R.N. Misra, C.J.
1. These are appeals under the Letters Patent read with the Orissa High Court Order directed against the common appellate decision of B. K. Ray, J. under Section 110D of the M. V. Act rendered in Miscellaneous Appeals Nos. 148 and 181 of 1974.
2. On 12-7-1973 at about 3.30 P. M. one Niranjan Senapati, a Class IV employee in the Establishment of the Gold Controller was knocked down while coming on bicycle on the Link Road within the town of Cuttack by a motor truck bearing registration number ORU 5905, Niranjan succumbed to the injuries while attempts were being made to take him to the hospital. His dependants filed a claim under Section 110-A of the M. V. Act asking for compensation of Rs. 40,000/-. They im-pleaded the owner of the truck as also the Insurer thereof as respondents. It was pleaded that at the time of death, Niranjan was getting a monthly salary of Rs. 157/-. He was aged about 30 and his contribution to the family was above Rs. 90/- per month. Niranjan's dependents happen to be the mother, the widow and a son.
3. Respondent No. 1, the owner, filed a Written statement denying that his truck had caused the accident. He also denied all other allegations that were made in the petition of claim.
The Insurer did not file any written statement until the trial was over and the matter had been reserved for award. At that stage in its written statement, the Insurer pleaded that on account of breach of the conditions of the policy issued by it to the owner of the Vehicle; it had no liability at all.
4. Before the Tribunal, 5 witnesses were examined in support of the claim while the owner examined only one witness. Several documents were produced on behalf of the claimants while on behalf of the owner the route permit and the certified copy of the driving licence of the truck driver were marked as Exts. A-1 and B-1 respectively and on behalf of the Insurer the Policy Bond was marked as Ext. A-2.
The Tribunal held that the accident was caused due to rash and negligent driving of the truck in question and the claimants were entitled to compensation of Rs. 14,000/- besides costs. He further found that the Insurer was not liable to meet the compensation payable to the claimants as there was a breach of the condition of the Policy.
5. The claimants preferred Miscellaneous Appeal No. 181 of 1974 asking for higher compensation and the owner preferred Miscellaneous Appeal No. 148 of 1974 challenging the direction of the Tribunal that the entire compensation was payable by him and the Insurer was not liable for it.
The learned single Judge on re-assessing the evidence allowed the claimants' appeal by enhancing the quantum of compensation to 27,140/-. Besides the quantified amount, the learned single Judge directed that the order for costs of Rs. 400/- would stand and on the compensation amount the claimants would be entitled to receive six per cent interest per annum from the date of the claim till payment. In the appeal by the owner, the learned single Judge came to notice :--
'..... A reading of the written statement of respondent No. 1 (owner) filed before the tribunal shows that he simply denied the allegations made by the appellants (claimants) in their claim petition. He never took the plea that the vehicle in question belonging to him was not involved in the accident. Curiously, however, during hearing before the Tribunal he came forward with a new stand that prior to the date of the accident the motor vehicle in question was in the garage of O. P. W. 1 for repairs and that it was made over to him after repairs in the evening of that day. Therefore, according to respondent No. 1, his truck could not have caused the accident resulting in the death of Niranjan. The tribunal, after very carefully scrutinizing the evidence of O. P. W. 1 and relying on the evidence of the witnesses to the accident, has recorded a definite finding that it was the truck of respondent No. 1 which had caused the accident. I do not see any reason to differ from this conclusion. It is thus deal that the plea taken by respondent No. 1 at the time of trial was a false one.. ... ...'
Coming to the question of non-examination of the owner and the driver, the learned single Judge observed :--
'..... respondent No. 2 (Insurer) filed an application during hearing of the case before the trial for examination of respondent No. 1 and his driver of the truck. Learned counsel for respondent No. 1 took time to produce respondent No. 1 and his driver for examination. In spite of this neither respondent No. 1 nor his driver Chandeswar was examined. Therefore, the tribunal is perfectly justified in drawing an adverse inference against respondent No. 1.....'
