An insurer can contest a claim on the grounds available to the insured only with the permission of the Tribunal and the policy issued by the insurer should comply with the requirements of Chapter VIII of The Motor Vehicles Act, 1939.

Headnote:
Insurance Company - Motor Accidents Claims Tribunal - The Motor Vehicles Act, 1939, Section 96, Section 110-C(2A)
Fact of the Case:

The Insurance Company appealed before the Motor Accidents Claims Tribunal, arguing that it had the right to contest the claim on the grounds available to the insured. The claimant argued that the appeal was not maintainable as the grounds urged could only be availed of by the insured.
Finding of the Court:

The court rejected the argument that the insurer could contest the claim on the grounds available to the insured without obtaining permission from the Tribunal. It held that the appeal was not maintainable and dismissed it.
Issues: The main issue was whether the Insurance Company had the right to contest the claim on the grounds available to the insured without obtaining permission from the Tribunal.
Ratio Decidendi: The court interpreted Section 110-C(2A) of The Motor Vehicles Act, 1939, and held that the insurer could contest the claim on the grounds available to the insured only with the permission of the Tribunal. It also emphasized that the policy issued by the insurer should comply with the requirements of Chapter VIII of The Act.
Final Decision: The court concluded that the appeal was not maintainable and dismissed it.

Judgment :-

1. The Insurance Company, the third respondent in O.P.(M.V.) No.774/1981 before the Motor Accidents Claims Tribunal, Ernakulam is the appellant.

2. On a perusal of the memorandum of appeal it is clear that the grounds urged therein are grounds which can be availed of only by the insured.

3. The counsel for the claimant therefore argued that the appeal was not maintainable. Dilating on this argument the counsel submitted that the Insurance Company was not entitled to take any defence which is not specified in sub-section (2) of S.96 of The Motor Vehicles Act, 1939, for short, The Act. Before we consider this case of the claimant we shall briefly state the arguments advanced by the counsel for the appellant. The counsel submits that the appeal may be treated as one filed on behalf of the insured and that is possible in view of S.110-C(2A) of Chap.8 of The Act. Had that not been the position there was no need for the Tribunal to allow the appellant to cross-examine the witnesses 'with permission', the counsel submits. He has a further case that in any event, in view of clause (2) of the conditions incorporated in the policy, the appellant has every right to take up the defence, the insured ordinarily can take in a case like this.

4. We shall now consider the argument based on S.110-C(2A). S.110-C(2A) reads:

"Where in the course of any inquiry, the Claims Tribunal is satisfied that

(i) there is collusion between the person making the claim and the person against whom the claim is made, or

(ii) the person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded by it 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 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".

This section provides that where in the course of any enquiry the Claims Tribunal is either satisfied that there was collusion between the claimant and the person against whom the claim was made or the person against whom the claim was made had failed to contest the claim; then, the Tribunal, for reasons to be recorded in writing, can direct that the insurer who will be liable in respect of the claim shall be impleaded as a party to the proceeding and the insurer so impleaded has the right to contest the claim on all or any of the grounds that are available to the insured.

5. This sub-section would suggest that an order under this section enabling an insurer to contest the claim on all or any of the grounds that are available to the insured, can be passed by the Tribunal only as a sequel to the order directing impleadment of the insurer, he would pass on his being satisfied that either there is collusion between the claimant and the insured or the insured has failed to contest the claim, the counsel representing the contesting respondents submit. We are not impressed by this argument. This sub-section, in our view, was introduced to safeguard the interests of the insurer which, going by S.96(2) is not entitled to take any defence which is not specified therein. Apart from S.96(2), an insurer had no right to get itself impleaded as a party to the action by the claimant against the insured causing the injury. This right is a statutory right While conferring this right, sub-section (2) of S.96 has imposed certain restrictions in regard to the defence the insurer can take. The insurer is not entitled to take any defence which is not specified in that sub-section. In short the only method of avoiding the liability provided for under sub-section (2) is setting up the defences enumerated therein. (See British India General Insurance Co. v. Captain Itbar Singh and others (AIR 1959 SC 1331). The restriction thus imposed on the defences made it impossible for the insurer to contest the claim not properly contested by the insure

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1989 Supreme(Ker) 434

An insurer can contest a claim on the grounds available to the insured only with the permission of the Tribunal and the policy issued by the insurer should comply with the requirements of Chapter VIII of The Motor Vehicles Act, 1939.

Cases Referred (1)