1 mst IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.648 OF 1998 The New India Assurance Co. Limited, Pune Regional Office, Sharda Centre, 2nd Floor, Behind Nal Stop, Off. Karve Road, Pune 411 004. Appellant versus 1. Uday Manohar Sapre, 2. Sau.Mrunmayi Moreshwar Palekar, 3. Rajesh Philip Dabare, 4. Madhukar Gajanan Padhye, 5. Zia Ahmed s/o Mohammad Gouse Respondents Mr.M.G.Barve for appellant. Mr.P.B.Shah a/w Vivek Salunkhe for respondents 1 and 2. CORAM : A.S.OKA, J. DATE : 16th December 2009 JUDGEMENT :- 1. This is an appeal purporting to be an appeal under section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as the "said Act of 1988"). This is an appeal preferred by the Insurer of the vehicle involved in an accident. Shri Shah, learned counsel appearing for the first and second respondents (original claimants) has raised a preliminary objection to the maintainability of the appeal. Accordingly, I have heard the learned counsel appearing for the parties on the said objection regarding 2 maintainability of the appeal. 2. The submission of Shri Shah appearing for the first and second respondents is that in the present case admittedly the appellant has not raised a defence covered by section 149(2) of the said Act of 1988. He submitted that a leave under section 170 of the said Act of 1988 was not even applied for by the appellant. He placed reliance on a decision of the Apex Court in the case of National Insurance Company Limited Vs. Nicolletta Rohtagi ([2002]7-SCC-456). 3. The learned counsel appearing for the appellant has made detailed submissions. He did not dispute that in the present case there is no specific order passed by the Tribunal in writing granting a leave under section 170 of the said Act of 1988. He did not dispute that there is no defence pleaded by the appellant insurer which is covered by Section 149(2) of the said Act of 1988. He invited my attention to Section 170 of the said Act of 1988. He submitted that as the appellant-insurer has been already made a party, there is no question of Tribunal granting any leave and the appellant can defend the claim petition on all grounds. He submitted that in the circumstances the appeal filed by the appellant- insurer is maintainable. His second submission is that on plain reading of section 170, when the Tribunal finds that either there is collusion between the person making the claim and the person against whom the claim is made or when the person against whom the claim is made has failed to contest the claim, it is the duty of the Tribunal to grant leave under section 3 170 of the said Act irrespective of the fact that whether any application seeking grant of leave is made by the insurer or not. He submitted that it is the obligation of the Tribunal either to grant leave when the insurer has been already made a party to the claim petition or to direct that the insurer shall be made as a party. His third submission is that section 170 of the said Act does not contemplate any application made by the insurer either oral or in writing for grant of leave and that is why it is the obligation of the Tribunal to grant leave even if leave is not sought by the insurer. He submitted that the Courts of law can only interpret the terms and conditions of the policy and can appreciate the evidence. However, the Courts of law cannot legislate and provide something which is absent in the section. He submitted that there is no ambiguity in section 170 and, therefore, there is no occasion to interpret the said section. 4. He submitted that even at the stage of final arguments of a claim petition, the insurer can make an oral prayer for grant of leave and even at the stage of arguments of a claim petition, the Tribunal has a power to grant leave under section 170 of the said Act of 1988. He submitted that a leave under section 170 can be sought even in an appeal which may be preferred by the insurer against an award made by the claims Tribunal in favour of the claimants. Inviting my attention to the memorandum of appeal as well as point no.5 in the synopsis of the memorandum of appeal, he submitted that even this Court can grant leave to the appellant and in any event, the appeal is maintainable. He pointed out that the owner of the vehicle and driver of the vehicle did not contest the claim 4 petition. He submitted that the Tribunal permitted the appellant to raise all permissible defenses and to contest the claim on merits. He submitted that the very fact that the claim petition was allowed to be contested by the appellant shows that the Tribunal had orally granted a leave to the appellant. In any event it will have to be inferred that a leave was granted by the Tribunal in favour of the appellant. He relied upon a decision of Division Bench in case of Oriental Fire and General Insurance Co. Ltd. Vs. Rajrani Surendrakumar Sharma and others (1990-ACJ-60). He submitted that in a case where the insurer is already a party, there is no requirement of law of the Tribunal recording any reasons in writing. Lastly he submitted that the impugned judgement and award is patently illegal and once illegality is shown, this Court will have to interfere with the impugned award at the instance of the appellant in the present appeal. He submitted that once the illegality in the award is shown, the appeal cannot be dismissed on the technical ground that the same is not maintainable. 