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2019 DIGILAW 631 (GAU)

Oriental Insurance Company Ltd. v. Lalawmpuii

2019-05-20

MICHAEL ZOTHANKHUMA

body2019
JUDGMENT : Michael Zothankhuma, J. 1. Heard Mr. Lalremtluanga, learned counsel for the appellant as well as Mr. Lalchhanliana Khiangte, learned counsel for the respondent No. 1. No one appears for the respondent No. 2. 2. Mr. Lalremtluanga, learned counsel for the appellant submits that the impugned Judgment & Award dated 18.05.2017, passed by the learned Motor Accident Claims Tribunal, Aizawl in MACT Case No. 19/2016, directing the appellant/Insurer to pay a sum of Rs. 28,54,000/-, along with interest @ 9% per annum, from the date of filing of the claim petition should be set aside, as there is no proof that the income of the deceased was Rs. 12,000/- per month. 3. Mr. Lalchhanliana Khiangte, learned counsel for the respondent No. 1 submits that the Income Certificate of the deceased was proved by the claimants. There was no objection to the Income Certificate at the time the said Certificate was exhibited. He submits that the deceased was an Electronic Technician, working in private firm at the time of his death and his pay of Rs. 12,000/- per month was not excessive. He accordingly submits that the Insurance Company has no right to raise any objection about the admissibility of the Income Certificate only at the time of appeal, as no such objection had been raised during the time it was exhibited in the learned Tribunal. He also submits that the Insurance Company not having been given the permission for filing an appeal on all grounds under Section 170 of the MV Act, 1988, the Insurance Company cannot make a challenge to the quantum of compensation given to the claimants. 4. I have heard the learned counsels for the parties. 5. The records show that no objection was raised by the appellant at the time the Income Certificate of the deceased was exhibited in the learned Tribunal, which is Exhibit-C-21. Further, though written statement was submitted, no evidence was adduced by the appellant Insurance Company before the learned Tribunal. It is also noticed that the respondent No. 2, the owner of the accident vehicle submitted her written statement, but no evidence was adduced by the respondent No. 2. 6. Section 149(2) and Section 170 of the M.V. Act, 1988 states as follows:- "149(2). It is also noticed that the respondent No. 2, the owner of the accident vehicle submitted her written statement, but no evidence was adduced by the respondent No. 2. 6. Section 149(2) and Section 170 of the M.V. Act, 1988 states as follows:- "149(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 organized 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 licensed, 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. 170. 170. Impleading 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 and the person against whom the claim is made, or (b) the person against who the claim is made has failed to contest the claim, 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, 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." 7. In the case of National Insurance Co. Ltd., Chandigarh Vs. Nicolletta Rohtagi & Ors. reported in 2002 7 ACC 456, the Apex Court has held at para 15 & 16 as follows:- "15. It is relevant to note that Parliament, while enacting sub-section (2) of Section 149 only specified some of the defences which are based on conditions of the policy and, therefore, any other breach of conditions of the policy by the insured which does not find place in sub-section (2) of Section 149 cannot be taken as a defence by the insurer. If Parliament had intended to include the breach of other conditions of the policy as a defence, it could have easily provided any breach of conditions of insurance policy in sub-section (2) of Section 149. If we permit the insurer to take any other defence other than those specified in sub-section (2) of Section 149, it would mean we are adding more defences to the insurer in the statute which is neither found in the Act nor was intended to be included. 16. For the aforesaid reasons, we are of the view that the statutory defences which are available to the insurer to contest a claim are confined to what are provided in sub-section (2) of Section 149 of the 1988 Act and not more and for that reason if an insurer is to file an appeal, the challenge in the appeal would confine to only those grounds." 8. A perusal of the above provisions of law, read with the Judgment of the Apex Court quoted above, would go to show that the Insurance Company's right to challenge the quantum of compensation is limited to the grounds set forth in Section 149 (2) of the Motor Vehicles Act, 1988. If the Insurance Company wanted to contest the claim on all grounds, including the income of the deceased or quantum payable to the claimant, the Insurance Company should have filed an application for permission to do the same under Section 170 (b) of the Motor Vehicles Act, 1988. The Insurance Company not having taken the permission of the learned Tribunal under Section 170 (b) of the Motor Vehicles Act, 1988, the Insurance Company cannot be allowed to make a challenge to the compensation amount awarded to the claimant by way of this appeal. 