An insurance company cannot maintain an appeal against an award of the Motor Accidents Claims Tribunal constituted under the Motor Vehicles Act, 1988 on the quantum of compensation, without having obtained leave under section 170 of the said Act, upon invocation of the reservation clause relating to subrogation.

( 1 ) A common question having arisen in these seven appeals as to whether an insurance company could maintain an appeal against an award of the Claims tribunal constituted under the Motor Vehicles act, 1988, on the quantum of compensation without having obtained leave under section 170 of the said Act but upon invocation of the reservation clause, being condition No. 2 of the policy of insurance, all the seven appeals were referred to a special Bench presided over by Ajoy Nath ray, J. [2002 ACJ 1646 (Calcutta)] to consider the said question.

( 2 ) ON consideration of section 96 (2) of motor Vehicles Act, 1939, corresponding to section 149 (2) of the Motor Vehicles act, 1988 and sections 110-C (2-A) and 110-D of 1939 Act, corresponding to sections 170 and 173 of the Motor Vehicles act, 1988, and in the light of the decision in British India Genl. Ins. Co. Ltd. v. Captain Itbar Singh, 1958-65 ACJ 1 (SC), ajoy Nath Ray, J. came to the conclusion that the insurer has a right to maintain, argue and conclude an appeal by itself even on the question of quantum and merits, provided the insured stayed away from the appellate court altogether or at any stage of the appeal makes it plain to the court of appeal that the attack against the quantum awarded by the Claims Tribunal has ceased to be fair and sufficient for the purpose of justice. In his judgment, the learned Judge recorded that the above would be the position when the policy contains a condition whereunder the insurer reserves the right to conduct in the name of the insured, the defence or settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or damages or otherwise and would have full discretion in the conduct of any proceedings or in the settlement of any claim.

( 3 ) IN a separate judgment, M,h. S. Ansari, J. observed as follows:"notwithstanding that no leave has been granted or no order has been passed by the Claims Tribunal under section 170 but the option reserved to the insurer under the reservation clause (conditionno. 2 of the insurance policy) is invoked, it must be established by the insurer that such option was exercised by the insurer either by way of subrogation or assignment and evidence in support thereof (instrument of subrogation or assignment) has been placed before the tribunal based whereupon the Claims tribunal had permitted the insurer to contest on merit, then and in that event appeal on quantum is maintainable by the insurer. Where, however, the option reserved to the insurer under the aforesaid reservation clause (condition No. 2) is invoked for the first time before the appeal court, which the insurer is entitled to so invoke, it must be established to the satisfaction of the appeal court by cogent evidence placed before it that the insurer has in fact exercised the option either by way of subrogation in which case the appeal has to be filed by the insurer in the name of the assured or if such right is claimed as and by way of assignment, appeal in its own name is maintainable by the insurer. It is on the tenor and true construction of the instrument (letter ofsubrogation/assignment) that the maintainability of the appeal would depend. "

( 4 ) A different view was expressed by ashim Kumar Banerjee, J. His Lordship chose to follow the views expressed by the honble Supreme Court in Shankarayya v. United India Insurance Co. Ltd. , 1998 acj 513 (SC) and held that the appeals were not maintainable on the ground other than those specified under section 149 (2)of the Motor Vehicles Act, 1988.

( 5 ) IN view of the different conclusions arrived at in the reference, the Special bench under Chapter VII, rule 6a of the appellate Side Rules referred the matter to the Honble Chief Justice for constitution of a larger Bench. Pursuant thereto this bench was constituted by the Honble chief Justice on 28. 2. 2003, to consider afresh the question referred to the Special bench.

( 6 ) AT the time whe