National Insurance Company Ltd. vs Smt. Kamala Khaitan And Ors.
2005 Latest Caselaw 971 Del

JUDGMENT

B.N. Chaturvedi, J.

1. Present appeal is directed against an order dated 26th March, 2004 passed by Motor Accident Claims Tribunal dismissing an application under Section 170 of the Motor Vehicles Act, 1988 (for short "the Act"-) made by appellant insurance company.

2. The application was made seeking permission to widen scope of its defenses on the ground that the owner and/or driver of the offending vehicle have colluded with the claimant as they failed to contest the claim and were proceeded ex parte. Though the Tribunal noticed that to attract application of Section 170 of the Act either of the two conditions, namely, (a) that there is collusion between the claimant and the owner and/or driver of the offending vehicle; or (b) owner and/or driver of the offending vehicle failed to contest the proceedings, has to be satisfied it proceeded to find that clause (b) of Section 170 would be invokable only where failure of owner/driver to contest the claim is in furtherance of collusion between them and the claimant. It further held that merely because owner and driver were proceeded ex parte and did not contest the claim that by itself would not suffice to infer that there was collusion between the claimant and the owner and driver of the offending vehicle to attract Section 170 of the Act to accord permission to the appellant to widen the scope of its defense.

3. Learned counsel for the appellant refers to a decision of the Supreme Court in United Indian Insurance Co. Ltd. v. Jyotsnaben Sudhirbhai Patel and Ors; to contend that the view taken by the Tribunal is wholly erroneous inasmuch as the two conditions contemplated under Section 170 of the Act are independent of each other and where the owner and/or driver of the offending vehicle fail/s to contest the proceedings that would satisfy the legal requirement to accord permission under Section 170 to widen the scope of defenses available to the insurance company and it need not be shown that the owner and/or driver of the offending vehicle failed to contest the proceedings by virtue of any collusion between them and the claimant.

4. In the absence of a permission under Section 170 of the Act the insurance company can contest the claim before the Tribunal only on the statutory grounds mentioned in Section 149(2) of the Act. Section 170 of the Act reads thus :

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 imp leaded as a party to the proceeding and the insurer so imp leaded 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."

5. Apart from finding that Section 170 would be attracted only on the person against whom claim is made failing to contest the claim in collusion with the claimant, the Tribunal also felt that Section 170 could be resorted to by a n insurance company for permission to contest on grounds, other than those enumerated under Section 149(2) available to the owner and driver of the offending vehicle only in cases where imp leaded as a party to the proceedings at a later point of time during the pendency of the proceedings. In the present case, since the appellant insurance company was already arrayed as respondent the Tribunal took the view that the appellant was precluded from invoking Section 170. In support of such a view a decision of Supreme Court in National Insurance Company Ltd., Chandigarh v. Nicolletta Rohtagi and Ors.; 2002 VII AD (SC) 566 was cited. The decision in National Insurance Co. Ltd. (supra) however on perusal would appear to be laying down no such law. The decision nowhere lays down that Section 170 of the Act would not be available to an insurance company even on either of the two conditions mentioned in Section 170 of the Act being satisfied where the insurance company has been arrayed as one of the respondents from the very beginning. The ratio of this decision would thus appear to have been wrongly applied by the Tribunal in support of its view that Section 170 would not be attracted where the insurance company is made a party to the proceedings from the very outset.

6. The Tribunal placed its reliance on a Kerala High Court decision in National Insurance Co. Ltd. v. Mary Janet and Ors.; 1999 ACJ 736 in support of its findings that conditions (a) and (b) mentioned in Section 170 of the Act are not mutually exclusive and that both the conditions need to be satisfied before permission there under could be granted in favor of the insurer. In National Insurance. Co. Ltd. (supra) it was held that where the driver and the owner of the offending motor vehicle did not file the written statement and failed to contest the proceedings the Tribunal before granting permission under Section 170 was required to record that fact only and nothing more. This was a case where the insurance company was a party to the proceedings from the very beginning and on an application under Section 170 by the insurance company being made the same was simply allowed by the Tribunal without recording its reasons therefore. The Supreme Court observed : -

"...but it is very much evident in this case that the driver and the owner of the motor vehicle did not file the written statement and failed to contest the proceedings. The Tribunal could have merely recorded that fact while allowing the application. In a situation contemplated by clause (b) of Section 170, nothing more was required than recording that indisputable fact...."

7. The decision in United Insurance Co. Ltd. adequately answers the question that the applicability of Section 170 is not confined only to a situation where the insurance company is imp leaded as a party to the respondents at a subsequent point of time during the pendency of the proceedings.

8. There is a reference to a Division Bench decision of this Court in United India Insurance Co. Ltd. v. Patricia Jean Mahajan; I 2001 ACC 480 DB which in substance reiterates the same very law as laid down by Supreme Court in United India Insurance Co. Ltd. (supra), National Insurance Co. Ltd., Chandigarh (supra) and its various other decisions. This decision in no way appears to support the view taken by the Tribunal in regard to applicability of Section 170 of the Act.

9. It is not disputed on behalf of the claimant that the owner and driver of the offending vehicle have omitted to file their written statement and also did not contest the claim otherwise. The learned counsel for the respondent submits that the cross examination of the claimant on behalf of the appellant insurance company is not restricted to the statutory defenses enumerated in Section 149(2) of the Act only and stretches beyond that. He points out that the appellant sought to summon the owner and driver of the offending vehicle in order to examine them as its witnesses but failed to secure their presence and eventually closed its evidence without examining them. He therefore, contends that the respondent having already examined the claimant on defenses other than statutory ones available under Section 149(2) of the Act and having availed the opportunity of producing their witness/s no prejudice has been caused to it on account of Tribunal's refusal to grant permission to it to widen the scope of its defenses.

10. Learned counsel for the appellant however disputed that the cross examination of the claimant is not restricted to statutory defenes only as available under Section 149(2) of the Act. He alternatively contended that even if it be accepted that the claimant had been cross examined on the points beyond those permissible under Section 149(2) of the Act, in the absence of a permission under Section 170 the appellant would be handicapped in asserting the defenses other than the ones contemplated under Section 149(2) of the Act while resisting the claim of respondent No. 1. Further he added that on an award being passed against it, in the absence of permission under Section 170 to widen its defenses, it would be incompetent on its part to maintain its appeal against the award on grounds other than those available under Section 149(2) of the Act.

11. Learned counsel for the respondent argued that presently the matter is pending at the stage of final arguments and in the event of appellant's application under Section 170 being granted it would amount to putting the clock back. This however would not appear to be a valid argument where it is found that the permission sought by the appellant under Section 170 of the Act on an application in that regard has been wrongly refused by the Tribunal. Since the impugned order declining the permission to widen the scope of its defenses is found to have been erroneously declined to the appellant the same is liable to be set aside.

12. In the result, the appeal is allowed and the impugned order dated 26th March, 2004 is set aside. Permission is granted to the appellant to widen the scope of its defenses and to produce evidence in support thereof which would include an opportunity to further cross examine the claimant.

13. The parties are directed to appear before the Tribunal concerned on 19th July, 2005 for fixing the date/s for further cross examination of the claimant and examination of witnesses, if any, to be produced by the appellant in support of its defenses other than those available under Section 149(2) of the Act. The Tribunal shall endeavor to dispose of the case as early as possible. Trial Court record be sent back immediately with a copy of the instant order.