1. Leave to delete respondent No. 1 as the Tribunal has already passed the orders against respondent No. 1 and the appeals are aimed against respondent No. 2. Hence, the appeals have been heard for final hearing.

2. These appeals are directed against the common judgment and orders dated 7.9.1996 passed by the Motor Accidents Claims Tribunal, Rajkot (hereinafter referred to as 'the Tribunal') on applications under Section 140 of Motor Vehicles Act, 1988 (hereinafter referred to as 'the Act') in different claim petitions arising from the same accident. As common questions of fact and law are involved, all appeals have been heard together and are being disposed of by this common judgment.

3. This group of appeals raises the important question about the scope of inquiry when a claimant files an application under Section 140 of the Act for claiming compensation under the no fault liability principle.

4. In the aforesaid group of claim petitions filed by persons who have suffered permanent disablement, the Tribunal has passed the order under Section 140 of the Act against respondent No. 1, owner of the vehicle but not against the insurance company on the ground that at the time of accident, the injured persons (who are claimants) were being carried in the goods vehicle by the driver of the vehicle with notice or knowledge of the owner of the vehicle and, therefore, the risk to such passengers was not covered by the insurance policy issued by respondent No. 2, United India Insurance Co. Ltd. (hereinafter referred to as 'the insurance company').

5. Before narrating the rival contentions urged by the learned Counsel, the facts leading to filing of the present appeal may be set out briefly.

6. Thirty to thirty-two persons were travelling by the truck in question belonging to respondent No. 1 (there is no dispute about identity of the vehicle or its owner) from Rajkot to Kota on 7.11.95. The vehicle met with an accident causing injuries to 27 persons who were travelling therein. 27 claim petitions, therefore, came to be filed before the Tribunal. During pendency of the claim petitions, respective claimants filed application, Exh. 7, in each case claiming compensation under Section 140 of the Act in the sum of Rs. 25,000 each on the ground that they received injuries and suffered permanent disablement and that the vehicle involved in the accident belonged to respondent No. 1 and was insured by respondent No. 2, United India Insurance Co. Ltd. The claimants produced a copy of the first information report, a copy of the insurance policy and other documents as required by Rule 231 (9) of the Gujarat Motor Vehicles Rules, 1989.

7. The insurance company strenuously contested the applications and submitted that the claimants were passengers being carried in a goods vehicle and, therefore, there was breach of the terms and conditions of the insurance policy and also of the permit granted by the motor vehicle authorities under the Act. Hence, the insurance company cannot be saddled with the liability to satisfy the award for compensation under Section 140 of the Act.

8. The Tribunal examined the averments made in the claim petitions to the effect that the claimants were travelling with their goods in the vehicle in question, the contents of the first information report, the terms and conditions of the insurance policy, the permit issued by the R.T.O. and the registration book for the vehicle in question and relying on certain decisions of other High Courts, the Tribunal held that it was open to the Tribunal to examine the defences raised by the insurance company while hearing the application for compensation under Section 140 of the Act and on that basis examined the rival contentions and passed the order under appeal on 6.9.1996 holding that each claimant is entitled to recover interim compensation under Section 140 of the Act in the sum of Rs. 25,000 with interest at the rate of 12 per cent per annum from the date of the application till the date of payment from respondent No. 1, i.e., the owner of the vehicle, but the Tribunal has dismissed application, Exh. 7, in each case with no order as to costs against respondent No. 2, insurance company.

9. The above common judgment and orders under Section 140 of the Act are challenged in the present group of appeals with a prayer that the order under Section 140 of the Act should have been passed against the insurance company as well. The following submissions have been urged by Mr. Pahwa in support of the appellant-claimants' case:

(1) The scheme of compensation payable to the heirs of the person who has died in an accident or who has suffered permanent disability under the provisions of Sections 140 to 144 of the Act is altogether different in nature from the scheme of compensation under Section 166 read with Section 163 of the Act which is based on traditional principles for awarding compensation.

(2) The compensation payable under Section 140 of the Act is not in the nature of 'interim compensation' as is sometimes erroneously understood. Hence, while considering the application for compensation under Section 140 of the Act, the Tribunal is not required to examine the question whether the claimant is likely to succeed at the final disposal of the claim petition but all that the Tribunal is required to examine at this stage are the limited questions about the factum of accident, identity of the vehicle, the owner and insurer of the vehicle and the factum of death or permanent disability of the victim/s of the accident.

