FIRST APPEAL NO. 189 OF 2019

16th September 2019

Petitioner Counsel: Shri R. D. Bhuibar
Respondent Counsel: Shri P.r. Agrawal
Act Name: Motor Vehicles Act, 1988

Section :
Section 149(2) Motor Vehicles Act, 1988 Section 17(b) Motor Vehicles Act, 1988 Section 170 Motor Vehicles Act, 1988 Section 170(b) Motor Vehicles Act, 1988 Section 173 Motor Vehicles Act, 1988

Cases Cited :
Paras 2, 5, 9, 11, 14: Royal Sundaram Alliance Insurance Co. Ltd. Vs. Hanamava Yamanappa Jedi and others (2014 (4) Mh.L.J. 401)
Paras 2, 3, 5, 11, 16: United India Insurance Co. Ltd., Goa. Vs. Gulam Mohammad and others (2016 (6) Mh.L.J.601)
Paras 3, 11, 13: Josphine James Vs. United India insurance Company Limited and anr. (2013) 16 SCC 711 : [2013 SAR(Civil)1143]
Paras 3, 5, 7, 8, 9, 11, 13: United India Assurance Company Limited Vs. Shila Datta and others [(2011) 10 SCC 509] : 2012(2) MhLJ 444
Paras 5, 6, 7, 8, 9, 10, 11, 13, 14: National Insurance Company Limited. Vs. Nicolletta Rohtagi [(2003) 7 SCC 456]
Para 6: Rita Devi. Vs. New India Assurance Co. Ltd. [(2000) 5 SCC 113]
Paras 6, 13: United India Assurance Co. Ltd. Vs. Bhushan Sachdev [(2002) 2 SCC 265]
Para 10: Sharad Ganpat Deshmukh and others. Vs. Smt. Kunda Ashok Polade (2004 (1) TAC 718 (Bombay))
Para 11: Narendra Kumar and another. Vs. Yarenissa and others (1998 (9) SCC 202)
Para 11: Rekha Jain Vs. National Insurance Company Ltd. And Ors.[2013 ALL SCR 2833]
Para 14: Harbhajan Singh and another. Vs. State of Punjab and another [(2009) 13 SCC 608]
Para 14: Ashok Sadarangani and another. Vs. Union of India [(2012) 12 SCC 321]
Para 15: State of Bihar Vs. Kalika Kuer alias Kalika Singh and others (2003) 5 SCC 448
Para 16: Vijay Laxmi Sadho. Vs. Jagdish [(2001) 2 SCC 247]
Para 16: Sandhya Educational Society and another. Vs. Union of India and others [(2014) 7 SCC 701]

JUDGEMENT

VINAY JOSHI, J.

Two inconsistent views taken by learned Single Judges of this Court gave rise to this reference to the larger Bench. The controversy in short was – Whether the appeal of insurer in terms of Section 173 of the Motor Vehicles Act, is maintainable in absence of permission obtained from the Tribunal as per Section 170[b] of the Motor Vehicles Act ?

2. In case of Royal Sundaram Alliance Insurance Co. Ltd. vrs. Hanamava Yamanappa Jedi and others (2014 (4) Mh.L.J. 401), the learned Single Judge of this Court ruled that, in absence of leave under Section 170 [b] of the Motor Vehicles Act, (“the M.V. Act” for short), the appeal of the insurer challenging the award is not maintainable. Whilst another learned Single Judge of this Court in reported case of United India Insurance Co. Ltd., Goa. vrs. Gulam Mohammad and others (2016 (6) Mh.L.J.601), taken a view that such appeal of the insurer is maintainable, without leave being sought from the Tribunal under Section 170 [b] of the M.V. Act.

3. In present appeal, the said inconsistent decisions were cited before the learned Single Judge. Perceiving the controversy, the learned Single Judge has framed following question, and referred to the larger Bench for adjudication.

