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TMI Blog2003 (7) TMI 723X X X X Extracts X X X X X X X X Extracts X X X X ..... Journal, page 1, Ajoy Nath Ray, J. came to the conclusion that the insurer has a right to maintain, argue and conclude an appeal by itself even on the question of quantum and merits, provided the insured stayed away from the appellate Court altogether, or at any stage of the appeal makes it plain to the Court of appeal that the attack against the quantum awarded by the Tribunal has ceased to be fair and sufficient for the purpose of justice. In his judgment, the learned Judge recorded that the above would be the position when the policy contains a condition whereunder the insurer reserves the right to conduct in the name of the insured, the defence or settlement of any claim or to prosecute in the name of the insured for its own benefit any claim for indemnity or damages or otherwise and would have full discretion in the conduct of any proceedings or in the settlement of any claim. 3. In a separate judgment, M.H.S. Ansari, J, observed as follows:- Notwithstanding that no leave has been granted or no order has been passed by the Claims Tribunal under Section 170 but the option reserved to the insurer under the reservation clause (condition-2 of the Insurance Policy) is invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, without obtaining leave from the Claims Tribunal under Section 170 of the Motor Vehicles Act, 1988, hereinafter referred to as the 1988 Act , an insurer could contest the claim only on the limited grounds set out in Sub-section (2) of Section 149 of the said Act involving breach of the conditions of the policy referred to therein. 7. The same view was expressed by the Hon'ble Supreme Court in the case of Narendra Kumar v. Yarenissa, reported in (1988)9 SCC 202, which was a decision rendered under Section 110 C(2-A) of the 1939 Act, the provision whereof are in pari materia with the provisions of Section 170 of the 1988 Act. 8. The view taken by the Hon'ble Supreme Court was subsequently reflected in two decisions of this Court in 1). United India Insurance Co. Ltd. v. Namita Das, 2001 ACJ 303 (Calcutta), and in (2) Oriental Insurance Company Ltd. v. Gurdial Stngh, 2001 ACJ 94 (Calcutta). 9. The Hon'ble Supreme Court had gone even further in the case of (1) Chinnama George v. N.K. Raju 2001 ACJ 777 (SC) : [2000 WBLR (SC) 437] and (2) Rita Devi v. New India Assurance Co. Ltd. wherein while considering Sections 173 and 149(2) of the 1988 Act, the Hon'ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent views necessitating the constitution of a larger Bench. 14. Appearing for some of the insurers in these appeals, Mr. K.K. Das urged that although the decision rendered in Shankarayya's case was followed in subsequent cases, a different note was sounded by a Division Bench of the Hon'ble Supreme Court in the case of United India Insurance Co. Ltd. v. Bhushan Sachdeva, wherein it was observed that it was erroneous to assume that an insurance company could not file an appeal under Section 173 of the 1988 Act. It was further observed that so long the insured had not challenged the award passed against him and so long as the liability to pay compensation would fall only on the insurance company, it would be inequitable to deny a remedy of appeal to the insurance company on all grounds as available to be insured. 15. Mr. Das who had appeared both before the Special Bench and the Division Bench which had rendered the decision in Gita Rani Mondal's case (supra), reiterated the submissions made by him on the basis of the decision of the Hon'ble Supreme Court in Captain Itbar Singh's case (supra). Mr. Das urged that the second condition incorporated in the pol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1988 Act, provides that the insurer has only statutory defences available as provided in Section 149(2) of the 1988 Act and where the Tribunal is of the view that there is a collusion between the claimant and the insured does not contest the claim, the insurer can be made a parry and on being so impleaded have all defences available to it. The Hon'ble Supreme Court, inter alia, observed further that Section 173 of the 1988 Act provides for an appeal against the award of the Tribunal and the consistent view of the Hon'ble Supreme Court has been that the insurer has no right to file an appeal to challenge the quantum of compensation. 19. In the said scenario it was categorically held by the Hon'ble Supreme Court that even if no appeal is preferred under Section 173 of the 1988 Act by an insured against the award of the Accident Claim Tribunal, it is not permission for an insurer to file an appeal questioning the quantum of compensation as well as findings as regards negligence or contributory negligence of the offending vehicle without leave having been obtained from the Claims Tribunal under Section 170 of the 1988 Act. 20. As will be evident from the above, the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er giving the parties an opportunity of being heard and holding an enquiry into the claim, may make an award determining the amount of compensation which appears to it to be just and specifying the persons to whom compensation shall be paid and it was to be specified what amount 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. 