FA/215/2002 1/25 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 215 of 2002 With CROSS OBJECTION No. 101 of 2002 In FIRST APPEAL No. 215 of 2002 For Approval and Signature: HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE AKIL KURESHI ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================= ORIENTAL INSURANCE CO.LTD. - Appellant(s) Versus RANIBEN WD/O RAMJIBHAI BHURABHAI MAKWANA & 7 - Defendant(s) ================================================= Appearance : MR RAJNI H MEHTA for Appellant(s) : 1, MR MEHUL S SHAH for Defendant(s) : 1,3 - 6. MR SURESH M SHAH for Defendant(s) : 1,3 - 6. NOTICE SERVED for Defendant(s) : 2,7 - 8. ================================================= CORAM : HONOURABLE MR.JUSTICE M.S.SHAH and HONOURABLE MR.JUSTICE AKIL KURESHI Date : 16 & 19/03/2007 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE M.S.SHAH) FA/215/2002 2/25 JUDGMENT This appeal by the insurer of one of the vehicles involved in the motor vehicle accident challenges the judgment and order dated 30th July 2001 passed by the Motor Accident Claims Tribunal, Kachchh-Bhuj in MACP No.354 of 1992 awarding compensation of Rs.18 lacs with proportionate costs and interest at the rate of 9 per cent per annum from the date of the claim petition to widow, children and brother of the deceased. 2. On 18th March 1992 Ramjibhai Bhurabhai Makwana, a Forest Officer in the services of the State Government and his friend Sumarbhai were travelling on a motor-cycle from Adesar to Bhachau on the Ahmedabad-Kandla National Highway. Ramjibhai was driving the motor-cycle and Sumarbhai was the pillion rider. When the motor-cycle reached near village Vondh, the chhakada rickshaw insured by the appellant Insurance Company came from the opposite direction and dashed against the motor-cycle. On account of the collision between the two vehicles, Ramjibhai, driver of the motor-cycle sustained serious injuries and died on the spot. The pillion rider also sustained serious injuries and died. 3. Widow, three minor daughters and minor son of the deceased and also the younger brother of the deceased filed the claim petition for compensation of Rs.15 lacs initially. Subsequently, by moving an amendment application vide application Ex.74, the claim was sought to be raised to Rs.30 lacs. The Tribunal granted the said application by order dated 19th July 2001. 4. The Tribunal held that the accident was caused by the sole negligence of the driver of the chhakada rickshaw insured by the appellant Insurance Company. FA/215/2002 3/25 JUDGMENT 5. On the question of quantum of compensation, the claimants' case was that the deceased was a Forest Officer and he was getting monthly salary of Rs.2858/- prior to the accident and that in view of pay-revisions during the pendency of the claim petition, the deceased would have got substantially higher salary till the date of his superannuation in the year 2020. The gross amount likely to have been received by the deceased till the date of his retirement was estimated at Rs.36 lacs and odd amount. The Tribunal proceeded on the basis that the deceased was 28 years old and the multiplier 18 would be applicable. The Tribunal then proceeded to consider as to what would be the salary of the deceased 18 years after the date of the accident had the deceased survived and on that basis assessed the prospective annual income of the deceased at Rs.1,33,884/- in the years 2009-10. Applying the multiplier of 18, the Tribunal computed the earnings of the deceased at Rs.24,09,912/-. Deducting one-third amount therefrom as the personal expenses of the deceased, the Tribunal determined the compensation for loss of dependency benefit at Rs.16,06,608/-. The Tribunal also awarded various amounts under other heads and made an award for total compensation of Rs.18 lacs as per the following break-up: Loss of dependency benefit Rs.16,06,608 Bonus for 18 years at the rate of Rs.2419/- Rs. 43,542 Gratuity Rs. 1,15,000 Loss to the estate Rs. 15,000 Loss of consortium Rs. 15,000 Funeral expenses Rs. 5,000 Total Rs.18,00,150 The Tribunal passed the award for the said amount with proportionate costs and interest at the rate of 9 per cent and also directed the appellant Insurance Company to satisfy the award. FA/215/2002 4/25 JUDGMENT 6. The appellant as insurer of the chhakada rickshaw is in appeal before us. Mr.R.H.Mehta, learned advocate for the appellant has challenged the judgment and award of the Tribunal both on the question of negligence and on the question of quantum of compensation. Preliminary Contention – Maintainability