5. Though the law on the subject is very well settled, I have permitted the learned counsel for the appellant to make the aforesaid submissions in as much as he submitted that the submissions go to the root of the matter. 6. It will be necessary to consider the decision of the Apex Court in the case of Shankarayya and another Vs. United India Insurance Co. Ltd. and another ([1998]3-SCC-140). This was a case where the insurer 5 of the vehicle challenged an award made by the Motor Accident Claims Tribunal by preferring an appeal before the High Court. This was a case where written statement was filed by the insurer in which it was stated that as the insured has not chosen to appear and contest the claim, the insurance company was desirous of obtaining proper orders under section 170 of the said Act of 1988. However, no application was made by the insurer for grant of leave under section 170 of the said Act of 1988. In paragraph 4 of the said decision, the Apex Court held thus :- 4. It clearly shows that the Insurance Company when im- pleaded as a party by the Court can be permitted to con- test the proceedings on merit only if the conditions pre- cedent mentioned in the section are found to be satis- fied and for that purpose the Insurance Company has to obtain order in writing from the Tribunal and which should be a reasoned order by the Tribunal. Unless that procedure is followed, the Insurance Company cannot have a wider defence on merits than what is available to it by way of statutory defence. It is true that the claimants them- selves had joined Respondent 1, Insurance Company in the claim petition but that was done with a view to thrust the statutory liability on the Insurance Company on ac- count of the contract of the insurance. That was not an order of the Court itself permitting the Insurance Com- pany which was impleaded to avail of a larger defence on merits on being satisfied on the aforesaid two condi- tions mentioned in Section 170. Consequently, it must be held that on the facts of the present case, Respond- ent 1, Insurance Company was not entitled to file an ap- peal on merits of the claim which was awarded by the Tribunal. (emphasis added) Thus, what has been held by the Apex Court is even if insurance company is made a party to the claim petition, the said company can be permitted to contest the claim on merits only if the conditions precedent mentioned in the section 170 are found to have been satisfied and for that purpose the insurance company has to obtain an order from the Tribunal. Thus, 6 what has been held by the Apex Court is that merely because the insurer is joined as a party that does not dispense with the statutory requirement of obtaining leave under section 170 of the said Act of 1988. 7. In the decision in case of the Oriental Fire and General Insurance Co. Ltd. Vs. Rajarani S. Sharma and others (supra) relied upon by the learned counsel for the appellant, the Division Bench of this Court considered Section 110C(2-A) of the Motor Vehicles Act, 1939 and observed that in a case where the insurer has already been made a party, there is no question of Court recording reasons in writing and directing the insurer to be made party. The Division Bench held that in such a case when the insured does not contest the claim, the insurer gets right to contest the claim on all the grounds though there is no leave granted. In view of the subsequent decision of the Apex Court in case of Shankarayya and another Vs. United India Insurance Co. Ltd. and another (supra), aforesaid decision of the Division Bench is no longer a binding precedent. 8. The law on this aspect has been laid down by the Apex Court in case of National Insurance Company Limited Vs. Nicolletta Rohtagi (supra). The Apex Court observed that a right of appeal is not an inherent right but it is a statutory right. The Apex Court observed that if the law provides that an appeal can be filed on limited grounds, the grounds of challenge cannot be enlarged. In the second paragraph of the said decision the Apex Court formulated the question arising before it. The 7 said question reads thus :- "Where an insured has not preferred an appeal under section 173 of the Motor Vehicles Act, 1988 (hereinafter referred to as `1988 Act') against an award given by the Motor Accidents Claims Tribunal (hereinafter referred to as `the Tribunal'), is it open to the insurer to prefer an appeal against the award by the Tribunal questioning the quantum of compensation, as well as the finding as regards the negligence of the offending vehicle." The Apex Court considered the entire scheme of the said Act of 1988. In paragraph 16 the Apex Court held thus :- "16. For the aforesaid reasons, we are of