FA/1683/2005 1/76 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD FIRST APPEAL No. 1683 of 2005 To FIRST APPEAL No. 1741 of 2005 With LETTRES PATENT APPEAL NO. 1399 OF 1997 To LETTERS PATENT APPEAL NO.1413 of 1997 DATE OF DECISION: 21-03-2006 ============================================== UNITED INDIA INSURANCE CO.LTD. - Appellants Versus KADVIBEN UDABHAI RATHWA & ANOTHER - Defendants ============================================== [See Next Page for Full Title] Coram: The Hon'ble Mr. Justice Bhawani Singh, Chief Justice The Hon'ble Mr. Justice H.K. Rathod, Judge The Hon'ble Smt. Justice Abhilasha Kumari, Judge Whether approved for Reporting? For Appellants: MR PV NANAVATI MR VIBHUTI NANAVATI For Respondents: MR DM THAKKAR MR MTM HAKIM ============================================== C.A.V. JUDGMENT: (Per: HONOURABLE THE CHIEF JUSTICE) 1 These are cases of permanent disablement and death of one person due to accident caused ============================================== Whether Reporters of Local Papers may be allowed to see the Judgment? FA/1683/2005 2/76 JUDGMENT when the driver lost control of the vehicle. Claimants suffering permanent disablement filed applications under Section 140 of the Motor Vehicles Act, 1988 (hereinafter `the M.V. Act') and in case of death of one of the occupants of the vehicle, legal heirs preferred claims both under Section 140 and 166 of the M.V. Act. These applications were opposed by the Insurance Company on grounds that the claimants were gratuitous passengers travelling in a goods vehicle, they did not suffer permanent disability, their names were not in the F.I.R./charge-sheet and nexus with the accident and injuries was not established. However, the Tribunal recording the finding of involvement of the vehicle and injuries to the claimants resulting from the accident, brushed aside the defences of the Insurance Company, holding that they could be decided later on merits. Accordingly claimants were awarded compensation. 2. Aggrieved by these awards, Insurance FA/1683/2005 3/76 JUDGMENT Company preferred appeals to this Court. Finding unable to agree with the two Single Bench judgments of this Court in New India Assurance Co. Ltd. Vs. Mithakhan Dinakhan Notiyar (1995(2) GLR 1111) rendered by J.M. Panchal J. and Mahendrakumar Kalyanjibhai Vs. Haresh Bipinchandra Pathak (1998(2) GLR 1199) by M.S. Shah J., learned Single Judge (Coram: D.H. Waghela J.), after considering various provisions of the M.V. Act, recorded in paragraph-7 that: “In light of the above discussion, I humbly find myself unable to subscribe to the view taken by this Court (Coram: J.M. Panchal, J.) in 1995 (2) GLR 1111 and (Coram: M.S. Shah, J.) in 1998 (2) GLR 1199 and propose to refer the matter to a larger bench under Rule 5 (1) of the Gujarat High Court Rules, 1993 with a request to have the appeals listed before a Division Bench or, if thought fit, considering the possibility of dissent, to a larger bench as expeditiously as possible. It is important to have the decision of a larger bench at the earliest in view of pendency of thousands and thousands of claim petitions in the State, the awards in which may be carried in appeal to this Court and the possibility of the procedure being adopted at present by the Claims Tribunal being held to be vitiated. The office shall place this matter before the Hon'ble the Chief Justice for appropriate orders.” 3. This order was passed on 21.12.2005, but it was not brought to the notice of the Division Bench (Coram: Bhawani Singh, C.J. and FA/1683/2005 4/76 JUDGMENT Smt. Abhilasha Kumari J.) while deciding First Appeal No.133 of 2006 (New India Assurance co. Ltd. Vs. Babubhai Purshottambhai Harijan and others) on 24.01.2006. Therefore, it was considered desirable to constitute a Larger Bench. This is how these matters are before this Full Bench. 4. The question advanced for consideration is `whether application under Section 140 can lie independently or has to be filed with application under Section 166'. In other words, whether in absence of application under Section 166, application under Section 140 is maintainable. If it is held that it is maintainable, Tribunal should allow the Insurance Company to raise all defences while dealing with application under Section 140 as if it is under Section 166. 