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2012 DIGILAW 876 (HP)

Oriental Insurance Company Limited v. Rajni Devi

2012-11-23

DHARAM CHAND CHAUDHARY

body2012
Judgment Dharam Chand Chaudhary, J. In the present writ petition, the insurer-1st respondent has assailed the legality and validity of the award dated 2.7.2010 passed by learned Motor Accident Claims Tribunal, Chamba, in Motor Accident Claims Petition No. 111 of 2009 on the ground that in view of para 5 of the claim petition Annexure P-1, the monthly income of the deceased has been claimed Rs.5,000/-, whereas a petition under Section 163-A of the Motor Vehicles Act (hereinafter referred to as ‘the Act’) can only be filed in those cases where the income of the deceased does not exceed to Rs.40,000/-. The claim petition was neither maintainable nor could have been entertained and also that in view of the 2nd schedule under Section 163-A of the Act only the claimant(s) is/are entitled to Rs.2,000/- on account of funeral expenses, Rs.5,000/- on account of loss of consortium and Rs.2,500/- on account of loss of estate, the award of Rs.15,000/-, Rs.40,000/- and Rs.40,000/-respectively, by the Tribunal below on these heads being not as per the schedule, the Tribunal below allegedly exceeded the jurisdiction vested in it and as such the award under challenge is stated to be perverse. 2. The striking of issue qua the cause of accident and also validity of driving licence etc. in a petition under Section 163-A and awarding interest at the rate of Rs.12% per annum on the awarded amount have been claimed to be another glaring example of perversity. The challenge to the award is thus on the sole ground of perversity. 3. Shri G.C Gupta, learned Senior Advocate though invited the attention of this Court to a judgment of the apex Court in National Insurance Company Limited vs. Sinitha and other, 2012 ACJ, 1 and on the strength of the ratio of the law laid down has contended that a petition under Section 163-A of the Act falls under the fault liability principle and that the owner or Insurance Company, as the case may be, is required to defeat the claim under Section 163-A by pleading and establishing through cogent evidence the fault ground, yet fairly conceded that in view of the Insurer-1st respondent having not raised any such plea before the learned Tribunal below, the law so laid down by the apex Court has no application in the present case. 4. 4. Learned Senior Advocate also did not press the challenge to the award on the ground of the ceiling of income i.e. Rs.40,000/- per annum for laying a claim under Section 163-A of the Act and rightly so as in the claim petition, the petitioner has claimed monthly income of the deceased as Rs.3,300/- per month i.e. Rs.39,600/- per annum and not Rs.5,000/- per month or Rs.40,000/- per annum. 5. As a matter of fact, learned Senior Advocate has restricted arguments in this matter only to the extent that the Tribunal below has allegedly failed to assess the compensation payable to the petitioner without appreciating the structured formula provided under Section 163-A of the Act and the schedule thereunder and strenuously contended that the impugned award is liable to be modified appropriately. 6. On the other hand, learned counsel representing respondents No.1 to 3 (hereinafter referred to as ‘the claimants’) has raised the question of maintainability of this writ petition and while making reference to a judgment of the apex Court in United India Insurance Company Limited vs. Shila Datta, 2011, ACJ, 2729 has contended that the Insurer-1st respondent instead of invoking the extraordinary jurisdiction vested in this Court under Article 226/227 of the Constitution of India should have preferred an appeal under Section 173 of the Act. The writ petition has thus been sought to be dismissed on this score alone. 7. Since the question of maintainability of this writ petition has been raised and even vigorously contested on both sides, therefore, before entering into the controversy on merits, I deem it proper to set at rest such controversy first. It is seen that in Shila Datta’s case, the appellant-Insurance Company had urged that the Insurance Companies are not barred from questioning the quantum of compensation either before MACT or in appeals arising from the award. The apex Court had formulated the following five points for its consideration:- (i) There is a significant difference between insurer as a `notice' [a person to whom a notice is served as required by section 149(2) of the Act] in a claim proceedings and an 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. 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 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 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 that it is not a `person aggrieved' by the quantum of compensation determined, would 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 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 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 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 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. 