9. However, in a subsequent case of the Apex Court i.e., United India Insurance Company Limited Vs. Shila Datta & Ors., reported in (2011) 10 SCC 509 , the 3 (three) Judges Bench of the Apex Court expressed its reservations against the correctness of the legal position in Nicolletta Rohtagi & Ors. (Supra) on various aspects. The 3 (three) Judges Bench in Shila Datta & Others (Supra) set out 5 (five) issues for consideration, which are as follows: "i) There is a significant difference between an 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. 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 (the 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. (ii) When the owner of the vehicle (the 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 the 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 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. (v) The Motor Vehicles Act, 1988 ("the 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. 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 cannot 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." 10. The 3 (three) Judges Bench is Shila Datta & Others (Supra) thereafter held at para Nos. 34, 35 & 36 as follows: "34. 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 Co. Ltd. Be that as it may. 35. 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, insofar as Issues (iii) to (v) are concerned, we are of the view that Nicolletta Rohtagi requires reconsideration by a larger Bench. 36. 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. 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 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." 11. In view of the differing judgments passed by the 2 (two) 3 (three) Judges Bench of the Apex Court in Nicolletta Rohtagi & Ors. (Supra) and Shila Datta & Others (Supra), the question of whether the Insurance Company was required to obtain permission under Section 170 of the MV Act, to enable it to make a challenge to the quantum of compensation awarded was decided by this Court in MAC Appeal No. 3/2019, "The New Insurance Assurance Company Limited v. Sh. Lalmihriata & Another". This Court in the above MAC Appeal No. 3/2019 held that the competency of the appellant Insurance Company to file the appeal on the quantum had been settled by the Apex Court in Shila Datta & Others (Supra) and accordingly held that no permission under Section 170 of the MV Act, 1988 was required. 12. This Court however finds that the judgment passed in MAC Appeal No. 3/2019, "The New Insurance Assurance Company Limited v. Sh. Lalmihriata & Another" was made without the Court being made aware of subsequent judgment of a 2 (two) Judges Bench of the Apex Court, in the case of Josephine James Vs. United India Insurance Company Limited & Anr., reported in 2013 4 TAC 22 (SC). 13. In the case of Josephine James (Supra), the 2 (two) Judges Bench of the Apex Court considered the 2 (two) differing judgments of the Apex Court in Nicolletta Rohtagi & Ors. (Supra) and Shila Datta & Others (Supra). The Apex Court held that though the Apex Court in Shila Datta & Others (Supra) has expressed its reservation against the correctness of the legal position in Nicolletta Rohtagi & Ors. (Supra) on various aspects, the same has been referred to a larger Bench and the same has not been overruled as yet. (Supra) and Shila Datta & Others (Supra). The Apex Court held that though the Apex Court in Shila Datta & Others (Supra) has expressed its reservation against the correctness of the legal position in Nicolletta Rohtagi & Ors. (Supra) on various aspects, the same has been referred to a larger Bench and the same has not been overruled as yet. Hence, the ratio of Nicolletta Rohtagi & Ors. (Supra) would still be applicable and the High Court was required to follow the decision rendered in Nicolletta Rohtagi & Ors. (Supra) and the earlier decisions wherein, this Court after interpreting Section 170 (b) of the MV Act, has held that in the absence of permission obtained by the Insurance Company from the Tribunal, it is not permitted to contest the case on merit. 14. In view of the reasons stated above, this Court would have to abide by the decision of the Apex Court in Josephine James (Supra), wherein it had considered the differing 2 (two) judgments of the Apex Court in Nicolletta Rohtagi & Ors. (Supra) and Shila Datta & Others (Supra). Accordingly, in view of the above, the decision of the Apex Court in Nicolletta Rohtagi & Ors. (Supra) having not been overruled, the same has to be applied to this case. Accordingly, as the records of the learned Tribunal show that the appellant did not obtain permission to contest the case on all grounds under Section 170 (b) of the MV Act, 1988 before the learned Tribunal, the appellant cannot be allowed to challenge the quantum of compensation awarded to the claimants in this appeal. Appeal is accordingly dismissed. Send back the LCR.