ROYAL INSURANCE CO LTD Vs. ABDUL MAHOMED MEHERALLI
LAWS(BOM)-1954-7-4
HIGH COURT OF BOMBAY
Decided on July 21,1954

ROYAL INSURANCE CO. LTD. Appellant
VERSUS
ABDUL MAHOMED MEHERALLI Respondents


Referred Judgements :-

WINDSOR V. CHALCRAFT [REFERRED TO]
SARUPSINGH MANGAT SINGH VS. NILKANT BHASKAR SURATKAR [REFERRED TO]



Cited Judgements :-

NEW INDIA ASSURANCE CO LTD VS. JANAK DULARI [LAWS(ALL)-1965-3-9] [REFERRED TO]
NATIONAL INSURANCE CO VS. MAGIKHAIA DAS AFTER HIM MST LAXMI DIBYA [LAWS(ORI)-1976-4-5] [REFERRED TO]
ORIENTAL INSURANCE CO LTD VS. GOWRAMMA [LAWS(KAR)-1998-12-13] [REFERRED TO]
ITBAR SINGH VS. P S GILL [LAWS(P&H)-1955-4-5] [REFERRED TO]
MOTOR AND GENERAL INSURANCE CO LTD VS. HOTA RAM [LAWS(P&H)-1960-8-21] [REFERRED TO]
BRITISH INDIA GENERAL INSURANCE CO. LTD VS. CAPTAIN ITBAR SINGH [LAWS(SC)-1958-5-19] [REFERRED TO]
VANGUARD FIRE AND GENERAL INSURANCE CO LTD VS. SARLA DEVI [LAWS(P&H)-1958-11-1] [REFERRED TO]
BRITISH INDIA GENERAL INSURANCE CO LTD VS. ITBAR SINGH [LAWS(P&H)-1959-9-26] [REFERRED TO]
JUPITER INSURANCE CO VS. MOHAMMAD MALIK [LAWS(RAJ)-1968-10-12] [REFERRED TO]
ORISSA CO-OPERATIVE INS. SOCIETY LTD. VS. BHAGABAN SAHU AND ORS. [LAWS(ORI)-1970-9-11] [REFERRED TO]
THE PROPRIETOR, ANDHRA TRADING COMPANY VS. K. MUTHUSWAMI AND ORS. [LAWS(MAD)-1955-11-12] [REFERRED TO]
CONTROLLER TRANSPORT, HARYANA ROADWAYS AND ANOTHER VS. SMT. NIRMALA AND OTHER [LAWS(HPH)-2004-8-21] [REFERRED TO]


