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PETITIONER:

CHINNAMA GEORGE & ORS.

Vs.

RESPONDENT:

N.K. RAJU & ANR.

DATE OF JUDGMENT: 06/04/2000

BENCH:

D.P.Wadhwa, D.P.Mohapatro

JUDGMENT:

D.P. WADHWA,J.

Appellants are widow and minor children of George who

died in a motor vehicle accident which occurred on May 28,

1989. George was riding a scooter. It was hit by a bus

driven by Mohanan, the third respondent in a rash and

negligent manner. Bus was owned by N.K. Raju, the first

Respondent. The insurer was the Oriental Insurance Co.

Ltd., the second respondent. Appellants are aggrieved by

the judgment dated January 6, 1998 of the Division bench of

the High Court of Kerala which reduced the amount of

compensation arising out of the accident from Rs.3,78,000/-

awarded by the Motor Accident Claims Tribunal (for short,

the 'Claims Tribunal') to Rs.2,27,320/-. George, the

deceased was 36 years of age at the time of the accident.

His income was Rs.2,000/- per month. He was an actor-cum-

secretary of a leading drama troupe which was staging drama

in India and abroad. After deducting his personal expenses,

his income was determined at Rs.1600/- per month by the

Claims Tribunal. Applying multiplier of 20, compensation

amount was fixed at Rs.3,78,000/- by the Claims Tribunal.

The Claims Tribunal gave an award dated 10.1.1991 for

Rs.3,78,000/- with interest @ 12% per annum from September

1, 1989 with cost. The owner of the Bus, N.K. Raju, and

the Insurer filed appeal against the order of the Claims

Tribunal under Section 173 of the Motor Vehicles Act, 1988

(for short, the 'Act'). Section 173 entitles any person

aggrieved by an award of the Claims Tribunal to prefer an

appeal to the High Court. In view of the decision of the

Claims Tribunal, it could not be said that N.K. Raju, the

owner could be an aggrieved person for him to file any

appeal against the award. We have gone through the impugned

judgment of the High Court. There is no mention in whole

body of the judgment as to how N.K. Raju felt aggrieved and

what was his argument raised against the award of Claims

Tribunal. There is no challenge to the finding that the bus

was being driven by the third respondent in rash and

negligent manner. Under Section 149 of the Act, it is the

duty of the insurer to satisfy the award against the person

insured in respect of third party risks. It is not that

liability of the insurer in the present case is being

disputed. Insurer can defend the proceedings before the

Claims Tribunal on certain limited grounds. Sub-sections

(1), (2) and (7) of Section 149 of the Act are relevant,

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which are as under : "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, 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

judgment. (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 not duly licenced,

or by any person who has been disqualified for holding or

obtaining a driving licence 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 fact or by a representation of

fact which was false in some material particular. (3) to

(6) ........... (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 (3) otherwise than in the manner

provided for in sub-section (2) or in the corresponding law

of the reciprocating country, as the case may be."

Admittedly, none of the grounds as given in

sub-section (2) of Section 149 exist for the insurer to

defend the claims petition. That being so, no right existed

in the insurer to file appeal against the award of the

Claims Tribunal. However, by adding N.K. Raju, the owner

as co- appellant, an appeal was filed in the High Court

which led to the impugned judgment. None of the grounds on

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which insurer could defend the claims petition was the

