IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION FIRST APPEAL NO.673 OF 1993. FIRST APPEAL NO.673 OF 1993. FIRST APPEAL NO.673 OF 1993. Bismilla Abidulla Ansari & Anr. ...Appellants Versus 1. Shri Kishorkumar N. Shah (Name deleted as per Courts Order) 2. The United India Insurance Co Ltd ...Respondents --- Shri Rajesh Behere for the Appellants. None for the Respondents. --- CORAM: ABHAY S.OKA, J. CORAM: ABHAY S.OKA, J. CORAM: ABHAY S.OKA, J. DATE : 23rd January, 2008. DATE : 23rd January, 2008. DATE : 23rd January, 2008. ORAL JUDGMENT: ORAL JUDGMENT: ORAL JUDGMENT: 1. The submissions of the learned counsel appearing for the appellants were heard on the last date and the judgment was reserved. The appellants have taken exception to the judgment and award dated 01st October, 1991 passed by the learned Member of the Motor Accident Claims Tribunal, Thane. The appellants are the original claimants in Motor Accident Claim No.128 of 1985. They applied for compensation on account of death of one Mohamad Yakub Bismilla Ansari in an accident. The appellants are the parents of the deceased. It will not be necessary to refer to the details of the accident as finding recorded by the Tribunal on the point of ... 2 ... negligence of the driver of the vehicle involved in the accident is not subject matter of challenge. The Tribunal held that the appellants were entitled to compensation. The compensation amount was quantified by the Tribunal at Rs.33,000/- (inclusive of No Fault Liability) together with interest at the rate of 10% per annum from the date of application till realisation. The operative part of the impugned judgment and order reads thus: ". The Opponent No.1 being the owner do pay the Applicants in Motor Accident Claim No.128 of 1985, compensation of Rs.33,000 (inclusive of no fault liability) together with interest at the rate of 10 per cent per annum from the date of application till realisation and proportionate costs. . The Opponent No.2 being insurer would be liable to satisfy the said award as against the owner-insured". 2. The first respondent in this appeal is the owner of the vehicle involved in the accident. The second respondent-insurance company is the insurer of the vehicle. The Farad Sheet shows that the name of the ... 3 ... first respondent has been deleted by order dated 06th June, 2007 on the prayer made by the appellants. At the time of hearing of the appeal a query was made by the Court as to whether an order of enhancement in compensation can be passed by this Court in the present appeal when the appeal has been dismissed as against the owner of the vehicle. 3. The submission of Shri Behere, the learned advocate appearing for the appellant was that the owner is neither a necessary nor a proper party to the appeal in as much as the first respondent owner has accepted the impugned judgment and award and especially the finding recorded by the Tribunal that the accident occurred due to rash and negligent driving of the truck owned by the first respondent by the driver employed by the first respondent. His submission is that the liability of the second respondent-insurer is a statutory liability. He has supported his submission by relying upon a decision of the Division Bench of the Andhra Pradesh High Court in the case of Meka Chakra Rao Vs. Yelubandi Babu Rao and others (2002 ACJ Page 828). He has also placed reliance on the two decisions of the Apex Court in the case of Guru Govekar Vs. Miss Filomena F. Lobo (AIR 1988 Supreme Court Page 1332) as well as A. Robert Vs. United Indian Insurance Company ... 4 ... Ltd (2000 ACJ Page 252). He has taken me through the aforesaid decisions. He has invited invited my attention to the relevant provisions of the Motor Vehicles Act, 1939 and Motor Vehicles Act, 1988. The submission of Shri Behere, the learned advocate for the appellant is that it is a statutory liability of the insurer of the vehicle to pay compensation which is found due and payable in law to the claimant in a Claim Petition. He invited my attention to relevant observations made by the Apex Court as well as Andhra Pradesh High Court in the aforesaid decisions. He submitted that if the appellants make out the case for grant of enhancement, this Court can always modify the award as the second respondent who is statutorily liable to pay compensation is very much before this Court and even in absence of the first respondent-owner, an award can be made against the second respondent. 4. On merits he submitted that the compensation fixed by the Tribunal is on the lower side considering the fact that the age of the deceased at the time of accident was 22 years. He, therefore, submitted that this is the fit case for granting enhancement in compensation. 5. I have carefully considered the submissions made ... 5 ... by Shri Behere. He invited my attention to the decision of a Division Bench of the Andhra Pradesh High Court in the case of Meka Chakra Rao (supra). The Division Bench of Andhra Pradesh High Court was dealing with the following questions formulated by the learned single Judge of the Andhra Pradesh High Court. The said questions read thus: "(1) What is the effect of the non-presence of the owner of a motor vehicle (insured) at the appellate stage, if the appeal against the owner is dismissed for default for non-payment of bhatta or for non-compliance with the orders of the court? (2) If the Tribunal records a finding that the accident had taken place due to rash and negligent driving of the motor vehicle by its driver and if such a finding is not challenged by the insurance company in the appeal, whether there is any need for the presence of the owner of the motor vehicle? (3) In an appeal filed by the insurance company, if the owner of the motor vehicle is not present (i.e if the appeal as against the ... 