IN IN IN THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL CIVIL CIVIL APPELLATE JURISDICTION APPELLATE JURISDICTION APPELLATE JURISDICTION FIRST FIRST FIRST APPEAL NO.2791 OF 2007. APPEAL NO.2791 OF 2007. APPEAL NO.2791 OF 2007. Bajaj Allianz General Insurance Co.Ltd. )...Appellant Versus. Smt Vaishali Shetty & Others )...Respondents --- Shri Amol A. Gatne for the Appellant. Shir R.G.Ketkar for the Respondent No.5. Shri S.M.Vidyarathi for the Respondent No.4. --- CORAM CORAM CORAM : ABHAY S.OKA, J. : ABHAY S.OKA, J. : ABHAY S.OKA, J. DATED DATED DATED : 31st MARCH, 2008. : 31st MARCH, 2008. : 31st MARCH, 2008. ORAL ORAL ORAL JUDGMENT: JUDGMENT: JUDGMENT: 1. On 12th December, 2007 this Court issued a notice for final disposal at admission stage. Submissions of the learned counsel appearing for the parties were heard on 14th February, 2008 and the judgment was reserved. Today, the appeal is kept for dictation of the judgment. 2. The present first appeal raises interesting questions regarding the scope of adjudication in a claim petition filed under section 140 of the Motor Vehicles Act, 1988. With a view to appreciate the submissions made by the learned counsel for the parties, it will be necessary to refer to the facts of the case in brief. : 2 : 2 : 2 : 3. The first to third respondents are the claimants in a petition filed under section 140 of the Motor Vehicles Act, 1988 (hereinafter referred to as the said Act of 1988). The claim for compensation is on account of death of one Suresh Shetty in an accident involving buses having registration Nos.MH12/CH 4583 and MH12/AR 8985. There is also a claim petition filed by the claimants under section 166 of the said Act of 1988. 4. It is the case of the claimants that on 07th December, 2006 the deceased was travelling by a bus bearing registration No.MH-12/CH-9583 owned by the fourth respondent herein which was insured with the appellant at the relevant time. Though the bus was owned by the fourth respondent it was being run on hire by the fifth respondent i.e the Pune Municipal Transport. The said bus in which the deceased was travelling gave a dash to the other bus bearing registration No.MH-12-AR-8985 involved in the accident which was stationery. The case is that as a result of injuries sustained in the accident the deceased Suresh died. 5. The claim petition was defended by the fifth respondent by filing a reply. The case made out by the : 3 : 3 : 3 : fifth respondent is that the bus was owned by the fourth respondent and was insured with the present appellant. It is contended that the fifth respondent had taken bus on hire from the fourth respondent. The contention raised by the appellant insurer in the reply is that though the offending bus was being used by the Pune Municipal Transport, there was no valid permit granted by the Regional Transport Office on the date of the accident and therefore, in view of the breach of terms and conditions of the policy, the appellant was not liable to satisfy the award which may be made against the owner. 6. The learned Member of the Tribunal allowed the claim petition under section 140 of the said Act of 1988 and held the appellant, fourth and fifth respondents jointly and severally liable to pay compensation of Rs.50,000/- with interest. 7. While passing the impugned judgment and award, the learned Member of the Tribunal referred to the copies of FIR, spot panchnama, inquest panchnama, insurance cover note, post mortem notes etc. The involvement of the bus concerned was not disputed. The learned Member of the Tribunal noted the contention : 4 : 4 : 4 : raised by the advocate for the appellant on the basis of the letter of Regional Transport Office, Pune dated 19th June, 2007 that the bus was not having a requisite permit. The learned Member of the Tribunal observed that the controversy whether there was a permit for plying the vehicle can be decided only after evidence is adduced by the parties. The learned Member observed that while deciding a petition under section 140 of the Motor Vehicles Act, 1988 it is not necessary to establish any negligence or fault on the part of the owner and driver of the vehicle. The learned Member of the Tribunal held that admittedly the bus was owned by the fourth respondent which was given on hire to the fifth respondent and that the same was insured with the appellant. Therefore, a joint and several award in the sum of Rs.50,000/- was passed by the Member of the Tribunal against the appellant, fourth and fifth respondents. 8. At this stage it must be stated that the fifth respondent filed an affidavit in reply to the civil application for stay and has placed on record alongwith the reply a copy of a certificate of insurance which is placed on record of the Tribunal. Moreover, alongwith the affidavit, an extract of the permit register of the : 5 : 5 : 5 : Regional Transport Office has been produced to show that there was a valid permit granted in respect of the bus from 17th December, 2004 to 16th February, 2009. The said register shows that the permit was transferred on 15th November, 2007 in the name of the fifth respondent. A copy of letter dated 30th May, 2007 sent by the Regional Transport Office, to the General Manager of the fifth respondent is placed on record. Lastly, a communication dated 29th January, 2008 issued by the Regional Transport Office to the fifth respondent is placed on record. By way of a rejoinder, the appellant has placed on record a letter dated 02nd February, 2008 issued by the Regional Transport Office, Pune to the appellant. Reliance is placed on the said letter by the appellant. 