JUDGEMENT

Chagla, C.J. - (1.)Respondent 1 was knocked down by a motor cycle belonging to respondent 2 on 14-3-1950, and suffered certain injuries. He filed a suit against the defendant claiming a sum of Rs. 30,000 as damages in respect of those injuries. Respondent 2 was insured against third party risk with the appellant company and on 26-31953, a notice was issued to the insurance company under Section 93(2), Motor Vehicles Act. The insurance company took out a chamber summons to be added as a party to the suit. That chamber summons was dismissed. It then took out a notice of motion to be allowed to defend the action in the name of the defendant. This notice of motion was also dismissed by Mr. Justice Coyajee, and it is against this decision that this appeal, is preferred.
(2.)Now, the position under Section 96, Motor Vehicles Act, is that a vicarious liability is cast upon the insurance company in respect of any decree that may be passed against the person in default and who has been insured with the insurance company. But before the plaintiff can become entitled to execute such a decree, it is obligatory that the insurer should have notice through the Court of the bringing of the proceedings and it was this notice that was served upon the insurance company on 26-8-1953. After the notice is served, the insurer has been given the right to be made a party to the suit and to defend the action on any of the grounds mentioned in Subsection (2) of Section 96. It is common ground that the insurance company in this case does not want to defend the action on any of those grounds. Therefore, it is clear that it is not entitled under Section 96(2) to be made a party and to defend the action in its own right. The question that we have to consider is whether the Court has any power independently of Section 96 to permit an insurance company to defend the action in the name of the defendant.
(3.)Now, the facts here are rather significant. The defendant is not in India. He has left India and he had to be served with a summons in the suit by substituted service and the possibilities are that at the hearing of the suit he will not appear to defend the action. Therefore, this very extraordinary situation arises, that although the defendant may not defend the action and although the insurance company cannot be made a party to the action under Section 96(2), if a decree were to be passed in favour of the plaintiff in an undefended action a statutory liability will be cast upon the insurance company to satisfy the decree inasmuch as the statutory notice has been served upon it; and the real question that arises for our determination is whether an insurance company is entitled to defend the action on merits, not in its own name, not in its own right, but in the name of the defendant. Now, apart from authorities, we should have thought that it is a principle of elementary justice that a liability cannot be cast upon a party with out that party being given an opportunity to resist the claim which it has ultimately to satisfy. What we are told by Mr. Desai on behalf of the plaintiff is that, however elementary this notion of justice might be, the Motor Vehicles Act does not permit us to give effect to this well-established principle. Now, it is perfectly true that a Court should never avail itself of its inherent powers under Section 151 in order to do something which is contrary to what a statute lays down. Section 151 does not exist in the Code of Civil Procedure in order to arm the Court with doing something contrary to the policy of the Legislature; but the very object of Section 151 is to empower the Court! to deal with those various situations which arise from time to time which could not possibly have been contemplated by the Legislature and could not have been dealt with by the Legislature. Now, Section 96 deals with the specific case where the insurance company wishes to defend the action on one of the grounds mentioned in Sub-section (2). The Legislature has not dealt at all with a case where the defendant does not wish to resist the plaintiff's claim. He may not wish to resist it because he may not be interested, knowing that the decree will ultimately be satisfied by the insurance company. He may collude with the plaintiff; he may submit to a consent decree which may be prejudicial to the interests of the insurance company. Is it suggested that the Legislature intended that in any one of these cases the mouth of the insurance company should be shut and it should not be permitted to defend the action in the name of the defendant? It is said by Mr. Desai that the only exception that the authorities contemplate is a case where there is a contract between the insurer and the defendant under which the defendant has permitted the insurer to take charge of the proceedings against the defendant; and Mr. Desai says that, as the present insurance policy does not contain any such term, it is not open to the insurance company to step into the shoes of the defendant. Now, we find it rather difficult to understand or appreciate this argument. If a contract between the parties can permit the Court to act in a manner not contemplated by the statute and to permit the insurance company to defend in the name of the defendant, why cannot the interests of justice equally permit the Court to allow the insurance company to defend in the name of the defendant? Surely the interests of justice should stand on a higher pedestal than the mere sanctity of a contract. As we shall presently point out, as far as the decision of this Court is concerned, it is clear that the view taken by this |Court is that it is only the interests of justice that would justify the Court in using its inherent power under Section 151 to permit the insurance company to defend in the name of the defendant. The decision just referred to is reported in --'Sarupsing Mangatsing v. Nilkant', That was rather a striking case where an 'ex parte' decree was passed against the defendant and the insurance company applied to set aside the 'ex parte' decree and the question that arose was whether the insurance company had a right to have an 'ex parte' decree set aside when the decree was not directed against it. In that case, we pointed out that the insurance company could not become a party to the suit under Section 96. We also pointed out that it could not be made a party under Order 1, Rule 10. But we made it clear that, if the insurance company had shown satisfactory cause why it did not have a proper opportunity to defend the action, we would certainly have, under our inherent jurisdiction, set aside the decree, because the view we would then have taken would be that in the interests of justice the insurance company should be given an opportunity to defend the action the result of which would cast a liability upon it under the Motor Vehicles Act. Therefore, clearly implicit in this decision is the principle that in the interests of justice the insurance company may be allowed to defend the action in the name of the defendant although the insurance company was not entitled to defend it in its own name and in its own right under. Section 96 (2). we have also pointed out at pp. 110, 111 that the object of giving the notice to the Insurance company was obviously to enable it to defend the action through the defendant, but that no right had been given to the insurance company to defend the action in all cases in its own right or in its own name. Therefore, the object of providing for a notice to the insurance company is really two-fold. One is to enable it to defend the action in its own right and in its own name if it is challenging the claim on any of the grounds mentioned in Section 96 (2). But the other purpose and object of the notice, which is equally important, is to give intimation to the insurance company that an action has been started against the defendant so as to enable the insurance company to see that that action is properly defended and that the decree does not go against the defendant by default or that a decree is not passed collusively against the defendant. Therefore, when in this casa a notice was served upon the insurance company, and when the insurance company found that the defendant had left India and was not likely to defend the action, it was open to the insurance company to come to Court and apply that it should be permitted to defend the suit in the name of the defendant.


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