(3) The purpose of awarding compensation under Section 140 of the Act is to help the claimants who have either suffered permanent disability or who have lost their bread-winner and, therefore, unable to earn livelihood during pendency of the claim petitions which are generally not heard for a number of years.

(4) This court has already held in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar 1996 ACT 155 (Gujarat), that the defence raised by the insurer or the owner should be examined when the claim petition is decided on merits and for awarding compensation under Section 140 of the Act the Tribunal is required to satisfy itself in respect of only the following matters:

(i) an accident has arisen out of the use of the motor vehicle;

(ii) the said accident has resulted in permanent disablement of the person who is making the claim or death of the person whose legal representative is making the claim;

(iii) the claim is made against the owner and insurer of the motor vehicle involved in the accident.

(5) Once the Tribunal has accepted the claimants' case and has passed the order against the owner under Section 140 of the Act, in view of the fact that on the date and time of the accident there was in force an insurance policy the Tribunal was required to pass the award against the insurance company as well without going into the detailed questions like whether there was any breach of the terms and conditions of the insurance policy.

(6) Even otherwise on merits, the Tribunal ought to have held that the insurance company is liable to pay compensation under Section 140 of the Act.

10. The principal controversy in the present group of appeals is about the scope of inquiry which a Claims Tribunal is to undertake for deciding the application under Section 140 of the Act. There is a difference of opinion between the different High Courts about the precise scope of such inquiry. This court speaking through learned brother J.M. Panchal, J. and the High Courts of Madhya Pradesh, Bombay, Calcutta, Jammu & Kashmir, Gauhati, Punjab & Haryana have taken the view that at the stage of considering the application under Section 140 of the Act or under section 92-a of the old act, the Tribunal is merely required to ascertain the fact whether there was in force a policy of insurance at the time of accident and that the Tribunal is not to go into the questions even prima facie whether there was any breach of the terms and conditions of the policy or whether any of the defences raised by the insurance company under Section 96(2) of the Act or under Section 147 or 149 of the new Act are likely to be accepted. These courts have held that such defences are to be examined only at the trial.

On the other hand, a Full Bench of the Karnataka High Court in United India Insurance Co. Ltd. v. Immam Aminasab Nadaf 1990 ACT 757 (Karnataka), followed in Oriental Insurance Co. Ltd. v. Irawwa 1992 ACJ 918 (Karnataka); and the High Court of Orissa in United India Insurance Co. Ltd. v. Kamalalochan Kamalo 1996 ACJ 302 (Orissa) and Patna in New India Assurance Co. Ltd. v. Turki Hi 1995 ACJ 1118 (Patna), have taken the other view that even while the Tribunal considers the application under Section 140 of the Act (section 92 of the old Act), the insurance company is entitled to raise, and the Tribunal is required to examine, albeit prima facie, the defence available to the insurance company and that if the Tribunal comes to the conclusion that the insurance company is not liable in view of the breach of terms and conditions of the policy or the non-coverage of the risk, the Tribunal would not fasten on the insurance company the liability to pay compensation under Section 140 of the Act (section 92 of the old Act).

11. In view of the decision of this Court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar 1996 ACJ 155 (Gujarat), no further discussion would have been necessary and all the appeals would have been required to be straightaway allowed. However, Mr. P.V. Nanavati, learned Counsel for the insurance company has addressed me at length and made an attempt to persuade me to take a different view and to agree with the view taken by the Full Bench of Karnataka High Court and Orissa and Patna High Courts. I have, therefore, examined the arguments of Mr. Nanavati at some length.

12. The learned Counsel for the insurance company has advanced the following broad contentions:

I. The compensation payable under Section 140 of the Act is different from the compensation payable at the conclusion of the trial only insofar as the question of negligence is not to be examined under the provisions of Section 140 of the Act, but there is no prohibition against the insurance company raising its defences at the interim stage. Since the compensation payable under Section 140 of the Act is in the nature of interim compensation the Tribunal is certainly required to examine the question whether the claimants are entitled to recover the compensation from the insurance company finally.

Strong reliance has also been placed on the decision of a Full Bench of the Karnataka High Court and the decisions of two other High Courts in support of the contentions of the insurance company that the Tribunal is required to examine prima facie defences of the insurance company even at the stage of considering the application under Section 140 of the Act.