of Appeal 7. Before we set out the contentions urged on behalf of the appellant Insurance Company on merits of the appeal, we may first deal with the preliminary contention raised by Mr.Mehul Suresh Shah for the original claimants that since the Tribunal had rejected the applications made by the appellant Insurance Company for permission under section 170 of the Motor Vehicles Act, 1988, this appeal challenging the findings of the Tribunal on negligence and quantum of compensation is not at all maintainable. Strong reliance is placed on the decisions of this Court in Oriental Insurance Company Ltd v. Manjulaben Jayantibhai Patel, 2003 (3) G.L.H.204 rendered by a Division Bench to which one of us was a party. Reliance is also placed on the decision of another Division Bench dated 22.12.2005 of this Court in First Appeal No.2107 of 2005 in support of the the above preliminary contention urged on behalf of the claimants who are respondents Nos.1 to 6 before us. 8. The record and proceedings of the claim petition reveal the following facts :- 8.1 The claim petition was filed before the Tribunal for compensation of Rs.15 lacs on 8th September, 1992. In response to the notice issued by the Tribunal, opponent No.1 – driver of the chhakada rickshaw was served, but did not appear before the Tribunal. Opponent No.2 (owner of the chhakada-rickshaw) FA/215/2002 5/25 JUDGMENT through advocate Mr.J.K.Thacker on 9th October, 1992 obtained permission of the Tribunal to appear for the owner and also filed an application praying for adjournment for filing written statement. The application was granted. Similarly, opponent No.3 insurance Company appeared through advocate Mr.Dholakia who also filed an application for adjournment for filing written statement. It appears that on three further occasions, applications for adjournments were made by the learned advocates for opponent Nos. 2 & 3 and thereafter on 11th February 1993, opponent No.3 Insurance Company (appellant herein) submitted its written statement at Ex.24. No written statement ever came to be filed by opponent No.2 – owner of the chhakada rickshaw. 8.2 On 14th February 2000, claimant No.6 was examined as the first witness of the claimants for producing the First Information Report, panchnama and driving licence, etc. having a bearing on the question of negligence and also other documents like, salary certificate and school leaving certificate having a bearing on the question of income of the deceased. After the said witness completed his examination in chief, a specific endorsement was made by the Tribunal as under: “Cross Examination: Opponent No.1 is absent, for opponent No.2 J.K.Thacker. No cross.” Mr.R.J.Dholakiya, learned advocate for opponent No.3 Insurance Company (appellant herein) cross-examined the said witness. On the same day, Hajrabhai, widow of pillion rider Sumar Bhatti was also examined in the companion petition (consolidated with the claim petition giving rise to this appeal) and after examination-in-chief was over, the Tribunal made the following endorsement: FA/215/2002 6/25 JUDGMENT “Cross-examination :- Opponent No.1-2 are absent Advocate Mr.Dholakiya for opponent No.3 cross-examined the witness” Thus neither of the witnesses examined on behalf of the claimants of the two claim petitions was cross-examined by or on behalf of opponent Nos.1 & 2 i.e. driver and owner the chhakada rickshaw which was insured by the present appellant. 8.3 On 1st March 2000, the learned advocate for the appellant Insurance Company submitted application Ex.52 stating that the driver and owner of the vehicle were served, but were not effectively contesting the claim and were not properly participating in the proceedings and therefore the Insurance Company had reasonable apprehension that the said opponents were not interested in contesting the claim and/or had colluded with the claimants and hence permission was sought under section 170 of the Act for contesting the claim on merits. The said application Ex.52 was rejected by the Tribunal with the following order: “Opponent No.2 is appearing through his advocate It is not survive (sic the application does not survive). Hence it is rejected.” 