The Oriental Insurance Co. Ltd. vs Smt. Usha Goel & Ors.
2008 Latest Caselaw 2058 Del

1
*IN THE HIGH COURT OF DELHI AT NEW DELHI

%                           Date of Decision 21.11.2008

+    C.R.P. No. 764/2003

     THE ORIENTAL INSURANCE CO. LTD.
                                    ..... Appellant
             Through: Mr. Pankaj Seth, Advocate.

               versus


     SMT. USHA GOEL & ORS.         ..... Respondent
             Through: Mr. S.K. Pruthi with Mr. Manoj
             Ahuja, Advocates.

+ M.A.C. APPEAL No. 489/2005

     THE ORIENTAL INSURANCE CO. LTD.
                                    ..... Appellant
             Through: Mr. Pankaj Seth, Advocate.

               versus


     SMT. USHA GOEL & ORS.           ... Respondent
             Through: Mr. S.K. Pruthi with Mr. Manoj
             Ahuja, Advocates.

+ M.A.C. APPEAL No. 535-39/2005

   SMT. USHA GOEL & ORS.
......Appellants
             Through: Mr. S.K. Pruthi with Mr. Manoj
             Ahuja, Advocates.

                 versus
     THE ORIENTAL INSURANCE CO. LTD. & ORS
                                   ......Respondents
             Through: Mr. Pankaj Seth, Advocate.




CRP 764/2003                                    Page 1 of 8
 CORAM:

Hon'ble Mr.Justice Pradeep Nandrajog

1. Whether reporters of local papers may be allowed
   to see the judgment?

2. To be referred to the Reporter or not?

3. Whether judgment should be reported in Digest?


: PRADEEP NANDRAJOG, J. (Oral)

R.P. No. 397/2007 in C.R.P. No. 764/2003

1. The Civil Revision Petition was filed by the Oriental

Insurance Company in the year 2003 raising a challenge to an

order dated 23.04.2003 dismissing the application filed by the

company under Section 170 of the M.V. Act, 1988, inter alia,

alleging that neither the owner nor the driver of the offending

vehicle had appeared to contest the proceedings evidenced

by the fact that none had bothered to enter appearance

before the Learned Judge MACT, and that from such conduct,

the Insurance Company apprehends a probable collusion

between the claimants and the owner/driver. It was thus

prayed that the Insurance Company may be permitted to

contest the claim petition on the grounds which in law are

available to the owner of the vehicle.

2. The said application was dismissed by the learned

Tribunal vide impugned order dated 23.04.2003.

3. The contention urged by the Insurance Company in the

Civil Revision Petition is that Section 170 of the M.V. Act, 1988

has two components. Clause (a) is the first component and

Clause (b) is the second component. It was urged that both

Clauses are independent of each other and if it is shown that

the owner/driver has failed to contest the claim, the Insurance

Company can seek a right to be granted the opportunity to

urge grounds that are available to the owner/driver of the

offending vehicle as per the mandate of Clause (b). The

reason why the Insurance Company had to so urge is the fact

that vide order dated 23.04.2003, the Learned Judge, MACT

has read Clause (a) and (b) of Section 170 as conjunctive and

not disjunctive i.e. has held that the element of collusion has

to be read in Clause (b) as well.

4. The Civil Revision Petition had come up for final hearing

on 25.01.2007. The same was allowed with a finding that the

Insurance Company had a right to take over the defence

available to the owner of the vehicle by virtue of Section 170

(b) of the M.V. Act, 1988. It may be noted that none had

appeared for the claimants on 25.1.2007.

5. Seeking review of the order dated 25.1.2007 disposing

of the Civil Revision Petition, it is pointed out that since the

Insurance Company failed to obtain a stay of proceedings

before the Learned Judge, MACT during the pendency of the

Revision Petition, proceedings continued, resulting in an

award being passed in favour of the claimants.

6. It may be noted that against the award, the Insurance

Company has filed MAC Appeal No. 489/2005. The claimants

are also aggrieved by the award evidence by the fact that

they have filed MAC Appeal No. 535-39/2005.

7. In respect of the plea urged in the Review Petition that

the Civil Revision Petition was rendered infructuous when the

award was published by the Tribunal suffice it would be to

state that where an order which affects a vital substantive

right of a party at a trial is questioned in a revision or an

appeal, merely because no stay is granted in the appeal or

revisional proceedings and in the meanwhile the main

proceedings before the Lower Court/Tribunal is concluded,

does not render infructuous the challenge to the said order.