“In the light of the decision in Josphine James vs. United India insurance Company Limited and anr. (2013) 16 SCC 711 wherein it has been held that an appeal by the Insurance Company challenging the quantum of compensation would not be maintainable in absence of any permission under Section 170(b) of the Motor Vehicles Act, 1988 being obtained, does the decision in United India Insurance Company vs. Gulam Mohhammad and ors. 2016(6) Mh.L.J. 601, holding otherwise by referring to the decision in United India Assurance Company Limited vs. Shila Datta and others 2012(2) MhLJ 444, lay down the correct law ?”

4. On and often preliminary objection is being raised about maintainability of insurer’s appeal in absence of prior permission of the Tribunal in terms of Section 170[b] of the M.V.Act. In other words, whether insurance company alone can contest the claim in appeal sans prior permission of the Tribunal to contest the claim on the grounds other than stated in Section 149[2] of the M.V. Act. For better appreciation, we find it necessary to reproduce the relevant provisions of the M.V. Act herein below :

“149 Duty of the insurers to satsify judments and awards against persons insured in respect of third party risks :
(1) …...
(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 licensed, 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.”
“170. Impleading insurer in certain cases - Where in the course of any inquiry, the Claims Tribunal is satisfied that –
[a] there is collusion between nthe person making the claim and the person against whom the claim is made, or
[b] the person against whom the claim is made had failed to contest the claim,
if may, for reason to be recorded in writing, direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have, without prejudice to the provisions contained in sub-section [2] of Section 149, the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made.”

5. Though the referal Judge has highlighted inconsistent view taken by the learned Single Judge in case of Gulam Mohammad (supra), than to the decision of the Supreme Court in case of Josphine James, the real controversy which we perceive is about two inconsistent view of the learned Single Judges of this Court. Firstly, in case of Hanamava Yamanappa (supra), the learned Single Judge by relying on the three- Judge Bench decision of Supreme Court in case of National Insurance Company Limited. vrs. Nicolletta Rohtagi [(2003) 7 SCC 456], ruled that in absence of prior permission under Section 170[b] of the M.V. Act, the appeal of insurer is not maintainable. Secondly, another learned Single Judge of this Court in case of Gulam Mohammad by relying on another three-Judge Bench decision in case of United India Assurance Company Ltd. vrs. Shila Datta and others [(2011) 10 SCC 509], held that such appeal of insurer is maintainable in absence of prior permission of the Tribunal.

6. In case of Nicolletta Rohtagi (supra), the reference was made in which the question of law was framed that “where an insured has not preferred an appeal under Section 173 of the M.V. Act, against an award, is it open to the insurer to prefer an appeal against the award by the Tribunal questioning the quantum of compensation as well as finding as regards the negligence of the offending vehicle ?” In that context the Supreme Court after considering earlier inconsistent views of two Benches of equal strength (two-Judges) in Rita Devi. vrs. New India Assurance Co. Ltd. [(2000) 5 SCC 113] and United India Assurance Co. Ltd. vrs. Bhushan Sachdev [(2002) 2 SCC 265], ruled that, the view taken in case of United India Assurance Co. (supra), does not lay down the correct law in following words :

“29. For the aforesaid reasons, as well as that the learned Judges in United India Insurance Co. Ltd., (supra), have failed to notice the limited grounds available to an insurer under Section 149[2] of the Act, we are of the view that the decision in United India Insurance (supra) does not lay down the correct view of law.
32. For the aforesaid reasons, our answer to the question is that even if no appeal is preferred under Section 173 of the Act by an insured against the award of a Tribunal, it is not permissible 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.”

7. This brings us to consider the another decision rendered by the Three-Judges of the Supreme Court in case of Shila Datta (supra). It was also a reference made to the Supreme Court on the question involved alongwith some additional issues. In the said reference, the Supreme Court has framed in all 5 questions for consideration. So far as the question relating to maintainability of the appeal preferred by the insurer is concerned, it is expressed that in earlier decision of Nicolletta Rohtagi (supra), the issue was not considered with reference to different situations. However, in view of the decision of Nicolletta Rohtagi (supra), the Supreme Court has refrained itself from deciding the point involved in this case and expressed that the view taken in case of Nicolletta Rohtagi (supra), requires reconsideration by a Larger Bench. The said expression is reproduced herein below.