1-3-2000 8.4 Thereafter on 1st March 2000 itself, Amirbhai Amadbhai Raja was examined at Ex.53 as an eye-witness mainly on the question of negligence stating that the motor-cycle being driven by the deceased was going at a very low speed and was on the correct side of the road when the chhakada rickshaw came from the opposite direction at an excessive speed and abruptly the chhakada rickshaw went over to the wrong side and dashed with the motor- cycle dragging the motor-cycle for 10 feet throwing off the two FA/215/2002 7/25 JUDGMENT passengers of the motor-cycle; both the passengers received serious head injuries and were bleeding and died on the spot. After completion of the examination in chief of this witness also, following endorsement was made by the Tribunal :- “Cross-examination: For No.1 absent. For No.2 Advocate Mr.J.K.Thacker, absent.” For opponent No.3 Mr.R.J.Dholakiya – cross examination was recorded. Thus this witness was also cross-examined only by learned advocate for the appellant Insurance Company. 8.5. On the same day i.e. 1st March 2000 after evidence of witness No.3 Amir Amadbhai Raja was recorded at Ex.53 (during whose chief, learned advocate for opponent No.2 Mr.J.K.Thacker was absent), the appellant Insurance Company gave another application Ex.54. In this application it was specifically stated that the other opponents were not effectively contesting the claim, that opponent No.2 had appeared but was not participating in the proceedings properly and that the Insurance company had reasonable apprehension that opponent No.2 was not interested in contesting the claim or was colluding with the claimants. It was further stated that opponent No.2 had not filed any written statement and was also not present for cross-examining the witnesses; hence the application of the Insurance Company for permission under section 170 of the Act may be granted. There is no dispute about the fact that the application Ex.54 was filed by the learned advocate for opponent No.3 Insurance Company on 1st March 2000 and on that very day, the Tribunal passed the following order: “Fixed for reply and hearing”. 1-3-2000 FA/215/2002 8/25 JUDGMENT It appears that no order was passed on the said application till the claim petition was finally decided by the Tribunal by the impugned judgment and award dated 30th July 2001 and the application Ex.54 came to be rejected by a separate order by the Tribunal on the same day on which the judgment and award were pronounced by the Tribunal. 9. In the background of the aforesaid facts, Mr.Mehul Suresh Shah, learned counsel for the respondent-claimants has made the following submissions in support of the preliminary contention :- 9.1 Since permission under section 170 of the Act was not granted by the Tribunal and both the applications of the Insurance Company were rejected, it was not open to the appellant Insurance Company to challenge the award on the question of negligence or on the question of quantum of compensation. Strong reliance is placed on the decision of the Apex Court in National Insurance Co. Ltd v. Nicolleta Rohtagi, 2002 ACJ 1950 = (2002) 7 SCC 456 in support of the contention that even if it was the case of the Insurance Company that permission was erroneously rejected by the Tribunal, the insurer can challenge that part of the order only in an appeal filed on the grounds specified in sub-section (2) of section 149 of the Act. It is submitted that since in this appeal the Insurance Company has not invoked any grounds available to the insurer under sub-section (2) of section 149 of the Act, the present appeal challenging the findings on the question of negligence and quantum is not at all maintainable on account of absence of any permission under section 170 of the Act. 9.2 In addition to placing reliance on a Division Bench decision of this Court in Oriental Insurance Co. Ltd. v. FA/215/2002 9/25 JUDGMENT Manjulaben Jayantibhai Patel, 2003 (3) G.L.H.204 to which one of us was a party, it is vehemently submitted that another Division Bench of this Court has already taken a view in the order dated 22nd December 2005 in First Appeal No.2107/05 (New India Assurance Co. Ltd v. Amit @ Mahesh Gopal Harijan) that order under section 170 of the Act passed by the Tribunal cannot be assailed in an appeal under section 173 of the Act. Order rejecting the application under section 170 of the Act is final since remedy of appeal is against the award and not against the order on application under section 170 of the Act. Therefore, the Act does not provide for a remedy against the order under section 170. 