8. Be that as it may, said aspect of the matter need not

bother me, for the reason the decision of the Hon'ble

Supreme Court reported as 2002 (6) SCALE 569 National

Insurance Company Vs. Nicolletta Rohtagi & Ors. held as

under, in Para 31:-

"31. We have already held that unless the conditions precedent specified in Section 170 of 1988 Act is satisfied, an insurance company has no right of appeal to challenge the award on merits. However, in a situation where there is a collusion between the claimants and the insured or the insured does not contest the claim and, further, the tribunal does not implead the insurance company to contest the claim in such cases it

is open to an insurer to seek permission of the tribunal to contest the claim on the ground available to the insured or to a person against whom a claim has been made. If permission is granted and the insurer is allowed to contest the claim on merits in that case it is open to the insurer to file an appeal against an award on merits, if aggrieved. In any case where an application for permission is erroneously rejected the insurer can challenge only that part of the order while filing appeal on grounds specified in sub- sections (2) of Section 149 of 1988 Act. But such application for permission has to be bonafide and filed at the stage when the insured is required to lead his evidence. So far as obtaining compensation by fraud by the claimant is concerned, it is no longer res integra that fraud vitiates the entire proceeding and in such cases it is open to an insurer to apply to the Tribunal for rectification of award."

10. Thus, the Insurance Company can challenge the

rejection of the application under Section 170 of the M.V.Act

1988 even in the appeal filed against the main award.

11. I, therefore, need not deal with the issue whether the

Civil Revision Petition was maintainable or the question

whether if held not to be maintainable, can the same be

converted into a petition under Article 227 of the Constitution

of India.

12. My reason for so holding is that the Insurance Company

has filed a substantive appeal against the final award and in

the same has questioned the legality of the order dated

23.4.2003. The said appeal is MAC Appeal No.489/2005.

Needless to state, as per the decision in Nicolletta Rohtagi's

case (supra) the said order can be challenged in the appeal

filed against the final award.

13. On the merits of the order passed by the Tribunal

rejecting the application filed by the Insurance Company

under Section 170 of the M.V. Act, 1988, I may note that apart

from the order under review, the consistent view taken by

this Court evidence by the decision reported as 134 (2006)

DLT 340 National Insurance Company Ltd. Vs. Ramesh Kumar

& Anr. is that Clause (a) and (b) of Section 170 are

disjunctive and in the alternate and thus the facet of collusion

which is an integral part of Clause (a) is not a facet of Clause

(b).

14. It is not in dispute that in the instant case neither the

owner nor the driver contested the claim petition and hence

on the question of the offending vehicle being driven rashly or

negligently or for that matter being involved in the accident

itself, a defence available to the owner and the driver was

entitled to be taken over by the insurance company by virtue

of Clause (b) of Section 170 of the M.V.Act 1988. The

consequence has to be that the Review Petition has to be

dismissed. Both appeals i.e. the appeal filed by the Insurance

Company as well as by the claimants have to be disposed of

by setting-aside the impugned award dated 21.04.2005 and

proceedings restored before the Tribunal with a direction that

the claim petition shall be decided in accordance with law

commencing from the stage where the application of the

Insurance Company under Section 170 of the M.V. Act, 1988

was dismissed. The said application is allowed. The Insurance

Company is permitted to contest the claim on the grounds

that are available to the owner of the vehicle.

15. I note that 50% of the awarded amount has been

deposited by the appellant with the Learned Judge, MACT as

per interim orders passed by this Court in MAC Appeal

No.489/2005. 10% thereof has been released in favour of the

claimants, subject to furnishing a security.

16. Since the award has been set-aside, consequential

directions pertaining to the said deposit have to be passed. I

direct that 40% of the awarded amount which has been

retained by the Learned Judge, MACT, together with the

accrued interest thereon be returned to the Insurance

Company. 10% amount released to the claimants is

permitted to be retained by the claimants, subject to keeping

alive the security afresh till the decision by the Tribunal.

Needless to state, if the claim fails the said amount would be

refunded and if the claim succeeds and equals to or exceeds

the amount received by the claimants the same shall be

adjusted against the fresh award and the security shall stand

released.

17. Parties are directed to appear before the Learned Judge,

MACT (Successor Court) on 15.12.2008. The Learned Judge,

MACT is requested to fast track the proceedings since the

matter has been remanded. Every attempt would be made to

decide the matter afresh within three months reckoned with

effect from 1.1.2009.

18. No costs.

19. TCR be returned forthwith.

PRADEEP NANDRAJOG, J.

NOVEMBER 21, 2008 rs