New India Assurance Co. Ltd., Cuttack Vs. Nasim Khan and ors. - Court Judgment

S.C. Mohapatra, J.

1. Insurer is the appellant in these two appeals. One appeal is against theorder refusing to set aside the ex parte award and the other is against the ex parte awarditself.

2. Respondents Nos. 1 to 6 are the claimants. Respondents Nos. 1 and 2 are the parents of the deceased, Respondent No. 3 is his widow and Respondents Nos. 4 and 5 are the minor children. Their case is that on 17-7-1987 at about 8.30 p.m. while deceased was returning from Brundaban Talkies in his cycle, motor cycle bearing registration No. OAU 3709 belonging to respondent No. 7 caused accident with the deceased resulting in fatal injuries sustained by him. Deceased was treated in the Neuro Surgical Ward of S.C.B. Medical College Hospital, Cuttack till 25-7-1987 when he succumbed to the injuries. Originally, claim was for compensation of Rs. 90,000/- but the same has been amended and enhanced to Rs. 1,90,000/-.

3. Respondent No. 1 denied the facts stated in the claim petition and his liability. However, he did not dispute that he was insured with the appellant in respect of his motor cycle. Insurer did not appear to contest.

4. On 19-4-1988, both the owner and the insurer were set ex parte as no steps were taken by them. On 11-8-1988 claimants filed a petition to issue notice to insurer to give discovery of the insurance policy. Tribunal allowed the same. But insurer did not appear on 21-9-1988 despite such notice. Claim petition was amended that day enhancing the claim amount. Claimant No. 1, the father of the deceased was examined that day as P.W. 1. On prayer of the claimants, hearing was adjourned to 1-11-1988. That day P.W. 2 was examined. Claimants filed application for adjournment to get chance to examine further witnesses. At that stage owner appeared, filed his written statement and prayed to set aside the ex parte order. The same wasaccepted and his prayer to treat the evidence already recorded to have been recorded in his presence was accepted by the Tribunal. Issues were settled thereafter and case was posted on 21-11-1988 for further hearing and on prayer of claimants that day was adjourned to 28-12-1988, Claimants filed documents on 28-12-1988 and prayed to recall P.W. 1 for further examination. The same was allowed. P.W. 1 was examined further and cross-examined. Case was posted to 5-1-1989 for the owner to produce the insurance policy and for argument. On 31-12-1988, owner produced xerox copy of insurance policy and certificate when Presiding Officer was absent on leave. On 5-1-1989, copy of the insurance policy was taken to evidence as Ext. 1. Enquiry was closed and argument was heard. After the award was made on 11-1-1989, insurer appeared on 12-1-1989 and filed an application to set aside the ex parte award and to get chance to cross-examine the witnesses. It was ordered:

'Since the O. P. No. 1 has contested the case and the award has already been passed, petition filed by O.P. 2 is not maintainable at this stage. Hence it is rejected.'

5. On the face of the aforesaid order, it is vulnerable. Under R. 20 of the Orissa Motor Vehicles (Accident Claims Tribunals) Rules, 1960 (hereinafter referred to as the 'Tribunal Rules'). Order 9, C.P.C. is made specifically applicable to a proceeding before a claims tribunal. Tribunal is not correct in law in refusing to entertain application to set aside an award passed ex pane against the insurer.

6. Interpreting Rules 17 and 19 of the Tribunal Rules, this Court in a decision reported in ILR (1981) 1 Cut 474 : (AIR 1981 Ori 203) Suresh Kumar Moharana v. Brundaban Barik held :--

'On a careful consideration of the provisions of Section 110-B and Rules 16, 17 and 19, I am inclined to hold that after the issues are framed the Claims Tribunal has no jurisdiction to dismiss the claim petition for default or to refuse to make an award. After framing of the issues, the Tribunal has to proceed with the case, hold the enquiry, decide the issuesand record the findings thereon notwithstanding the default of either party................'

Earlier in the said decision, it was observed:

'................an order of dismissal of a claimpetition for default is not an award so as to attract the scope of Section 110-D. I would accordingly, hold that the present appeal is not maintainable.'