II. While the Tribunal is examining the aforesaid question, it is open to the insurance company to produce its documentary evidence for urging before the Tribunal that the insurance company is prima facie not liable to satisfy any award against the insured, and, therefore, any interim order against the insured.

In the alternative, even if the insurance company is not to be permitted to lead evidence at this stage, the insurance company is entitled to refer to the documents produced by the claimants either along with the claim petition or along with the application under Section 140 of the Act for satisfying the Tribunal that the insurance company had not insured the risk to the claimants.

III. If the insurance company is held liable to pay the compensation under Section 140 of the Act and ultimately the insurance company succeeds at the time of final decision and the Tribunal holds that the insurance company is not liable to satisfy the award against the owner, the insurance company will not be able to recover the amount from the claimants.

IV. In the facts of the case the Tribunal had rightly come to the conclusion that the insurance company was not liable to satisfy the award under Section 140 of the Act because the documents produced by the claimants, such as, first information report showed that the claimants were not travelling in the vehicle as owners of the goods but as pilgrims and the number of the passengers being carried was 27 and therefore, in excess of the number permitted by the R.T.O. permit for the vehicle in question which is a goods vehicle.

13. Mr. P.V. Nanavati has vehemently advanced the following arguments in support of his first three contentions:

(i) The legislature while providing that the issue of negligence is not to be considered while awarding the interim compensation under section 92-a of the old act or under section 140 of new act, could as well have provided that the Tribunal is not required to look at the question of coverage of risk or breach of the terms and conditions of the insurance policy. The absence of such provision indicates that the Tribunal is certainly required to consider the aforesaid question even while awarding interim compensation.

(ii) In the case of Gujarat State Road Trans. Corpn. v. Ramanbhai Prabhatbhai 1987 ACJ 561 (SC), the Supreme Court has said that the substantive law of the country is modified to the extent that negligence is not to be proved for awarding interim compensation. But there is no modification of that part of the law dealing with the liability of the insurance company which can arise only if the risk in question was covered by the insurance policy and if there was no breach of the terms and conditions of the policy.

(iii) If the insurance company can point out, even according to the view of the High Courts of Bombay and M.P. that at the time of the accident, there was no insurance policy in force, because the insurance was taken after the date of the accident or after the accident took place on that particular day and for that limited purpose the Tribunal can look at the contents of the certificate of insurance or insurance policy, there is no reason why the insurer should be precluded from looking at the insurance policy containing the terms and conditions or indicating the persons whose risk is or is not covered by the insurance policy.

(iv) Similarly there were many such defences which go to the root of the matter such as-

(a) Since the liability of the insurance company will arise only if the accident has taken place in a public place, the insurance company should not be precluded even at the interim stage from pointing out that the accident in a particular case had taken place in a private place and not in a public place.

(b) Suppose the first information report or other papers on record reveal that the driver of the vehicle in question was driving without holding driving licence at the time of accident how the insurance company can be held to be liable to pay even interim compensation, if ultimately the insurance company is going to be exonerated from any liability to indemnify the owner.

(c) It has been held in the case of Pushpabai Purshottam Udeshi v. Ranjit Ginning and Pressing Co. 1977 ACJ 343 (SC), that passenger in a motor vehicle is not a third party. In this view of the matter also, the insurance company would be at liberty to contend and show that it would not be liable to pay compensation either at the interim or final stage if the victim was travelling as a passenger in a goods vehicle and by satisfying the Tribunal that all the conditions laid down by this Court in the case of New India Assurance Co. Ltd. v. Kamlaben 1993 ACJ 673 (Gujarat), were fulfilled.

14. The thrust of Mr. P.V. Nanavati's submissions, therefore, is that before the Tribunal decides an application under section 140 of the new act, the insurance company must have an opportunity to lead evidence, at least documentary evidence, like motor vehicle permit, the detailed terms and conditions of the insurance policy, etc., and to show that it should not be held liable to pay even interim compensation because there was prima facie substance in the defence raised by the insurance company.

In the alternative, Mr. P.V. Nanavati submitted that even if the court is not prepared to go to that length, it should at least be held that the insurance company is entitled to submit before the Tribunal on the basis of the material already produced by the claimants on record, including the material documents such as F.I.R., panchnama and insurance policy, etc., that the insurance company was not liable to cover the risk of injury caused to the victim in a particular case. For instance, in the instant case, the Tribunal has referred to the contents of the F.I.R. and the motor vehicle permit and the insurance policy to come to the conclusion that the claimants were passengers travelling in a goods vehicle and, therefore, the risk of the passengers was not covered by the insurance policy and, therefore, the insurance company was not liable to pay even interim compensation.