9. Though the parties are relying upon some documents which were not produced before the Tribunal, instead of passing an order of remand, I have heard the parties on the said documents as there is no dispute about the genuineness of the said documents. Moreover, if an order of remand is passed it will cause prejudice to the original claimants. There will be a delay in disposal of a petition under section 140 of the said Act of 1988 thereby completely defeating the legislative : 6 : 6 : 6 : intent of providing for immediate relief to the victims of an accident. 10. The submission of the learned advocate for the appellant is that as held by the Apex Court in a recent case, an order passed by the Tribunal in a claim petition under section 140 of the said Act of 1988 is an award which is subject to an appeal under section 173 of the said Act of 1988. He relied upon relevant clauses in the policy of insurance. He pointed out that the policy was subject to use of bus under a permit within the meaning of the said Act of 1988 or such a carriage falling under sub-section 3 of Section 66 of the said Act of 1988. Relying upon the documents which are referred to above, he pointed out that admittedly such permit was not issued on the date of the accident. He submitted that at highest the documents relied upon by the fifth respondent indicate that a decision was taken to issue such a permit but the same was neither issued nor granted. He pointed out that in communication dated 02nd February, 2008 sent by the Regional Transport Office to appellant it is specially recorded that permit has not been issued to the motor vehicle. However, as per the Permit Register maintained manually by the said office, Permit No.92 is assigned to the said bus for a : 7 : 7 : 7 : period from 17th December, 2004 to 16th December, 2009. He pointed out that there is an endorsement that the said permit is withheld for non-payment of passenger tax. He, therefore, submitted that it was obvious that there was no valid permit in existence which was either issued or granted to the bus concerned on the date of the accident. 11. He submitted that all the defences which are available under sub-section 2 of section 149 of the said Act of 1988 were available to an insurer while defending a claim petition under section 140 of the said Act of 1988. He invited my attention to the decision of the Apex Court in the case of Yallwwa (Smt) and others Vs. National Insurance Company Ltd and another [(2007) 6 Supreme Court Cases Page 657). He also relied upon certain other decisions of the learned single Judges of this Court and submitted that while passing an award under section 140 of the said Act of 1988, the defence raised by an insurer regarding absence of policy or regarding breach of terms and conditions of the policy will have to be considered on merits by the Tribunal as the adjudication made under section 140 of the said Act of 1988 is an award within the meaning of said Act of 1988. Another submission made by the appellant is that : 8 : 8 : 8 : the liability to pay compensation under section 140 of the said Act of 1908 is that of the insured and even under section 149(1) of the said Act of 1988 the insurer is under no obligation to honour the award made against the insured under section 140 of the said Act of 1988. 12. The learned counsel appearing for the fifth respondent has supported the impugned judgment and award. He pointed out that merely because the Regional Transport Office did not issue the permit, it cannot be said that the vehicle was being plied without the permit. He submitted that though a permit was issued, it was not physically handed over as according to the Regional Transport Office, certain taxes are not paid by the fifth respondent. His submission is that even the communication on which reliance is placed by the appellant records the decision of the Regional Transport Office to issue the permit for the period covering the date of the accident. His submission is that by virtue of section 144 of the said Act of 1988, section 140 of the said Act of 1988 has an overriding effect over the other provisions of the said Act of 1988 and therefore, while deciding a petition under section 140, defences under sub-section 2 of section 149 of the said Act of 1988 are not available to the insurer. : 9 : 9 : 9 : 13. The learned counsel appearing for the fourth respondent also supported the impugned judgment and award. His submission is that the proceedings under section 140 of the said Act of 1988 is a summary proceedings. His submission is that if such a summary proceedings is allowed to be converted into a full-fledged trial by allowing the parties to lead evidence on the alleged breach of the terms and conditions of the policy, the legislative intent will be completely defeated. He has placed reliance on certain decisions of the Apex Court and this Court. Reliance was placed on decision of the Apex Court in the case of K.M.Viswanatha Pillai Vs. K.M.Shanmugham Pillai (AIR 1969 Supreme Court Page 493) which lays down that under section 42(1) of the Motor Vehicles Act, 1939 it is not necessary that the owner himself should obtain permit and it only requires that the transport vehicle shall not be used except in accordance with the conditions of the permit. 