petition specially under the Motor Vehicles Rules. It nowhere lays down that if the insurance company is (Sic. not) allowed to contest the liability in the absence of the insured it should not be held liable. This ruling does not deal with the rules framed under the 1939 Act for filing the claim petition specially under the Motor Vehicles Rules. In Guru Govekar v. Filomena F. Lobo 1988 ACJ 585 (SC), it has been held that once the insurer had issued a certificate of insurance in accordance with Sub-section (4) of Section 95 of the Act, the insurer had to satisfy any decree which a person receiving injuries from the use of the vehicle insured had obtained against any person insured by the policy. He was liable to satisfy the decree when he had been served with a notice under Sub-section (2) of Section 96 of the Act about the proceedings in which the judgment was delivered. In this case the dispute was regarding public place. The vehicle was engaged by the repairer who had undertaken to repair the vehicle in the garage. So the dispute was whether the insurer can be made liable to pay compensation found to be due to the claimant when the vehicle was in custody of the repairer. The facts in this case are quite different and do not deal with the impact of the insurer being a necessary party to the original proceeding or not. 8. In the ruling cited by the applicants themselves, i.e., M.P.S.R.T. Corpn. v. Jahiram 1969 ACJ 3 (MP), Rule 3 of the Madhya Pradesh Motor Accidents Claims Tribunal Rules, 1959, has been construed and it has been held that the insurer must be impleaded as a party as required in Form 'A' prescribed in Rule 3 of the M.P. Motor Accidents Claims Tribunal Rules, 1959. Omission to implead insurer is serious. This court while dealing with the provisions has also relied on principles laid down in British India General Insurance Co. Ltd. v. Capt. Itbar Singh, 1958-65 ACJ 1 (SC). 9. According to Sub-section (2) of Section 110-A of the Motor Vehicles Act, 1939, every application under Sub-section (1) shall be made to the Claims Tribunal, which shall be in such form and shall contain such particulars as may be prescribed. Ltd. v. Capt. Itbar Singh, 1958-65 ACJ 1 (SC). 9. According to Sub-section (2) of Section 110-A of the Motor Vehicles Act, 1939, every application under Sub-section (1) shall be made to the Claims Tribunal, which shall be in such form and shall contain such particulars as may be prescribed. The form of the application which has been prescribed for by Rule 3 of the Madhya Pradesh Motor Accidents Claims Tribunal Rules, 1959, as in the judgment reported in M.P. State Road Trans. Corpn. v. Jahiram 1969 ACJ 3 (MP), is reproduced as under: 3. Application. (1) An application for a claim for compensation arising out of an accident of the nature specified in Sub-section (1) of Section 110-A of the Act shall be made in Form 'A' appended to these rules. Such application shall be in duplicate and shall be signed and verified in the manner prescribed by Order 6, Rule 15 of the Code of Civil Procedure, 1908 (V of 1908). It has been held in the above-said judgment: The submission that insurers had no right to be impleaded as a party is wholly unfounded. Their Lordships of the Supreme Court have in British India General Insurance Co. Ltd. v. Captain Itbar Singh, 1958-65 ACJ 1 (SC), indicated the nature of defences that are available to an insurer upon being impleaded as a party. We fail to appreciate how can the statutory defences be raised unless the insurer is made a party. That is the only manner in which the insurer can avoid its liability. In view of the clear provisions contained in Section 96(2) and (6) of the Motor Vehicles Act, it can hardly be asserted that an insurer is not a party to an action for recovery of damages. Thus, the insurer must, of necessity, be a party to such proceedings. The provisions of Rule 277 are para materia to Rule 3 of 1959 Rules. 10. In order to appreciate the similarity, Rule 277 of the Madhya Pradesh Motor Vehicles Rules, 1974, is reproduced below: 277. Application.-(I) An application for a claim for compensation arising out of an accident of the nature specified in Sub-section (1) of Section 110-A of the Act shall be made in Form 'C.A.A.' appended to these rules, to the Claims Tribunal having jurisdiction over the area in which the accident occurred. Application.