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 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. (v) The Motor Vehicles Act, 1988 (`Act' for short) creates a liability upon the insurer to satisfy the judgments and awards against the insured. The Act expressly restricts the right of the insurer to avoid the liability as insurer, only to the grounds specified in section 149(2) of the Act. Though it is impermissible to add to the grounds mentioned in the statute, 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, 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, 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. 8. The apex Court while answering Points No.(i) and (ii) in favour of the appellant-insurance company, no doubt has held that if the insurer-1st respondent is not only a ‘noticee’ in a claim proceedings and rather a party-respondent, it can contest the claim on all grounds, however, where it is not so impleaded by the claimant as a party, but only issued a statutory notice under Section 149 (2) of the Act by the Tribunal, is entitled to be a party to deny the liability on the grounds mentioned in the section ibid and also that where insurer is liable to pay the compensation it has to be termed as a ‘person aggrieved’ and competent to join in an appeal filed by the insured challenging the quantum. 9. The remaining three points i.e. (iii), (iv) & (v), have not been answered in this judgment and the Bench hearing the case ibid in the light of the law laid down by a coordinate Bench in National Insurance Company Limited vs. Nicolletta Rohtagi, 2002, ACJ, 1950 (SC) that the insurance company can contest the Motor Accident Claims for compensation only on the ground mentioned in Section 149 (2) of the Act, referred the same to be answered by a larger Bench. 10. To be more specific, the relevant portion of the judgment ibid is extracted as follows:- “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 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 the Act (even though several other grounds may be available under the terms 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 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 arriving at the `just' compensation. xxxxx. 18. ………… 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 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. 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. 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 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 of justice will not be served by allowing obvious errors to remain uncorrected. 19. The Insurers submit that 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 file an appeal, by applying the principle underlying section 170 of the Code. In this behalf, they relied upon the decision in United India Insurance Co. Ltd. vs. Bhushan Sachdeva - 2002 (2) SCC 265 , (held to be not good law in Nicolletta Rohtagi) wherein a two Judge Bench of this Court held thus : "(13) The person against whom the claim is made is normally the insured of the vehicle involved in the accident. When he failed to contest that claim 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 of the insured to contest a claim does not stop with the end of the proceedings before the Tribunal. (14) 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 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. Those words must be interpreted in a realistic manner. Right to contest would include the right to contest by filing an 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 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 all grounds available to the insured." 20. In British India General Insurance Co. Ltd. v. Captain Itbar Singh & Ors., AIR 1959 SC 1331 , a three Judge Bench of this Court held as under: "....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...." (emphasis supplied) Nicolletta Rohtagi did not consider the issue with reference to 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. In fact if such a contention had been raised, the court would have noticed that the issue was covered by a binding three-Judge Bench judgment in British India General Insurance. In fact if such a contention had been raised, the court would have 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 the aforesaid reasons, in so far as issues (iii) to (v) are concerned, we are of the view that Nicolletta Rohtagi requires reconsideration by a larger bench. Conclusion 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 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 insurer alone was the appellant before the High Court and where the insurer was only a notice 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.” 11. In view of the controversy that the insurer is competent to challenge the award on the quantum of compensation or not is thus not yet answered by the apex Court in the judgment cited supra and rather referred the same to a larger Bench and as the insurer seems to be aggrieved from non computation of the compensation awarded to the claimants in accordance with the structured formula provided under Section 163-A of the Act and the schedule thereunder, it cannot be said that this writ petition is not maintainable. The writ petition thus has to be entertained, however, in writ jurisdiction; the insurance company is competent to challenge the award only on the ground of perversity as has been held by a Full Bench of this Court in National Insurance Company Ltd. vs. Soma Devi and Others, 2003 (3) Shim.L.C., 7. 