Dealing with the liability of the Insurer, the learned single Judge observed :--
'..... It may be remembered in this connection that according to the terms of the Policy, respondent No. 2 was not to indemnify respondent No. 1 if the vehicle insured caused the accident while being driven by a person other than the owner having no authority or by a person without a driving licence. The written statement of respondent No. 2 reveals that it has taken the plea that on account of breach of conditions in the policy it is not liable to pay any damage. In view of the fact that neither respondent No. 1 nor his driver was examined in spite of orders of the tribunal, there can be no escape from the conclusion that the vehicle at the time of causing the accident was being driven by a person either without any authority from the owner of the vehicle or by a person without any driving licence. In such an event, it must be held that there has been breach of conditions in the policy issued by respondent No. 2 in favour of respondent No. 1. That apart, a reference to the policy filed in the case shows that it was incumbent on respondent No. 1 to inform respondent No. 2 about the accident immediately after it occurred. Admittedly, this has not been done. On the other hand, in spite of respondent No. 2 writing to respondent No. 1 for information about the accident, respondent No. 1 kept quiet without replying to the queries of respondent No. 2. This is another breach of a condition in the policy. Section 96(2)(b) of the Act clearly provides that an Insurer can take a defence that there has been a breach of a special condition in the policy, such as excluding driving by any person who is not duly licensed or by any person who has been disqualified for holding or obtaining a driving licence. According to respondent No. 2, non-production of respondent No. 1 and his driver for examination raises an inference that the vehicle at the time of causing the accident was being driven rashly and negligently by an unauthorised person. That apart, as has been indicated above, the attitude of respondent No. 1 which has been noticed by the tribunal in its judgment shows that by not informing respondent No. 2 about the accident, respondent No. 1 was guilty of breach of another special condition in the policy.
On the aforesaid analysis I have no doubt in my mind that the tribunal is right in exonerating respondent No. 2 from the liability to pay damages to the appellants.....'
The owner has carried these two appeals against the common judgment of the learned single Judge.
6. At the commencement of arguments, Mr. Ray for the owner-appellant has candidly stated that the quantum of compensation determined in appeal is not open to challenge as it is a fair estimate on the basis of materials taken into account We must, therefore, hold that there is no merit in A. H. O. No. 26 of 1976. That appeal is directed to be dismissed without any order for costs.
7. A. H. O. No. 25 of 1976 has been directed against the judgment of the learned single Judge in M. A. No. 148 of 1974. The main question for determination in this appeal is as to whether the Insurer has liability to satisfy the demand of compensation in terms of the award. Chapter VIII of the M. V. Act makes insurance of motor vehicles against third party risks mandatory. Section 95(5) of the Act provides :--
'Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons.'
There is no dispute that the truck in question had been insured with respondent No, 2 covering the risk referred to in Section 95 of the Act. Therefore, under Sub-section (5) of Section 95, the Insurer has to indemnify the owner of the vehicle unless there be any exemption of liability.
Section 96(2) of the Act provides that the Insurer shall be entitled to defend an action on two 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 a 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 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 motorcycle; 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 non-disclosure of a material fact or by a representation of fact which was false in some material particular.'
A Full Bench of this Court in the case of National Insurance Co. v. Magikhaia Das, AIR 1976 Orissa 175 (FB) has held (at p. 177) :
'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 ......
Admittedly, the owner entered contest in the proceeding and, therefore, the Insurer could only raise a defence in tune with Section 96(2) of the Act.
8. Before the Tribunal, the Insurer had been set ex parte. On 5-2-1974, the application of the Insurer was allowed and the order setting him ex parte was recalled. Issues were settled on 1-5-1974. Two witnesses were examined on that day for the claimants and some documents were exhibited. The Insurer was again set ex parte. On
9-5-1974, at the instance of the Insurer the ex parte order was recalled. That day, the Insurer applied that the owner should produce the insurance policy and the driving licence. An authenticated copy of the insurance policy was filed by the Insurer. On 10-5-1974, some more witnesses were examined. The trial continued on 14-5-1974 and on that day the Insurer wanted a direction to the owner to produce the route permit. Further trial was taken up on 15-5-1974 and 16-5-1974 and the evidence was closed. The route permit and the certified copy of the driving licence produced by the owner were exhibited. On that day, the Insurer applied for a direction that the owner should examine himself as also his driver and failing non-examination, adverse inference would be drawn against the owner. That prayer was dealt with by the Tribunal thus :-
-'..... Heard the learned counsel on both sides. The learned counsel for O. P. No. 1 that he wants time till coming Monday to examine the driver and the owner if available. Now the case is in the stage of arguments. As such, such a long date cannot be given. The O. P. No. 1 can examine himself and his driver either today or tomorrow. The petition is therefore allowed.'
At that stage, the Insurer also filed an application for framing of an additional issue on the question of insurance and the Tribunal raised the following issue :--
'Whether the insurer is liable to pay compensation to the petitioners (claimants) on behalf of the owner under the terms and conditions of the policy ?'
