United India Insurance Co. Ltd. Vs. Motor Accident Claims Tribunal and ors. - Court Judgment

Rakesh Tiwari, J.

1. Heard learned Counsel for the parties.

2. The brief facts of the case are that Sri Himmat Arora died in an accident said to have been caused by Maruti Van No. U.P. 25-K-7081 which was insured by the petitioner's company. He was husband of respondent No. 2 Smt. Namita Arora aged about 43 years, father of Ms. Shweta Arora aged about 22 years and son Manish Arora aged about 20 years. The petitioner is United India Insurance Ltd. filed an application under Section 170 of Motor Vehicles Act for granting permission to contest the claim petition on the ground that owner of the vehicle was not contesting the claim petition properly.

3. The Motor Accident Tribunal rejected the application of the petitioner filed under Section 170 of the Motor Vehicles Act vide order dated 22.8.2008.

4. Learned Counsel for the petitioner has strenuously argued that they have full right to file application under Section 170 of the Motor Vehicles Act to contest the claim. He has urged on two points that:

(1) unless conditions precedent specified in Section 170 is satisfied, insurance company will not be able to take any defence beyond the other provision of the Act in appeal or even if no appeal is preferred by the insured against award of Tribunal, and

(2) The application of the petitioner under Section 170 of the Motor Vehicles Act has been illegally rejected by the Tribunal vide order impugned dated 22.8.2008 by a non-speaking order and therefore if the petitioner is not permitted by the Tribunal to contest the claim on merits by taking all the grounds available on behalf of the owner of the vehicle, it will undoubtedly prejudice insurer to a great extent.

5. In respect of his first contention the counsel for the petitioner has relied upon paragraph 10 of the judgment rendered by the Kerala High Court in Oriental Insurance Co. Ltd. v. Narayanan Nair and Ors. 2007 (1) TAC 233 (Ker). In the aforesaid judgment the maintainability of the appeal was under challenge, which was opposed on the ground that the insurer was not entitled to file an appeal disputing involvement of the vehicle, since the Tribunal did not grant permission to appellant under Section 170 of the Act. The Court in the aforesaid circumstances considered the scope of Section 170 of the Motor Vehicles Act for grant of permission to contest the case on all grounds available to the owner of the insured vehicle. The Court considered as to whether the Tribunal would without disposing of the application allow the insurer to cross-examine the claimant and thereafter pass the award directing the insurer to pay compensation whether it was permissible for insurer to challenge the award on merits in appeal on grounds other than those which are specified in Section 149(2) of the Act, in absence of the specific order by the Tribunal under Section 170 of the Act granting permission?

6. It appears that Motor Accident Claims Tribunal in the case of Oriental Insurance Company (supra) had failed to dispose of the application filed under Section 170 of the Act and it was pleaded that in those circumstances the insurance company did not have any permission to contest the case on all grounds other than those specified in Section 149(2) of the Act.

7. The crux of the contention of learned Counsel for the petitioner in that case was that the appeal was maintainable even in the absence of the specific order under Section 170 of the Act. Even if there is omission on the part of the Tribunal to pass order on the said application, it will not affect the right to file the appeal.

8. The High Court in that case, relying upon the judgment rendered by the Apex Court in United India Insurance Co. Ltd. v. Jyotsnaben Sudhirbhai Patel : AIR2003SC3127 , for holding that award passed without disposal of an interlocutory application is unsustainable and deserves an interference for fresh consideration by the Tribunal. The Court in that case held that the Tribunal applied its mind to the condition stated in Section 170 and allows the insurer's company to contest the case on merit by cross-examining the claimant on merit as it was a case where the owner-cum-driver did not file any written statement and he failed to contest the case.