Following the said decision, it was held in a decision reported in (1984) 58 Cut LT 468 : (AIR 1985 Ori 128) (Smt. Nishamani Swain v. Maheswar Sahu):--

'There was, thus, sufficient cause for the claimants for their absence. The proceeding was at a stage of hearing after the issues were framed. The Tribunal has no jurisdiction to entertain an application under Order 9, C.P.C. Statute has created a Tribunal for the purpose so that sufferers will not have to travel through the technicalities of the procedure (sic : as in a suit) and are not to satisfy the strict rule of evidence and would get the due compensation speedily. With that end in view, Section 110-B has provided that after giving opportunity to parties, the enquiry will be conducted by the Tribunal in spite of one party not taking part in the enquiry. The benevolent provision to give benefit to sufferer who could not take part in the enquiry is to be interpreted in a manner by which the benefit under the law is able to be enjoyed by him. As the Tribunal is not able to help the sufferer, the High Court in appeal is to enquire the cause of absence of a party and give the required relief..................'

In the aforesaid case, claimants not being present to adduce evidence, Tribunal gave a nil award against which an appeal was filed under Section 110-D of the Act.

7. It was not necessary in ILR (1981) 1 Cut 474 : (AIR 1981 Ori 203) (supra) to consider R. 20 and such rule was not taken into consideration in (1984) 58 Cut LT 468 : (AIR 1985 Ori 128) (supra) while observingthat Tribunal has no jurisdiction to entertain an application under Order 9, C.P.C. A Division Bench of this Court in the decision reported in (1988) 66 Cut LT 587 : (AIR 1989 NOC 131)(Asit Kumar Mohanty v. The Second Motor Accidents Claims Tribunal, Cuttack) considered the question of applicability of Order 9, C.P.C. and correctness of the decision reported in ILR (1981) 1 Cut 474: (AIR 1981 Ori 203) (supra). While approving the principle that in case the claim case is not dismissed summarily under R. 5 of the Tribunal Rules, it is mandatory for the Tribunal to hold an enquiry into the claim as enjoined by Section 110-B, Division Bench held :

'.................. as enjoined by Rule 20 of theRules, Order 9 of the Code is wholly applicable to the proceeding of a claim case, irrespective ofits stage.'

In view of the decision of the Division Bench, observation in (1984) 58 Cut LT 468 : (AIR 1985 Ori 128) (supra) that Tribunal has no jurisdiction to entertain an application under Order 9, C.P.C. is deemed to have been overruled.

8. In view of the aforesaid discussions, when Order 9, C.P.C. is attracted to a proceeding arising out of an application under Section 110-A finding of the Tribunal that an application by the insurer for setting aside the ex parte award against it is not maintainable, cannot be sustained and is liable to be set aside.

9. Tribunal has held that owner having contested, the application cannot be entertained. Said question was irrelevant for consideration at the stage of entertaining the application under Order 9, C.P.C. where only consideration was whether the application is maintainable.

10. Effect of setting aside the order dismissing application for setting aside the ex parte award would be to prolong the litigation for a longer time to detriment of the claimants since on application of the insurer, payment may have to be stayed. Accordingly, I heard the merit of the award also since both the insurer and the claimants are dissatisfied with the award for which appeal and cross-objection have been filed.

11. Initially I examined the record to find whether procedure laid down in the rules have been followed since 'formality is perhaps theonly available substitute for the solemnity by Which, ideally at all events, such proceedings especially should be characterised' as has been observed in AIR 1936 PC 246 (Cora Lillian Mopherson v. Oram Leo Meterson. Besides, procedure is meant to be followed although it is handmaid of justice and ought not to thwart a proceeding. Added to it, a tribunal created under statute is called upon to exercise that much of power as vested in it and in the manner provided or not at all. It has been observed by the Division Bench of this Court in the decision reported in ILR (1977) 2 Cut 334 : (AIR 1978 NOC 86) (Naresh Chandra Tripathy v. Revenue Officer):

'The Revenue Officer seems to have lost sight of the fact that he was a statutory authority created by the Act with limited power; the statute indicates his jurisdiction, defines his powers and lays down the activities he was required to perform. It was not certainly open to him while functioning as a Tribunal within the limits of law to over reach the law for purposes unknown to the statute, defy the mandate of the legislature, throw rights of the land owner to winds and thereby turn out to be a good officer.'

