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United India Insurance Company Limited v. Serjerao And Others
Factual and Procedural Background
Labourers (the respondents) were travelling in a trolley attached to a tractor when an accident occurred, causing injuries. They filed claims for compensation under the Motor Vehicles Act, 1988, accompanied by applications under Section 140 (no-fault liability). The Motor Accidents Claims Tribunal (MACT), Latur, awarded compensation on the no-fault principle.
The appellant Insurance Company contended before MACT that it bore no liability for persons travelling in a trolley; MACT rejected this contention. The insurer then filed appeals under Section 173 of the Act before the Bombay High Court (Aurangabad Bench). A learned Single Judge doubted the maintainability of such appeals and referred the matter first to a Division Bench and then to a Full Bench. While that reference remained pending, execution proceedings were initiated on the MACT awards, prompting the insurer to file writ petitions. The High Court dismissed those writ petitions, leading to the present appeals before the Supreme Court.
Legal Issues Presented
- Whether an order of MACT passed under Section 140 of the Motor Vehicles Act constitutes an “award” appealable under Section 173 of the Act.
- Whether an insurer is liable to pay compensation for injuries sustained by labourers travelling in a trolley attached to a tractor.
Arguments of the Parties
Appellant Insurance Company
- Appeals under Section 173 are maintainable because an order under Section 140 amounts to an “award.”
- The insurance policy does not cover persons travelling in a trolley; therefore, the insurer has no statutory or contractual liability to indemnify the owner for such claims.
No appearance or arguments were recorded on behalf of the respondents.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Yallwwa v. National Insurance Co. Ltd. (2007) 6 SCC 657 |
An order passed under Section 140 of the Motor Vehicles Act is an “award” for purposes of Section 173, and an insurer may contest liability at that stage. | The Court relied on paragraphs 16–19 to hold that the insurer’s appeal under Section 173 was maintainable. |
| Oriental Insurance Co. Ltd. v. Brij Mohan (2007) 7 SCC 56 |
An insurance company has no liability for passengers or labourers travelling in a trolley attached to a tractor. | Used to affirm the insurer’s substantive defence that it bore no liability for the claims in question. |
Court's Reasoning and Analysis
The Supreme Court first addressed maintainability. Citing the decision in Yallwwa, it held that an order granting compensation under Section 140 is indeed an “award,” rendering an appeal under Section 173 competent. Consequently, the High Court’s prima facie view to the contrary was erroneous.
Turning to substantive liability, the Court referred to Brij Mohan, which ruled that insurers are not liable for injuries to persons travelling in a trolley attached to a tractor. In light of that binding precedent, the insurer’s defence had arguable merit that required adjudication.
Because both issues were either ignored or incorrectly decided by the High Court, the Supreme Court set aside the impugned orders and remitted the matters for fresh consideration consistent with the two cited authorities.
Holding and Implications
HELD: The impugned High Court orders are set aside; the matters are remitted to the High Court for fresh adjudication in conformity with the rulings in Yallwwa and Brij Mohan.
Immediate effect: execution of the MACT awards is stayed pending reconsideration. Broader implication: the judgment re-affirms that (i) orders under Section 140 are appealable “awards,” and (ii) insurers are not liable for passengers or labourers travelling in a tractor-trolley combination, guiding lower courts on similar questions. No new precedent is established; rather, existing Supreme Court authority is reinforced.
Dr. Arijit Pasayat, J.— Leave granted.