9. A perusal of the judgment shows that Tribunal in the aforesaid peculiar facts and circumstances had passed an order on the application filed by insurer under Section 170, 'granted as prayed for'. It was not a speaking order and in view of the settled legal position a non-speaking order passed under Section 170 of the Act is illegal and hence it was contended before the Supreme Court that the insurer was not entitled to file an appeal on merit in the absence of a legally valid order being passed under Section 170 of the Act. The Supreme Court after considering the various aspects held in Jyotsnaben's case as follows:

Section 170(b) of the M.V. Act states that the Tribunal while passing an order shall record its reasons. But it is very much evident in the present case that the driver and the owner of the motor vehicle did not file the written statement and failed to contest the proceedings. The Tribunal could have merely recorded that fact while allowing the application. For failure to do so, the appellant shall not suffer prejudice. Therefore, the appellant insurance company was justified in contesting the proceedings on grounds other than those enumerated under Section 149(2) pursuant to the permission granted by Court. For the same reason, the insurance company can be legitimately considered to be a 'person aggrieved' within the meaning of Section 173 of the Act.

10. In case of Oriental Insurance Co. (supra) while considering the case of Jyotsnaben, the Court observed in paragraphs 8 to 12 as under:

8. As rightly argued by learned Counsel for appellant, it would appear from the dictum laid down in Jyotsnaben's case that the Supreme Court is of the view that a mere omission on the part of a Court to do something shall not prejudice any party. If from the records, it can be inferred that the requirements of Section 170 are made out and that the Tribunal had also applied its mind to those relevant facts, a non-speaking order is to be treated as inconsequential. Therefore, even though the order passed under Section 170 in Jyotsnaben's case did not specify that the conditions precedent for granting permission under Section 170 of the Act are satisfied, the Supreme Court held that an appeal filed by insurer is still maintainable.

9. But, the situation herein is, different. Unlike in Jyotsnaben's case, there is total lack of an order under Section 170 of the Act in this case. Further, the owner-cum-driver herein filed written statement, specifically disputing involvement of his vehicle in the accident. He also examined himself as a witness on his side. Despite all these the Tribunal had allowed the insurer to cross-examine claimant at a stage when the owner failed to challenge his evidence on merits. This may be because the Tribunal was satisfied that the requirements of Section 170 of the Act are made out.

10. It is needless to say that even in cases where written statement is filed by the owner or driver, and they. examine themselves as witnesses, the Tribunal may be able to conclude elements of collusion between the claimant and the owner/driver, depending upon the facts and circumstances of each case. It may be possible to infer that there is failure on the part of the owner or driver to contest the case, notwithstanding the positive steps taken by them like filing of written statement, examining witnesses etc. A contest, in this context does not mean filing of written statement or examining a witness. A contest must be a genuine contest challenge or opposition and not a mere eye-wash.

11. Looking into the various aspects, the Tribunal will be in a position to say whether there is bona fide contest or not, or whether there is any collusion or not. In cases where the driver and owner have filed written statement and examined wittness, the Tribunal will have to scan through the relevant matters and decide whether there is collusion or not and whether they are actually contesting the matter or not. In such a situation, a reasoned order will be required, showing reasons to support the conclusions, either way. In the absence of a speaking order in writing, it will not be possible for this Court to infer from vacuum, that the Tribunal was satisfied of the requirements of Section 170 of the Act and it had granted permission.

12. This is a case where a speaking order ought to have been passed by the Tribunal on the application filed under Section 170 of the Act without leaving it to this Court or the parties to read its mind from emptiness. The failure to dispose of the application, doubtlessly, has prejudiced the insurer to a great extent. It has jeopardises appellant's entitlement to file an appeal, since the very right of appeal of the insurer dangles on the decision that ought to have been taken by the Tribunal on an application under Section 170 of the Act. This Court is prevented from even deciding the question of maintainability of this appeal, in the absence of an order passed on the application filed under Section 170 of the Act.