27. Section 110-C contained the procedure and powers of Claims Tribunal. It is provided that a summary procedure is to be followed. 28. Section 110-D provided for appeals to High Court. This section permitted preferring of appeal against an award of a Claims Tribunal by any persons aggrieved by such award. 29. None of the provisions in the said Act at that stage, specifically permitted the insurer any opportunity of hearing. But under Rule 241-A(5) of the Bengal Motor Vehicles Rules, 1940, Tribunal was to give a notice of the claim application to the owner and the insurer. But no provision could be shown which permitted the insurer an opportunity of hearing in assessment of claim. 30. Section 110-C was amended further by Introducing Sub-section 2-A by the Act 56 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring. Therefore, after the above change in law making the Insurer party to a proceeding having a right of hearing, cannot be curtailed even if the insurer does not exercise the right under Section 170. 36. Similarly, Section 149 in the new Act of 1988, is the section corresponding to Section 96 of the old Act of 1939. Sub-section 2 of Section 96 was also a special provision entitling the insurer to be made party and to defend the action in a claim proceeding under the specified circumstances. This provision has been repeated in Sub-section 2 to Section 149 of the new Act. This also similarly, in my opinion, is an additional right which cannot curtail the right to be a party and to an opportunity of hearing as new recognised under Section 168 of the new Act of 1988. 37. Therefore, it requires a consideration as to whether in view of present recognition of the right of insurer under Section 168 of the new Act for becoming a party and having an opportunity of hearing in the original claim application, non exercise of power under Section 149 of the new Act of 1988 (corresponding to Section 96 of the old Act) or under Section 170 of the new Act of 1988 (corresponding to Sub-secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atio laid down in British. India General Insurance Co. Ltd. v. Captain Itbar Singh and Ors.,. But in United Insurance Co. Ltd. v. Gita Rani Mondal 2001 ACJ 1962, this Court had held that an appeal by the insurer is maintainable on the principle of advance subrogation in the form of reservation clause. A Full Bench of Kerala High Court in New India Assurance Co. Ltd. v. Celine and Ors. 1993 ACJ 371 (Ker) (FB) had differed from National Insurance Company Ltd. v. Magikhia Das and Ors. 1976 ACJ 239 (Ori) (FB) and took the same view which was followed in Gita Rant Mondal (supra). It is this decision in Gita Rani Mondal (supra) has given rise to the present reference. 44. The question could have been buried in view of the decision in Shankarayya and Anr. v. United India Insurance Co. Ltd. and Anr.,, but for the decision in United India Insurance Co. Ltd. v. Bhushan Sachdeva and Ors.,. Now all these questions with regard to the reservation clause are being sought to be raised. However, it can be argued that in Shankarayya (supra), the Apex Court did not address itself on the question of the insurer's right vis-a-vis, the reservation clause on the principle of advance subrogation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied and the reason of satisfaction to be recorded in writing before the leave is so granted. The right to defend by an insurer is limited by Section 96(2) read with Sub-section (6) thereof circumscribed by Sub-section (2A) of Section 110-C creating a relaxation of the embargo or prohibition provided in Section 96(2). 48. This relaxation had also stood the scrutiny of different High Courts and the Apex Court until the decisions by Kerala Full Bench in Celine (supra) and a Division Bench of our High Court in Gita Rani Mondal (supra), and then Bhushan Sachdeva (supra). 