the view that the statutory defenses which are available to the insurer to contest a claim are confined to what are provided in sub-section (2) of section 149 of 1988 Act and not more and for that reason if an insurer is to file an appeal, the challenge in the appeal would confine to only those grounds." (Emphasis added) In paragraph 17 the Apex Court considered the provision of Section 110C(2-A) of the said Act of 1939 which was brought on the statute book in the year 1970 and which is similar to section 170 of the said Act of 1988. The Apex Court thereafter considered various decisions including its earlier decision in case of Shankarayya and another Vs. United India Insurance Co. Ltd. and another (supra). In paragraph 26, the Apex Court held thus :- "26. 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 8 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 insurer or to the persons 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 are satisfied and the 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 170 of the 1988 Act, the same would go contrary to the scheme and object of the Act." (emphasis added) In paragraph 31 the Apex Court proceeded to observed as under :- “ We have already held that unless the conditions pre- cedent specified in Section 170 of the 1988 Act are satis- fied, 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 permis- sion 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-section (2) of Section 149 of the 1988 Act. But such application for permis- sion has to be bona fide and filed at the stage when the in- sured is required to lead his evidence. So far as obtaining compensation by fraud by the claimant is concerned, it is no 9 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.” (emphasis added) 9. Another Bench of the Apex Court consisting of three Hon'ble Juges in the case of Sadhana Lodh Vs. National Insurance Co. Ltd. ([2003]3- SCC-524) affirmed the view in the case of National Insurance Company Ltd. Vs. Nicolletta Rohtagi (supra). In another decision in the case of R.Mannakatti and another Vs. M.Subramaniyam and another ([2005]11-SCC-389), the Apex Court considered a case where there was no leave granted under section 170 and where there was no defence under section 149(2) raised by the insurer. In such a case the insurer and insured preferred an appeal for challenging the award of the Claims Tribunal. The Apex Court held that the said appeal at the instance of the insurer was not maintainable. In the case of United India Insurance Co. Ltd. Vs. Jyotsnaben Sudhirbhai Patel and others ([2003]7-SCC-212) the Apex Court considered the effect of grant of permission under section 170(b) by a Claims Tribunal by a non speaking order. The Apex Court held that the error committed by the Tribunal of passing a non speaking order is not fatal to the insurer and once the insurer contests the claim on the basis of such order, the right of appeal is available to the insurer. It must be stated here that the said decision of the Apex Court was delivered by a Bench of two Hon'ble Judges on 2nd August 2003. A perusal of the said decision shows that the attention of the Apex Court was not invited to the decision of the Larger Bench in the case of National Insurance Company Limited Vs. Nicolletta Rohtagi (supra) which was 10 delivered on 17th September 2002. The attention of the Apex Court was not also invited to another case of a Larger Bench of the Apex Court in case of Sadhana Lodh Vs. National Insurance Co. Ltd. (supra) which was delivered by the Apex Court on 24th January 2003. In any case, the Apex Court in the said case of United India Insurance Co. Ltd. Vs. Jyotsnaben Sudhirbhai Patel and others (supra) has not dispensed with the requirement of obtaining a leave under section 170 of the said Act of 1988. 10. In the subsequent decision in the case of Bijoy Kumar Dugar Vs. Bidya Dhar Dutta and others ([2006]3-SCC-242) , the Apex Court reiterated the principles laid down in its earlier decisions and in particular in case of Sadhana Lodh Vs. National Insurance Co. Ltd. (supra). In case of V.Subbulakshmi and others Vs. S.Lakshmi and another ([2008]4- SCC-224) , the Apex Court again reiterated the law laid down by its larger Bench and held that if an appeal is filed by the insurer and the insured and if it is found that the appeal filed by the insurer is not maintainable, the name of the insurer can be deleted and the appeal can be prosecuted by the insured. 11. At this stage it will be necessary to consider a decision of the Division Bench of this Court in case of National Insurance Company Limited, Belgaum Vs. Mrs.Samira Fernandes and others (2009[2]- Mh.L.J.-458). It was held by the Division Bench that an insurer cannot file an appeal disputing the quantum of compensation unless the insurer 11 obtains an order under section 170 of the said Act of 1988. This Court in the case of Oriental Insurance Co. Ltd. Vs. K.M.George Kutty @ Raju and another (2005[3]0-Mh.L.J.