(1.) A common question of law as to whether it is open to an Insurance Company to challenge the quantum of compensation awarded by the Motor Accidents Claims Tribunal in an appeal filed in the High Court, arises in The three appeals which are under consideration by us. The matter was referred to the Full Bench because when one appeal i.e. Civil Misc. First Appeal No. 80 of 1977 came up for disposal before a Division Bench of this Court, comprising Mian Jalal-ud-Din, Chief Justice and Mir J., their Lordships were of the opinion that there was some divergence of opinion on this subject in the different High Courts in the country and consequently they made the following Order of reference on 27th October 1979.
"The point sought to be raised in this appeal relates to the quantum of compensation awarded by the Motor Accidents claims Tribunal in favour of the respondents. A preliminary objection has been raised on behalf of the respondents that it is not open to the appellant to challenge the quantum of compensation awarded by the Tribunal. The argument if founded on the language employed in Section 96(2) and Sections 110-C and 110-D of the Motor Vehicles Act. Mr Ganjoo has sought to meet this point by enunciating the view that it is open to the insurer to challenge the very quantum of compensation. Section 96(2) read with Sections 110-C and 110-D do not operate as a bar to the raising of such a plea in the appeal. It seems that there is divergence of opinion among the Indian High Courts on the question of law debated before us. AIR 1977 All 330, AIR 1971 Mys 207 and AIR 1969 Madh Pra 190, support the contention of the respondent whereas 1979 Motor Accidents Claims Journal 103 (Madh Pra) (sic). AIR 1970 All 329, (sic) have laid down the contrary view. We are given to understand that there is a recent judgment of this Court rendered in Civil First Misc Appeal No 15 of 1978* Mohi-ud-Din v. Ghulam Mohammad Shah, dealing with the point at issue. In view of the divergence of Opinion expressed by the Indian High Courts on this subject and in view of the recent judgment of this Court, it would be appropriate to refer the case to the Full Bench. Accordingly the case is referred to the Full Bench for an authoritative pronouncement. The date and the venue will be communicated to the counsel for the parties''.
(2.) IN the other two appeals also, this question was involved and they were also directed to be heard along with C. M. I. A. 80 of 1977
The fact in all the three appeals are somewhat different and I propose to first deal with the legal question and then deal with each of the three appeals on merits
(3.) AT the outset. I would like to point out, with due respect to the referring bench, that in all the judgments noticed in the order of reference, there is no divergence of opinion and all the judgments noticed therein lay down the proposition that it is not open to an insurer to question an award of the Motor Accidents Claims Tribunal on the question of quantum only except on the grounds contained in Section 96 (2) of the Motor Vehicles Act. This position is conceded by Mr. Ganjoo also but his argument is that Section 96 (2) of the Act is not exhaustive and that there are no limitations prescribed by Section 110-D of the Act, of the nature and character of Section 96 (2) of the Act, and therefore, an insurer has a right to challenge an Award of the Tribunal on all the grounds, including the challenge to the quantum of compensation, in an appeal in the High Court. Before proceeding to examine these submissions, it would be advantageous to notice some of the relevant provisions of the Act.
"Section 96 Duty of insurers to satisfy judgments against persons insured in respect of third party risk.- (1) If, after a certificate of insurance has been issued under sub-section (4) of Section 95 in favour of the person by whom a policy has been effected, judgment in respect of any such liability as is required to be covered by a policy under Clause (b) of sub-section (1) of Section 95 (being a liability covered by the terms of the policy) is obtained against any person insured by the policy, then, notwithstanding that the insurer may be entitled to avoid or cancel or may have avoided or cancelled the policy, the insurer shall, subject to the provisions of this section, pay to the person entitled to the benefit of the decree any sum not exceeding the sum assured payable thereunder, as if he were the judgment-debtor, in respect of the liability, together with any amount payable in respect of costs and any sum payable in respect of interest on that sum by virtue of any enactment relating to interest on judgments. (2) 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 provisions of section 105; or (b) that there has been a breach of the specified condition of the policy, being one of the following conditions, namely; (i) a condition excluding the use of the 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 speed testing, or (c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a public service vehicle or a goods 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 licensed, 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. (2-A) Where any such judgment as is referred to in sub-section (1) is, obtained from a Court in the State of Jammu and Kashmir or in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of Section 13 of the Civil Procedure Code 1908, conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act, 1938, and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in sub-section (1), as if the judgment were given by a Court in India: Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before or after the commencement of the proceedings in which the judgment is given, the insurer had notice through the Court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the State of Jammu and Kashmir or the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in sub-section (2). (3) Where a certificate of insurance has been issued under sub-section (4) of Section 95 to the person by whom a policy has been effected so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in clause (b) of sub-section (2) shall, as respects such liability as are required to be covered by a policy under Clause (b) of sub-section (1) of Section 95, be of no effect: Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person. (4) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person. (5) In this section the expressions "material fact" and "material particular" mean, respectively, a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk and, if so, at what premium and on what conditions, and the expression "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy. (6) No insurer to whom the notice referred to in sub-section (2) or sub-section (2-A) has been given shall be entitled to avoid his liability to any person entitled to the bendfit of any such judgment as is referred to in subsection (1) or sub-section (2-A) otherwise than in the manner provided for in sub-section (2) or in the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, as the case may be.andquot. ;