The authenticated copy of the policy of insurance was marked as an exhibit that day. Arguments were heard in part and the matter was adjourned till next day. On 17-5-1974, the Tribunal recorded the following order :--
'..... Heard arguments. Posted to 24-5-74 for Judgment. .....'
Judgment was not ready on the 24th of May, 1974. The matter was adjourned to 29-5-1974 for such purpose. On that day, as order No. 35 shows, the Tribunal stated :--
'At the time of dictating the judgment it is found that a formal defect crept into the record on 5-2-74 on which date the learned counsel for the O. P. No. 2 filed a petition to set aside the ex parte order passed against him and to allow him one month time to file his written statement. The ex parte order was set aside but the Insurance Company was not directed to file its written statement. Neither Order 1, Rule 8 C. P. C. nor Rule 7of the Orissa Motor Vehicles Rules (Accident Claims Tribunal) Rules, 1960 casts any duty upon the defendant to file written statement, unless the Tribunal specifically called upon to file written statement.
Rule 7 of the Claims Tribunal Rules, 1960 reads as follows :
The owner of the motor vehicle and the insurer may, and if so required by the Claims Tribunal shall at or before the first hearing or within such further time as the Claims Tribunal may allow, file a written statement dealing with the Claims raised in the application and any such written statement shall form part of the record.'
It is clear that a duty is cast upon the Tribunal by the above Rule to call upon the Opposite parties to file their written statement but that has not been done and all the parties missed this most important legal imperative violation of which vitiates entire procedure and trial of the case. In exercise of the inherent powers to remove any formal defect it is ordered under Rule 7 of the Claims Tribunal Rules to call upon O. P. No. 2 to file its written statement within 10 days hence, failing which it will be deemed that opposite party No. 2 has no written statement to file. The Judgment is accordingly stayed and the case is posted to 8-6-74 for filing the written statement by the opposite party No. 2 -- Insurance Company.'
On 8-6-1974, the Insurer did not file the written statement and was absent. The case was adjourned to 15-6-1974 for Judgment. On 10-6-1974, the Insurer filed a written statement and an application for slaying delivery of judgment. The Tribunal stayed the judgment and directed that the matter would be further heard on 15-6-1974. On that day the Insurer filed fresh draft issues, the Tribunal recast them and adjourned the proceeding to 19-6-1974 for evidence. The Insurer no more participated in the proceeding. The award was ultimately delivered on 6-7-1974.
9. We have referred to the various orders at length with a view to pointing out that the Tribunal appears to have completely misconducted himself by falling into a trap of errors. Rule 20 of the Orissa Motor Vehicles (Accident Claims Tribunal) Rules, 1960 (hereinafter referred to as the 'Rules') made under Section 111A of the Act makes certain provisions of the Civil P. C. applicable to the proceedings. Order 9 of the Code has been applied. Rule 7, which we have already extracted, nowhere makes it mandatory for the Tribunal to call upon the insurer to file a written statement. It enables the insurer to file a written statement dealing With the claim raised in the application. It also authorises the Tribunal to make a special direction in that behalf, if found necessary. At its instance the ex parte order was withdrawn. In the application for recalling the ex parte order the insurer had indicated that it would file its. written statement. It failed to do so. It was again set ex parte obviously on the ground that no written statement was filed. The insurer participated at the trial and cross-examined witnesses. It follows that it did not want to file any written statement. After the trial was over and the matter was reserved for delivery of award, the Tribunal had no business to be solicitous for a written statement from the insurer and to have adjourned his proceedings from day to day awaiting the filing thereof. The Tribunal seems to have conducted itself in a way which gives us the impression that it abdicated its powers to regulate the proceedings and permitted the insurer to control the proceeding at its choice.
Issues had been settled in the presence of the parties. There was no occasion for the insurer to put in issues on the basis of its written statement after the trial was closed. The procedure adopted by the Tribunal is clearly contrary to the rules and the accepted system which is prevalent in Motor Accidents Claims or followed for disposal of claims.
10. The owner had no obligation to examine himself or his driver. If the Tribunal thought that the request to examine these 2 persons should be allowed after evidence had been closed, the owner should have been given a reasonable opportunity for these persons to be called to the Court for being examined as witnesses. A reasonable request was made on the claimants' behalf. That was, however, rejected on the ground that the stage of argument had reached. Certainly the stage of argument had reached by the time the prayer of the insurer was made. That could have been a valid ground to reject the request of the insurer at the belated stage, but in case the Tribunal thought that should be done, a reasonable opportunity should have been extended to the claimants before any adverse inference could be drawn for non-examination. It is the party's choice as to who would be examined in support of his stand, and when the Tribunal at the instance of the adversary wanted some one to be examined, a reasonable opportunity should have been extended.