5. Shri Vibhuti Nanavati, learned counsel for the appellant, contended that application under Section 140 is not maintainable independent of Section 166, it is interim in FA/1683/2005 5/76 JUDGMENT nature and compensation has to be adjusted against the award passed on merits under Section 166. It is also contended that while deciding the application under Section 140, defences available to Insurance Company can be raised before the Tribunal. In case application under Section 140 is maintainable independent of Section 166, the same be tried on merits giving opportunity to raise defences available to it and dispose of the same, otherwise, Insurance Company will be fastened with liability without being heard in the matter. With a view to support his submissions, reliance is placed on Bishan Devi and others Vs. Sirbaksh Singh and another (AIR 1979 SC 1862), Shivaji Dayanu Patil and another Vs. Smt. Vatschala Uttam More (AIR 1991 SC 1769), National Insurance Co. Ltd. Vs. Jethu Ram and others (1998 ACJ 921), United India Insurance Co. Ltd. Vs. Maganlal Hirabhai Patel and others (1999 ACJ 268), New India Assurance Co. Ltd. Vs. Dinanath Agrawala and others (AIR 2000 Orissa 40), New India Assurance Co. Ltd. Vs. Sita Bai and others (2000 ACJ 40), Andhavarapu Kamaraju Vs. Thammineni Seetharam and others FA/1683/2005 6/76 JUDGMENT (2001 ACJ 787), The Oriental Insurance Co. Ltd. Vs. Hansrajbhai V. Kodala (AIR 2001 SC 1832), Oriental Insurance Co. Ltd. Vs. B. Lakshmamma and others (2002 ACJ 670), New India Assurance Co. Ltd. Vs. Asha Rani and others (AIR 2003 SC 607), Deepal Girishbhai Soni and others Vs. United Insurance Co. Ltd. (2004(2) GLR 1597) and National Insurance Co. Ltd. Vs. Bommithi Subbhayamma and others (2000 ACJ 721). 6. Learned M.T.M. Hakim, learned counsel for the respondents, contended that application under Section 140 is maintainable independently of application under Section 166. They can file application under Section 140 alone and may not file application under Section 166. They may file applications under Section 140 and Section 166 simultaneously. In application under Section 140, Insurance Company cannot seek trial of defences as if it is application under Section 166. However, when applications are preferred under both Sections, no fault compensation awarded in application under Section 140 can be adjusted against compensation awarded under Section FA/1683/2005 7/76 JUDGMENT 166. Where no fault compensation is awarded against the Insurance Company, it can seek reimbursement from the owner but there is no reimbursement from the claimant. Reliance is placed on Shivaji Dayanu Patil and another Vs. Vatschala Uttam More (1991 ACJ 777: AIR 1991 SC 1769), National Insurance Co. Ltd. Vs. Thaglu Singh and others (1995 ACJ 248), New India Assurance Co. Ltd., Ahmedabad Vs. Mithakhan Dinakhan Notiyar & others (1995(2) GLR 1111), New India Assurance Co. Ltd. Vs. Bhajnoo and another (1996 ACJ 367), Mahendrakumar Kalyanjibhai Vs. Haresh Bipinchandra Pathan and another (1998(2) GLR 1199, New India Assurance Co. Ltd. Vs. Dinanath Agrawalla and others (2000 ACJ 525: AIR 2000 Orissa 40), Oriental Insurance Co. Ltd. Vs. Sarju Ram and others (2002 ACJ 177), New India Assurance Co. Ltd. Vs. Fida Hussain and another (2003 ACJ 1048) and New India Assurance co. Ltd. Vs. Babubhai Purshottambhai Harijan and others (First Appeal No.133 of 2006) decided on 24.01.2006. 7. Considering the question, it is relevant to quote some relevant statutory provisions of the M.V. Act:- CHAPTER X FA/1683/2005 8/76 JUDGMENT Liability without fault in certain cases. 140 Liability to pay compensation in certain cases on the principle of no fault- (1) Where death or permanent disablement of any person has resulted from an accident arising out of the use of a motor vehicle or motor vehicles, the owner of the vehicle shall, or, as the case may be, the owners of the vehicles shall, jointly and severally, be liable to pay compensation in respect of such death or disablement in accordance with the provisions of this section. (2) xxx xxx xxx (3) xxx xxx xxx (4) A claim for compensation under sub-section (1) shall not be defeated by reason of any wrongful act, neglect or default of the person in respect of whose death or permanent disablement the claim has been made nor shall the quantum of compensation recoverable in respect of such death or permanent disablement be reduced on the basis of the share of each person in the responsibility for such death or permanent disablement. (5) Notwithstanding anything contained in sub-section (2) regarding death or bodily injury to any person, for which the owner of the vehicle is liable to give compensation for relief, he is also liable to pay compensation