6 ... owner is dismissed), what is the effect of the same on the said appeal? (4) In an appeal filed by the claimant, if the insurance company has not filed any cross-appeal, what is the need for the presence of the owner of the motor vehicle?" 6. The Division Bench answered the said questions and the answers of the Division Bench can be summarised as under: . If the claims Tribunal records a finding that accident had taken place due to rash and negligent driving of the driver of the motorcycle and if such finding is not challenged either by the insurance company or by the owner of the motorcycle, the question that arises in appeal preferred against the order of the Tribunal by the original claimants is only with regard to the determination of quantum of compensation payable to the claimants. Therefore, there cannot be any bar to decide the quantum of compensation as against the insurer of the vehicle in the absence of the insured. ... 7 ... However, if compensation which is claimed is in excess of the upper limit of the statutory liability of the insurance company, the Appellate Court cannot decide the appeal in absence of the insured/owner. . The right of an insurer to prefer an appeal against an award made by the Tribunal is of limited right as provided by law. Thus, in substance an appeal by an insurer is maintainable only on limited grounds. . The statutory liability of the insurance company in absence of the insured can be decided in an appeal preferred by the original claimants. 7. In paragraph No.13 and 14 of the decision of the Andhra Pradesh High Court it is held thus: "13. Accordingly, the questions 1 and 2 are answered holding that even if the appeal is dismissed against the owner of the vehicle, the question of statutory liability of the insurance company survives for consideration and there is no need for the presence of the ... 8 ... owner of the vehicle to decide the question of statutory liability of the insurance company at the appellate stage in the cases wherever the Tribunal recorded a finding that the accident has taken place due to rash and/or negligent driving of the driver of the motor vehicle and if the said finding is not challenged either by the owner of the vehicle or by the insurance company. 14. With regard to the third question, the only limited scope for the insurance company to contest the claim on all or any of the all the grounds that are available to the insured person is available only when there is collusion between the person making the claim and the person against whom the claim is made has failed to contest the claim. If the owner of the vehicle fails to contest the claim before the Tribunal, the insurance company can contest the claim only before the Tribunal. If it gets itself impleaded by an order of the Tribunal to contest on the grounds mentioned under section 170 of the Act and in the absence of such an order, the insurance company cannot maintain an appeal as mentioned ... 9 ... in section 170 of the Act. With regard to the determination to the extent of the statutory liability of the insurance company cannot maintain an appeal as mentioned in section 170 of the Act. With regard to the determination to the extent of the statutory liability of the insurance company, in an appeal filed by the insurance company before the appellate authority, it can be decided even in the absence of the owner of the vehicle. The limited scope available for filing the appeal other than the grounds mentioned under section 170 (a) and (b) is only with regard to the excess quantum of the compensation payable by it over and above the statutory liability and that question can be decided at the appellate stage insofar as the statutory liability is concerned even in the absence of the owner". 8. In the case of Guru Govekar (supra) the question which arose for the consideration before the Apex Court was whether an insurer who has issued a policy insuring any person specified in policy against any liability which may be incurred by him in respect of death of or bodily injury to any person or damage to any property of a third party caused by or arising out of the use of a ... 10 ... motor vehicle in a public place, is liable to pay compensation to such third party or to the legal representatives of the third party in a case where at the time of accident the motor vehicle in question was in the custody of a repairer. The appellant Guru Govekar was the proprietor of a garage to whom the vehicle was entrusted for repairs. The claim was contested on various grounds before the Tribunal. The Tribunal held the insurer liable. An appeal was carried to the High Court by the insurer of the vehicle. The appeal was allowed and it was held that the insurer of the vehicle was liable only to the extent of no fault liability under section 92-A of the said Act of 1939. The net result of the decision of the High Court was that the entire compensation amount save and except the amount payable by way of no fault liability became payable by the appellant before the Apex Court. 9. The Apex Court discussed the question of liability of the insurer. In paragraph No.6 of the decision the Apex Court observed that when any third party suffers an injury on account of negligence of the employee of an independent contractor who had taken the vehicle from the owner, there is no liability on the part of the owner to pay compensation to the third party under the Law of Tort. The Apex Court, however, ... 