11. As regards the second contention, learned Counsel for the petitioner has relied upon the judgment of single Judge rendered in National Insurance Co. Ltd. v. Smt. Kamla Khaitan 2006 (1) TAC 71 : 2006 (1) ACCD 111 (Del). The paragraphs 9 to 12 are as under:

9. It is not disputed on behalf of the claimant that the owner and driver of the offending vehicle have omitted to file their written statement and also did not contest the claim otherwise. The learned Counsel for the respondent submits that the cross-examination of the claimant on behalf of the appellant insurance company is not restricted to the statutory defences enumerated in Section 149 (2) of the Act only and stretches beyond that. He points out that the appellant sought to summon the owner and driver of the offending vehicle in order to examine them as its witnesses but failed to secure their presence and eventually closed its evidence without examining them. He therefore, contends that the respondent having already examined the claimant on defences other than statutory ones available under Section 149(2) of the Act and having availed the opportunity of producing their witness no prejudice has been caused to it on account of Tribunal's refusal to grant permission to it to widen the scope of its defence.

10. Learned Counsel for the appellant however disputed that the cross-examination of the claimant is not restricted to statutory defences only as available under Section 149(2) of the Act. He alternatively contended that even if it be accepted that the claimant had been cross-examined on the points beyond those permissible under Section 149(2) of the Act, in the absence of a permission under Section 170, the appellant would be handicapped in asserting the defences other than the one contemplated under Section 149(2) of the Act while resisting the claim of respondent No. 1. Further he added that on an award being passed against it, in the absence of permission under Section 170 to widen its defences, it would be incompetent on its part to maintain its appeal against the award on grounds other than those available under Section 149(2) of the Act.

11. Learned Counsel for the respondent argued that presently the matter is pending at the stage of final arguments and in the event of appellants application under Section 170 being granted it would amount to putting the clock back. This however would not appear to be a valid argument where it is found that the permission sought by the appellant under Section 170 of the Act on an application in that regard has been wrongly refused by the Tribunal. Since the impugned order declining the permission to widen the scope of its defences is found to have been erroneously declined to the appellant the same is liable to be set aside.

12. In the result, the appeal is allowed and the impugned order dated 26.3.2004 is set aside. Permission is granted to the appellant to widen the scope of its defences and to produce evidence in support thereof which would include an opportunity to further cross-examine the claimant.

12. A perusal of the aforesaid case shows that the permission was sought by the insurer under Section 170 of the Act, 1988, which was dismissed by the Tribunal, considering the scope and ambit of section as well as justification of the order passed by the Court held that permission sought by the insurer to widen scope of its defences where owner and driver had omitted to file their written statement and also did not contest the claim otherwise permission was wrongly refused by the Tribunal. It was in those circumstances the Court has set aside the order of Tribunal.

13. Learned Counsel for the petitioner has then placed reliance in paragraph 19 of the judgment rendered in National Insurance Co. Ltd. v. Nicolletta Rohtagt and Ors. 2003 (3) TAC 293 : 2003 (1) AWC 23 (SC), for the purpose of placing legislative intent and the scope of Section 170 of the Motor Vehicles Act, 1988. In paragraph 19 wherein the case of Shankaracharya and Anr. v. United India Insurance Co. Ltd. and Anr. has been considered by the Apex Court, learned Counsel for the petitioner has relied upon in support of his argument that the order passed by the Tribunal should be a reasoned order. Paragraph-19 is as under:

In Shankarayya and Anr. v. United India Insurance Co. Ltd. and Anr. : AIR1998SC2968 , it was held that an insurance company when impleaded as a party by the Court can be permitted to contest the proceedings on merits only if the conditions precedent mentioned in Section 170 are found to be satisfied and for that purpose the insurance company has to obtain an order in writing from the Tribunal and which should be a reasoned order by the Tribunal. Unless this procedure is followed, the insurance company cannot have a wider defence on merits than what is available to it by way of statutory defences. In absence of the existence of the conditions precedent mentioned in Section 170, the insurance company was not entitled to file an appeal on merits questioning the quantum of compensation.

14. After hearing the learned Counsel for the petitioner and on perusal of the record as well as aforesaid judgments, it is necessary to refer the Section 170 of the Motor Vehicles Act, which is as under:

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 whom 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.