“34. Nicolletta Rohtagi did not consider the issue with reference to the situation where the insurer is enabled by a specific term in the insurance policy to take over and conduct the defence of the case in the name of the insured, presumably as the insurance policy did not have such an enabling provision. In fact if such a contention had been raised, the Court would have noticed that the issue was covered by a binding three-Judge Bench judgment in British India General Insurance Company Ltd. Be that as it may.
35. However, in view of the decision in Nicolletta Rohtagi, we cannot decide Points (iii) to (v) in favour of the insurers. For the aforesaid reasons, insofar as Issues (iii) to (v) are concerned, we are of the view that Nicolletta Rohtagi requires reconsideration by a larger Bench.”

8. In the wake of that again said question came for scrutiny before the Supreme Court in case of Josphine James. In said case, the earlier pronouncements in case of Nicolletta Rohtagi as well as Shila Datta (supra) of equal strength of Judges were cited for consideration. The two Judge Bench of Supreme Court after considering the above referred both the decisions of equal strength of three Judges, has expressed that, though the correctness of the decision in case of Nicolletta Rohtagi (supra), was referred to the larger Bench, still the view expressed in said case that, in absence of compliance of Section 170[b] of the M.V. Act the appeal of insurer is not maintainable, has to be followed. These observations are in following words.

“20. …. The High Court, in reducing the quantum of compensation under the heading of loss of dependency of the appellant, was required to follow the decision rendered by three judge Bench of this Court in Nicolletta Rohtagi case (supra)and earlier decisions wherein this Court after interpreting Section 170 (b) of the M. V. Act, has rightly held that in the absence of permission obtained by the Insurance Company from the Tribunal to avail the defence of the insured, it is not permitted to contest the case on merits. The aforesaid legal principle is applicable to the fact situation in view of the three judge bench decision referred to supra though the correctness of the aforesaid decision is referred to larger bench. This important aspect of the matter has been overlooked by the High Court while passing the impugned judgment and the said approach is contrary to law laid down by this Court.
21. In view of the aforesaid reasons, the Insurance Company is not entitled to file appeal questioning the quantum of compensation awarded in favour of the appellant for the reasons stated supra. In the absence of the same, the Insurance Company had only limited defence to contest in the proceedings as provided under Section 149 (2) of the M.V. Act.”

9. In case of Hanamava Yamanappa (supra), the learned Single Judge again had an occasion to consider the controversy. In that regard, the learned Single Judge has observed that, the two Judge Bench of Supreme Court in case of Josphine James, after considering two divergent views expressed by the Supreme Court in case of Nicolletta Rohtagi and Shela Datta (supra), stated that the view expressed in case of Nicolletta Rohtagi (supra), though referred to larger Bench, is binding and therefore, it is to be followed. These observations reads as under :

“17. The above decision of the Division Bench of the Hon’ble Supreme Court in the case of “Josphine James” is binding on this Court, because the decision of the larger Bench of the Supreme Court in cases of Nicolletta Rohtagi as well as Shila Dutta have been considered and interpreted by it. It is therefore, evident that the ratio of Nicolletta Rohtagi’s case (supra), is still applicable to the present case.”

10. The learned Single Judge relying on the decision in case of Sharad Ganpat Deshmukh and others. vrs. Smt. Kunda Ashok Polade (2004 (1) TAC 718 (Bombay)), has expressed that, where the decision of a larger Bench of Supreme Court is considered and interpreted in a particular way, by a subsequent smaller Bench of the Supreme Court, then the interpretation of the judgment of larger Bench made by the smaller Bench is binding on all subordinate Courts including High Court. Ultimately, the learned Single Judge relying on the judgment of Nicolletta Rohtagi (supra), as interpreted in later decision of Josephine James, has ruled that the appeal of the insurance company to challenge the award on the grounds not covered by Section 149[2] of the M.V. Act, for want of leave under Section 170[b] of the M.V. Act, is not maintainable.