under any other law for the time being in force. Provided that the amount of such compensation to be given under any other law shall be reduced from the amount of compensation payable under this section or under section 163A. 141. Provisions as to other right to claim compensation for death or permanent disablement- (1) The right to claim compensation under section 140 in respect of death or permanent disablement of any person shall be in addition to any other right, except the right to claim under the scheme referred to in section 163A (such other right hereafter in this section referred to as the right on the principle of fault) to claim compensation in respect thereof under any other provision of this Act or of any other law for the time being in force. FA/1683/2005 9/76 JUDGMENT (2) A claim for compensation under section 140 in respect of death or permanent disablement of any person shall be disposed of as expeditiously as possible and where compensation is claimed in respect of such death or permanent disablement under section 140 and also in pursuance of any right on the principle of fault, the claim for compensation under section 140 shall be disposed of as aforesaid in the first place. (3) Notwithstanding anything contained in sub-section (1), where in respect of the death or permanent disablement of any person, the person liable to pay compensation under section 140 is also liable to pay compensation in accordance with the right on the principle of fault, the person so liable shall pay the first-mentioned compensation and- a) if the amount of the first-mentioned compensation is less than the amount of the second-mentioned compensation, he shall be liable to pay (in addition to the first- mentioned compensation) only so much of the second-mentioned compensation as is equal to the amount by which it exceeds the first mentioned compensation; (b) if the amount of the first-mentioned compensation is equal to or more than the amount of the second-mentioned compensation, he shall not be liable to pay the second-mentioned compensation. 142. Permanent disablement: For the purpose of this Chapter, permanent disablement of a person shall be deemed to have resulted from an accident of the nature referred to in sub-section (1) of section 140 if such person has suffered by reason of the accident, any injury or injuries involving:- (a) permanent privation of the sight of either eye or the hearing of either ear, or privation of any member or joint; or (b) destruction or permanent impairing of the powers of any member or joint; or (c) permanent disfiguration of the heard or face. 143. xxx xxx xxx 144. Overriding effect: FA/1683/2005 10/76 JUDGMENT The provisions of this Chapter shall have effect notwithstanding anything contained in any other provision of this Act or of any other law for the time being in force. CHAPTER XI. INSURANCE OF MOTOR VEHICLES AGAINST THIRD PARTY RISKS 145. Definitions: In this Chapter,- (a) xxx xxx xxx (b) xxx xxx xxx (c) “liability”, wherever used in relation to the death of or bodily injury to any person, includes liability in respect thereof under section 140; (d) xxx xxx xxx (e) xxx xxx xxx (f) xxx xxx xxx (g) xxx xxx xxx 146. xxx xxx xxx 147. xxx xxx xxx 148. xxx xxx xxx 149. Duty of insurers to satisfy judgments and awards against persons insured in respect of third party risks- (1) If, after a certificate of insurance has been issued under sub-section (3) of section 147 in favour of the person by whom a policy has been effected, judgment or award in respect of any such liability as is required to be covered by a policy under clause (b) of sub-section (1) of section 147 (being a liability covered by the terms of the policy) or under the provisions of section 163A is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment debtor, in respect of the liability, FA/1683/2005 11/76 JUDGMENT together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) No sum shall be payable by an insurer under sub- section (1) in respect of any judgment or award unless, before the commencement of the proceedings in which the judgment or award is given, the insurer had notice through the Court or, as the case may be, the Claims Tribunal of the bringing of the proceedings, or in respect of such judgment or award so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:- (a) that there has been a breach of a specified condition of the policy, being one of the following conditions, namely:- (i) a condition excluding the use of the