Altamas Kabir, J. (For himself and Asok Kumar Ganguly and Pravendu Narayan Sinha, JJ.):— A common question having arisen in these seven appeals as to whether an Insurance Company could maintain an appeal against an Award of the Claims Tribunal constituted under the Motor Vehicles Act, 1988, on the quantum of compensation without having obtained leave under S. 170 of the said Act but upon invocation of the reservation clause, being condition No. 2 of the policy of insurance, all the seven appeals were referred to a Special Bench presided over by Ajoy Nath Ray, J. to consider the said question.
2. On consideration of S. 96(2) of the Motor Vehicles Act, 1939, corresponding to S. 149(2) of the Motor Vehicles Act, 1988 and Ss. 110-C(2-A) and 110-D of 1939 Act, corresponding to Ss. 170 and 173 of the Motor Vehicles Act, 1988, and in the light of the decision in Captain Itbar Singh's case, reported in 1958-65 Acc CJ 1 : (AIR 1959 SC 1331), 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 S. 170 but the option reserved to the insurer under the reservation clause (Condition 2 of the Insurance Policy) is invoked, it must be established by the insurer either by way of subrogation or assignment and evidence in support thereof (instrument of subrogation/assignment) has been placed before the Tribunal based whereupon the Claims Tribunal had permitted the insurer to contest on merit, then and in that event appeal on quantum is maintainable by the insurer.
Where, however, the option reserved to the insurer under the aforesaid ‘reservation clause’ (condition 2) is invoked for the first time before the appeal Court, which the insurer is entitled to so invoke, it must be established to the satisfaction of the appeal Court by cogent evidence placed before it that the insurer has in fact exercised the option either by way of subrogation in which case the appeal has to be filed by the Insurer in the name of the assured or if such right is claimed as and by way of assignment appeal in its own name is maintainable by the insurer. It is on the tenor and true construction of the instrument (letter of subrogation/assignment) that the maintainability of the appeal would depend.”
4. A different view was expressed by Ashim Kumar Banerjee, J. his Lordship chose to follow the views expressed by the Hon'ble Supreme Court in Shankarayya v. United India Insurance Company Ltd., reported in AIR 1998 SC 2968, and held that the appeals were not maintainable on the ground other than those specified under S. 149(2) of the Motor Vehicles Act, 1988.
5. In view of the different conclusions arrived at in the reference, the Special Bench under Chapter VII, R. 6-A of the Appellate Side Rules preferred the matter to the Hon'ble Chief Justice for constitution of a larger Bench. Pursuant thereto this Bench was constituted by the Hon'ble Chief Justice on 28th February, 2003, to consider afresh the question referred to the Special Bench.
6. At the time when the reference was made, the Hon'ble Supreme Court had, in fact, already considered the question in the case of Shankarayya v. United India Insurance Co. Ltd. (supra) and had, inter alia, held that notwithstanding the fact that the insurance company had been impleaded as a party in the claim petition, unless the procedure indicated in S. 170 of the Motor Vehicles Act, 1988, was followed the insurance company could not have a wider defence on merits than what was available to it by way of statutory defence. In other words, without obtaining leave from the Claims Tribunal under S. 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 S. 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 (1998) 9 SCC 202, which was a decision rendered under S. 110-C(2-A) of the 1939 Act, the provisions whereof are in pari materia with the provisions of S. 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 Acc CJ 303 : (AIR 2000 Cal 145) and in 2) The Oriental Insurance Company Ltd.… v. Gurdial Singh…. (2001) 1 Acc CJ 94 : (AIR 2000 Cal 226) (Cal).
9. The Hon'ble Supreme Court had gone even further in the case of 1) Chinnama George v. N.S Raju (2000) 1 Acc CJ 777 : (AIR 2000 SC 1565) and 2) Rita Devi v. New India Assurance Co. Ltd. (2000) 2 Acc CJ 801 : (AIR 2000 SC 1930), wherein while considering Ss. 173 and 149(2) of the 1988 Act, the Hon'ble Supreme Court was of the view that a joint appeal by the owner of the vehicle and the insurer would be maintainable only if any of the permitted defences was available to the insurer. It was held that the insurer could not avoid the statutory bar merely by joining the insured owner or the driver as co-appellant in such appeal.