10. On the other hand, Mr.R.H.Mehta, learned counsel for the appellant Insurance Company has submitted that the appellant Insurance Company had no opportunity to challenge the order of rejection of application under section 170 of the Act because soon after the first application at Exh.52 was rejected on 1st March 2000, the third witness was examined on behalf of the claimants and at that time also, the owner or his learned advocate were not present and the cross-examination was done only by learned advocate for the Insurance Company and therefore, immediately after the deposition of the said witness was recorded at Ex.53, another application at Ex.54 was submitted on behalf of the Insurance Company pointing out that opponent No.2, owner of the chhakada rickshaw had not filed any written statement and was also not present for cross-examination of the witnesses of the claimants. It is submitted that since this application Exh.52 remained pending and came to be rejected only on the date of pronouncement of the judgment and award the Insurance Company got the opportunity to challenge the said order only in the present appeal under section 173 of the Act challenging the award. FA/215/2002 10/25 JUDGMENT It is further submitted by Mr.Mehta that the Apex Court has never held that in an appeal under section 173 of the Act, the Insurance Company cannot challenge any erroneous order of the Tribunal rejecting permission under section 170 of the Act. 11. Let us first examine the three Judge Bench decision of the Apex Court in National Insurance Co. Ltd. v. Nicolletta Rohtagi 2002 ACJ 1950 = (2002) 7 SCC 456. The Apex Court traced the legislative history of English law as regards the liability of an insurer in the event of a motor vehicle accident in respect of third party right and held that in order to avoid its liability on the ground that there was breach of the terms and conditions of the policy, the insurer cannot invoke breach of any term or condition of the policy but breach of only those terms and conditions which were indicated in sub-section (2) of section 149 of the Act. Breach of any other condition of the policy by the insured which does not find place in sub-section (2) of section 149 of the Act cannot be taken as a defence by the insurer. The Apex Court then made following observations: “31. We have already held that unless the conditions precedent specified in section 170 of the 1988 Act are satisfied, an insurance company has no right to 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 grounds 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 an appeal on grounds specified in sub-section (2) of section 149 of 1988 Act. But such application for permission has to be bona fide 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 FA/215/2002 11/25 JUDGMENT 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.” (emphasis supplied). 19.03.2007 12. Learned counsel for either side laid considerable emphasis on the underlined words in the above quoted paragraph. While Mr.Mehul Suresh Shah for the claimants vehemently submitted that it is only if the Insurance Company has filed an appeal on the grounds specified under sub-section (2) of section 149 of the Act that the Insurance Company can further challenge the rejection of the application for permission under section 170 of the Act in such an appeal, Mr.Mehta for the Insurance Company submitted that all that the Apex Court has held is that the rejection of an application for permission under section 170 need not be challenged at an interlocutory stage, but only after the award is made by the Tribunal in the claim petition. 13. Having examined the relevant provisions of the Motor Vehicles Act, 1988 and having gone through the aforesaid decision of the Apex Court and also other decisions of this Court, we find considerable substance in the submission of Mr.Mehta for the Insurance Company. For the present, leaving aside the case falling under clause (a) (collusion between the claimant and driver/owner of the vehicle involved in the accident), it is clear that the ingredients of clause (b) of section 170 are quite objective in nature. Once the Insurance Company is able to show that driver/owner of the vehicle has failed to contest the claim, permission to the insurer under section 170 of the Act to contest the claim on all or any of the grounds available to driver and owner of the vehicle should be granted. In such a case, it is difficult to appreciate as to how the claimant could possibly oppose the FA/215/2002 12/25 JUDGMENT insurer's application for permission under section 170 of the Act. 14. The facts of the present case, as narrated in para 8 hereinabove are eloquent and leave no room for doubt that driver as well as owner of the vehicle involved in the accident had utterly failed to contest the claim. The driver did not appear even after service of notice of the claim petition. Though the owner did appear by engaging an advocate, there was no effective contest inasmuch as neither written statement was filed nor the witnesses of the claimants were cross-examined. Either the owner's advocate was absent when the claimants' witnesses were being examined or the said advocate simply declined to cross-examine the witnesses. Even then, the Tribunal rejected application Ex.52 on the ground that the vehicle owner had appeared in the claim petition and therefore application Ex.52 for permission under section 170 did not survive. 