On the basis of the above submissions, Mr. Nanavati submitted that the Tribunal cannot make an interim award against the insurance company and that liability for paying the interim compensation cannot be foisted upon the insurance company, when the insurance company is patently not liable to pay such compensation at the conclusion of the trial. It was also vehemently submitted that ultimately even if the insurance company succeeds at the conclusion of the trial, insurance company will not be able to recover the amount from the claimants.

15. Before examining the rival contentions of the parties, it would not be out of place to refer to the legislative history of the provisions of Chapter X of the Motor Vehicles Act, 1988 (from Sections 140 to 144) which are in pari materia with the provisions of Chapter VII-A of the Motor Vehicles Act, 1939 (including Section 92-A) with the change in the amounts of compensation for death and permanent disability.

Earlier the legal position was that a person who has suffered injuries in a motor vehicle accident or the heir of a person who has died in an accident could claim compensation from the driver and owner of the vehicle on the basis of the fault principle. The insurance company could be held liable only if the owner of the vehicle was held to be liable and it was proved that there existed an insurance policy at the time of the accident and that it covered risk to the claimant and further the insurance company could be exonerated if it succeeded in making good any of the defences available to it under the provisions of Section 96 of the old Act (corresponding to Section 149 of the present Act).

However, in view of the fast increasing volume of the traffic and the number of accidents being on the rise, the Tribunals were flooded with a large number of claim petitions which unfortunately the Tribunals could not dispose of within a reasonable time of a year or so; in a large number of cases the claim petitions remain pending for almost a decade, if not longer.

In order to meet, to some extent, with the responsibility of the society for the deaths and injuries caused in road accidents, there was a continuous agitation throughout the nation to make the liability for damages arising out of motor vehicles as a liability without fault. The Law Commission also suggested certain reforms and, therefore, Chapter VII-A was introduced in the Motor Vehicles Act, 1939 by Motor Vehicles (Amendment) Act, 1982. As per the said provision, a person injured in an accident who suffered permanent disablement was entitled to recover Rs. 7,500 and heirs of the person who died were entitled to recover Rs. 15,000. The said provisions are now to be found in Chapter X of the Motor Vehicles Act, 1988. The respective amounts have been raised to Rs. 25,000 and Rs. 50,000 for permanent disablement and death respectively.

16. Chapter X of the Motor Vehicles Act, 1988 contains provisions providing for liability without fault in certain cases. Section 140 provides for liability to pay compensation in case of death or permanent disability on the principle of no fault and provisions of Sub-section (1) of Section 141 preserve the right to claim compensation on the traditional principle of fault. Sub-section (2) of Section 141 provides that 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 that 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 in the first place. Sub-section (3) of Section 141 while providing that compensation paid under Section 140 shall be adjusted against the higher amount of compensation payable on the principle of fault, also provides that if the compensation payable on the principle of fault is less than the compensation already paid under Section 140, the compensation under fault liability is not required to be paid, but there is no provision requiring the claimant to refund such amount received under Section 140. Section 142 defines what will be treated as permanent disablement. Section 143 provides for applicability of Chapter X also to claims for compensation under the Workmen's Compensation Act. Section 144 gives overriding effect to the provisions of Chapter X, notwithstanding anything contained in any other provisions of the Motor Vehicles Act or of any other law for the time being in force.

17. Now let us look at the relevant provisions of Chapter XI of the Motor Vehicles Act, 1988 which provides for insurance of motor vehicles. Section 145 Clause (c) defines 'liability' as under:

Liability wherever used in relation to the death of or bodily injury to any person, includes liability in respect thereof under Section 140.

Section 146 provides for necessity of insurance for use of a motor vehicle in a public place. Section 147 provides for requirements of policies and limits of liability which contains certain exclusion clauses, but does not exclude the liability under Section 149. On the contrary, Sub-section (2) thereof specifically provides that a policy of insurance shall cover any liability incurred in respect of any accident up to the specified limits...Section 149 provides for defences available to the insurance company.