subject matter of the appeal as far as the insurer is

concerned. We have already noticed above that we have not

been able to figure out from the impugned judgment as to how

the owner felt aggrieved by the award of the Claims

Tribunal. The impugned judgment does not reflect any

grievance of the owner or even that of the driver of the

offending bus against the award of the Claims Tribunal. The

insurer by associating the owner or the driver in the appeal

when the owner or the driver is not an aggrieved person

cannot be allowed to mock at the law which prohibit the

insurer from filing any appeal except on the limited grounds

on which it could defend the claims petition. We cannot put

our stamp of approval as to the validity of the appeal by

the insurer merely by associating the insured. Provision of

law cannot be undermined in this way. We have to give

effect to the real purpose to the provision of law relating

to the award of compensation in respect of the accident

arising out of the use of the motor vehicles and cannot

permit the insurer to give him right to defend or appeal on

grounds not permitted by law by a backdoor method. Any

other interpretation will produce unjust results and open

gates for the insurer to challenge any award. We have to

adopt purposive approach which would not defeat the broad

purpose of the Act. Court has to give effect to true object

of the Act by adopting purposive approach. Sections 146,

147, 149 and 173 are in the scheme of the Act and when read

together mean : (1) it is legally obligatory to insure the

motor vehicle against third party risk. Driving an

uninsured vehicle is an offence punishable with an

imprisonment extending up to three months or the fine which

may extend to Rs.1,000/- or both; (2) Policy of insurance

must comply with the requirements as contained in Section

147 of the Act; (3) It is obligatory for the insurer to

satisfy the judgments and awards against the person insured

in respect of third party risks. These are sub-sections (1)

and (7) of Section 149. Grounds on which insurer can avoid

his liability are given in sub-section (2) of Section 149.

If none of the conditions as contained in sub-section (2) of

Section 149 exist for the insurer to avoid the policy of

insurance he is legally bound to satisfy the award. He

cannot be a person aggrieved by the award. In that case

insurer will be barred from filing any appeal against the

award of the Claims Tribunal. The question that arises for

consideration is : can the insurer join the owner or the

driver in filing the appeal against the award of the Claims

Tribunal as driver or owner would be the person aggrieved as

held by this Court in Narendra Kumar & Anr. vs. Yarenissa

& Ors. [(1998) 9 SCC 202]? This Court has held that appeal

would be maintainable by the driver or the owner and not by

the insurer and, thus, a joint appeal when filed could be

maintainable by the driver or the owner. This is how the

Court held: - "For the reasons stated above, we are of the

opinion that even in the case of a joint appeal by insurer

and owner of offending vehicle if an award has been made

against the tortfeasors as well as the insurer even though

an appeal filed by the insurer is not competent, it may not

be dismissed as such. The tortfeasor can proceed with the

appeal after the cause-title is suitably amended by deleting

the name of the insurer."

There is no dispute with the proposition so laid by

this Court. But the insurer cannot maintain a joint appeal

along with the owner or the driver if defence on any ground

under Section 149(2) is not available to it. In that

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situation joint appeal will be incompetent. It is not

enough if the insurer is struck out from the array of the

appellants. The appellate court must also be satisfied that

a defence which is permitted to be taken by the insurer

under the Act was taken in the pleadings and was pressed

before the Tribunal. On the appellate court being so

satisfied the appeal may be entertained for examination of

the correctness or otherwise of the judgment of the Tribunal

on the question arising from/relating to such defence taken

by the insurer. If the appellate court is not satisfied

that any such question was raised by the insurer in the

pleadings and/or was pressed before the Tribunal, the appeal

filed by the insurer has to be dismissed as not

maintainable. The court should take care to ascertain this

position on proper consideration so that the statutory bar

against the insurer in a proceeding of claim of compensation

is not rendered irrelevant by the subterfuge of the

insurance company joining the insured as a co- appellant in

the appeal filed by it. This position is clear on a

harmonious reading of the statutory provisions in Sections

147, 149 and 173 of the Act. Any other interpretation will

defeat the provision of sub-section (2) of Section 149 of

the Act and throw the legal representatives of the deceased

or the injured in the accident to unnecessary prolonged

litigation at the instance of the insurer.

In the present case we do not find any argument

addressed on behalf of the owner of the offending vehicle

and the only argument, which the High Court noticed, was

that of the counsel for the insurer. That argument was on

the quantum of compensation granted to the appellants. That

ground is certainly not available to the insurer for the

purpose of filing the appeal. We, therefore, hold that the

present appeal by the insurer by joining the owner was not

competent, as there was no ground available to the insurer

to defend the claim petition.

We, therefore, set aside the impugned judgment of the

High Court and restore that of the Claims Tribunal.

Appellants shall be entitled to cost which we quantify at

Rs.10,000/-.

Accordingly, the appeal is allowed.