R.N.Misra, J. - (1.)Jagannath Narula, respondent No. 2, was the owner of car No. O. R. P. 2848. Around 8. p. m. on 19-8-1972 this car was proceeding from Puri towards Bhubaneswar on the State Highway. Near village Talapati between Sakhigopal and Gopabandhu Sevasangha, the claimant, original respondent No. 1, was running his own cycle rickshaw on the said road at a slow speed. The car, came from the opposite direction and dashed against the rickshaw. As a result of the accident, the claimant received serious injuries over several parts of his body and remained as an indoor patient at Sakhigopal Hospital. It was found that his left leg and the right collar bone were fractured. He alleged that he became invalid and members of his family have been deprived of his earnings as a rickshaw puller. Claim of Rs. 22,000/-as compensation was laid before the Motor Accidents Claims Tribunal at Puri. The owner of the car, respondent No. 2, entered contest, filed a written statement, cross-examined the witnesses for claimant and adduced defence evidence by examining the driver of his car who was still employed under him. This vehicle was insured with the National Insurance Company Ltd. who was impleaded as opposite party No. 2 before the Tribunal. It filed a written statement admitting that it was the insurer of the vehicle but denied each and every allegation made in the claim petition and specifically disputed the quantum. The Tribunal awarded compensation of Rs. 17,000/- with interest and consolidated cost and directed the Insurance Company to pay the the same. This appeal under Section 110-D of the Motor Vehicles Act (hereinafter referred to as the 'Act') has been filed by the insurer. When the appeal came up for hearing before a learned single Judge, on behalf of the claimant it was contended that the appeal did not lie at the instance of the insurer in view of the provision of Section 96 (2) of the Act which restricts the grounds upon which a claim is open to challenge. On behalf of the insurer it was contended that it was a term in policy of insurance that the insurer could take any defence available to the insured in the name of the insured and the insured having not preferred any appeal and the entire liability for payment of compensation awarded by the Tribunal having come on the shoulders of the insurer, the insurer must be held eligible to challenge the quantum of compensation as also its basis. Before the learned single Judge the decision of the Supreme Court in the case of British India General Insurance Co. v. Itbar Singh, AIR 1959 SC 1331, and a Bench decision of this Court in the case of the Oriental Fire & General Insurance Co. v. Vanita Kalyani. 1972 ACJ 261 (Orissa) and a decision of a learned single Judge in the case of The Orissa Co-operative Insurance Society y. Ranjan Kumar Garabaru, 1'976 ACJ 21 (Orissa) were placed. The learned single Judge was of the view that the contention made on behalf of the appellant was correct but in view of -the observations made by this Court in the two decisions referred to above he was not in a position to dispose of the matter by overruling the respondents' contention and asked the matter to be referred to a Pull Bench for disposal.
(2.)As already indicated the appeal has been filed under Section 110-D of the Act. In such an appeal against the award of a Tribunal, the insurer is entitled to raise only those pleas which could be raised by it before the Tribunal and the appeal would not be maintainable on grounds which could not be raised before the Tribunal by the insurer. The view expressed by Mysore High Court in the case of I. M. G. Ins. Society v. Helen, AIR 1971 Mys 207, in our view, is correct. It may be stated there that even Counsel for the appellant does not dispute this position. Section 96 (2) of the Act provides :--
"No sum shall be payable by an insurer under Sub-section (1) in respect of any judgment unless before or after the commencement of the proceedings in which the judgment is given the insurer had notice through the court of the bringing of the proceedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceedings is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely :- (a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provision of Section 105; or (b) that there has been a breach of a specified condition of the Policy, being one of the following conditions namely :-"( i) a condition excluding the use of vehicle :- (a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or (b) for organised racing and speed testing, or (c) for a purpose not allowed by the permit under which the vehicle, is used, where the vehicle is a transport vehicle, or (d) without side-car being attached, where the vehicle is a motor cycle; or (ii) a condition excluding driving by a named person or persons or by any person who is not duly licenced, or by any person who has been disqualified for holding or obtaining a driving licence during the period of disqualification; or (iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion; or (c) that the policy is void on the ground that it was obtained by the nondisclosure of a material fact or by a representation of fact which was false in some material particular."
The statutory provision is clear that an insurer who has been made a party to a proceeding for recovery of compensation can resist the claim only on those grounds mentioned in Sub-section (2) and it is not open to it to raise any other plea. The consensus of judicial opinion is to the same effect. See Vanguard F. & G. I. Co. v. Sarla Devi, AIR 1959 Punj 297; I. M. G. Ins. Society v. Helen, AIR 1971 Mys 207; H. G. I. Society v. S. C. Paul, AIR 1972 Tripura 9; Vangaurd Insurance Co. Ltd. v. Shafali Mukherji, 1970 ACJ 245 (All); Kesavan Nair v. State Insurance Officer, 1971 ACJ 219 (Ker) and B. I. G. Insurance Co. v. Itbar Singh, AIR 1959 SC 1331. Reliance has been placed on the decision of the Supreme Court in the case of B. I. G. Insurance Co. v. Itbar Singh (Supra) in support of the contention that under the terms of the policy the right to defend the claim proceeding has been reserved to the insurer. Ext. A-II is the Policy bond. One of the express conditions being condition No. 2 therein runs thus :--
"No admission, offer, promise, payment or indemnity shall be made or given by or on behalf of the insured without the written consent of the Company which shall be entitled if it so desires to take over and 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 otherwise and shall have full discretion in the conduct of any proceedings or in the settlement of any claim and the insured shall give all such information and assistance as the Company may require."
