IMPORTANT POINT
Where driver and owner of offending vehicle had failed to appear and contest motor accident claim petition and Insurance Company was granted permission to contest the claim though by cryptic order, Insurance Company could claim to be a person aggrieved and entitled to maintain appeal u/s 173 of Motor Vehicles Act.

Headnote:Motor Vehicles Act, 1988-Sections 149(2), 170 and 173-Tribunal passed award in a fatal accident claim petition-Driver and owner of offending vehicle had failed to appear and contest the claim-Insurance Company filed petition u/s 170 of the Act praying a permission to contest proceedings and application was allowed by cryptic order Granted as prayed for -Appeal filed by Insurance Company was dismissed as not maintainable-Appeal-Tribunal was bound to record reasons while granted permission to Insurance Company to contest claim on grounds beyond statutory defences-Failure to do so should not cause prejudice to appellant-Insurance Company in given facts could be legitimately considered to be person aggrieved and entitled to file appeal-Impugned order was liable to be set aside.
Held : In the instant case, the Insurance Company was impleaded as third respondent. The driver and owner of the vehicle, though appeared before the Tribunal, did not contest the proceedings. They did not file the written statement nor did they choose to give evidence before the Tribunal. Admittedly, the appellant filed an application under Section 170 of the Act seeking permission of the Tribunal to contest the proceedings giving the necessary details. The award passed by the Tribunal also evidently shows that pursuant to this permission, the counsel for the appellant-Insurance Company cross-examined the witnesses produced by the claimant to prove the negligence of the offending vehicle. Unfortunately, however, the Tribunal, while passing its orders on the petition filed under Section 170 of the Act only stated that the prayer was granted, though the mandate of Section 170 (b) of the Motor Vehicles Act states that the Tribunal while passing an order shall record its reasons. This Court in Shankarayya s case (supra) had emphasised this aspect. But it is very much evident in this 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. In a situation contemplated by clause (b) of Section 170, nothing more was required than recording that indisputable fact. For failure to do so, the appellant shall not suffer prejudice. Therefore, the appellant-Insurance Company was justified in contesting the proceedings on the grounds other than those enumerated under sub-Section (2) of Section 149 of the Act, pursuant to the permission granted by court. For the same reason, the Insurance company can be legitimately considered to be person aggrieved within the meaning of Section 173 of the Act. (Para 12)

JUDGMENT

K.G. Balakrishnan, J.-Leave granted.

2. Aggrieved by the order passed by the Division Bench of the Gujarat High Court, the United India Insurance Company has come up in appeal by way of special leave. The appellant was the third respondent in a motor accident claim preferred by respondents 1 to 3 herein, who are legal heirs of one Sudhirbhai Jayrambhai Patel who died in a motor accident on 27.8.1994. Respondents 1 to 3 claimed a total compensation of Rs. 80 lacs and the Motor Accident Claims Tribunal (Special), Vadodra, passed an award for Rs.32,50,000/- with interest at the rate of 12% per annum from the date of application till realisation. From the impugned judgment of the Tribunal dated 15.5.1999, it appears that the first respondent, the driver of the offending vehicle and the second respondent, the owner of the vehicle appeared before the Triunal, but did not file any written statement refuting the allegations made in the petition. The Tribunal has stated that these respondents did not step into the witness box to explain the circumstances and the manner in which the actual mishap took place. It was further stated that in view of that, the Tribunal was compelled to draw an adverse inference against them. These observations have been made in paragraph 18 of the judgment of the Tribunal.

3. Before the Tribunal, the appellant Insurance Company filed a petition under Section 170 of the Motor Vehicles Act, 1988 (hereinafter referred to as the Act ) praying that the appellant herein be allowed to contest the proceedings. That application was granted by the Tribunal by a cryptic order; Granted as prayed for". After the award was passed by the Tribunal, the appellant filed an appeal before the Gujarat High Court impleading the legal heirs of the deceased and also the driver and owner of the offending vehicle as respondents. When the appeal came up for consideration, the Division Bench was of the view that in view of Section 149(2) of the Act, the appeal under Section 170 was not maintainable, especially in view of the observations made by this Court in Shankaravva vs. United India Insurance Co. Ltd. AIR 1998 SC 2968, and the appeal preferred by the appellant was dismissed. Aggrieved by the same, the present appeal is filed by the United India Insurance Company Limited.

We heard the appellant s counsel and also counsel for the respondents.

4. The short question that arises for consideration is whether the appeal preferred by the appellant before the High Court was maintainable or whether it was barred by the provisions of the Motor Vehicles Act. It is now a settled position that an insurer can contest the proceedings before the Motor Accident Claims Tribunal only on any of the grounds prescribed under Section 149 (2) of the Act and unless a specific order is passed by the Tribunal under Section 170, the insurer cannot contest the claim on grounds other than the grounds mentioned in sub-section (2) of Section 149 of the Act. It is relevant to extract Section 149 and 170 of the Motor Vehicles Act. Sub-section (2) of Section 149 of the Motor Vehicles Act, 1988 reads as under:

"(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 unuser had notice through the Court, 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 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

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2003 Supreme(SC) 748

Cases Referred (5)