10. The law as it stood when the reference was made was that the provision for appeal under S. 173 of the 1988 Act by the insurer was subject to the statutory bar imposed under Ss. 149(2) and 170 of the said Act.
11. Despite the above, a Division Bench of this Court took a different view in the case of United India Insurance Co. Ltd. v. Gita Rani Mondal (2001) 3 Acc CJ 1692, following an earlier judgment of the Hon'ble Supreme Court in the case of British India General Insurance Co. Ltd. v. Captain Itbar Singh, 1958-65 Acc CJ 1 : (AIR 1959 SC 1331). Distinguishing the decision of the Hon'ble Supreme Court in Shankarayya's case (AIR 1998 SC 2968), the Division Bench, inter alia, held that in a situation where a policy contains a subrogation clause, it is allowed to the insurer to take up the defence on merits whether in the absence or presence of the insured, without invoking S. 170 of the 1988 Act.
12. After the aforesaid decision was rendered in Sita Rani Mondal's case, the same question fell for consideration before another Division Bench of this Court in the case of Oriental Insurance Co. Ltd. v. Bini Bala Mondal (2001) 3 Acc CJ 1959, wherein it was explained that Captain Itbar Singh's case (supra) had been decided at a time when S. 110-C(2-A) was not in the statute book and the reservation clause for the purpose of subrogation was no doubt relevant for an insurer to defend a claim on behalf of the insured. It was held that the position stood materially altered with the incorporation of S. 110-C(2-A) in the 1939 Act, which is pari materia with S. 170 in the 1988 Act and following the decision in Shankarayya's case (AIR 1998 SC 2968), as subsequently followed in various other cases, the Division Bench held that an appeal by the insurer on merits was not maintainable without leave having been obtained by the insurer from the Claims Tribunal under S. 170 of the 1998 Act.
13. The seven appeals were then referred to the Special Bench to clarify the position. As indicated hereinabove, the Hon'ble Judges comprising the Special Bench took different 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 (AIR 1998 SC 2968) 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, AIR 2002 SC 662, wherein it was observed that it was erroneous to assume that an insurance company could not file an appeal under S. 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 fell 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 (2001 (3) Acc CJ 1692) (Cal) (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 (AIR 1959 SC 1331) (supra). Mr. Das urged that the second condition incorporated in the policy insurance reserving a right to defend the action in the name of the insured, allowed the insurer by subrogation to contest an appeal on all grounds available to the insured. According to Mr. Das and also Mr. R.P Banerji who appeared for one of the insurers, it would be illogical to leave the final assessment of a just award with the Tribunal without the insurer being able to test the correctness thereof before the appeal Court. Both the learned counsels tried to impress upon us that it is to prevent such an eventuality that the right of subrogation is required to be seriously considered when the insured either chooses not to contest the award or to abandon such contest in midstream.
16. On the other hand, Mr. Krishanu Banik and the other counsels appearing for the award holders, submitted that there was, in fact, no scope for argument on the question referred to this Bench as the said question had again come up for consideration recently before a Division Bench of the Hon'ble Supreme Court comprised of three learned Judges in the case of National Insurance Co. Ltd., Chandigarh v. Nicolletta Rohtagi (2002) 7 SCC 456 : (AIR 2002 SC 3350). It was pointed out that in the said decision, all the earlier decisions rendered by the Hon'ble Supreme Court on the said question, including the decision rendered in Shankaraya's case (AIR 1998 SC 2968) and Bhushan Sachdeva's case (AIR 2002 SC 662), were considered and the views expressed in Shankarayya's case, as followed in Narendra Kumar v. Yarenissa (1998 (9) SCC 202), Chinnama George v. N.K Raju, AIR 2000 SC 1565 and in Rita Devi v. New India Assurance Co. Ltd. (AIR 2000 SC 1930) were upheld and the decision rendered in Bhushan Sachdeva's case was overruled.
17. Initially, the task cut out for us promised to be a little hazardous having regard to the diametrically opposite views expressed by two Benches of co-ordinate jurisdiction both of the Hon'ble Supreme Court as also this Court. Our task has, however, been considerably simplified by the recent decision of the Hon'ble Supreme Court in Nicolletta Rohtagi's case (supra).