11. It was for the insurer to raise a plea within the scope of Section 96(2) of the Act. That could have been done only by filing a written statement and raising an issue at the appropriate stage. Though the insurer had full notice of the matter and should have taken a lesson from the fact that it had once been set ex parte and that order had been recalled and indulgence had been extended to permit the insurer to contest the proceedings, the written statement was not filed and the specific plea within the ambit of Section 96(2) of the Act was not raised. The appropriate issue was not struck and parties were not put to notice as to what special defence of the insurer had to be met by leading evidence, oral and documentary. The insurer knew what special defence it had and if it was permitted to raise it at a belated stage when the trial was over, the proceedings were bound to be prejudiced and the persons who were statutorily protected by a requirement of insurance would certainly be adversely affected.
12. The learned single Judge is wrong in saying that the owner had not indicated denial of the involvement of his truck in the accident. Paragraph 10 of the written statement specifically denied the allegations made with reference to truck No. ORU 5905 of which he was owner. It is true that he had never pleaded that the vehicle had been left at a garage for repairs and since the vehicle had not been taken out of the garage by the time of the accident, that truck could not have caused the accident. This was for the first time introduced at the trial. Both the Tribunal as also the learned single Judge have discarded this defence, the result of which is that the allegation that the vehicle was made over to the garage for repairs and was at the garage when the accident is said to have taken place is a false one. Once it is held that the vehicle was not at the garage and had been taken on the road, there was no presumption that the driver of the vehicle had not operated it, nor was there any scope for assuming that the vehicle must have been driven by an employee of the garage. To assume such a fact by drawing an adverse inference is wholly unwarranted by law. We are not prepared to go that length to accept as a fact that the vehicle was being driven at the time it met with an accident by an unauthorised person. The learned single Judge in our view committed an error in assuming that the person who drove the vehicle, even if he belonged to the garage, was an unlicensed driver. The condition in the policy bond did not permit the vehicle to be driven by a named driver. Any driver who was licensed under the law was entitled to drive the vehicle and when such a driver drove the vehicle, it must be assumed that he had the authority of the owner to drive the vehicle. There could be no breach of the conditioa of the policy on that ground.
13. The learned single Judge has also relied upon a clause in the policy that if the accident took place, the insurer had to be notified within a time. On the basis of silence on the part of the owner to answer the queries made by the insurer, the learned single Judge has assumed that a breach of the terms of the policy had been committed. Here again, we think the learned single Judge went wrong because, as was pointed out by this Court in the case of the New India Assurance Co. Ltd. v. Srikanta Ghosh, 1972 Ace CJ 153, such a defence for the insurer to avoid liability under the Act would not be available. One of us in the reported decision referred to above quoted what was said by the Supreme Court in the case of New Asiatic Insurance Co. Ltd. v. Pessumal DhanamaJ Aswani, AIR 1964 SC 1736, which we may usefully quote here (at p. 1741) :
'Thus the contract between the insured and the company may not provide for all the liabilities which the company has to undertake vis-a-vis the third parties, in view of the provisions of the Act. We are of opinion that once the company had undertaken liability to third parties incurred by the persons as specified in the policy, the third parties' right to recover any amount Wider or by virtue of the provisions of the Act is not affected by any condition in the policy. Considering this aspect of the terms of the policy, it is reasonable to conclude tkat Proviso (a) of para 3 of Section II is a mere condition affecting the rights of the insured who effected the policy and the persons to whom the cover of the policy was extended by the company, and does not come in the way of third party's claim against a person specified in para 3 as one to whom cover of the policy was extended.'
We are inclined to agree in the facts of the case with the submission advanced on behalf of the appellant that the insurer was not entitled to raise the defence on account of its conduct and there was no scope for drawing any adverse inference for non-examination of the owner and the driver of the truck and there was no foundation for the finding that there was a breach of the terms of the policy which led to the position that the insurer was absolved of its statutory liability.
14. A. H. O. No. 25 of 1976 is accordingly allowed. The decisions of the Tribunal as also of the learned single Judge are reversed and the insurer is held liable for the entire compensation payable to the claimant! as it is within the statutory limit prescribed under the Act. The claimants shall be entitled to costs from the insurer only. Hearing fee is assessed at Rs. 200/- (Two hundred).
15. I agree.