Hon'ble Dr. Dhananjaya Yeshwant Chandrachud, C.J.—During the course of the hearing of a First Appeal From Order (FAFO) arising out of a decision of the Motor Accident Claims Tribunal at Saharanpur dated 6 May 2014, a Division Bench of this Court formulated the following questions for consideration by a Full Bench (The questions have been slightly reformulated to bring greater clarity to the issues involved) :

(i) Where on account of a breach of an insurance policy, the owner of an offending vehicle has been held liable to pay compensation (the insurer having been held not to be liable) but a direction is issued to the insurer to pay the compensation awarded to the claimant and to recover it from the owner of the offending vehicle, does the insurer have a right to appeal under Section 173 of the Motor Vehicles Act, 1988 (the Act)?

(ii) If question (i) above is answered in the affirmative, to what extent and on what grounds will the insurer have the right to challenge an order of the Tribunal?

(iii) In a situation where the Motor Accident Claims Tribunal (the Tribunal) has fastened the liability to pay compensation only on the owner of the offending vehicle but the insurer has been directed to pay the compensation to the claimant and recover it from the owner subject to the owner furnishing security to the extent of the compensation awarded and if the owner fails to furnish security, either due to incapability or for any other reason, should the award be allowed to be frustrated for want of security, thereby defeating the object of the legislature to protect the right of third parties?

2. The incident which had led to the proceedings before the Division Bench in an FAFO took place at 6.30 p.m. on 24 December 2010 when Surya Prakash Sharma boarded a tempo at Saharanpur. During the course of the journey, the tempo collided with a tractor and trolley coming from the opposite direction. Surya Prakash Sharma sustained multiple injuries and was declared dead at the District Hospital at Saharanpur. The place of the occurrence was before the Air Station Sarsawa, near Sourana on the Saharanpur Sarsawa road.

3. The claim petition was filed before the Tribunal at Saharanpur by the widow on her behalf and for three minor children who were respectively of the ages of one, fourteen and sixteen. United India Insurance Company Limited (Insurance Company), the appellant, was impleaded as a party to the claim petition. The Tribunal held that the insurance company was not liable to pay compensation on the ground that (i) the driver did not have a valid and effective driving licence on the date of the accident and there was a violation of the conditions of the insurance policy; and (ii) the tempo was being driven in violation of its route permit. The Tribunal came to the conclusion that the accident took place because of the rash and negligent manner in which the tempo was being driven. The claim for compensation was allowed in the amount of Rs. 19,10,665/- together with interest at the rate of seven percent per annum. The insurance company was directed to satisfy the award by paying the compensation awarded to the claimants subject to its right to recover the amount from the insured.

4. We will now proceed to analyse the three questions which have been referred to the Full Bench for being considered.

Re Questions (i) and (ii)

Section 173 of the Act provides as follows:

“173. Appeals.—(1) Subject to the provisions of sub-section (2), any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to the High Court:

Provided that no appeal by the person who is required to pay any amount in terms of such award shall be entertained by the High Court unless he has deposited with it twenty-five thousand rupees or fifty per cent of the amount so awarded, whichever is less, in the manner directed by the High Court:

Provided further that the High Court may entertain the appeal after the exp