Although this observation is not directly applicable to this case, all Presiding Officers should keep in mind the aforesaid observations so that procedure laid down by law are followed.

12. Under the scheme of the Tribunal Rules on an application being received under Rule 3, claims tribunal is to examine the applicant on oath and substance of the examination is to be reduced to writing as provided in Rule 4. This is, of course, discretionary. Where, however, a provision is made in the rules giving discretion to act in a particular manner and tribunal intends not to exercise the power, some reason should be recorded to make it clear to the appellate forum that judicial mind was applied. It is true that where such statement is recorded, tribunal gets jurisdiction to dismiss a claim petition summarily under R. 5 after perusing the petition and the statement, and where no such statement is recorded there is no scope toexercise power under Rule 5. Yet, recording such statement would have the effect of reducing the chance of many frivolous claims being made. Some indication ought to be given in the order-sheet why discretion under Rule 4 or Rule 5 has not been exercised. In this case, discretion in Rule 4 and Rule 5 have not been exercised and notice has been issued under Rule 6. After notice, owner and insurer may file written statement at their option. Where, however, tribunal requires, they are to file their written statements as provided in Rule 7. Tribunal ought to apply its judicial mind at stage of Rule 6 whether it desires the parties or any of them to file written statement. If there is a compulsion to the owner under Rule 6 to file written statement he would disclose the liability of the insurer which would facilitate early disposal and in case he accepts the claim in all respects, insurer can get a chance to examine whether there is collusion between the claimant and the owner so as to be able to take steps for contesting the claim on merit also. Under Rule 10, Tribunal may visit the site of accident for local inspection or for examining any person likely to be able to give information to the proceeding. It may also inspect the vehicle involved in the accident as provided in Rule 11. Rule 10 reads as follows:

'10. Local inspection : -- (1) The claims Tribunal may at any time during the course of an inquiry before it visits the site at which the accident occurred for the purpose of making a local inspection or examining any persons likely to be able to give information to the proceeding.

(2) Any party to a proceeding or the representative of any such party may accompany the claims Tribunal for a local inspection.

(3) The claims Tribunal after making a local inspection shall note briefly in a memorandum any facts observed, and such memorandum shall form part of the record of inquiry.

(4) The memorandum referred to in Sub-rule (3) may be shown to any party to the proceedings who desires to see it and a copy thereof may, on application, be supplied to any such party.'

Where during local inspection or at any other time save a formal hearing, Tribunal examines a person likely to be able to give information relating to the case, whether such person has been or is so-called as a witness in the case or not and whether any or all the parties are present or not, it shall examine such person summarily and no oath shall be administered to such person examined which procedure is laid down in Rule 12 which reads as follows: --

'12. Power of summary examination:--(1) The claims during a local inspection or at any other time save at a formal hearing of a case pending before it, may examine summarily any person likely to be able to give information relating to such case, whether such person has been or is to be called as a witness in the case or not, and whether any or all of the parties are present or not.

(2) No oath shall be administered to a person examined under Sub-rule(1)'.

Rule 16 provides for framing issues. It readsas follows:--

'16. Framing of issues:-- (1) After considering any written statement the evidence of the witnesses examined and the result of any local inspection, the Claims Tribunal shall proceed to frame and record the issue upon which the right decision of the case appears to it to depend.

(2) Notwithstanding anything contained in Sub-rule (1), the claims Tribunal may drop the proceedings at any stage in its discretion if the claim is admitted by the owner or insurer'.

Rule 17 provides for determination of issues which reads as follows :--

'17. Determination of Issues:-- After framing the issues the claims Tribunal shall proceed to record evidence thereon which each party may desire to produce.'

Rule 19 reads as follows :--

'19. Judgment and award of compensation :-- (1) The Claims Tribunal, in passing, orders shall record concisely in a judgment the findings on each of the issue framed andthe reasons for such findings and make an award specifying the amount of compensation to be paid by the insurer and also the person or persons to whom compensation shall be paid.

(2) Where compensation is awarded to two or more persons, the Claims Tribunal shall also specify the amount payable to each of them'.