11 ... observed that question of liability of the insurer has to be determined in the light of the provisions of the said Act of 1939 and especially sections 94 and 95 thereof. In paragraph No.8 the Apex Court held thus: ". Thus, if a policy is taken in respect of a motor vehicle from an insurer in compliance with the requirements of Chapter VIII of the Act, the insurer is under an obligation to pay the compensation payable to a third party on account of any injury to his/her person or property or payable to the legal representatives of the third party in case of death of the third party caused by or arising out of the use of the vehicle at a public place". 10. In paragraph No.12, after considering plethora of decisions, the Apex Court held thus: ". We do no agree with the decision in D. Rajapathi V. University of Madurai, 1980 ACJ 113: (AIR 1980 Mad 219) in which it has been held that the doctrine of vicarious liability could not be extended to a case where the accident had taken place on account of the ... 12 ... negligence of the driver employed by an independent contractor even when the claim is made not under the Law of Torts but under the provisions of the Act. While it may be true, While it may be true, While it may be true, as we have observed earlier, that under the as we have observed earlier, that under the as we have observed earlier, that under the Law of Torts, the owner may not be liable on Law of Torts, the owner may not be liable on Law of Torts, the owner may not be liable on the principle of vicarious liability, the the principle of vicarious liability, the the principle of vicarious liability, the insurer would be liable to pay the insurer would be liable to pay the insurer would be liable to pay the compensation by virtue of the provisions of compensation by virtue of the provisions of compensation by virtue of the provisions of section 94 and section 95 of the Act, referred section 94 and section 95 of the Act, referred section 94 and section 95 of the Act, referred to above to above to above". (Emphasis added) 11. In the case of A. Robert (supra) the Apex Court was hearing an appeal by original claimant. The first respondent in the appeal before the Apex Court was the insurer of the vehicle and the second respondent was the insured. The name of the second respondent insured was deleted as the appellant before the Apex Court failed to serve notice to the second respondent. In a Claim Petition under section 110-A of the said Act of 1939, compensation of Rs.99,000/- was awarded by the Tribunal. An appeal was preferred by the original claimant before the High Court. The insurer filed cross-objection in appeal. The award was confirmed by the High Court. Only modification made by the High Court was for correcting an arithmetic error. The High Court reduced ... 13 ... the compensation amount to Rs.96,500/-. The Apex Court in an appeal preferred by the original claimant found that for the statutory liability of the insurance company was limited to the extent of Rs.01,50,000/-. In the context of this factual position, the Apex Court in paragraph No.5 observed thus: ". The only question which survives for our consideration is whether the said statutory liability of the insurance company is required to be fully foisted on the respondent". 12. The Apex Court found that the total amount of compensation payable was Rs.01,52,500/-. However, considering the statutory limit of liability of the insurer to the extent of Rs.01,50,000/-, the Supreme Court confined the award to Rs.01,50,000/-. 13. The submission of Shri Behere, the learned advocate for the appellant was that the Apex Court found that even though the appeal before it was dismissed as against the insured, the claim for enhancement in compensation as against the insurer of the vehicle can be always considered and decided to the extent of the liability of the insurer under the statutory policy. It ... 14 ... is true that the question which specifically arises in this appeal for consideration did not specifically arose for consideration before the Apex Court. Nevertheless, the Apex Court in the said case considered and granted prayer for enhancement for compensation to the extent of the liability of the insurer though the appeal was dismissed against the insurer. 14. At this juncture, it will be necessary to refer to the relevant provisions of the said Act of 1939. Chapter VIII of the said Act deals with insurance of motor vehicles against the third party risks. Section 94 makes it obligatory for any person not to use any motor vehicle in public place unless he has taken out a policy of insurance complying with the requirements of the said Chapter. Section 95 of the said Act of 1939 provides for requirements of the policy and the limit of liability of an insurer under the policy. What is relevant for consideration is sub-section 1 of section 96 of the said Act of 1939. If an Award or Judgment has ben made in respect of a liability which is required to be covered under the policy by section 95 of the said Act of 1939, the insurer is under an obligation to satisfy the Judgment or Award to the extent of its liability. Now turning to the provisions of the said Act of 1988, the relevant Chapter is Chapter XI which ... 