A Bench of the Bombay High Court in the case of Royal Insurance Co. v. Abdul Mahomed, AIR 1955 Bom 39, was called upon to deal with the situation where the owner of the vehicle did not resist the claim and the insurer wanted to step in to dispute the claim but there was no term in the policy bond as referred to above. Chagla, C. J. spoke for the Court thus :--
"Therefore, clearly implicit in this decision (AIR 1953 Bom 109) 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 collu-sively against the defendant. Therefore, when in this case 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."
Repelling the contention against the insurer, the learned Chief Justice further observed :-
"We are also unable to accept the view of the learned Judge that, in the absence of any specific clause in the insurance policy entitling the Insurance Company to defend the action in the name of the defendant, the Court would not be entitled under its inherent powers to allow the insurance company to defend in the name of the defendant."
We may now refer to the decision of the Supreme Court in the case of B. I. G. Insurance Co. v. Itbar Singh, (AIR 1959 SC 1331) (Supra). This was a case where in the policy bond there was a condition as in this case. First dealing with the provision of Section 96 of the Act, the Court observed :--
"To start with it is necessary to remember that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury. Sub-section (2) of Section 96 however gives him the right to be made a party to the suit and to defend it. The right therefore is created by statute and its content necessarily depends on the provisions of the statute. The question then really is, what are the defences that Subsection (2) makes available to an insurer ? That clearly is a question of interpretation of the sub-section. Now the language of Sub-section (2) seems to us to be perfectly plain and to admit of no doubt or confusion. It is that an insurer to whom the requisite notice of the action has been given 'shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely', after which comes an enumeration of the grounds. It would follow that an insurer is entitled to defend on any of the grounds enumerated and no others. If it were not so, then of course no grounds need have been enumerated. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute."
Coming to deal with the terms of the policy bond the Court further observed :-
"We think that this contention is without foundation. Sub-section (2) in fact deals with defences other than those based on the conditions of a policy. Thus Clause (a) of that sub-section permits an insurer to defend an action on the ground that the policy has been duly cancelled provided the conditions set out in that clause have been satisfied. Clause (c) gives him the right to defend the action on the ground that the policy is void as having been obtained by nondisclosure of a material fact or a material false representation of fact. Therefore, it cannot be said that in enacting Sub-section (2) the legislature was contemplating only those defences which were based on the conditions of the policy, It also seems to us that even if, Sub-section (2) and Sub-section (3) were confined only to defences based on the conditions of the policy that would not have led to the conclusion that the legislature thought that other defences not based on such conditions, would be open to an insurer. If that was what the legislature intended, then there was nothing to prevent it from expressing its intention. What the legislature has done is to enumerate in Sub-section (2) the defences available to an insurer and to provide by Sub-section (6) that he cannot avoid his liability excepting by means of such defences. In order that Sub-section (2) may be interpreted in the way the learned Solicitor-General suggests we have to add words to it. The learned Solicitor-General concedes this and says that the only word that has to be added is the word 'also' after the word 'grounds'. But even this the rules of interpretation do not permit us to do unless the section as it stands is meaningless or of doubtful meaning, neither of which we think it is. The addition suggested will, in our view, make the language used unhappy and further effect a complete change in the meaning of the words used in the sub-section."
Next comes the observation on which full reliance has been placed by the insurer.
"..... The Statute has no doubt created a liability in the insurer to the injured person but the statute has also expressly confined the right to avoid that liability to certain grounds specified in it It is not for us to add to those grounds and therefore to the statute for reasons of hardship. We are furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him and there is no other defence that he claims to be entitled to urge. He can thus avoid all hardship, if any, by providing for a right to defend the action in the name of the assured and this he has full liberty to do....."
From this decision of the Supreme Court, three propitions seem to have become settled; (i) an insurer is not entitled to resist a claim on a ground not enumerated under Section 96(2) of the Act, (ii) Section 96 (2) of the Act deals with defences other than those based on conditions of a policy, and (iii) where conditions of the policy so provide, an insurer has the right to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by the insurer. There seems to have been some dispute as to what exactly was meant by the Supreme Court when it observed :--
"..... the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does so, all defences open to the assured can then be urged by him....."