vehicle- (a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or (b) for organised racing and speed testing, or (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a transport vehicle, or (d) without side-car being attached where the vehicle is a motor cycle; or (ii) a condition excluding driving by a named person or persons or by any person who is snot duly licensed, or by any person who has been disqualified for holding or obtaining a driving license during the period of disqualification; or (iii)a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or (b) that the policy is void on the ground that it was obtained by the non-disclosure of a material or by a representation of fact which was false in some material particular. FA/1683/2005 12/76 JUDGMENT (3) xxx xxx xxx (4) Where a certificate of insurance has been issued under sub-section (3) of section 147 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any condition other than those in clause (b) of sub- section (2) shall, as respects such liabilities as are required to be covered by a policy under clause (b) of sub-section (1) of section 147, be of no effect: Provided that any sum paid by the insurer towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. (5) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would, apart from the provisions of this section, be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from the person. (6) xxx xxx xxx (7) No insurer to whom the notice referred to in sub- section (2) or sub-section (3) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment or award as is referred to in sub-section (1) or in such judgment as is referred to in sub-section (2) or in the corresponding law of the reciprocating country, as the case may be. Explanation: - For the purposes of this section, “Claims Tribunal” means a Claims Tribunal constituted under section 165 and “award” means an award made by that Tribunal under section 168.” 150 to 160 xxx xxx xxx 161. Special provisions as to compensation in case of hit and run motor accident.- (1) For the purposes of this section, section 162 and section 163 - (a) “grievous hurt” shall have the same meaning as in the Indian Penal Code, 1860 (45 of 1860); (b) “hit and run motor accident: means an accident FA/1683/2005 13/76 JUDGMENT arising out of the use of a motor vehicle or motor vehicles the identity whereof cannot be ascertained in spite of reasonable efforts for the purpose; (c) “scheme” means the scheme framed under section 163. (2) Notwithstanding anything contained in the General Insurance Business (Nationalization) Act, 1972 (57 of 1972) or any other law for the time being in force or any instrument having the force of law, the General Insurance Corporation of India formed under section 9 of the said Act and the insurance companies for the time being carrying on general insurance business in India shall provide for paying in accordance with the provisions of this Act and the scheme, compensation in respect of the death of, or grievous hurt to persons resulting from hit and run motor accidents. (3) Subject to the provisions of this Act and the scheme, there shall be paid as compensation- (a) in respect of the death of any person resulting from a hit and run motor accident, a fixed sum of twenty-five thousand rupees; (b) in respect of grievous hurt to any person resulting from a hit and run motor accident, a fixed sum of twelve thousand and five hundred rupees. (4) The provisions of sub-section 91) of section 166 shall apply for the purpose of making applications for compensation under this section as they apply for the purpose of making applications for compensation referred to in that sub-section. 162. Refund in certain cases of compensation paid under section 161.- (1) The payment of compensation in respect of the death of, or grievous hurt to, any person under section 161 shall be subject to the condition that if any compensation (hereafter in this sub0section referred to as the other compensation) or other amount in lieu of or by way of satisfaction of a claim for compensation is awarded or paid in respect of such death or grievous hurt under any other provision of this Act or any other law or otherwise so much of the other compensation or other amount aforesaid as is equal to the compensation paid under section 161 shall be refunded to the insurer. (2) Before awarding compensation in respect of an accident involving the death of, or bodily injury to, any person arising out of the use of a motor FA/1683/2005 14/76 