15. Perusal of the section brings out the procedures and powers of the Court and its scope within which the application may be made by the insurer without impleading as party by the Court.

16. In the instant case, a perusal of Annexure-6 the claim application shows that case was fixed for final hearing on 22.8.2008. The ground taken by the insurance company was that the owner of the maruti car contested the case in collusion with the claimant after filing of the written statement, hence they prayed for permission to defend the said case on behalf of the owner of the maruti car. A perusal of Annexure-7 impugned in the writ petition shows that insurance company was heard on the application. The owner of the vehicle was also present in the Court and had cross-examined the witness, i.e., claimants, therefore it cannot be said that order rejecting the application is a non-speaking order. The reasons for rejecting an application may be short but they do give an indication for rejection of the application of the company and is a speaking order.

17. In my opinion Section 170 of the Motor Vehicles Act would come into force where the insurance company is not parry and therefore if it is not impleaded as party to contest the claim on behalf of the owner, who might be in collusion with the claimants or has failed to contest the case. Since the petitioner was a party in the claim application, it could have filed separate written statement for contesting the claim. I am supported by a judgment in National Insurance Co. Ltd. v. B. Veer Swamy and Ors. 1996 ACJ 394.

18. The petitioner insurance company has also appended the copy of the claim petition. It is apparent from the array of parties that United India Insurance Company Ltd. was also a party in the aforesaid claim petition. Hence, it has the right to contest the claim on all grounds available to the owners.

19. The insurance company being a party before the Motor Accident Claims Tribunal had filed written statement, they had to satisfy the Tribunal that there was a collusion between the owner and the claimant which has power, authority and jurisdiction to either allow the application of the insurance company under Section 170 or to dismiss it giving cogent reasons.

20. The case was admittedly listed for final hearing, witness had been cross-examined and it was at this final stage of hearing that application under Section 170 of the Motor Vehicles Act was filed without any supporting documents or basis regarding collusion between the claimant and the owner or the owner not contesting the claim. It was an application filed mechanically which after hearing has been rejected by the court below as the petitioner failed to establish any collusion between the claimants and the owner except making bald allegations in this regard which did not make the application a genuine application.

21. Per contra from the judgment in Oriental Insurance Co. (supra) relied upon by the petitioner it is clear that the Tribunal has considered the facts and circumstances of each case and looking into the various aspects thereafter the Tribunal was in a position to say as to whether there was a bona fide contest or not or whether there is any collusion or not. It appears that in the instant case there was no material brought on record by the Tribunal for coming to the conclusion that there was any elements of collusion or improper contest of the case by the owner of the vehicle. Merely because bald statement in the application was made in this regard it would not be sufficient for allowing an application.

22. It may be noted that in paragraph 10 of the Judgment cited by the petitioner it has also been observed that the contest must be a genuine. The challenge or opposition must not be a mere eye wash. If any person including the insurer, who contests the case, should move application based on genuine reasons for challenging or opposing it.

23. It was incumbent upon the petitioner in the facts and circumstances to have brought all facts before the Tribunal from which it could be deduced by it that there was an element of collusion between claimant and owner or the owner was not contesting the case properly. Even otherwise as stated above the petitioner could have produced its witnesses after filing his written statement in the case on all the grounds available to it for contesting the case.

24. The petitioner simply made an application mechanically under Section 170 of the Motor Vehicles Act.

25. The cases cited by the petitioner in fact do not help his case in the writ petition.

26. In my opinion the petitioner did not satisfy the ingredients of Section 170 of the Act for its applicability. The Court has given brief cogent reasons indicating the grounds and backdrop of passing the order impugned. The reasons may be given in a three line order to indicate the mind of the Court and detailed reasons in every order is not a must. Since the application filed by the petitioner did not indicate any collusion or non-contest between the parties, the order passed by the Court being based on sufficient reasons does not require interference in discretionary jurisdiction of the High Court under Article 226 of the Constitution.

27. For all reasons stated above, the writ petition is accordingly dismissed. No order as to costs.