15. The Tribunal was clearly in error in substituting for all practical purposes the language of sub-section (b) of section 170 of the Act. When the Legislature intended to permit the insurer to contest the claim petition on all grounds when driver/owner of the vehicle failed to contest a claim petition, mere appearance of the owner through an advocate would be of no use. Since ultimately it is the insurer which will be satisfying the award and shelling out compensation from its pocket, it is entitled to expect the vehicle owner as well as driver to contest the claimant's assertions and evidence on the question of negligence and quantum of compensation. When there is no such contest from owner and driver of the vehicle, rejection of the insurer's application under section 170 would either require the insurer to challenge the order by filing a writ petition at the interlocutory stage (which would unnecessarily prolong the claim proceedings) or the insurer must be permitted to challenge the adverse order under section 170 at FA/215/2002 13/25 JUDGMENT least after the final award is made by the Tribunal. 16. Seen in this light, the underlined observations of the Apex Court in National Insurance Co. Ltd. v. Nicolletta Rohtagi, 2002 ACJ 1950 would be capable of only one interpretation, namely, where an application for permission is erroneously rejected, the insurer need not challenge that part of the order at an interlocutory stage, but it is while filing an appeal challenging the award that the adverse order under section 170 can be challenged. It is true that words “while filing an appeal on grounds specified in sub-section (2) of section 149 of 1988 Act” may indicate that when permission under section 170 is refused and the final award is made in the claim petition, the insurer may ordinarily file an appeal on grounds specified in sub-section (2) of section 149 of the Act. That, however, cannot mean that if the insurer has not invoked any grounds specified in sub-section (2) of section 149 of the Act, it cannot challenge the refusal of permission under section 170 of the Act because the very scope of application under section 170 is for permission to contest the claim petition on merits i.e. on questions of negligence, quantum of compensation and vicarious liability of the owner. If the insurer is not interested in challenging the award on any of these grounds available to driver/owner of the vehicle, he need not in the first place have filed any application under section 170 of the Act. We are, therefore, not in a position to accept the submission made on behalf of the claimants that an erroneous order rejecting permission under section 170 cannot be challenged unless and until the insurer has raised at least some grounds specified in sub-section (2) of section 149 of the Act in the appeal. In other words, if the insurer's application under section 170 of the Act is rejected by the Tribunal, it would be open for the insurer to question the legality of such an order while filing an FA/215/2002 14/25 JUDGMENT appeal against the final judgment and award. If the challenge is upheld by the higher court, the scope of appeal filed by the Insurance Company challenging the judgment and award of the Tribunal would stand enlarged and it would be open for the insurer to press in service all defences available. On the other hand, if the appellate court were to uphold the order of the Tribunal rejecting the application under section 170 of the Act, the appeal of the insurer shall have to be confined only to the statutory defences which the insurer can raise under sub-section (2) of section 149 of the Act. 17. As regards reliance placed by the learned advocate for the claimants on the order dated 22.12.2005 of a Division Bench of this Court taking a view that remedy of appeal lies against the award and not against the order on application under section 170 of the Act, we would like to observe that when section 173(1) of the Act confers right of appeal on any person aggrieved by an award of the Claims Tribunal,