15 ... deals with the insurance of motor vehicles against the third party risks. Section 146 of the said Act of 1988 is similar to section 94 of the said Act of 1939. Section 147 of the said Act of 1988 lays down the requirements of policies and limits of liability of the insurer. Sub-section 1 of section 149 of the said Act of 1988 virtually reproduces sub-section 1 of section 96 with necessary modifications required to be made on account of introduction of section 163A of the said Act of 1988. 15. Thus, by a legal fiction, section 96 of the said Act of 1939 and section 149 of the said Act of 1988 make the liability of the insurer under a contract of insurance a statutory liability. The emphasis in sub-section 1 of section 96 is on a judgment in respect of any liability which is required to be covered by the policy under clause (b) of sub-section 1 of section 95. The judgment must be in respect of a liability which is required to be covered by a policy of insurance. Thus, the section provides that once there is a judgment or award establishing the liability of the insured, the insurer, subject to the provisions of the said section has to pay to the person entitled to benefit of Award any sum not exceeding the sum assured to be payable under the policy. Thus, where the case does not fall ... 16 ... under any of the exceptions carved out by sub-section 2 of section 96, the insurer has to pay to the person entitled to benefit of the judgment the amount payable under the judgment. Considering the scheme of Chapter VII of the said Act of 1939 and Chapter XI of the said Act of 1988 it is apparent that if there is a judgment holding the insured liable to pay an amount to a third party, the insurer has to pay the amount to the person for whose benefit the judgment is delivered. The liability of the insurer is naturally subject to the liability incorporated in the policy issued as required by section 95 of the said Act of 1939 or section 147 of the said Act of 1988, as the case may be. If the validly issued policy does not cover the liability of the insured arising out of the judgment, the insurance company is not liable. By way of illustration useful reference can be made to the decision of the Apex Court in the case of A. Robert (supra) where the Apex Court considered the liability of the insurance company only to the extent of the upper limit of the statutory liability provided in the policy of insurance which was subject matter of the case before the Apex Court. 16. In the context of the aforesaid scheme of both the Acts which is more or less similar subject to certain modifications, the decision of the Division ... 17 ... Bench of Andhra Pradesh High Court has to be appreciated. In the present case the liability of the insured to pay compensation on account of the finding of negligence against him has been established. In a given case where similar factual situation arises where the appeal of the claimant is dismissed against the insured, if monetary liability of the insurer under the policy is limited to Rs.50,000/-, the Appellate Court cannot consider the claim of the claimants above a sum of Rs.50,000/- which is the upper limit of the statutory liability covered by the policy of insurance. The reason is that to the extent of liability covered by the policy the insurer has to satisfy the liability incurred by the insured. To that extent the view taken by the Division bench of the Andhra Pradesh High Court will have to be accepted as correct. 17. In the present case, the insured did not appear before the Tribunal and did not contest the claim. In a case where the insured appears and contests the claim, he will be certainly a necessary party in an Appeal by the claimant for enhancement of claim. In such a case, he may not have preferred an Appeal but he can certainly file cross objection in an Appeal preferred by the claimant. However, in the present case the insured has not chosen to contest the claim and the Tribunal ... 18 ... proceeded ex-parte against him. Therefore, the claim made by the appellants in this appeal for enhancement can be certainly considered to the extent of liability of the second respondent-insurer as there is already a judgment delivered by the Tribunal holding the first respondent-owner liable. 18. It will be necessary to refer to the written statement of the second respondent which is at Exhibit 9. In paragraph No.2 of the written statement the existence of insurance cover to the truck in question has been admitted by the second respondent. The contention raised by the second respondent is that the policy of insurance did not cover the risk to the passengers carried in the vehicle except such passengers whose risk was required to be covered by the provisions of section 95 of the said Act of 1939. In that context it is contended that the deceased was travelling in the truck as a passenger either gratuitously or for consideration and as there was no statutory obligation to cover the risk of such passenger, the second respondent was not liable. It will be necessary to refer to the findings recorded by the Tribunal. There is a finding recorded by the Tribunal that the deceased was not travelling in the truck as a passenger. Thus, the said defence of the second respondent was not ... 19 ... accepted by the Tribunal. The second respondent has not preferred any appeal or cross-objection. Though the second respondent is duly served with the notice of the appeal none appears for the insurer. Therefore, the case for enhancement in compensation can be considered to the extent of Rs.01,50,000/-. It must be stated that the claim of the appellants in the claim petition was only Rs.75,000/-. In paragraph No.19 of the judgment, the Tribunal observed that the liability of the second respondent was limited to Rs.01,50,000/-.