14. The first question which arises for consideration is whether the defence covered by sub-section 2 of section 149 of the said Act of 1988 is available to an insurer while defending a claim petition : 10 : 10 : 10 : under section 140 of the said Act of 1988. The second question to be decided is as to what is the nature and the scope of proceedings under section 140 of the said Act of 1988 and whether the Tribunal is required to hold a full trial while deciding the petition under section 140 of the said Act of 1988. The third question will be whether the insurer is liable to satisfy the award made against the insured under section 140 of the said Act of 1988. In the event the answer to the first question is in the affirmative the other question will be whether the appellant has established a breach thereby entitling it avoid the liability under the policy of insurance. 15. As far as the first question is concerned, it is no longer res integra in view of what has been held by the Apex Court in the recent judgment in the case of Yallwwa (Smt) and others [(2007) 6 Supreme Court Cases Page 657]. In paragraph No.10 of the decision, the Apex Court has observed as under: "Section 140, as noticed hereinbefore, provides for no fault liability. It uses the words "accident arising out of the use of a motor vehicle", "the owner of the vehicle" and when more than two vehicles are involved, "the : 11 : 11 : 11 : owners of the vehicles" shall, jointly and severally, be liable to pay compensation. The said provision, therefore, makes the owners of the vehicles liable but not the insurer per se. Irrespective of the fact whether a claim Irrespective of the fact whether a claim Irrespective of the fact whether a claim petition petition petition is required to be adjudicated under is required to be adjudicated under is required to be adjudicated under Chapter Chapter Chapter X or Chapter XII of the Act, it is X or Chapter XII of the Act, it is X or Chapter XII of the Act, it is permissible permissible permissible to raise a defence in terms of to raise a defence in terms of to raise a defence in terms of sub-section sub-section sub-section (2) of Section 149 of the Act. It (2) of Section 149 of the Act. It (2) of Section 149 of the Act. It is is is even possible for the owner of the vehicle even possible for the owner of the vehicle even possible for the owner of the vehicle to to to raise a contention that this vehicle being raise a contention that this vehicle being raise a contention that this vehicle being not not not involved in the accident, he is not liable involved in the accident, he is not liable involved in the accident, he is not liable to to to pay any amount in terms of Section 140 of pay any amount in terms of Section 140 of pay any amount in terms of Section 140 of the the the Act" Act" Act". (Emphasis added) In paragraph No.17 the Apex Court proceeded to observe as under: "In a given case, the statutory liability of an insurance company, therefore, either may be nil or a sum lower than the amount specified under Section 140 of the Act. Thus, when a Thus, when a Thus, when a separate separate separate application is filed in terms Section application is filed in terms Section application is filed in terms Section 140 140 140 of the Act, in terms of Section 168 of the Act, in terms of Section 168 of the Act, in terms of Section 168 thereof, thereof, thereof, an insurer has to be given a notice an insurer has to be given a notice an insurer has to be given a notice : 12 : 12 : 12 : in in in which event, it goes without saying, it which event, it goes without saying, it which event, it goes without saying, it would would would be open to the insurance company to be open to the insurance company to be open to the insurance company to plead plead plead and prove that it is not liable at all" and prove that it is not liable at all" and prove that it is not liable at all". (Emphasis added) In the said decision, the Apex Court considered legality and validity of a decision of Full Bench of this Court in the case of Division Controller, Maharashtra State Road Transport Corporation Vs. Bapu Omkar Chaudhari (2003(4) Maharashtra Law Journal Page 990). The issue before the Apex Court was whether an order passed under section 140 of the said Act of 1988 is an award which is appealable under section 173 of the said Act of 1988. In paragraph No.29 the Apex Court answered the question by observing that: "... In our opinion, an order of the Tribunal awarding compensation under Section 140 of the Act is appealable under Section 173 as it amounts to an award under Section 173". Thus, the first question is already answered by the aforesaid decision of the Apex Court which holds that it is permissible for an insurer to raise defences in terms of sub section 2 of section 149 of the Act while : 13 : 13 : 13 : resisting a claim petition under section 140 of the said Act of 1988. This decision also answers the third question framed above. The very fact that the Apex Court has held that a defence under sub-section 2 of section 149 of the said Act of 1988 is available to the insurer in a claim petition under section 140 shows that the insurer is liable under the statute to satisfy the award made under section 140 against the insured. 