JUDGMENT vehicle or motor vehicles under any provision of this Act (other than section 161) or any other law, the Tribunal, Court or other authority awarding such compensation shall verify as to whether in respect of such death or bodily injury compensation has already been paid under section 161 or an application for payment of compensation is pending under that section, and such Tribunal, Court or other authority shall - (a) if compensation has already been paid under section 161, direct the person liable to pay the compensation awarded by it to refund to the insurer, so much thereof as is required to be refunded in accordance with the provisions of sub- section (1); (b) if an application for payment of compensation is pending under section 161 forward the particulars as to the compensation awarded by it to the insurer. Explanation.- For the purpose of this sub- section, an application for compensation under section 161 shall be deemed to be pending- (i) if such application has been rejected, till the date of the rejection of the application, and (ii) in any other case, till the date of payment of compensation in pursuance of the application. 163. Scheme for payment of compensation in case of hit and run motor accidents.- (1) The Central Government may, by notification in the Official Gazette, make a scheme specifying, the manner in which the scheme shall be administered by the General Insurance Corporation, the form, manner and the time within which applications for compensation may be made, the officers or authorities to whom such applications may be made, the procedure to be followed by such officers or authorities for considering and passing orders on such applications, and all other matters connected with, or incidental to, the administration of the scheme and the payment of compensation. (2) A scheme made under sub-section (1) may provide that- (a) a contravention of any provision thereof shall be punishable with imprisonment for such term as may be specified but in no case exceeding three months, or with fine which may extend to such amount as may be specified but in no case exceeding five hundred FA/1683/2005 15/76 JUDGMENT rupees or with both; (b) the powers, functions or duties conferred or imposed on any officer or authority by such scheme may be delegated with the prior approval in writing of the Central government, by such officer or authority to any other officer or authority; (c) any provision of such scheme may operate with retrospective effect from a date not earlier than the date of establishment of the Solatium Fund under the Motor Vehicles Act, 1939 (4 of 1939) as it stood immediately before the commencement of this Act: Provided that no such retrospective effect shall be given so as to prejudicially affect the interests of any person who may be governed by such provision. 163A. Special provisions as to payment of compensation on structured formula basis.- (1) Notwithstanding anything contained in this Act or in any other law for the time being in force or instrument having the force of law, the owner of the motor vehicle or the authorized insurer shall be liable liable to pay in the case of death or permanent disablement due to accident arising out of the use of motor vehicle, compensation, as indicated in the Second Schedule, to the legal heirs or the victim, as the case may be. Explanation.- For the purposes of this sub- section, “permanent disability” shall have the same meaning and extent as in the Workmen's Compensation Act, 1923 (8 of 1923). (2) In any claim for compensation under sub-section 91), the claimant shall not be required to plead or establish that the death or permanent disablement in respect of which the claim has been made was due to any wrongful act or neglect or default of the owner of the vehicle or vehicles concerned or of any other person. (3) The Central Government may, keeping in view the cost of living by notification in the Official Gazette, from to time amend the Second Schedule. 163B. Option to file claim in certain cases.- Where a person is entitled to claim compensation under section 140 and section 163A, he shall file the claim under either of the said sections and not FA/1683/2005 16/76 JUDGMENT under both. CHAPTER XII CLAIMS TRIBUNALS 165. Claims Tribunals - (1) A State Government may, by notification in the Official Gazette, constitute one or more Motor Accidents Claims Tribunals (hereafter in this Chapter referred to as Claims Tribunal) for such area as may be specified in the notification