2. Challenge in these appeals is to the order passed by a learned Single Judge of the Bombay High Court, Aurangabad Bench dismissing the writ petitions filed by the appellant (described hereinafter as “the Insurance Company”). The controversy lies within a very narrow compass:
The respondents were travelling in the trolley attached to a tractor as labourers. They claimed to have suffered injuries because the tractor with the trolley in each case met with an accident. Petitions claiming compensation under the Motor Vehicles Act, 1988 (in short “the Act”) were filed along with application under Section 140 of the Act. Order was passed by the learned Additional District Judge and ex-officio Member, Motor Accidents Claims Tribunal, Latur (in short “mact”) on the principle of no-fault liability. The Insurance Company took the stand that it had no liability in respect of the persons travelling in the trolley and the owner of the tractor is liable to pay compensation. This plea was rejected by mact. Appeal in terms of Section 173 of the Act in each case was preferred before the High Court. Learned Single Judge, prima facie, was of the view that the appeal was not maintainable. Nevertheless, he referred the matter to the Division Bench, which, it appears referred it to a Full Bench. While the matter was pending consideration by the Full Bench, execution proceedings were filed. Therefore, writ petitions were filed before the High Court. The High Court, by the impugned order in each case, dismissed the writ petitions holding that though arguable questions were involved, the writ petitions did not deserve consideration.
3. In support of the appeals, learned counsel for the appellant Insurance Company submitted that the appeals in terms of Section 173 of the Act were maintainable and in any event, the Insurance Company has no liability in respect of the persons travelling in trolleys attached to the tractors.
4. There is no appearance on behalf of the respondents when the matter was called.
5. So far as the question of maintainability aspect is concerned, the issue is concluded by a judgment of this Court in Yallwwa v. National Insurance Co. Ltd. (2007) 6 SCC 657, (2007) 8 Scale 77 In paras 16 to 19 of the judgment, it was observed as follows: (Yallwwa case (2007) 6 SCC 657, (2007) 8 Scale 77, pp. 664-65)
“16. The question which is required to be considered is what would be the meaning of the term ‘award’ when such a contention is raised. Although in a given situation having regard to the liability of the owner of the vehicle, a Claims Tribunal need not go into the question as to whether the owner of the vehicle in question was at fault or not, but determination of the liability of the insurance company, in our opinion, stands on a different footing. When a statutory liability has been imposed upon the owner, in our opinion, the same cannot extend the liability of an insurer to indemnify the owner although in terms of the insurance policy or under the Act, it would not be liable therefor.
17. In a given case, the statutory liability of an insurance company, therefore, either may be nil or a sum lower than the amount specified under Section 140 of the Act. Thus, when a separate application is filed in terms of Section 140 of the Act, in terms of Section 168 thereof, an insurer has to be given a notice in which event, it goes without saying, it would be open to the insurance company to plead and prove that it is not liable at all.
18. Furthermore, it is not in dispute that there can be more than one award, particularly when a sum paid may have to be adjusted from the final award. Keeping in view the provisions of Section 168 of the Act, there cannot be any doubt whatsoever that an award for enforcing the right under Section 140 of the Act is also required to be passed under Section 168 only after the parties concerned have filed their pleadings and have been given a reasonable opportunity of being heard. A Claims Tribunal, thus, must be satisfied that the conditions precedent specified in Section 140 of the Act have been substantiated, which is the basis for making an award.
19. Furthermore, evidently, the amount directed to be paid even in terms of Chapter X of the Act must as of necessity, in the event of non-compliance with directions, has to be recovered in terms of Section 174 of the Act. There is no other provision in the Act which takes care of such a situation. We, therefore, are of the opinion that even when objections are raised by the insurance company in regard to its liability, the Tribunal is required to render a decision upon the issue, which would attain finality and, thus, the same would be an award within the meaning of Section 173 of the Act.”
6. So far as the question of liability regarding labourers travelling in trolleys is concerned, the matter was considered by this Court in Oriental Insurance Co. Ltd. v. Brij Mohan (2007) 7 SCC 56, (2007) 7 Scale 753 and it was held that the Insurance Company has no liability. In view of the aforesaid two decisions of this Court, we set aside the impugned order in each case and remit the matters to the High Court to consider the matters afresh in the light of what has been stated by this Court in Yallwwa case (2007) 6 SCC 657, (2007) 8 Scale 77 and Brij Mohan case (2007) 7 SCC 56, (2007) 7 Scale 753.
7. The appeals are accordingly disposed of with no order as to costs.
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