The judgment established the right of the insurance company to challenge the principles applied in calculating the compensation amount under the Motor Vehicles Act, while recognizing the limitations on challenging the quantum of compensation.

S.N.Pathak, J.

1. This miscellaneous appeal has been filed by Oriental Insurance Co. Ltd., opposite party No. 3 of the Claim Case No. 14 of 1993.

2. The relevant fact was that the claimants of the aforesaid claim case had preferred an application u/s. 166 of the Motor Vehicles Act, 1988 , for compensation on account of the death of his minor child, 4 years old, who was allegedly killed in an accident that occurred on 7.5.1993. The accident was caused by a motor vehicle bearing registration No. BPK 6874. The Claims Tribunal decided the claim of the applicant Suresh Kumar on the basis of evidence adduced and directed the appellant company to pay compensation of Rs. 1,55,000 with interest at the rate of 12 per cent per annum from 31.5.1993 till realisation.

3. The appellant before me submitted that the learned Tribunal adopted a wrong approach in calculating the amount of compensation. The alleged accident took place in the year 1993 when the Motor Vehicles Act, 1988 , was in force and, therefore, the compensation should not have been calculated on the principles as laid down in the Motor Vehicles Amendment Act, 1994. The Tribunal took the notional income of the deceased child to be Rs. 15,000 on the basis of the Second Schedule of the Motor Vehicles Amendment Act, 1994. So, the Tribunal committed a legal error. Besides the same, a child of four years was not supposed to earn any income in order to contribute to its family and, therefore, the notional income fixed by the Motor Vehicles Amendment Act, 1994, which is for unemployed persons, but who are capable of earning, should not have been used as the basis for calculating the income of the deceased child.

4. The respondents lawyer submitted that u/s. 170 of Motor Vehicles Act, the insurance company is not entitled to challenge the amount of award fixed by the Claims Tribunal. Its objection should be limited to the provisions as laid down under Secs. 147, 148 and 149 of the Motor Vehicles Act and for his contention he relied on a decision Chinnama George V/s. N.K. Raju 2000 ACT 777 (SC), as also the decision in Kaushnuma Begum V/s. New India Assurance Co. Ltd. 2001 ACJ 428 (SC). Appellants lawyer referred to a decision rendered by this court reported in 2001 (1) PLJR 431. Of course, sec. 170 of Motor Vehicles Act has placed certain restrictions upon the insurer of the motor vehicle regarding its plea in a claim case. It is better to set forth the provisions of the aforesaid section to appreciate the legal principles laid down by the aforesaid section:

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 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-sec. (2) of sec. 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.

All that the aforesaid section of the Motor Vehicles Act has laid down is that when there is a collusion between the claimant and vehicle owner and when the latter has failed to contest the claim, the Tribunal for reasons to be recorded in writing may direct the insurer of a vehicle to be impleaded as a party to the proceedings and then the insurer without prejudice to the provisions contained in Sub-sec. (2) of sec. 149 shall have 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 preferred. So the wording of sec. 170 of the Motor Vehicles Act, 1988, are explicit to the effect that once the insurance company is impleaded in the case before