18. Rule 231 of the Gujarat Motor Vehicles Rules, 1989, particularly Sub-rule (9) thereof, provides that the Claims Tribunal shall proceed with the application for compensation under Section 140 of the Act on the basis of:

(i) First information report;

(ii) Inquiry certificate of post-mortem report in case of death;

(iii) Registration certificate of the motor vehicle involved in the accident;

(iv) Cover note, certificate of insurance or the policy, relating to the insurance of the vehicle against third party risk;

(v) The nature of the treatment given by the medical officer who has treated the victim.

19. Before dealing with the submissions urged by Mr. Nanavati, at the outset it is necessary to bear in mind a few caveats and perceptions.

Firstly, compensation payable under section 140 of the new act is not 'interim compensation' as is ordinarily understood. Section 140 does not use this expression. It is necessary to bear this caveat in mind because the word 'interim' conditions our mind imperceptibly to turn to the general principle of civil law that what the plaintiff cannot get at the final hearing, he cannot get at an interim stage. Once we get rid of this conditioning, it is much easier to appreciate the scheme of provisions of Section 140 of the new Act (corresponding to Section 92-A of the old Act) and similar other provisions.

For instance, when a wife applies for maintenance pendente lite in a matrimonial petition, she is required to plead and show the fact of marriage with the respondent and her inability to maintain herself from her own source of earnings and not that she is likely to succeed in finally getting the relief prayed for in the main petition.

Secondly, we must also bear in mind the reason why Parliament had to provide for compulsory insurance. As pointed out by the Supreme Court in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), the law may provide for compensation to the victims of the accident who sustain injury in the case of an automobile accident or compensation to the dependants of the victims in the case of fatal accident, but such protection would remain illusory unless there is a guarantee that the compensation would be recovered from the persons held liable for the consequences of the accident. A court can only pass an award or decree. To see that the exercise undertaken by the courts does not remain an exercise in futility, the legislature has provided for compulsory insurance coverage for use of the motor vehicles. Even in the case of Motor Owners' Insurance Co. Ltd. v. Jadavji Keshavji Modi 1981 ACJ 507 (SC), the Apex Court has expressed the difficulties of the victims of motor vehicle accidents and their heirs in the following words:

Common experience shows that the woes of the injured and of the heirs of those who perish in automobile accidents begin after they embark upon the adventure of execution proceedings... There are proverbial difficulties in proving the ownership of goods vehicles, particularly if they are subject to a hire-purchase agreement and truck owners are quite known for the ease with which they proclaim their insolvency. It is, therefore, no consolation that the leftover liability will fall on the insured.

The difficulties that befall on the claimant after the award on the basis of fault principle are bound to stare him in the face even after compensation is awarded to him under Section 140 of the Act.

The third important aspect, which is also required to be borne in mind and which appears to have prompted the legislature in introducing Section 92-A in the old Act corresponding to Section 140 of the new Act, is the unfortunate spectre of phenomenal delays in disposal of motor accident claim cases. Such claim cases were expected to be decided within a very short time of a year or so. Unfortunately, such cases now drag on for as long as 10 to 12 years. While the system of Lok Adalats has certainly made substantial contribution in easing this problem, the fact remains that at Lok Adalats claim petitions with pendency of 2 to 3 years get settled but such petitions pending for 8 to 10 years or longer do not get settled, because the insurance companies refuse to pay any interest on the amount of compensation which may be worked out by mutual consent as reasonable compensation. Since this works out to as much as 90 per cent of the compensation or even 150 per cent of the compensation (12 per cent rate of interest x 8 years = 96 per cent, 12 per cent x 10 years = 120 per cent and so on and so forth), the claimants and their advisers are reluctant to settle old claim petitions at Lok Adalats. The representatives of insurance companies plead their inability to agree to payment of any interest even at a lesser rate than the rate at which the Tribunals normally award interest, on the ground of a directive from the higher-ups in the General Insurance Corporation. It is a matter of regret that such intransigent attitude is adopted which on the one hand prolongs the misery of the victims of motor accidents or their heirs and on the other hand adds burden on the insurance company by way of interest liability which goes on piling up. Be that as it may, even pendency of claim petitions for 2 to 3 years would mean that persons who have suffered permanent disablement in a motor vehicle accident or heirs (usually widows and minor children) of victims who have succumbed to the injuries in such accidents have to continue to starve until they would get the award on the basis of fault principle after all the vicissitudes of the trial and defences raised by the insurance company would be examined.

