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Supreme Court Of India
R.V.Raveendran,H.L.Dattu
NATIONAL INSURANCE COMPANY LTD.
Versus
MEGHJI NARAN SORATIYA
Decided On : 02/26/2009
(b) Motor Vehicles Act, 1988 – Section 170 – Requiring Tribunal to implead the insurer – in specified circumstances – Tribunal required to record reasons for directing the insurer – Insurer gets 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. (Para 3)
(c) Motor Vehicles Act, 1988 – Sections 149 and 170 – Entitlement of insurer to deny liability – Under section 149, on breach of a specified condition of the policy or on the ground that the policy itself is void – Issue of liability of the driver/owner or quantum of compensation cannot be subject matter of contest by the insurer under section 149 – Under section 170, Insurer entitled to contest the claim even on merits, if the tribunal is satisfied that there is collusion between the claimants and the owner/driver, or the owner/driver failed to contest the proceedings – Right of insurer u/s 170 is in addition to its statutory right under section 149 (2) to repudiate or deny its liability. (Para 4)
(d) Motor Vehicles Act, 1988 – Section 170 – Both driver and owner remaining absent and not contesting the claim – Insurer specifically alleging in its application u/s 170 failure of driver/owner to contest the claim – No interference called for. (Para 8)
(e) Motor Vehicles Act, 1988 – Section 170 – Order granting permission to insurer failing to record reasons – High Court on challenge could set it aside and remit the matter to Tribunal or itself consider whether grant of permission was warranted – Failure to record reasons cannot be taken as denial of permission – Further in absence of any challenge to order granting permission, High Court cannot dismiss appeal by insurer on merits on ground of failure of Tribunal to record reasons for granting permission. (Para 9)
Facts of the case:
THE insurer has challenged the dismissal of its appeals (against the awards of Motor Accident Claims tribunal), by the Gujarat High Court on the sole ground that the Tribunal while granting permission to the insurer to contest the claim under Section 170 of the Motor vehicles Act, 1988 (`act’ for short) did not assign reasons for granting permission.
Finding of the Court:
The orders of the High Court dismissing the appeals only on the ground that the Tribunal did not record reasons for granting permission, are liable to be set aside.
Result:
Appeals allowed.
R. V. RAVEENDRAN, J.
( 1 ) THE insurer has challenged the dismissal of its appeals (against the awards of Motor Accident Claims tribunal), by the Gujarat High Court on the sole ground that the Tribunal while granting permission to the insurer to contest the claim under Section 170 of the Motor vehicles Act, 1988 (`act' for short) did not assign reasons for granting permission.
( 2 ) CHAPTER XII of the Act relates to Claims Tribunals. Chapter XI relates to insurance of motor vehicles against third party risks. The scheme, in particular, the provisions of section 170 read with section 149, contemplate the claimants in a motor accident claim filing the claim petition against the driver and owner of the motor vehicle. The claimants are required to furnish the particulars relating to insurance and the name and address of the insurer, but are not required to implead the insurer as a party to the proceedings. Having regard to the statutory obligation imposed on the insurer to satisfy judgments and awards against persons insured in respect of third party risks, the tribunal is required to issue notice to the insurer about the initiation of the claim proceedings. When such notice is given, the insurer can seek impleadment only for the limited purpose of defending the action on the grounds mentioned in sub-section (2) of section 149, that is, breach of a specified condition of the policy by the insured (owner of the vehicle) or voidness/invalidity of the policy by reason of the policy having been obtained by non-disclosure of material facts or by representation of any fact which was false in some material particular. An insurer is not entitled to contest the claim on merits when it received such notice under section 149 (2 ).
( 3 ) HOWEVER, section 170 of the Act requires the Tribunal to implead the insurer as a party to contest the claim in the following two circumstances, where it is satisfied that : (a) there is collusion between the persons making the claim and the person against whom the claim is made; or (b) the person against whom claim is made, failed to contest the claim. The Tribunal is required to record the reasons in writing while directing the insurer who may be liable in respect of such claim to be impleaded as a party to the proceedings. On being so impleaded in pursuance of an order under section 170 of the Act, the insurer, without prejudice to the provisions contained in sub-section (2) of section 149, has 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.
( 4 ) THUS, the insurer has two distinct and compartmentalised rights, while defending against claims. First is where it wants to repudiate or deny liability as insurer, either on the ground that there is a breach of a specified condition of the policy or on the ground that the policy itself is void. Participation under section 149 (2)is only to repudiate or deny its liability under the insurance policy. Neither the issue of liability of the driver/owner nor the issue of quantum of compensation can be the subject matter of contest by the insurer who is served a notice under section 149 (2 ). Second is where the insurer is impleaded as a respondent with the right to contest the claim even on merits, either on account of the tribunal being satisfied that there is collusion between the claimants and the owner/driver, or on account of the owner/driver who have been impleaded as respondents, failing to contest the proceedings. When the insurer is impleaded and permitted to contest under section 170 of the act, it can contest either the quantum of compensation claimed or even the liability of the driver/owner to pay compensation. This is in addition to, and without prejudice to its statutory right under section 149 (2) to repudiate or deny its liability.
( 5 ) SECTION 170 therefore proceeds on the assumption that the insurer will not be a party to the claim proceedings and requires for the Trib
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