18. Views similar to those expressed by a Division Bench of this Court in Bini Bala Mondal's case (2001 (3) Acc CJ 1959) regarding the effect of the incorporation of S. 110-C(2-A) in the 1939 Act, were also expressed by the Hon'ble Supreme Court in Nicolletta Rohtagi's case (AIR 2002 SC 3350). It was observed that S. 110-C(2-A) of the 1939 Act, which corresponds to S. 170 of the 1988 Act, provides that the insurer has only statutory defences available as provided in S. 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 party and on being so impleaded have all defences available to it. The Hon'ble Supreme Court, inter alia, observed further that S. 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 S. 173 of the 1988 Act by an insured against the award of the Accident Claims 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 without leave having been obtained from the Claims Tribunal under S. 170 of the 1988 Act.
20. As will be evident from the above, the very question which has been referred to this Bench has been answered in the negative by the Hon'ble Supreme Court in the aforesaid case of Nicolletta Rohtagi.
21. Consequently, the reference made to this Bench as to whether an insurance company can maintain an appeal against an Award of the Accidents Claims Tribunal constituted under the Motor Vehicles Act, 1988 on the quantum of compensation, without having obtained leave under S. 170 of the said Act, upon invocation of the reservation clause relating to subrogation, is also answered in the negative.
22. If an urgent xerox certified copy of this judgment is applied for, the same is to be supplied to the applicant expeditiously, subject to compliance with all the required formalities.
Asok Kumar Ganguly, J.:— 23. I agree.
Pravendu Narayan Sinha, J.:— 24. I agree.
Aloke Chakrabarti, J.:— 25. I had the privilege of going through the judgment prepared by Kabir, J. I feel that one aspect of the matter requires consideration with regard to right of appeal of the insurer in respect of a motor accident claim. The Motor Vehicles Act was enacted in the year 1939 repealing thereby various statutes as indicated in the Xllth Schedule to the Act. Section 110 of the Motor Vehicles Act, 1939 earlier provided that a State Government may appoint a body or body of persons to investigate and report on accidents involving the death of or bodily injury to any person arising out of the use of motor vehicles and the extent to which their claim to compensation have been specified and to advise and assist such persons or their respective in presenting their claim for compensation. By Act 100 of 1956 new Secs. 100, 110-A, 110-B, 110-C, 110-D, 110-E and 110-F were introduced in place of original S. 110 with effect from February 16, 1957.
26. New S. 110 provided for constitution of Motor Accidents Claims Tribunal for the purpose of adjudicating upon claims for compensation in respect of accidents involving the death of or bodily injury to persons arising out of the use of motor vehicles or damages to any property of a third party so arising or both.
27. Section 110-A provided for application for compensation before the appropriate Claims Tribunal prescribing limitation for making such applications.
28. Section 110-B provided for award of the Claims Tribunal. This section provided that the Claims Tribunal shall after 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 person or 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.
29. Section 110-C contained the procedure and powers of Claims Tribunal. It is provided that a summary procedure is to be followed.
30. Section 110-D provided for appeals to High Court. This section permitted preferring of appeal against an award of a Claims Tribunal by any person aggrieved by such award.
31. None of the provisions in the said Act at that stage, specifically permitted the insurer any opportunity of hearing. But under R. 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 such permitted the insurer an opportunity of hearing in assessment of claim.
32. Section 110-C was amended further by introducing sub-section (2-A) by the Act 56 of 1969 with effect from 2nd March, 1970. The said sub-section (2-A) is set out herein—
“2-A. where in the course of any inquiry, the Claims Tribunal is satisfied that—
(i) there is collusion between the person making the claim and the person against whom claims is made, or
(ii) the person against whom the claim is made has failed to contest the claim,
it may, for reasons to be recorded by it in writing, direct that the ensurer 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 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.”
33. This provision was introduced for impleading the insurer as a party to the proceeding only in a case the Tribunal is satisfied that there is collusion between the person making the claim and the person against whom the claim is made or a person against whom the claim is made has failed to contest the claim.
34. When the new Act being the Motor Vehicles Act, 1988 was enacted, it has S. 165 corresponding to S. 110, S. 166 corresponding to S. 110-A, S. 168 corresponding to S. 110-B and S. 169 corresponding to S. 110-C. The provisions introduced in the form of sub-section (2-A) in S. 110-C is contained in a separate S. 170 in the new Act. Appeal has been provided in S. 173 corresponding to S. 110-D of the old Act.