Fourthly, anyone who has even a nodding acquaintance with our legal system in action (or inaction) knows that large part of the courts' time is consumed by hearing of applications for interlocutory orders at which hearing the first question being examined at length is whether the plaintiff/ petitioner has a prima facie case on merits. Interlocutory applications are also decided after six months if not a couple of years.

Fifthly, as has already been observed by the Supreme Court in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC), a benevolent provision made by the legislature cannot be nullified by reading it with a non-benevolent eye and with a mind not tuned to the purpose and philosophy of the legislation without being informed of the true goals sought to be achieved. What the legislature has given, the court cannot deprive of by way of an exercise in interpretation when the view which renders the provision potent is equally plausible as the one which renders the provision impotent.

20. While the aforesaid important factors may be kept at the back of the mind, the following aspects must remain in front of the eyes:

(i) the compensation payable under section 140 of the new act is not for the benefit of all claimants, but only for the benefit of the persons who have suffered injuries causing permanent disablement or death meaning thereby the provisions are enacted for the benefit of persons who are permanently disabled and, therefore, likely to be incapacitated or handicapped in earning living for themselves and for their dependants or for heirs in case of death of victims. Hence, the analogy of the wife claiming maintenance pendente lite is to be kept in mind.

(ii) The application under Section 140 of the Act is required to be decided first and thereafter the application for compensation on the basis of the fault principle is to be decided.

(iii) As stated above, Sub-section (3) of Section 141, while providing for adjustment of smaller award under Section 140 of the Act against the larger award on the basis of the fault principle, makes it clear that even if the subsequent award on the basis of the fault principle is for a smaller amount than the award under Section 140 of the Act, the claimant is not required to refund the difference.

21. Mr. Nanavati's contention that if the policy can be looked at for the purpose of finding out the time when the insurance was taken, why should the insurance company be precluded from reading the other contents of the policy such as terms and conditions thereof is misconceived. It is only in order to ascertain the existence of the contract of insurance at the time when the accident took place that a Tribunal would look at the policy or the insurance certificate, so that the owner or the driver does not go to the insurance company after the accident and get a non-insured vehicle covered by a contract of insurance. The factum of the contract of the insurance having not been entered into is materially different from the contents of the contract and the scope and ambit of each clause of such contract. If even prima facie inquiry is permitted about the ambit and scope of the contents of the contract of insurance, the laudable legislative object of providing immediate succour to the victims of motor vehicle accidents would be lost by permitting long drawn out legal battles when the injured who are suffering from permanent disablement or heirs (generally widow and minor children) of the deceased are starving. It is not possible to conceive that the legislature which has called upon the Tribunal to dispense with even the prima facie inquiry into the question of negligence would have expected the Tribunal to go into the question, even in a prima facie manner, about breach of the terms and conditions contained in the insurance policy or about coverage of the risk, even after it is found that the vehicle and the owners were insured by the opponent insurance company at the time of the accident.

22. The only reasoning which has appealed to a Full Bench of the Karnataka High Court and to the High Courts of Orissa and Patna is the argument that if the legislature intended to take away the right of the insurance company to raise the defence at the stage of hearing of applications under Section 140 of the Act, the legislature would have said so in so many words. The Full Bench has made the following observations in para 18 of its judgment in United India Insurance Co. Ltd. v. Immam Aminasab Nadaf 1990 ACJ 757 (Karnataka).

It is nowhere provided and it is not also the case of the claimant that an insurer should pay the amount awarded under Section 92-A even if the liability was not covered by the policy. Further, if the intention of the legislature was to deprive of the defences available under Section 96(2) of the Act at the stage of adjudication of a claim under Section 92-A of the Act, the legislature would have incorporated such a condition. In fact, the only provision incorporated in Section 92-B (2) of the Act is to require the Tribunal to dispose of the claim under Section 92-A of the Act as expeditiously as possible. Thus, when the legislature has not imposed the liability on the insurer to pay the amount awarded under Section 92-A, even in cases in which the liability is not covered by the policy and further the legislature has not deprived of the defences open to insurance company under Section 96 (2), in the course of adjudication of claims under Section 92-A, such a bar cannot be assumed by the courts.