13. Perusal of Rule 19, indicates that judgment and award of compensation can be passed on findings being given on each issue framed. In other words, settlement of issues, is necessary in any proceeding where award is given. Rule 17 provides that after framing of issues evidence is to be recorded. In this context, if Rule 16 is read, the term 'the statement of witnesses examined' in Sub-rule (1) immediately before the term 'and the result of any local inspection' would mean the statements recorded under Rule 12 during local inspection or at any other time but does not include the evidence recorded under Rule 17. Although Rule 16 envisages perusal of written statement before framing of issue, it does not absolve Tribunal from the duty to frame issue since the same is a precondition for award as envisaged under Rule 19.

14. In the present case, evidence of claimant No. 1 as P.W. 1 and of P.W. 2 were recorded before settlement of issues as seen from the order sheet possibly because no written statement had been filed. But, such evidence not being under Rule 12, Tribunal could not have proceeded to record the same until issues are framed. Recording of evidence of P.Ws. 1 and 2 before framing of issues is not correct procedure under the Rules as discussed above.

15. I might not have attached much importance to these procedural irregularities if insurer would have entered appearance and owner would have cross-examined P.W. 2 and examined himself or his statement would have been recorded by the Tribunal when he filed written statement. If the papers of Mangalabag Police Station case No. 383 of 1987 registered as J. D. Case No. 254 of 1987 would have been on the record, I would have also perused the same to give finding. I findthat item 14 of the claim petition stating particulars of the vehicle which caused the accident has been denied by the owner in his written statement in paragraph-4. P.W. I was not at the place of accident at the time of accident. P. W. 2 who was with the deceased at the time of accident was not cross-examined and owner accepted the evidence recorded to be the evidence for the purpose of the case, I cannot draw an inference that Mr. Dillip Kumar Mohanti, Advocate for the owner had deficiency in rendering his professional service without any allegation to that effect. In the circumstances, I am inclined to hold that on instruction of the owner P.W. 2 was not sought to be cross-examined and owner did not examine himself. Added to it, evidence of P.Ws. 1 and 2 which were recorded before framing of issues were accepted as evidence on record. From this, an inference of collusion can legitimately be drawn to give chance to the insurer to contest on merit also. Finding of Tribunal that owner contested though correct apparently, is found to be wrong when the circumstances revealed are carefully examined. Owner might have given a show of contest but in effect has not contested the claim. Show of contest in real sense is not contest.

16. Another disquieting feature is seen from the records. Order dated 31-12-1988 shows that the xerox copy of the policy was filed with the certificate. From record, I find that original policy has been marked as exhibit. No certificate is found in the record and in its place an original cash receipt is available. Original policy is prepared on use of carbon. A portion in a slip containing the same figures as in the carbon typing is attached by pin and staple to the policy which also bears the sea! and signature in ink as in the policy. This surplus age also requires explanation from the owner.

17. In view of the aforesaid discussions, I am satisfied that the award ought to be set aside.

18. If the insurer would have been vigilant from the beginning, such unhappy proceeding could have been avoided. Claimants cannot be squarely blamed for the same. They willhave to face a prolonged litigation when enquiry is made afresh. Since the date of application, they have been deprived of compensation if at all they would be entitled to the same. As a result of prolongation of enquiry, they will be deprived of compensation for some more time. This prejudice can be mitigated in case I direct both the insuerer and the claimants to appear before the Tribunal on 30-11-1990 (Friday) on which day insurer shall hand over a crossed bank draft of Rs. 10,000/- (Ten thousand rupees only) in name of claimant No. 1 to him being identified by his Advocate in presence of the Tribunal or in case claimant No. I does not appear, it shall deposit the same before the Tribunal for payment to the claimant No. 1 when he appears and identifies. On being satisfied that the above direction has been complied with, Tribunal shall fix a date for the insurer to file its written statement and thereafter proceed with the enquiry in accordance with law so as to finalise the same on or before 31st March, 1991. On failure of the insurer to comply with the direction, award shall stand confirmed without further reference to Bench.

19. In the result, appeals and cross-objection are allowed. Award is set aside subject to aforesaid direction. No costs.