35. But a vital change was introduced in S. 168 of the new Act whereby on receipt of a claim application, the Claims Tribunal shall after giving notice of the application to the insurer and after giving the parties (including the insurer) an opportunity of being heard, will proceed to hold enquiry and to make an award determining the amount of compensation. This right of opportunity of hearing of the insurer was never recognised earlier.
36. It appears that when the law was not recognising right of an insurer to be a party entitled to an opportunity of hearing under the old law, sub-section (2-A) was introduced in S. 110-C for impleading the insurer in special circumstances.
37. In such circumstances, S. 170 should be treated as an additional right of the insurer over and above the right under S. 168 to be a party in the proceeding and getting opportunity of hearing. 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 S. 170.
38. Similarly S. 149 in the new Act of 1988, is the section corresponding to S. 96 of the old Act of 1939. Sub-section (2) of S. 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 S. 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 on opportunity of hearing as new recognised under S. 168 of the new Act of 1988.
39. Therefore, it requires a consideration as to whether in view of present recognition of the right of insurer under S. 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 S. 149 of the new Act of 1988 (corresponding to S. 96 of the old Act) or under S. 170 of the new Act of 1988 (corresponding to sub-section (2-A) of S. 110-C of the old Act of 1939) can still deprive the insurer of its unconditional right to prefer appeal now recognised by Legislature, under S. 168. The judgments deciding such rights as conditional in various cases including the case of Shankaryya v. United India Insurance Co. Ltd., reported in AIR 1998 SC 2968 and National Insurance Co. Ltd., Chandigarh v. Nicolletta Rohtagi, reported in (2002) 7 SCC 456 : (AIR 2002 SC 3350) having not decided the said aspect, whether requires a fresh consideration.
40. In this connection, it also requires a consideration in view of such recognition of right of insurer under S. 168 of the new Act, the right under S. 173 to any aggrieved person to prefer an appeal can be interpreted as not a right to a party to the proceeding to prefer such appeal.
41. Though, in my opinion, these aspects require consideration but in view of the force of the precedents in various cases including the cases of Shankaryya (supra) and Nicolletta Rohtagi (supra) and the binding effect under Art. 141 of the Constitution of India, I express my agreement with answer to the reference as given in the judgment of Altamas Kabir, J.
D.K Seth, J.:— 42. I had the privilege of going through the judgment of my learned brother Kabir, J. I fully agree with the same. I would, however, like to add a few words of mine in support of the view taken by brother Kabir, J.
43. This reference to five-Judges Bench has been made to answer the question: whether the insurer can maintain an appeal on points other than those mentioned in S. 149(2) of the Motor Vehicles Act, 1988 (1988 Act) corresponding to S. 96(2) of the Motor Vehicles Act, 1939 (1939 Act) without having taken the aid of S. 170(110-C(2A) of 1939 Act) of 1988 Act.
44. The matter was referred to a three-Judges Bench. While Hon'ble A.N Ray, J. and Hon'ble M.H.S Ansari, J. were pleased to answer the question in the affirmative in favour of the insurer with little modification supported by different reasons. Hon'ble A.K Banerjee, J. was pleased to answer in the negative against the insurer. The Majority view proceeded on the basis of the reservation clause now provided in the insurance policy by the insurer after the insertion of S. 110-C(2A) in the 1939 Act with effect from 2nd March, 1970.
45. Our High Court had consistently been following the principle/ratio laid down in British India General Insurance Co. Ltd. v. Captain Itbar Singh, AIR 1959 SC 1331. But in United Insurance Co. Ltd. v. Gita Rani Mondal (2001) 3 Acc CJ 1692, 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 (1993) 1 Acc CJ 371 had differed from National Insurance Company Ltd. v. Magikhia Das, 1976 Acc CJ 239 : (AIR 1976 Ori 175) (FB) and took the same view which was followed in Gita Rani Mondal (supra). It is this decision in Gita Rani Mondal (supra) has given rise to the present reference.
46. The question could have been buried in view of the decision in Shankarayya v. United India Insurance Co. Ltd., AIR 1998 SC 2968, but for the decision in United India Insurance Co. Ltd. v. Bhushan Sachdeva (2002) 2 SCC 265 : (AIR 2002 SC 662). Now all these questions with regard to the reservation clause are being sought to be raised. However, it can be argued that in Sankarayya (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.