49. The Madras High Court in The Indian Mutual General Insurance Society Ltd., Madras v. M. Kothandian Naidu and Ors., 1966 ACJ 62 (Mad); Ayesha Begum v. G. Veerappan and Ors., 1996 ACJ 101 (Mad) and The United India Fire General Insurance Co. Ltd. v. Parvathy and Anr., 1979 ACJ 101 (Mad) before and after the insertion of Section 11OC(2A) in the 1939 Act had taken the same view following Captain Itbar Singh (supra). The Madhya Pradesh High Court in Manjula Devi Bhuta and Anr. v. Manjusri Raha and Ors., 1968 ACJ 1 (M.P.); The New India Assurance Co. Ltd. v. Shiv Kumar and Ors., 1978 ACJ 137 (M.P.); New India Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, subject to the relaxation provided in Section 110-C(2A) of the 1939 Act (170 of the 1988 Act). In Bhushan Sachdeva (supra), the Apex Court had taken a different view. This decision was rendered in 18th January, 2002. We may, however, note that all these decisions by the Apex Court are of coordinate Benches, namely, of two Judges quorum. In Bhushan Sachdeva (supra), the decision in Narendra Kumar (supra) and Chinnama George (supra) were noticed and distinguished. Whereas Shankarayya (supra) and Rita Devi (supra), though earlier in point of time have not been noticed nor distinguished in Bhushan Sachdeva (supra). Before we deal with Bhushan Sachdeva (supra), vis-a-vis, Shankaryya (supra) and Rita Devi (supra) and the other decisions of the Apex Court, we may refer to the views taken by this Court. 50. This High Court in Hukum Chand Insurance Co. Ltd. v. Subhashini Roy and Anr. 1971 ACJ 156(Cal) had followed the principle laid down in Itbar Singh (supra). In Calcutta Insurance Co. and Anr. v. Rita Ganguli and Ors., 79 (1974-75) CWN 69, it had again taken the same view and it continued to follow the same principle that the insurer has no right to agitate any point other than thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pra), though later in point of time, is a decision by a co-ordinate Bench, therefore, there is no question of implied overruling of Shankaryya (supra) or Rita Devi (supra) or any of the earlier decisions. Though, two of the earlier decisions have been noticed and distinguished, yet these were not overruled. 53. Conflict between judgments of the Apex Court rendered by coordinate Benches creates certain uncomfortable situation for the High Courts. Article 141 makes are decision of the Apex Court binding of all Courts. But conflicting decisions, if bind the High Court, then High Court would be at a fix as to which one is to be followed. At one point of time it was the latter decision that was to be followed, at one point of time it was the earlier decision, which was to be followed. But, these views have now been replaced. Now the High Court has to undertake an uncomfortable job of preferring one and not the other or others. The principle of preference is guided by the system of acceptability of the preferable judgment by the High Court on the basis which of them lay down of the law elaborately and accurately. It is the decision, which, appears to the High Court to have elaborately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a failure to contest. Therefore, it had held that the right to contest includes the right to contest by filling an appeal against the award of the Tribunal as well. Thus, the insured can continue to contest the claim by filing an appeal. If the insured fails to prefer an appeal, it also amounts to failure to contest the claim effectively. Therefore, in such eventuality -the insurer becomes entitled to contest the claim on all grounds available to the insured. 56. Thus, in principle the Apex Court had accepted that continuation of contesting the claim does not end with the decision of the Tribunal, but continues even in appeal. It is an indirect acceptance of the proposition that appeal is a continuation of the proceedings to which the failure to contest provided in Section 170 of 1988 Act must also continue. But Section 170 postulates a situation within the ambit of the proceedings before the Tribunal which cannot travel beyond the award and be made applicable in the appeal because of the expressed terms used in Section 170, which mistakably, unequivocally and unambiguously prescribes the power of the Tribunal upon being satisfied with the test of Clauses (a) and (b) of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 1939 Act) of 1988 Act, and had restricted its right by insertion of Section 149(2) [section 96(2) of 1993 Act] of 1988 Act circumscribed by Sub-sections (5) and (7) thereof. It is the intention of the legislature, which has to be upheld. The enactment of these provisions clearly indicates the legislative intent to protect the claimant. When statutory provides a particular prohibition, the same cannot be superseded by act of parties. The principle of advance subrogation is something, which has no statutory force, but is merely a contract. The principle of advance subrogation does not apply to render a statutory provision ineffective. Inasmuch as, it would simply by a contracting out of statute, which, unless permitted by statute, is impermissible. Therefore, reservation clause can never enable the insurer to get rid of the prohibition provided under Section 149(2) [section 96(2) of 1939 Act] of 1988 Act. The statute does not provide for any scope of contracting out of the statute and thereby attract the application of the principle of advance subrogation. There is no scope for advance subrogation or contracting out of statute when the statute itself provides for right to contest t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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