23. The Karnataka, Orissa and Patna High Courts have asked themselves a question how can the Tribunal fasten the liability on the insurance company to pay interim compensation under Section 140 of the Act without reference to the insurance policy. With greatest respect to the learned Judges of the aforesaid courts, the question is not whether the liability of the insurance company is to be fastened contrary to the terms and conditions of the insurance policy. The question is whether objections of the owner and insurer of the vehicle (obviously meaning thereby objections other than the objections limited to the question of involvement of vehicle in question, ownership of the vehicle, existence of policy of insurance at the time of the accident and death or permanent disablement having resulted from the accident- objections which are hereafter referred to as limited objections and inquiry into these objections referred to as limited inquiry) are at all to be considered at the stage of deciding application for compensation under Section 140 of the Act. The view that such objections are not to be considered at the stage of deciding application under Section 140 of the Act, as already taken by this Court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar 1996 ACJ 155 (Gujarat) and many other High Courts, is more in consonance with the object underlying the provisions of section 140 of act as discussed earlier.

In fairness to the learned Judges of the Full Bench of the Karnataka High Court, it must, however, be stated that they have made a distinction between the cases in which on consideration of the material placed before it at the stage of consideration of the claim under Section 92-A (section 140 of the new Act), the insurance company is found to be patently not liable and the cases where the insurance company does not have such a cast-iron case. The Full Bench would not award compensation under Section 140 in the first category, but would award it in the second category with a rider for reimbursement. While this classification or reasoning might appear to be attractive at the first blush, it is necessary to remember what may prima facie appear to be a cast-iron case for the insurance company may ultimately not be decided in favour of the insurance company. Who should then be required to bear the risk of this finding not being confirmed at the stage of the final award on the basis of fault principle? For instance, in the case of B.V Nagaraju v. Oriental Insurance Co. Ltd., Divisional Officer, Hassan. 1996 ACJ 1178 (SC), the insurance company had pleaded exclusion of its liability on the ground that the vehicle in question was a goods vehicle which was used for the purpose of carrying 9 passengers as against permissible maximum 6 employees and, therefore, the insurance company should not be held liable. The Supreme Court observed in the above case that the misuse of the vehicle was somewhat irregular, but not so fundamental in nature so as to put an end to the contract of insurance and on that basis the insurance company was held liable. The Supreme Court then expressed its agreement with the following principles laid down in the case of Skandia Insurance Co. Ltd. v. Kokilaben Chandravadan 1987 ACJ 411 (SC):

...When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by it, by way of business activity, there is hardly any choice. The court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to the doctrine of 'reading down' the exclusion clause in the light of the 'main purpose' of the provision so that the 'exclusion clause' does not cross swords with the 'main purpose' highlighted earlier. The effort must be to harmonise the two instead of allowing the exclusion clause to snipe successfully at the main purpose.

24. It would, therefore, be more prudent and pragmatic to leave such fine questions of law and other mixed questions of law and fact for the stage of trial rather than to decide them at the stage of deciding applications under Section 140 of the Act when the claimants suffering from permanent disablement or heirs (usually widow and minor children) of deceased victim/s are crying for succour. The reason for confining the scope of inquiry to the limited objections is that if the scope of inquiry is widened to introduce the debate about the breach of the terms and conditions of the insurance policy, very thin is the practical line between prima facie inquiry and full-fledged inquiry. The protracted hearing of the interim injunction applications in civil matters and the writ petitions more than justifies the reluctance to throw open the door wider than the limits demarcated by the court and a majority of the other High Courts. It is for this reason that the various illustrative cases referred to in the judgment of the Full Bench of the Karnataka High Court and in the arguments of the learned Counsel for the insurance company set out in para 13 above better be considered at the time of the trial of the claim petitions rather than be permitted to consume the valuable time of the Tribunals for decision at the stage of considering the applications under Section 140 of the Act.

25. If the legislature had intended that all such questions about defences of the insurance company could be raised in proceedings under Section 140 of the Act, Section 144 would have provided that the provisions of Chapter X shall have effect subject to the provisions of Section 149(2) of this Act but not notwithstanding anything contained in any other provisions of this Act or of any other law for the time being in force.

26. The question which has been raised in the present appeals has also been considered by various other High Courts and most of them have taken the view that the defences which the insurance company pleads, other than the question of existence of the insurance policy, are not to be considered at the stage of deciding application under Section 140 of the Act (corresponding to section 92-a of the old act). For instance, speaking for the Jammu & Kashmir High Court, Dr. A.S. Anand, CJ (as His Lordship then was) held in the case of National Insurance Co. Ltd. v. Surjit Singh 1988 ACJ 1122 (J&K):

The language of Section 92-A of the Act unmistakably shows that the intention of the legislature was to make the liability under it indefeasible and total. The insurance company can be saddled with the liability under Section 92-A as an insurer, if either the insurance company admits the fact that the vehicle in question was insured with it or the fact is prima facie established from the material on the record. No more enquiry at that stage is required to be made by the Tribunal while granting relief under Section 92-A of the Act. If a detailed enquiry is to be held by the Tribunal even at this stage, it would frustrate the very object for which Section 92-A was enacted. The court has a duty to promote the intention of the legislature and not to frustrate it particularly while considering a beneficial legislation.