47. The question would not expose us to any difficult problem if we follow the statute and the principle laid down by various Division Bench of different High Courts and the Apex Court consistently right from the decision in British India General Insurance Co. Ltd. v. Captain Itbar Singh (AIR 1959 SC 1331) (supra).
48. Section 96(2) of the 1939 Act provided the extent of the insurer's right to contest a claim before a Motor Accident Claims Tribunal. The insurance of a motor vehicle is covered by S. 95 of the 1939 Act. The liability of the owner to insure the vehicle is a statutory obligation created under S. 95 of the 1939 Act. The liability of the insurer arising out of such statutory obligation is specified in S. 96. Under sub-section (1), it makes the insurance cqmpany liable to pay the amount of the award to the claimant. Sub-section (2) specifies the defence available to the insurer. Sub-section (6) binds the insurer from avoiding the liability. These were explained in Itbar Singh (supra), but admitting of the principle of subrogation. This view has since been followed consistently and without the principle of subrogation after insertion of S. 110-C(2A) in the 1939 Act until Bhushan Sachdeva (supra).
49. With effect from 2nd March, 1970, the insurer became entitled to defend the claim even on points other than those provided in S. 96(2) of the 1939 Act by reason of insertion of sub-section (2A) in S. 110-C of the 1939 Act in given circumstances. This has been provided for addition of an insurer if not added as a party in the proceedings, if the Court is satisfied that any of the two grounds specified in Cls. (a) and (b) of sub-section (2A) exists. Upon being so added, the insurer would be entitled to contest the claim stepping into the shoes of the insured. Where the insurer is already a party in the proceedings, if the condition contained in Cls. (a) and (b) of sub-sec. (2A) of S. 110-C of the 1939 Act, then it can obtain leave from the Court under sub-section (2A) or even the Court if satisfied might grant suo motu such leave to the insurer. But sub-section (2A) provides that in order to grant such leave the Court has to record reasons for granting such leave. Thus, the leave is not available to an insurer only on the mere asking. The Court's power to grant such leave is also circumscribed by the test to be satisfied 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 S. 96(2) read with sub-section (6) thereof circumscribed by sub-section (2A) of S. 110-C creating a relaxation of the embargo or prohibition provided in S. 96(2).
50. This relaxation had also stood the scrutiny of different High Court and the Apex Court until the decisions by Kerala Full Bench in Celine (1993 (1) Acc CJ 371) (supra) and a Division Bench of our High Court in Gita Rani Mondal (2001 (3) Acc CJ 1692) (supra), and then Bhushan Sachdeva (AIR 2002 SC 662) (supra).
51. The Madras High Court in the Indian Mutual General Insurance Society Limited, Madras v. M. Kothandian Naidu, 1966 Acc CJ 62 : (AIR 1967 Mad 54); Ayesha Begum v. G. Veerappan, 1966 Acc CJ 101 (Mad) and the United India Fire and General Insurance Co. Ltd. v. Parvathy, 1979 Acc CJ 101 (Madras) before and after the insertion of S. 110-C(2A) in the 1939 Act had taken the same view following Captain Itbar Singh (AIR 1959 SC 1331) (supra). The Madhya Pradesh High Court in Manjula Devi Bhuta v. Manjusri Raha, 1968 Acc CJ 1; New India Assurance Co. Ltd. v. Shiv Kumar, 1978 Acc CJ 137 (Madras); New India Assurance Co. Ltd. v. Shakuntala Bai, 1987 Acc CJ 224 : (AIR 1987 Madh Pra 244) and Parmanand v. Monohardas, 1990 Acc CJ 888 (Madh Pra) had also taken the identical view. The Mysore High Court in the Indian Mutual General Insurance Society Ltd. v. Helen Minezes, AIR 1971 (Mysore) 207 had followed the same principle. The Orissa High Court in Orissa Co-operative