Calcutta High Court (Appellete Side)

Bajaj Allianz General Insurance ... vs Intazul Mallick & Ors on 13 September, 2024

                                    1

              IN THE HIGH COURT AT CALCUTTA
                    Civil Appellate Jurisdiction
Present: -        Hon'ble Mr. Justice Subhendu Samanta.
                     FMAT (MV) 148 of 2024
                           With
                      IA No.-CAN 1 of 2024
                           with
                       CAN 2/2024

     Bajaj Allianz General Insurance Company Ltd.
                             Versus
                  Intazul Mallick & Ors.
                           with
                       FMA 336 of 2024
             The Oriental Insurance Company Ltd.
                             Versus
                Sekhar Ranjan Chaudhury & Anr.

For the appellant/
Insurance Co.                  :           Mr. Rajesh Singh, Adv.
                                           Ms. Sucharita Paul Adv.


For the respondents/
Claimants                       :          Mr. Jayanta Banerjee, Adv.,
                                           Mr. F.B. Hazari, Adv.,
                                           Ms. Ruxmini Basu Roy, Adv.,
                                           Mr. Argha Bhattacharjee Adv.

Reserved on                     :              29.07.2024

Judgment on                     :              13.09.2024



Subhendu Samanta, J.

1. Both the appeals are heard on the point of

maintainability.

2. Issues involved in both the appeals are similar on

point of law. Thus both the appeals are taken up together for

unified decision. The Insurance Company have preferred the

appeals against an Ex-parte award of compensation passed by

the Learned Tribunal. This court on the earlier occasion in New

India Assurance Company Ltd. Vs. Mithu Sk and Anr.

[2024(2) TAC 190 (Cal)] by following the observation of

Hon'ble Supreme Court in National Insurance Company Ltd.

Chandigarh Vs. Necolleta Rohatgi (2002 ACJ 1950) and

Jasphin James Vs. United Assurance Company Ltd. (2013)

ACJ 2418 has observed that :

Thus, unless an order is passed by the Tribunal permitting the insurer to avail the grounds available to an insured or any other person against whom a claim has been made on being satisfied of the two conditions specified in Section 170 of the Act, it is not permissible to the insurer to contest the claim on the grounds which are available to the insured or to a person against whom a claim has been made. Thus where conditions precedent embodied in Section 170 are satisfied and award is adverse to the interest of the insurer, the insurer has a right to file an appeal challenging the quantum of compensation or negligence or contributory negligence of the offending vehicle even if the insured has not filed any appeal against the quantum of compensation. Sections 149, 170 and 173 are part of one Scheme and 8 if we give any different interpretation to Section 173 of the 1988 Act, the same would go contrary to the scheme and object of the Act."

3. Mr. Rajesh Singh Learned Counsel appearing on

behalf of the Insurance Company has approached this court to

reconsider the view of this court by virtue of decision of Hon'ble

Supreme Court passed in United India Insurance Company

Vs. Shila Datta and Ors. (2011) ACJ 2729.

4. Mr. Singh submits that decision of three Judges

Bench of Hon'ble Supreme Court Necolleta Rohatgi was

reviewed by the Hon'ble Supreme Court in Shila Dutta

(Comprising three Judges Bench). In deciding the case of

Hon'ble Supreme Court has formulated as many as 05 issues

amongst them three issues appears to be decided in Necolleta

Rohatgi was referred to the larger Bench of for fresh

consideration. The rest two issues which were not dealt with

specifically by the Hon'ble Supreme Court in Necolleta

Rohatgi was finally decided by the Hon'ble Supreme Court in

Shila Datta. He submits that the three issues which are

referred to the larger Bench for fresh consideration are as

follows:

(i) Whether the insurance company can challenge the

quantum of compensation claimed/awarded if the insurer

was only a 'noticee' under Section 149(2)?

(ii) Whether the insurer can be permitted under Section

170 to file an appeal and contest the award if the insured

fails to challenge the award even when the award was

erroneous or arbitrary?