16. Now turning to the second question, it must be stated here that section 140 forms part of Chapter X of the said Act of 1988. The provision of section 140 corresponds to section 92-A of the Motor Vehicles Act, 1939 (hereinafter referred to as the said Act of 1939) which has been repealed by the said Act of 1988. Section 166 of the said Act of 1988 which forms part of Chapter XII of the said Act of 1988 provides for filing an application for compensation on account of a bodily injury to person or death of a person resulting from an accident involving use of a motor vehicles. Section 168 deals with the procedure to be followed while dealing with an application under section 166. Sub-section 1 of section 168 reads thus: "168. Award of the Claims Tribunal.-(1) On : 14 : 14 : 14 : receipt of an application for compensation made under section 166, the Claims Tribunal shall, after giving notice of the application to the insurer and after giving the parties (including the insurer) an opportunity of being heard, hold an inquiry into the claim or, as the case may be, each of the claims and, subject to the provisions of section 162 may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid and in making the award the Claims Tribunal shall specify the amount which shall be paid by the insurer or owner or driver of the vehicle involved in the accident or by all or any of them, as the case may be: . Provided that where such application makes a claim for compensation under section 140 in respect of the death or permanent disablement of any person, such claim and any other claim (whether made in such application or otherwise) for compensation in respect of such death or permanent disablement shall be : 15 : 15 : 15 : disposed of in accordance with the provisions of Chapter X". Therefore, sub section 1 of section 168 itself makes a distinction between the procedure to be followed while deciding an application under section 166 and the procedure to be followed while dealing with an application under section 140. The proviso to sub section 1 provides that when an applicant in an application under section 166 also makes a claim for compensation under section 140 in respect of death or permanent disability of any person, such claim shall be disposed of in accordance with the provisions of Chapter X. There is one section in Chapter X which deserves to be taken a note of. It is the section 144 which provides that the provisions of Chapter X shall have overriding effect notwithstanding anything contained in any other provision of this Act or of any other law for the time being in force. Thus, section 140 of the said Act overrides not only the other provisions of the said Act of 1988 but also provisions of other laws for the time being in force. 17. The State of Maharashtra has exercised the rule making power under the said Act of 1988 and has framed : 16 : 16 : 16 : the Maharashtra Motor Vehicle Rules, 1989 (hereinafter referred to as the said Rules). It will be necessary to refer to the relevant rules contained in Chapter IX under the heading "Claims Tribunal". Rule 254 provides for contents of an application made under section 166 of the said Act of 1988. Rule 255 provides that notwithstanding anything contained in Rule 254 every application for a claim under section 140 shall be filed before the Claims Tribunal in the manner provided in the said rule. Thus, the rules also make a special provision in respect of claim application under section 140 of the said Act of 1988 with regard to procedural requirements relating to filing of a claim petition. Rule 258 provides for examination of the applicant in a claim petition under section 166 of the said Act of 1988 covered by Rule 254. Rule 259 gives a power to summarily dismiss such application. Rule 260 provides that if the said application is not dismissed under Rule 259, a notice is required to be issued to the owner, driver and insurer. Sub-rule 3 of Rule 260 makes a special provision for dealing with an application under section 140. Rule 260 reads thus: "260. Notice to the parties involved : 17 : 17 : 17 : . (1) If the application is not dismissed under rule 259, the Claims Tribunal shall, send to the owner of the driver of the vehicle or both involved in the accident and its insurer, a copy of the application, and the annexures thereto together with the notice of the date on which the parties shall enter their appearance either in persons, or through their duly authorised agents, and may also file their written statement, if any, with additional copies of the same, for being furnished to the other parties connected with the matter. It will dispose off the application, and may call upon the parties to produce on that date any evidence which they may wish to tender. . (2) The service of the notice shall be effected on the owner, the driver and the insurer of the vehicle in question, as the case may be, by way of personal service through the bailiff or by Registered Post A/D or both. . (3) Where the applicant makes a : 18 : 18 : 18 : claim for compensation under section 140, the Claims Tribunal shall give notice to the owner and insurer, if any, of the vehicles involved in the accident directing them to appear on the date, not later than fifteen days from the date of issue of such notice. The date so fixed for such appearance shall also be not later than fifteen days from the receipt of the claim application filed by the claimant. The Claims Tribunal shall state in such notice that in case they fail to appear on such appointed date, the Claims Tribunal shall proceed ex-parte on the presumption that they have no contention to make against the award of compensation". 18. Thereafter there are elaborate provisions regarding appearance