(Emphasis supplied) Similarly, speaking for the High Court of Gauhati in the case of New India Assurance Co. Ltd. v. Member, Motor Accidents Claims Tribunal 1988 ACJ 612 (Gauhati), B.L. Hansaria, J. (as His Lordship then was) held as under:

The underlying idea behind Section 92-A being payment of prompt and immediate compensation, the same cannot be allowed to be frustrated to decide various defences to be raised by the insurance company, the disposal of which would naturally take time. This reading of Section 92-A would cause no real prejudice to the insurer as its interest can well be protected, in case it is ultimately found that it is not liable under the policy to indemnify the insured, by passing appropriate order under Section 96 (4) of the Act as observed earlier. I would, therefore, hold that at the stage of passing of the award under Section 92-A of the Act, the Claims Tribunal is not to apply its mind to the defences available to an insurance company under Section 96 (2), or for that matter, whether the company is protected by anything stated in the proviso to Section 95 (I) of the Act. In taking this view, I have also borne in mind Section 92-E of the Act (new Section 144) which has stated that the provisions of Chapter VII-A (new Chapter X) shall have effect notwithstanding anything contained in any other provision of the Act or any other law for the time being in force.

(Emphasis supplied)

27. Mr. P.V. Nanavati's apprehension that ultimately if the insurance company succeeds in getting a finding that it was not. liable to indemnify the insured, it would not be in a position to recover from the claimants compensation paid under Section 140, can be taken care of by imposing a suitable condition (as has been done by various High Courts) by providing that ultimately if the insurance company succeeds in establishing that it was not liable to indemnify the insured, it shall be entitled to recover the amount paid under section 140 of the new act from the insured.

28. In view of the above discussion, I see no reason to take a view different from the view already taken by my esteemed brother, J.M. Panchal, J. of this Court in the case of New India Assurance Co. Ltd. v. Mithakhan Dinakhan Notiyar 1996 ACJ 155 (Gujarat) and with which I respectfully agree, that for awarding compensation under Section 140 of the Act, the Claims Tribunal is required to satisfy itself in respect of only the following matters:

(i) an accident has arisen out of the use of a motor vehicle;

(ii) the said accident has resulted in permanent disablement of the person who is making the claim or death of the person whose legal representative is making the claim;

(iii) the claim is made against the owner and insurer of the motor vehicle involved in the accident, and that the defences raised by the insurer or the owner should be examined later when the claim petition is decided on merits.

29. In the view that I have taken about the scope of inquiry under Section 140 of the Act, it is not necessary to go into the merits of the other defences urged by the learned Counsel for the insurance company.

30. In view of the above discussion, the appeals are allowed. Since the Tribunal has already found that the appellant in each of the present group of appeals had suffered from permanent disablement and is entitled to recover compensation in the sum of Rs. 25,000 with interest at the rate of 12 per cent from the date of the claim petition till the date of payment, from the owner of the vehicle, it is held that respondent No. 2 herein, United India Insurance Co. Ltd., is also liable jointly and severally with the owner of the vehicle to pay amount of Rs. 25,000 with interest at the rate of 12 per cent from the date of claim petition till the date of payment to each appellant as compensation under Section 140 of the Motor Vehicles Act, 1988.

It is clarified that ultimately, if the insurance company succeeds in establishing at the trial of the claim petitions that it was not liable to indemnify the insured, it shall be entitled to recover the amounts paid to the claimants under this order, from the owner of the vehicle.

31. The appeals are allowed with costs. Respondent No. 2, United India Insurance Co. Ltd., is directed to deposit the aforesaid amount of compensation in each case together with interest thereon with the Motor Accidents Claims Tribunal, Rajkot within thirty days from today.

32. The Registry shall send a copy of the relevant extract of this judgment to the Chairman of the General Insurance Corporation, with particular reference to para 19 of this judgment dealing with Lok Adalats.