-440 considered the question of maintainability of an appeal by an insurer in a case where the insurer was permitted by the Tribunal to file written statement and was permitted to cross examine the witnesses. A submission was made that grant of leave under section 170 of the said Act of 1988 by the Tribunal will have to be inferred though it may not have been granted in writing. In paragraph 4 of the judgment , the learned Judge observed thus :- “This case has to be distinguished to the facts of the present case. Because in that case at least an order granting leave was there, though it was a cryptic order. In the instant case, there is no order at all under Section 170 of the Act. The counsel for the appellants tried to contend that the written statement of the insurance company was accepted and taken on record and it was permitted to cross examine the witnesses. Therefore, it should be taken that the leave under Section 170 was granted though not specifically and clearly in writing. It is difficult to accept this submission. Because if the law requires the tribunal to pass an order giving reasons as to why insurance company as a necessary party with reference to sub-sections (a) and (b) of Section 170 of the Act, then no such presumption can be drawn that because the insurance company was permitted to file written statement and was allowed to cross examine the witnesses, any deem permission was granted to it. The judgment of the Supreme Court relied upon by Mr.Hegade, appearing for the respondent/claimant is absolutely clear on this point and, therefore, his objection regarding maintainability of appeal has to be upheld………..” Thus, all submissions except the last one made by the learned counsel for the appellant will have to be rejected. Admittedly in the present case a leave under section 170 was neither applied for nor granted by the 12 tribunal. Merely because the appellant was permitted to contest the claim petition,the grant of leave cannot be inferred. The conditions precedent prescribed by section 170 will have to be complied with before the insurer contests the claim. The power under section 170 has to be exercised in the manner provided by law. Hence, the submission that a leave can be granted by this Court in an appeal must be rejected. 12. This judgment will not be complete unless the last argument made by Shri Barve is dealt with. The argument was once it is pointed out that the impugned award is illegal or perverse, the appeal cannot be dismissed on the technical ground that it is not maintainable. It is well settled that an appeal is a creation of a statute. Therefore, an objection that an appeal is not maintainable cannot be said to be merely a technical objection. A reference will have to be made to a decision of this Court in the case of the Oriental Insurance Co Ltd. versus R.R.Bhatti (2008[8]-L.J.SOFT). This was a case where it was submitted that the Tribunal had no jurisdiction to entertain the claim petition. The submission made before this Court was that as the issue of jurisdiction which goes to the root of the matter was raised, it cannot be said that the appeal is not maintainable. The said argument was rejected by this Court by observing that right of an appeal is not an inherent right and it is a statutory right. The submissions made before this Court were as under :- “7. Submission of the learned counsel appearing for the Appellant is that the claim petition filed by the first and second respondent was not maintainable under section 166 of the said Act of 1988. He pointed out that a specific 13 contention was raised that the first and second Respondents ought to have filed the claim under the said Act of 1923. 8. Apart from the aforesaid submissions, his contention is that the deceased cannot be treated as a third party as the deceased was actually driving the vehicle concerned at the time of accident. He submitted that by no stretch of imagination, the driver can be termed as a third party. He submitted that there was no statutory requirement under the said Act of 1988 of covering the liability of a driver. Moreover, the driver cannot be treated as a third party. 9. He submitted that since the aforesaid contentions go to the root of the matter and relate to the jurisdiction of the tribunal, it cannot be said that this Appeal was not maintainable.” Thereafter this Court proceeded to discuss the issue of maintainability of the appeal. The relevant paragraphs of the said judgment read as under: “12. It is well settled proposition of law that an Appeal is always a creation of a statute. Right of the Appeal is always created by a statute and the same can be taken away by the statute. The right of the Appeal can be always curtailed or limited by the statute. In the present case, under the said Act of 1988, right of appeal is created under section 173 thereof. In so far as the scope of right of appeal is concerned, the legal position is no more res integra. 16. In paragraph 27, the Apex Court noted the well settled position that as the right of Appeal is not an inherent right and is only a statutory right, if the law provides that the Appeal can be filed on