12. There is no dispute so as to the death of bread winner in the family, who was none-else, but the person at the wheel being driver of ill fated vehicle in the accident occurred on 7.11.2009 around 7.30 p.m. at ‘Machhetar Thokar’. 12. There is no dispute so as to the death of bread winner in the family, who was none-else, but the person at the wheel being driver of ill fated vehicle in the accident occurred on 7.11.2009 around 7.30 p.m. at ‘Machhetar Thokar’. True it is that the Hon’ble apex Court in Sinitha’s case cited supra has not taken a view that Section 163-A of the Act is founded under the fault liability principle, however, it is worthwhile to point it out here that fault, if any, on the part of deceased Gantha Ram, admittedly at the wheel of the vehicle at the time of accident is neither pleaded nor proved except for a passing reference in para 24 of reply filed on behalf of the insurer-1st respondent that “the accident occurred due to rash and negligent driving of the driver of the vehicle”, which in my considered opinion, is neither sufficient nor convincing to record a finding that the insurer/insured has pleaded and proved through cogent evidence the fault ground and succeeded in its exclusion from payment of compensation. It is in this background, learned senior Advocate representing the petitioner irrespective of having raised the plea of fault liability, not pressed for any finding thereon and rightly so as neither there exists any pleadings nor evidence in this behalf on record. 13. Now if adverting to the sole ground that computation of the compensation is neither in accordance with structured formula provided under Section 163-A of the Act nor the schedule thereunder urged on behalf of the insurer-1st respondent, the same in the light of the judgment of this Court dated 6th November, 2012 in CWP No.921 of 2001, titled New India Assurance Company vs. Smt. Prakasho Devi & others setting aside thereby the multiplier of 10 in a case where the deceased was above 65 years of age, and that the computation of compensation was not in accordance with structured formula, and rather perverse while holding that the applicable multiplier should have been five, modified the award, finds substance. 14. In the case in hand, there is no quarrel qua the age of the deceased as 29 years at the time of his death in the accident and his monthly income being Rs.3,300/- per month or Rs.39,600/- per annum. As per the schedule, proper multiplier is 18. The total compensation as per the schedule would thus be Rs.6,80,000/-. 14. In the case in hand, there is no quarrel qua the age of the deceased as 29 years at the time of his death in the accident and his monthly income being Rs.3,300/- per month or Rs.39,600/- per annum. As per the schedule, proper multiplier is 18. The total compensation as per the schedule would thus be Rs.6,80,000/-. If 1/3rd thereof in consideration of expense, which the victim would have incurred towards maintaining himself is deducted therefrom, net amount payable as compensation to the claimants works out as Rs.6,80,000-2,26,666=4,53,334. The Motor Accident Claims Tribunal has definitely exceeded the jurisdiction vested in it while awarding funeral expenses to the tune of Rs.15,000/, loss of consortium to the tune of Rs.40,000/- and loss of estate Rs.40,000/- for the reason that the structured formula under Section 163-A of the Act provides only for award of a sum of Rs.2,000/-, Rs.5000/- and Rs.2500/-, respectively, on these heads. Thus, only a sum of Rs.9,500/- could have been awarded as compensation against all the three heads. The total amount payable as compensation would thus be Rs.4,53,334 + 9500 = 4,62,834/- rounded off to Rs.4,63,000/-. The compensation awarded by the Tribunal below, however, is Rs.5,70,200/-, the computation whereof, in my considered opinion, is contrary to the structured formula and the 2nd schedule. The award to this extent is perverse and as the insurer-1st respondent in terms of ratio of the judgment in Soma Devi’s case cited supra is competent to challenge the award passed by the Tribunal below, if perverse, the amount awarded is liable to be modified only to the above extent. 15. Since nothing is brought to the notice of this Court that the awarding of interest at the rate of 12% per annum on the awarded amount is also a perversity and to the contrary this Court in Prakasho Devi’s case cited supra has held the claimants entitled to the interest at the rate of 12% per annum from the date of claim petition till the amount is deposited by the insurer, therefore, there is no substance in such plea raised in the present writ petition. 16. 16. In view of the forgoing reasons, the claimants will be entitled only to an amount of Rs.4,62,834/- as compensation towards loss of income in lump sum and not Rs.5,70,200/-, however, together with interest at the rate of 12% per annum from the date of claim petition till the same is deposited by the insurance company-1st respondent. The award stands modified accordingly. 17. With these observations, the writ petition stands disposed of, so also the pending application(s), if any.