-(I) An application for a claim for compensation arising out of an accident of the nature specified in Sub-section (1) of Section 110-A of the Act shall be made in Form 'C.A.A.' appended to these rules, to the Claims Tribunal having jurisdiction over the area in which the accident occurred. (2) The person or persons competent to make an application for a claim for compensation under Sub-rule (1) shall either present it in person or send it by registered post to the Claims Tribunal or to any of its officers duly authorised by it to receive such application. (3) The application under Sub-rule (1) shall be appended with a certificate which shall be signed by the applicant to the effect that the statement of facts contained in the application is, to the best of his knowledge and belief, true and shall be in duplicate duly signed and verified in the manner prescribed by Order 6, Rule 15 of the Code of Civil Procedure, 1908 (V of 1908). 11. Sub-section (2-A) to Section 110-C was introduced by amendment with effect from 2.3.1970. Sub-section (2-A) of this section gives right to the insurance company to contest the claim, in case there is collusion between the person making the claim and the person against whom the claim is made, or the person against whom the claim is made has failed to contest the claim. Even if this Court has nothing on record that there was collusion between the parties, but at least this much position is admitted that the non-applicant Nos. 1 to 3 against whom the claim was made failed to contest the claim. In such a case it was the duty of the court to record such reasons in writing and direct that the insurer who may be liable in respect of such claim shall be impleaded as a party to the proceedings and the insurer so impleaded thereupon could have the right to contest the claim on all or any of the grounds that are available to a person against whom the claim has been made. It goes to show that the insurance company had not only the limited defences under Section 96, but could contest on merits also. Since the insurance company was not noticed, it had no opportunity to defend the action. It goes to show that the insurance company had not only the limited defences under Section 96, but could contest on merits also. Since the insurance company was not noticed, it had no opportunity to defend the action. It had also no opportunity to ask the court for opportunity to contest when the owner had chosen to remain absent. 12. A cogent reading of both sections, i.e. 96 (2) and 110-C (2-A) indicates that whether there is a collusion between the person making the claim and the person against whom the claim is (Sic. made, or the person against whom the claim is) made has failed to contest the claim, the insurance company is entitled to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made. This position is not dealt with in any of the rulings cited by the parties. The insurance company had no notice either of the accident or of the claim from the Claims Tribunal. Admittedly, the owner has also not claimed any amount from the insurance company till today. Whether the insurance company can still be made liable to pay the amount of the award in the absence of the notice till today. The question that remains to be answered is as to whether the party which was not a party to the decree or award can be made liable to pay. 13. In New India Assurance Co. Ltd. v. Mariappan 1984 ACJ 222 (Madras), it has been held that the defences are available to the insurer under Sections 96 (2) as well as 110-C (2-A) of the Motor Vehicles Act, 1939, in case where the owner of the vehicle remained ex parte. In that case the insurer had only filed the appeal against the award as the owner of the vehicle remained ex parte before the Claims Tribunal. The case was remitted to the Tribunal for fresh consideration after giving due opportunity to the insurance company for cross-examining the eye-witnesses and putting forward defences open to it. There is difficulty in this case to remand or remit the case because it is not an appeal, but only an order in the execution proceeding of the award. 14. The case was remitted to the Tribunal for fresh consideration after giving due opportunity to the insurance company for cross-examining the eye-witnesses and putting forward defences open to it. There is difficulty in this case to remand or remit the case because it is not an appeal, but only an order in the execution proceeding of the award. 14. Looking to the peculiar position and the facts and circumstances of the case, I am unable to hold the insurance company liable to pay the amount of award without being noticed in the original claim proceedings. It is for the claimants-applicants to recover the amount from the other non-applicants, viz., owners and the driver, who on payment can in turn claim from the insurance company. 15. Consequently, this revision petition fails and is hereby dismissed but without any order as to costs.