(iii) Whether the insurer is restricted to defend the claim

only on the grounds available under Section 149(2) even in

cases where the Company is authorised by the policy to

defend the claim in the name of the insured owner?

The rest two issues are decided by the Hon'ble Supreme Court

in Shila Datta which were not in conflict with the decision of

Necolleta Rohatgi among those issues the issue No. 1 is as

follows:-

"Motor Vehicles Act, 1988 - Sections 149 (2) & 170 If the insurer is only a 'noticee' under Section 149(2) and not a party Respondent or where the claim is initiated suo motu under Section 149(7), 158(6) or 170, it can defend the claim only on the grounds mentioned in S. 149(2). But if the insurer is made a party- respondent, it can raise other grounds also"

5. Mr. Singh further argued in deciding the same issue

the Hon'ble Supreme Court has observed that :

Point No (i): The position in cases where the

claimants implead the insurer as a respondent in the claim

petition.

6. The scheme of the Motor Vehicles Act, 1988, as contained in Chapters XI (Insurance of Motor Vehicles against Third Party risks) and XII (Claim Tribunals) proceeds on the basis that an insurer need not be impleaded as a party to the claim proceedings and it should only be issued a statutory notice under Section 149(2) of the Act so that it can be made liable to pay the compensation awarded by the tribunal and also resist the claim on any one of the grounds mentioned in Clauses (a) and (b) of Sub-section (2) of Section 149. Sub-sections (1), (2) and (7) of Section 149 clearly refer to the insurer being merely a noticee and not a party. Similarly, Sections 158(6), 166(4), 168(1) and 170 clearly provide for and contemplate insurer being merely a noticee for the purposes mentioned in the Act and not being a party respondent Section 170 specifically refers to impleading of insurer as a party to the claim proceedings.

7. When an insurer is impleaded as a party Respondent to the claim petition, as contrasted from merely being a noticee under Section 149(2) of the Act, its rights are significantly different. If the insurer is only a noticee, it can only raise such of those grounds as are

permissible in law under Section 149(2). But if he is a party- respondent, it can raise, not only those grounds which are available under Section 149(2), but also all other grounds that are available to a person against whom a claim is made. It therefore follows that if a claimant impleads the insurer as a party- respondent, for whatever reason, then as such Respondent, the insurer will be entitled to urge all contentions and grounds which may be available to it.

8. The Act does not require the claimants to implead the insurer as a party Respondent. But if the claimants choose to implead the insurer as a party, not being a noticee under Section 149(2), the insurer can urge all grounds and not necessarily the limited grounds mentioned in Section 149(2) of the Act. If the insurer is already a Respondent (having been impleaded as a party Respondent), it need not seek the permission' of the Tribunal under Section 170 of the Act to raise grounds other than those mentioned in Section 149(2) of the Act. The entire scheme and structure of Chapters XI and XII is that the claimant files a claim petition only against the owner and driver and the tribunal issues notice to the insurer under Section 149(2) so that it can be made liable to pay the amount awarded against the insurer and if necessary, deny liability under the policy of insurance, on any of the grounds mentioned in Section 149(2). If an insurer is only a noticee and not a party Respondent, having regard to the decision in Nicolletta Rohtagi, it can defend the claim only on the grounds mentioned in Section 149(2) and not any of the other grounds relating to merits available to the insured- respondent. This is the position even where the claim proceedings are initiated suo moto under Sections 149(7) and 158(6) of the Act, without any formal application by the claimants, as the insurer is only a noticee under Section 149(2) of the Act.