11-12. Coming to the core issue of reference relating to the decision of the learned Single Judge in case of Gulam Mohammed (supra), the learned Judge referred decisions of the Supreme Court in case of Nicolletta Rohtagi, Shila Datta, Josephine, and decision of another Single Judge in case of Hanamava Yamanappa (supra). A specific question was posed before the learned Single Judge about maintainability of appeal of the insurer sans permission sought under Section 170[b] of the M.V. Act. The learned Single Judge has discussed at length the decision of Supreme Court in case of Narendra Kumar and another. vrs. Yarenissa and others (1998 (9) SCC 202). The issue discussed and ruled in the case of Narendra Kumar (supra), was relating to the maintainability of the joint appeal of insured and insurer, which was not the question posed in case of Gulam Mohammad. The learned Single Judge has referred the decision of the Supreme Court in case of Nicolletta Rohtagi (supra), as explained by the two judge bench of the Supreme Court in case of Josephine James, as well as the decision of learned Single Judge of this Court in case of Hanamava Yamanappa, but, ultimately held that the appeal of insurer is maintainable without obtaining leave of the Tribunal under Section 170 [b] of the M.V. Act. The relevant observations are reproduced herein below.

“25] In Hanamava Yamanappa (supra), the learned Single Judge of this Court also considered the case of Rekha Jain Vs. National Insurance Company Ltd. And Ors.[2013 ALL SCR 2833] where the insurer was impleaded before the Tribunal as a party respondent and the Division Bench of the Apex Court relying on the judgment in Nicolletta Rohtagi held that the Insurance Company could not have challenged the finding without obtaining the permission as required under Section 170(b) of the Act, to avail the defence of the insured to contest the case. For that matter, the learned Judge also considered the judgment in Josphine James Vs. United India Insurance Co.Ltd. And another [2013 SAR(Civil)1143] where the insurer was impleaded before the Tribunal as a party respondent and the Division Bench of the Hon'ble Apex Court considering the judgment in Nicolletta Rohtagi as well as that in Shila Datta(supra), held that the ratio of Nicolletta Rohtagi would still be applicable in the present case. In the ultimate it was held that the appeal at the instance of insurer was not maintainable.
26] Considering these judgments in Nicolletta Rohtagi and Shila Datta of the Three Judge Bench of the Hon'ble Apex Court, the appeal of the insurer is maintainable without any leave being sought of the Tribunal under Section 170 of the Act.”

13. The learned Single Judge (para no.25) has observed that after considering the earlier pronouncements in case of Nicolletta Rohtagi and Shila Datta, the Supreme Court in case of Josphine James (supra) held that the ratio of Nicolletta Rohtagi would still be applicable and the appeal is not maintainable. However, in subsequent para (paragraph no.26), concluded the issue by stating that, in view of the judgment of Supreme Court in case of Nicolletta Rohtagi and Shila Datta, the appeal of the insurer is maintainable. We are unable to comprehend the said expression in the light of the law laid down by the Supreme Court with clarity in case of Josphine James, which was followed by the learned Single Judge of this Court in case of Hanamava Yamanappa. Infact to our mind, when the Smaller Bench of the Supreme Court in case of Josphine James, has interpreted the decisions of two larger Benches of the Supreme Court in a particular way, it is not open to take a contrary view. In substance, there was no need to delve on the issue further more, since the Supreme Court in case of Josephine James has made the position crystal clear in expressive language in paragraph no.10 of the judgment, which reads as under :

“10. Aggrieved by the impugned judgment and award passed by the High Court in MAC Appeal no. 433/2005and the review petition, the present appeal is filed by the appellant urging certain grounds and assailing the impugned judgment in allowing the appeal of the Insurance Company without following the law laid down by this Court in Nicolletta Rohtagi’s case (supra)and instead, placing reliance upon the Bhushan Sachdeva’s case (supra). Nicolletta Rohtagi’s case was exhaustively discussed by a three judge bench in the case of United India Insurance Company Vs. Shila Datta. Though the Court has expressed its reservations against the correctness of the legal position in Nicolletta Rohtagi decision on various aspects, the same has been referred to higher bench and has not been overruled as yet. Hence, the ratio of Nicolletta Rohtagi’s case will be still applicable in the present case.”