Insurance Society Limited v. Adar Dei, 1976 Acc CJ 189 (Orissa); Orissa Co-operative Insurance Society Limited v. Ranjan Kumar Gorabaru, 1976 Acc CJ 21 (Orissa); Vanguard Insurance Co. Ltd. v. Raghurath Patra, 1976 Acc CJ 12 (Orissa) and in Full Bench in National Insurance Co. Ltd. v. Magikhia Das, 1976 Acc CJ 239 : (AIR 1976 Ori 175) had taken the identical view. The Gujarat High Court in Punjabhai Prabhudas and Co. v. Sakinaben Mohamadbhai, 1977 ACJ 44 : (AIR 1977 Guj 179); the Allahabad High Court in Oriental Fire and General Insurance Co. Ltd. v. Rajendra Kaur, 1989 Acc CJ 961 : (AIR 1989 All 221); the Gauhati High Court in Hemendra Dutta Choudhury v. Arun Kumar Bordoloi, 1988 Acc CJ 813; the Karnataka High Court in Vellayya Gounder v. N. Ramnathan, 1982 Acc CJ 251; the Delhi High Court in New India Assurance Co. Ltd. v. Union of India, 1987 Acc CJ 763; the Kerala High Court in K.R Visalakshi v. Pookodan Hamza, 1989 Acc CJ 600 : (AIR 1989 Ker 192) and the Full Bench of Jammu and Kashmir High Court in United India Fire and General Insurance Co. Ltd. v. Lakshmi Shori Ganjoo, 1982 Acc CJ 470 :(AIR 1982 J & K 105) had taken the same view. However, the Kerala decision lost its significance in view of the Full Bench decision in Celine (1993 (1) Acc CJ 371) (supra). Apart from Captain Itbar Singh (AIR 1959 SC 1331) (supra), the Apex Court in C.K Subramonia Iyer v. T. Kunhikuttan Nair, AIR 1970 SC 376; Sheikhupura Transport Co. Ltd. v. Northern India Transport Insurance Co.† , AIR 1971 SC 1624 and Narendra Kumar v. Yarenissa (1998) 9 SCC 202 had taken consistently the same view as were taken by various High Courts. In Narendra Kumar (supra) rendered by the Apex Court on 12th January, 1996; Shankarayya (AIR 1998 SC 2968) (supra) rendered by the Apex Court on 16th January, 1998; in Chinnama George v. N.K Raju (2000) 4 SCC 130 : (AIR 2000 SC 1565) rendered by the Apex Court on 6th April, 2000 and Smt. Rita Devi v. New India Insurance Co. Ltd., AIR 2000 SC 1930 rendered by the Apex Court on 27th April, 2000; Bal Bahadur Singh v. Oriental Insurance Company (2001) 2 Acc CJ 1345 : (AIR 2000 SC 3546 (2)) had consistently followed the principle laid down in Itbar Singh (supra), however, subject to the relaxation provided in S. 110-C(2A) of the 1939 Act (170 of 1988 Act). In Bhushan Sachdeva (AIR 2002 SC 662) (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 co-ordinate 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, Shankarayya (supra) and Rita Devi (supra) and the other decisions of the Apex Court, we may refer to the views taken by this Court.
52. This High Court in Hukum Chand Insurance Co. Ltd. v. Subhashini Roy, 1971 Acc CJ 156 (Cal) had followed the principle laid down in Itbar Singh (AIR 1959 SC 1331) (supra). In Calcutta Insurance Co. v. Rita Ganguli (1974-75) 79 Cal WN 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 those in S. 96(2) of the 1939 Act repeatedly in the Motor Owner's Insurance Co. Ltd. v. Hrishikesh Das, 1975 Acc CJ 295 : (AIR 1975 Cal 218); the Premier Insurance Co. Ltd. v. Smt. Gitarani Ghosh, AIR 1975 Cal 239; Kantilal and Bros. v. Ramarani Devi, 1980 Acc CJ 501 : AIR 1979 Cal 152; New India Assurance Co. Ltd. v. Ashutosh Bhattacharjee, 1988 Acc CJ 831 (Cal) and Oriental Insurance Co. Ltd. v. Bini Bala Mondal (2001) 3 Acc CJ 1959. In Rita Ganguli (supra), the insurer's right to challenge the quantum was negatived. Whereas in Kantilal Brothers (supra), this Court had held that the insurer has no right to defend except on the grounds provide in S. 96(2) and that a joint appeal is also not maintainable. The proposition of advance subrogation on the basis of the reservation clause as propounded in Gita Rani Mondal (supra) does not find support from any other Division Bench of this Court, though contemporary in time in Bini Bala Mondal (supra), the old view has been followed.