9. Section 170 of the Act does not contemplate an insurer making an application for impleadment. Nor does it contemplate the insurer, if he is already impleaded as a party Respondent by the claimants, making any application seeking permission to contest the matter on merits. Section 170 proceeds on the

assumption that a claim petition is filed by the claimants, or is registered suo moto by the tribunal, with only the owner and driver of the vehicle as the Respondents. It also proceeds on the basis that in such a proceeding, a statutory notice would have been issued by the tribunal to the insurer so that the insurer may know about its future liability in the claim petition and also resist the claim, on any of the grounds mentioned in Section 149(2). Section 170 of the Act also assumes that the tribunal will hold an inquiry into the claim, where only the claimants and the owner and driver will be the parties. Section 170 provides that if during the course of such inquiry, the tribunal finds and satisfies itself that there is any collusion between the claimant and the owner/driver or where the owner/driver has failed to contest the claim, the tribunal may suo moto, for reasons to be recorded in writing, direct that the insurer who may be liable in respect of the claim, who was till then only a notice, shall be treated as a party to the proceedings. The insurer so impleaded, without prejudice to the provisions of Section 149(2), will have the right to contest the claim on all or any of the grounds that are available to the driver/owner.

10. Therefore, where the insurer is a party- respondent, either on account of being impleaded as a party by the tribunal under Section 170 or being impleaded as a party- respondent by the claimants in the claim petition voluntarily, it will be entitled to contest the matter by raising all grounds, without being restricted to the grounds available under Section 149(2) of the Act. The claim petition is maintainable against the owner and driver without impleading the insurer as a party. When a statutory notice is issued under Section 149(2) by the tribunal, it is clear that such notice is issued not to implead the insurer as a party-respondent but merely to put it on notice that a claim has been made in regard to a policy issued by it and that it will have to bear the liability as and when an award is made in regard to such claim.

Therefore, it cannot, as of right, require that it should be impleaded as a party-respondent. But it can however be made a party-respondent either by the claimants voluntarily in the claim

petition or by the direction of the Tribunal under Section 170 of the Act. Whatever be the reason or ground for the insurer being impleaded as a party, once it is a party- respondent, it can raise all contentions that are available to resist the claim.

6. Mr. Singh by citing the observation of Hon'ble

Supreme Court in Shila Datta has submitted that in the

present cases the Insurance Company being the insurer was

impleaded by the claimants as party respondent in the claim

case from the inception. No statutory notice u/s 149(2) of the

Act has been served upon the insurer. The Hon'ble Supreme

Court in Shila Datta has categorically segregated to set of

proceedings wherein the insurer has impleaded as "noticee"

and other cases where the insurer has impleaded by the

claimants as "party respondents".

7. Mr. Singh argued that where the Insurer has

impleaded as a party respondents by the claimants, from the

inception of the proceeding it is not required for the insurer to

file an application before the concerned Tribunal u/s 170 of

MV Act to contest the claim case on all available grounds

except the grounds mentioned in Section 142 (2) of the said

Act.

8. Mr. Singh Further argued that for all those cases

where the insurer has impleaded as a party respondents from

the beginning of the proceeding they are not entitled to file an

appeal against the award passed Ex-parte against the insurer

challenging quantum of compensation. He further argued that

though this court has observed in following the observation of

Jasphin James but such observation is not legally tenable.

9. Mr. Singh further argued the Hon'ble Aex Court in

National Insurance Company Ltd. Vs. Manju Majumder

remanded several SLPs to the Concerned High Court following

the decision of Shila Datta. He Further argued that the same

view was adopted in the case of Baja Allianz General

insurance Company Ltd. Vs. Kirtika Lakhotia and Ors 2013

ACJ 913 has decided the same issued by following the decision

of Shila Dutta (Supra) as follows:

We have considered the rival contentions as well as the precedents cited at the Bar. The decision in the case of Shila Datta (Supra) distinguished the earlier decisions of the Apex Court and held that when an Insurance Company was a respondent and contested the claim it would have right available in law to prefer appeal on all issues. The said decision tried to distinguish the phraseology 'Noticee' and 'Party respondent.

The Full Bench decision in the case of Tara Sundari Phauzdar & Ors. (Supra) should be read along with the Apex Court decision in the case of Shila Datta (Supra) to decide on the question of the right of the Insurance Company to contest the claim. All the earlier decisions of the Apex Court stood clarified by Shila Datta (Supra) including the one Nicolletta Rohtagi (Supra). We thus do not specifically refer to those decisions as Shila Datta (Supra) would make the issue more clear.