On a plain reading of the lines quoted above from the judgment of the Supreme Court, it appears to us that the Court has said that the insurer must have reserved to it by the policy the right to defend the action in the name of the assured and the insurer must defend in the name of the assured in order that the restriction put under Section 96 (2) of the Act goes and all the defences available to the assured are available to the insurer. The phrase 'if he does so' does not have the narrow interpretation, as given to it by Counsel in support of the appeal, namely, that the insurer has reserved to it the right to defend in the name of the assured. If that was the real meaning intended to be given to the phrase, after it has already been said that the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured there was no necessity to add. What was really intended to be said was that such a condition was there under the terms of the policy and the insurer was out to raise the defence in exercise of the right. Most of the cases cited to us have followed the dictum of the Supreme Court in this sense though in one or two Courts a different view has been taken. Each of the cases that was cited to us at the Bar, however, seems to be one where the insured had not entered contest, i. e. both the insurer and the insured were not contesting simultaneously. It is unnecessary to give a catalogue of such cases. Where the insured appears and defends the claim and the insurer intends to defend in his own name, the condition in the policy bond does not provide shelter to the insurer.
(3.)The Supreme Court has dealt with an appeal arising out of the suit. By then the Motor Accidents Claims Tribunal had not been constituted under Section 110 (1) of the Act, and, therefore, a suit had been instituted. We have been shown the decision of the Madras High Court in the case of Gopala Kri-shnan v. Sankara Narayanan, AIR 1968 Mad 436, wherein in paragraph 25 of the decision at page 446 of the Reporter, Sadasivam, J. speaking for the Court has observed :-
"..... Thus the insurer is an important party in the claim before the Tribunal as the amount payable by it should be clearly specified in the award. The Claims Tribunal has restricted the rights of the insurance company to cross-examine the claimant and his witnesses on its construction of Section 96 of the Act. It should be noted that Section 96 of the act was introduced several years before the constitution of the Claims Tribunal by the present Section 110 of the Act. At the time when Section 96 of the Act first came into force there was no claims tribunal. Section 96 was introduced in order to enforce the duty of insurers to satisfy judgments against persons insured in respect of third party risk by giving them notice after judgment obtained by third party against persons insured in respect of third party risk. It is only in such cases the defences open to the insurer are restricted to the grounds mentioned in Section 96 (2) of the Act. A reading of Section 96 would clearly show that it was not intended to govern enquiry before a claims tribunal. Section 96 contemplates proceedings in a Court and not a proceeding before a Tribunal. It contemplates notice being given to the insurer which may be before or after judgment is obtained against the person who had effected insurance for third party risk. The insurer is no doubt entitled to be made a party and defend the action on the grounds mentioned in that section. But in the proceedings before a Claims Tribunal the insurer is a party. The decisions in Vanguard Fire and General Insurance Co. v. Sarla Devi, AIR 1959 Punj 297 and B. I. G. Insurance Co. Ltd. v. Itbar Singh, AIR 1959 SC 1331 holding that an insurer is not entitled to take any defence which is not mentioned in Sub-section (2) of Section 96 of the Act are all decisions in which the insurers were given notice in proceedings by way of suit as contemplated under the provisions of Section 96 of the Act. It has been rightly pointed out in those decisions that apart from the statute, an insurer has no right to be made a party to the action by the injured person against the insured causing the injury and that the rights open to the insurer are therefore governed by those provided in the section. The decisions do not relate to proceedings before a Claims Tribunal where the insurers are made parties and the scope of the defences which they were to put forward has not in any way been restricted. The contention of Sri C. R. Krishna Rao is that if Section 96 could have no application to proceedings before the Claims Tribunal, it would have been deleted after Section 110 was introduced in the Act. But the obvious answer is that it is only after a Claims Tribunal is constituted by the State Government by a notification in the Official Gazette, the Civil Court's jurisdiction would be barred. There may be States where a Claims Tribunal may not have been constituted and in those States Section 96 of the Act could be invoked and the insurance company could be permitted to take only the defences allowed under Section 96 of the Act in respect of the judgment obtained by a third party. In our opinion, the insurance companies who are mainly responsible to satisfy the claims of third parties and who are parties to the proceedings before the Claims Tribunal (sic-and who ?) are entitled to cross-examine cannot be restricted to the defences specified in Section 96 (2) of the Act."
With due respect to the learned Judges in the Division Bench, we are afraid that the conclusion is not correct. It is true that when the decision of the Supreme Court was given the Claims Tribunal had not been constituted under Section 110 of the Act. The Act has undergone in recent years copious amendments and if the view indicated by the Madras High Court was in accord with the intention of Parliament, we think, Parliament would have taken steps to delete Section 96 (2) of the Act, In a series of cases coming from different High Courts and arising out of proceedings before the Claims Tribunal, Section 96 (2) has been applied and in fact the Madras decision, more or less a solitary one, has taken the view indicated above. There may be some force in say-Ing that Section 96 (2) of the Act should have been adapted after the Claims Tribunals came into existence and the reference to 'court' appearing therein should have been substituted by 'Tribunal'. We do not think Section 96 (2) of the Act was intended to apply to claims proceedings before the Court and not the Tribunal.