53. In this background, we may now approach to ascertain the position as is apparent from the statutory provision provided in the respective Acts. In fact, the 1988 Act has replaced the 1939 Act. But while replacing, the 1988 Act has adapted the provisions of Ss. 96(2), 110-C(2A) and 110-D of 1939 Act as it were, in Ss. 149(2), 170 and 173 respectively. Therefore, in order to appreciate the situation, we may rely on the decisions on this proposition rendered under the 1939 Act as well.
54. In Bhushan Sachdeva (AIR 2002 SC 662) (supra), the Apex Court had attempted to make a distinction between the proceedings before the Tribunal and the High Court. It is the original proceeding before the Tribunal out of which appeal is provided to the High Court. But while making such distinction, the Apex Court did not take into consideration the settled proposition of law that appeal is a continuation of proceeding or in effect a rehearing of the original proceeding (Vijai Nath v. Damodar Das, AIR 1971 All 109; Damodar Mukherjee v. Bonwarilal Agarwalla, AIR 1960 Cal 469; Dayawati v. Inderjit, AIR 1966 SC 1423). The appeal cannot travel beyond the scope of the original proceeding. A ground, which is not available in the suit, cannot become available in an appeal unless there is a change in law in a given circumstances. Admittedly, in the present case, there has been no change in the law. In Bhushan Sachdeva (supra), though later in point of time, is a decision by a co-ordinate Bench, therefore, there is no question of implied overruling of Shankarayya (AIR 1998 SC 2968) (supra) or Rita Devi (AIR 2000 SC 1930) (supra) or any of the earlier decisions. Though, two of the earlier decisions have been noticed and distinguished, yet these were not overruled.
55. Conflict between judgments of the Apex Court rendered by co-ordinate Benches creates certain uncomfortable situation for the High Courts. Article 141 makes the 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 and accurately dealt with the law, is to be preferred.
56. The Full Bench of Allahabad High Court in Ganga Saran v. Civil Judge, Hapur, Gaziabad, AIR 1991 All 114 (FB) held that if there is conflict between the judgments of the Supreme Court consisting of equal authorities, incidence of time is not a relevant factor. The High Court must follow the judgment, which appears to lay down law elaborately and accurately. The Full Bench of Punjab and Haryana High Court in Indo Swiss Times Ltd., Dundahera v. Umrao, AIR 1981 Punj & Har 213 had taken the same view. A Division Bench of Allahabad High Court in New India Insurance Co. Ltd. v. Jagdish Prasad Pandey (1998) 1 TAC 600 : (1997 All LJ 2415) taken the same view following Indo Swiss Times (supra) by Punjab and Haryana High Court. The Punjab and Haryana High Court had taken the view that when judgments of superior Court are of co-equal Benches, namely, of matching authority, then their weight inevitably must be considered by the rationale and the logic thereof and not by mere fortuitous circumstances of the time and date on which they were rendered. Both of the conflicting judgments cannot be binding on the Court below. Inevitably a choice, though a difficult one, has to be made. On principle, the High Court is to follow the judgment, which appears to lay down the law more elaborately and accurately. A Special Bench of this High Court in Bholanath Karmakar v. Madan mohan Karmakar, AIR 1988 Cal 1 had also followed the same principle and held that it is highly embarrassing for the High Court to declare one out of two or more decisions of the Supreme Court to be more reasonable implying thereby that the other or others is or are less reasonable. But if such a task falls upon the High Court because of irreconcilable contrary decisions of the Supreme Court emanating from Benches of coordinate jurisdiction, the task, however, uncomfortable, has got to be performed.
57. In these circumstances, we may now undertake the uncomfortable task of examining Bhushan Sachdeva (AIR 2002 SC 662) (supra). It had sought to distinguish Narendra Kumar (1998 (9) SCC 202) (supra) and Chinnama George (AIR 2000 SC 1565) (supra) on the ground that in both these two cases the insured had filed an appeal. Therefore, the insurer could not avail of the grounds available to the insured. Therefore, interpreting S. 170 of 1988 Act, particularly, the phrase “fail to contest,” it had interpreted that failure of the insured to prefer an appeal is a failure to contest. Therefore, it had held that the right to contest includes the right to contest by filing 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.