14. The situation emerges that in earlier decision of Hanamava Yamanappa [supra], the learned Single Judge has taken a view that appeal is not maintainable, whilst in later decision another learned Single Judge in case of Gulam Mohammad took a divergent view upholding the maintainability of appeal in absence of a permission under Section 17[b] of the M.V. Act. Undeniably, three Judge Bench decision of Supreme Court in case of Nicolletta Rohtagi (supra), (followed in Hanamava Yamanappa’s case), is referred to larger Bench and reference is pending for adjudication. At this juncture, it is apt to note the decision of Supreme Court in case of Harbhajan Singh and another. vrs. State of Punjab and another [(2009) 13 SCC 608] and Ashok Sadarangani and another. vrs. Union of India [(2012) 12 SCC 321], wherein it is ruled that, when the matter is referred to earlierlarger Bench, the other proceeding involving the same issue would not remain stayed, but, the view taken by the earlier Bench holds the field until reference is answered. In other words, the view taken in Nicolletta Rohtagi’s case is binding till the reference is answered.

15. We find that already the issue was considered by the learned Single Judge in Hanamava Yamanappa’s case, and a particular view was taken about non-maintainability of insurer’s appeal. Despite that, in case of Gulam Mohammad, another learned Single Judge took a divergent view. At this stage, we may refer to the decision which deals with the concept of pending proceedings. In State of Bihar v. Kalika Kuer alias Kalika Singh and others (2003) 5 SCC 448, it is held as under :

“10. … an earlier decision may seem to be incorrect to a Bench of a coordinate jurisdiction considering the question later, on the ground that a possible aspect of the matter was not considered or not raised before the court or more aspects should have been gone into by the court deciding the matter earlier but it would not be a reason to say that the decision was rendered per incuriam and liable to be ignored. The earlier judgment may seem to be not correct yet it will have the binding effect on the later Bench of coordinate jurisdiction… ….. ….. Easy course of saying that earlier decision was rendered per incuriam is not permissible and the matter will have to be resolved only in two ways – either to follow the earlier decision or refer the matter to a larger Bench to examine the issue, in case it is felt that earlier decision is not correct on merits.”

16. Law will be bereft of all its utility if it should be thrown into a state of uncertainty by reason of conflicting decision, and it is therefore, desirable that in case of difference of opinion, the question should be authoritatively settled by larger Bench. In this context, we may fruitfully note what has been stated by the Supreme Court in a reported case of Vijay Laxmi Sadho. vrs. Jagdish [(2001) 2 SCC 247]. In the said case, it is held that “As the learned Single Judge was not in agreement with the view expressed in Devilal case, it would have been proper, to maintain judicial discipline, to refer the matter to a larger Bench rather than to take a different view.” The Supreme Court in another case of Sandhya Educational Society and another. vrs. Union of India and others [(2014) 7 SCC 701], has observed that “the judicial decoram and discipline is paramount and, therefore, a coordinate Bench has to respect the judgments and orders passed by another coordinate Bench.” In view of that, the learned Single Judge while deciding the case of Gulam Mohammad (supra), ought to have referred the question to larger Bench instead of taking a divergent view.

17. Be that as it may, the view taken by the Hon’ble Supreme Court in case of Nicolletta Rohtagi though referred to the larger Bench, still holds the field, as explained by the Supreme Court in Josephine James case, and therefore, the position is quite clear that the appeal of the insurer in absence of leave under Section 170 [b] of the M.V. Act is not maintainable. To modulate the answer to the question referred, we state that the view taken by the learned Single Judge in case of Gulam Mohammad, taking a contrary view to the decision rendered in the case of Nicolletta Rohtagi and Josephine James, cannot be accepted, and it is not a good law. The appeal by the Insurance Company challenging the quantum of compensation would not be maintainable in absence of permission under Section 170[b] of the M.V. Act.

18. The reference is answered accordingly.