In the present case, the Insurance Company throughout contested the claim as a party respondent. Hence, they were entitled to take all grounds available to them in law. On that score, we do not find any scope to restrict the Insurance Company in the appeal.

10. On the above score Mr. Singh argued that in the

present case, the Learned Tribunal has awarded the

compensation ex-parte against the insurer/ Insurance

Company exorbitantly. The Insurance Company was impleaded

as party respondent in both the cases, so the Insurance

Company is entitled to file the appeal on all available grounds.

11. Mr. Jayanta Banerjee Learned Counsel appearing on

behalf of the respondent claimants submits that the

observation of Hon'ble Supreme Court in Shila Datta is not at

all applicable in the present case. The law has been decided by

Hon'ble Suprme Court by three Judges Bench In Necolleta

Rohatgi followed by Jasphin James. This Division Bench as

well as another Co-ordinate Bench having (New India

Assurance Company Vs. Palash Bhuinya and Anr.) the same

determination has taken the same view.

12. Mr. Banerjee further argued that whether the

Insurance Company was impleaded in the cases as a "party

respondent", or they are "noticee", is not an issue before the

Hon'ble Supreme Court in Shila Dutta. Mr. Banerjee further

argued that the claimants are required to file claim application

according to a format before the learned Tribunal for getting

the compensation u/s 166 of MV Act. In the same format, the

insurer or the owner of the offending vehicle never made as a

party respondent. More over he submits that this court cannot

over turn his decision taken in Mithu Sk (supra). So he

submits that both the appeals filed by the Insurance Company

is not maintainable.

13. Heard the Learned Counsels perused the

observations of Three Judges Bench of Hon'ble Supreme Court

in Necolleta Rohatgi which was decided the issue on 17th

September 2022 as follows:

For the aforesaid reasons, an insurer if aggrieved against an award, may file an appeal only on those grounds and no other. However, by virtue of Section 170 of the 1988 Act, where in course of an enquiry the Claims Tribunal is satisfied that (a ) there is a collusion between the person making a claim and the person against whom the claim has been made or (b) the person against whom the claim has been made has failed to contest the claim, the tribunal may, for reasons to be recorded in writing, implead the insurer and in that case it is permissible for the insurer to contest the claim also on the grounds which are available to the insured or to the person against whom the claim has been made. Thus, unless an order is passed by the tribunal permitting the insurer to avail the grounds available to an insured or any other person against whom a claim has been made on being satisfied of the two conditions specified in Section 170 of the Act, it is not permissible to the insurer to contest the claim on the grounds which are available to the insured or to a person against whom a claim has been made. Thus where conditions precedent embodied in Section 170 is satisfied and award is adverse to the interest of the insurer, the insurer has a right to file an appeal challenging the quantum of compensation or negligence or contributory negligence of the offending vehicle even if the insured has not filed any appeal against the quantum of compensation. Sections 149, 170 and 173 are part of one Scheme and if we give any different interpretation to Section 173 of the 1988 Act, the same would go contrary to the scheme and object of the Act.

This matter may be examined from another angle. The right of appeal is not an inherent right or common law right, but it is a statutory right. If the law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged on the premise that the insured or the persons against whom a claim has been made has not filed any appeal. Section 149 (2) of 1988 Act limits the insurer's appeal on those enumerated grounds and the appeal being a product of the statute, it is not open to an insurer to take any other plea other than those provided in Section 149(2) of 1988 Act. The view taken in United India Insurance Co. Ltd. v. Bhushan Sachdeva & Ors., (supra) that a right to contest would also include the right to file an appeal is contrary to well established law that creation of a right to appeal is an act which requires legislative authority and no court or tribunal can confer such right, it being one of limitation or extension of jurisdiction. Further, the view taken in United India Insurance (supra) that since the Insurance companies are nationalised and are dealing with public money/fund and to deny them the right of appeal when there is a collusion between the claimants and the insured would mean draining out or abuse of public fund is contrary to the object and intention of the Parliament behind enacting Chapter XI of 1988 Act. The main object of enacting Chapter XI of 1988 Act was to protect the interest of the victims of motor vehicle accidents and it is for that reason the Insurance of all motor vehicles has been made statutorily compulsory. Compulsory Insurance of motor vehicle was not to promote the business interest of insurer engaged in the business of insurance. Provisions embodied either in 1939 or 1988 Act nave been purposely enacted to protect the interest of travelling public or those using road from the risk attendant upon the user of motor vehicles on the roads. If law would have provided for compensation to dependants of victims of motor vehicle accident, that would not have been sufficient unless there is a guarantee that compensation awarded to an injured or dependant of the victims of motor accident shall be recoverable from person held liable for the consequences of the accident. In Skandia