58. 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 S. 170 of 1988 Act must also continue. But S. 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 S. 170, which unmistakably, unequivocally and unambiguously prescribes the power of the Tribunal upon being satisfied with the test of Cls. (a) and (b) of S. 170 to grant leave to the insurer to contest on all points by an order supported by reason to be recorded in writing. This provision of S. 170 cannot be adapted and applied in an appeal before the High Court. Secondly, it has attempted to recognise insurer as a person aggrieved against an award entitled to contest the claim if the insured does not file the appeal. This proposition was attempted to be supported on the analogy that the insurance company deals with public money and unjust claims would be met out of public funds. This proposition does not seem to be of any relevance. Inasmuch as, the insurance company has entered into a business whether the funds are public funds or not is immaterial. The insurer had entered into such business with its eyes open and the risk involved having regard to the statute providing for compulsory insurance of all vehicles. The insurer seeks to make profit out of this statutory provision by reason whereof every vehicle is compulsorily insurable. Therefore, such a reasoning does not purport to lay down the law accurately or appears to be less reasonable.
59. This may also be considered from the point of view that the insurance of vehicle and the business arising out of it is governed by the statute. The insurance company has taken advantage of this compulsory insurance of every vehicle in order to carry on its business. Therefore, it has to take whatever has been provided in the statute, good, bad or indifferent. The insurance company was never compelled to enter into such business. It has entered into such business on its own volition. Therefore, it has to accept the rule of the game. That apart, sufficient protection has been provided to the insurance company by insertion of S. 170 in the statute itself. By reason of this provision, an insurer has every right to apply before the Tribunal and allege collusion and prove the same and obtain the leave to defend the claim on points other than S. 96(2). The statutory provisions were enacted to enable the claimants to get the right in the form of compensation at the earliest without involving them in protracted litigation. The theory of suing the owner by the claimant and the owner/insured suing the insurer for re-imbursement of the claim paid by it to the claimant was sought to be exploded by reason of insertion of Ss. 146 and 149 (Ss. 95 and 96 of 1939 Act) of 1988 Act, and had restricted its right by insertion of S. 149(2) and (S. 96(2) of 1939 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 statute 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 be 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 S. 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 contract out of statute when the statute itself provides for right to contest the claim in certain circumstances by inserting S. 170 (110-C(2A) of 1939 Act) of 1988 Act. Such principle of advance subrogation or contracting out is in direct conflict with S. 96(2) read with sub-section (6) thereof of 1939 Act corresponding to S. 149(2) and sub-section (7) of 1988 Act.
60. Thus, we find that the High Courts and the Apex Court had consistently been interpreting the said provisions and had dealt with different aspects thereof from different angle and had pointed out the scope of insurer's right to contest a claim. The decision in Shankarayya (AIR 1998 SC 2968) (supra) and Rita Devi (AIR 2000 SC 1930) (supra) of the Apex Court read with the other decisions appears to have laid down the law more reasonably and accurately. We, therefore, could have preferred those decisions as against Bhushan Sachdeva (AIR 2002 SC 662) (supra).
61. But our task has become simple by reason of the judgment of the Apex Court delivered on 17th September, 2002 in National Insurance Co. Ltd., Chandigarh v. Nicolletta Rohtagi (2002) 7 SCC 456 : (AIR 2002 SC 3350) in a three Judges Bench. This decision has reiterated the consistent view taken by the High Courts and the Supreme Court and resolved the contradictory view taken in Bhushan Sachdeva (supra) and settled the controversy. In paragraph 29 of the said decision in Nicolletta Rohtagi (supra), it was held that the learned Judges in Bhushan Sachdeva (supra) failed to notice the limited grounds available to an insurer under S. 149(2) of the Act and the Court was of the view that the decision in Bhushan Sachdeva (supra) did not lay down the correct view of the law. It had held that the view taken in Bhushan Sachdeva (supra) that a right to contest would also include the right to file an appeal is contrary to well established law that creation of a right to appeal is an act which requires legislative authority and no Court or Tribunal can confer such right, it being one of limitation or extension of jurisdiction. Therefore, ratio decided in Bhushan Sachdeva (supra); Celine (1993 (1) Acc CJ 371) (Ker) (FB) (supra) and Gita Rani Mondal (2001 (3) Acc CJ 1692) (Cal) (supra) is no more a good law.
Order accordingly.