Insurance Co. Ltd v. Kokilaben Chandravadan & Ors. [1987] 2 SCC 654, it was observed thus:

"In other words, the legislature has insisted and make i t incumbent on the user of a motor vehicle to be armed with an insurance policy covering third party risks which is in conformity with the provisions enacted by the legislature. It is so provided in order to ensure that the injured victims of automobile accidents or the dependants of the victims of fatal accidents are really compensated in terms of money and not in terms of promise. Such a benign provision enacted by the legislature having regard to the fact that in the modern age the use of motor vehicles notwithstanding the attendant hazards, has become an inescapable fact of life, has to be interpreted in a meaningful manner which serves rather than defeats the purpose of the legislation. The provision has therefore to be interpreted in the light of the aforesaid perspective. "

Following the observation of Necolleta Rohatgi, Thereafter the

Hon'ble Supreme Court in Shila Dutta, having the same

strength (three judges Bench), has segregated the status of

insurer as "Noticee" i.e. upon whom a notice is served under

Section 149(2) of the said Act, or as "a party respondent"

impleaded by the claimants from the inception of the

proceeding. In deciding the issues the Hon'ble Supreme Court

in Shila Dutta has specifically observed that when Insurance

Company was impleaded as a party respondent from the

inception of the proceeding it is not required for the Insurance

Company to file an application u/s 170 of the Act seeking

permission to contests the claim cases on all available grounds

apart from the grounds mentioned u/s 149(2) of the said Act;

for that reason, the appeal filed by the Insurance Company on

these cases is maintainable if it was challenged the ex-parte

exorbitant quantum of compensation awarded by the tribunal.

14. It is true following decision of Hon'ble Supreme

Court in Shila Datta several appeals were remanded by the

Hon'ble Apex Court to the concerned High Courts to decide the

matter under the observation of Shila Datta.

15. In Josphen Jamaes the two judges bench of Hon'ble

Supreme Court has observed that:-

Aggrieved by the impugned judgment and award passed by the High Court in MAC Appeal No. 433/2005 and the review petition, the present appeal is filed by the Appellant urging certain grounds and assailing the impugned judgment in allowing the appeal of the Insurance Company without following the law laid down by this Court in Nicolletta Rohtagi's case (supra) and instead, placing reliance upon the Bhushan Sachdeva's case (supra). Nicolletta Rohtagi's case was exhaustively discussed by a three judge bench in the case of United India Insurance Co. v. Shila Datta MANU/SC/1256/2011: (2011) 10 SCC 509. Though the Court has expressed its reservations against the correctness of the legal position in Nicolletta Rohtagi decision on various aspects, the same has been referred to higher bench and has not been overruled as yet. Hence, the ratio of Nicolletta Rohtagi's case will be still applicable in the present case. The Appellant claimed that interference by the High Court with the quantum of compensation awarded by the Tribunal in favour of Appellant and considerably reducing the same by modifying the judgment of the Tribunal is vitiated in law. Therefore, the impugned judgments and awards are liable to be set aside.

16. So the division Bench of Hon'ble Apex Court in

Jasphen James has observed that the ratio in Necolleta

Rohatgi has not been overruled by the Higher Bench. Thus the

ratio will be still applicable.

17. Let me consider the issue from the inception. It is

true that the observation of Hon'ble Apex Court in Necolleta

Rohatgi as well as Shila Dutta is separate and distinct. The

aspect as decided by Shila Datta has categorically segregated

the status of insurer regarding the participation of the

Insurance Company in a claim proceeding. It is the guiding

ratio of Shila Datta that if the insurer is a "noticee" then the

Insurance Company cannot file an appeal before the appeal

forum against the order of the Tribunal challenging the

compensation without getting permission of the Tribunal u/s

170 of MV Act. At the same time, it is the observation of

Hon'ble Supreme Court in Shila Datta that if the insurer has

impleaded as a party respondent since the inception of the

proceeding, it is not required for them to ask for a permission

from the tribunal u/s 170 of the MV Act to contest the claim

case on all available grounds except the grounds u/s 149(2) of

the MV Act, in those cases the Insurance Company may file an

appeal against Ex-parte order passed by the Learned Tribunal.

On close scrutiny of the present claim applications it appears

to me that the claimants has filed application u/s 166 of the

MV act before the Learned Tribunal for getting compensation

stating the fact of the accident including the name of owner

and insurer of the offending vehicle. The application was filed

in a format. Let me see, what is the procedure/powers of the

claim tribunal u/s 169 of MV Act to deal with the claim

applications.

18. For proper appreciation of the scope of notice upon

the Insurance Company it is required to set out the provision

u/s 168 as well as 169 of the MV Act.

168. Award of the Claims Tribunal- On receipt of an application for compensation made under section 166, the Claims Tribunal shall, after giving notice of the application to the insurer and after giving the parties (including the insurer) an opportunity of being heard, hold an inquiry into the claim or, as the case may be, each of the claims and, subject to the provisions of section 162 may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid and in making the award the Claims Tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the in accident or by all or any of them, as the case may be:

Provided that where such application makes a claim for compensation under section 140 in respect of the death or permanent disablement of any person, such claim and any other claim (whether made in such application or otherwise) for compensation in respect of such death or permanent disablement shall be in

disposed of in accordance with the provisions of Chapter X. (2) The Claims Tribunal shall arrange to deliver copies of the award to the parties concerned expeditiously and in any case within a period of fifteen days from the date of the award.

(3) When an award is made under this section, the person who is required to pay any amount in terms of such award shall, within thirty days of the date of announcing the award by the Claims Tribunal, deposit the entire amount awarded in such manner as the Claims Tribunal may direct.

169. Procedure and powers of Claims Tribunals. (1) In holding any inquiry under section 168, the Claims Tribunal may, subject to any rules that may be made in this behalf, follow such summary procedure as it thinks fit.

(2) The Claims Tribunal shall have all the powers of a Civil Court for the purpose of taking evidence on oath and of enforcing the attendance of witnesses

and of compelling the discovery and production of documents and material objects and for such other purposes as may be prescribed; and the Claims Tribunal shall be deemed to be a Civil Court for all the purposes of section 195

and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of 1974). (3) Subject to any rules that may be made in this behalf, the Claims Tribunal

may, for the purpose of adjudicating upon any claim for compensation, choose one or more persons possessing special knowledge of and matter relevant to the inquiry to assist it in holding the inquiry.

Section 170 of the MV Act also provides to implead insurer in

certain cases:-

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-section (2) of section 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.

19. So, on plain perusal of the provisions enumerated

u/s 168,169,170 of the MV Act. it appears to me that in all the

cases it is the only option of the Learned Tribunal to issue or

give notice of the application to the insurer. There is no option

for the claimant to implead the insurer as a party respondent

in a claim case under the MV Act 1988. The claim tribunals

have no power like Civil Court according to the provisions of

Section 27 Section 28 and Section 29 as well as order V of the

code of Civil Procedure which can enable a claimant to issue

summons of the claim case to the insurer. Thus, in my view a

claimant in a claim proceeding under provisions of MV Act