Kanta Bhatnagar, J.
1. This appeal is directed against the award given by the Motor Accident Claims Tribunal, Jodhpur on February 21, 1983.
2. One B.K. Sharma, husband of the claimant Suit. Indra Sharma met an accident on January 28, 1980 caused by Matador No. RRQ 4287 belonging to the University of Jodhpur, driven by Madan Singh Driver and insured with the appellant, the New India Assurance Co. Ltd. Jodhpur (hereinafter to be referred as 'the Company,). On January 29, 1980 B.K. Sharma succumbed to injuries sustained in the accident. His wife Smt. Indra Sharma filed a claim of Rs. 9,32,460/- before the Claims Tribunal against the owner of the Matador, its driver and the appellant Company with which the vehicle was insured. The Claims Tribunal gave on award of Rs. 72,000/-in favour of Smt. Indra Sharma and against the aforesaid three non-petitioners.
3. Feeling aggrieved by the award, the Company has filed the appeal in this Court.
4. At the commencement of the arguments Mr. R.R. Nagori, learned Counsel for the claimant respondent Smt. Indra Sharma raised a preliminary objection regarding the maintainability of the appeal on the grounds that the defence available to the Company is limited to the grounds mentioned in Sub-section (2) of Section 96 of the Motor Vehicles Act, 1939 (hereinafter to be referred as 'the Act') and therefore, the appeal filed beyond that scope is not entertainable.
5. Mr. Nagori submitted that the insured contested the claim before the Tribunal on the grounds available to him and because, of his not choosing to prefer an appeal it is not open to the insured company to take the defence which it could not have availed of before the Tribunal.
6. Mr. B.L. Maheshwari, learned Counsel for the appellant controverted these contentions and stressed the right of the Insurance Company to file the appeal on all the grounds available to the insured on the ground that the insured in collusion with the claimant, has not filed the appeal. Mr. Maheshwari also argued that the insurer has reserved the right to defend in the name of the insured and therefore, the Company can agitate in the appeal all those grounds which were available to the insured in case the latter would have filed the appeal.
7. Both the learned Counsel referred to a number of authorities to substantiate their rival contentions which I would discuss at appropriate place.
8. At the, very, outset it may be observed that the claim was against the owner, driver and the insurer of the vehicle. The owner and the driver filed a joint reply and the company a separate one. Evidently all the three have contested the claim. Section 96 of the Act deals with the provisions relating to the duty of the insurer to satisfy judgment against persons insured in respect of third party risk. Sub-section (2) or that section creates a right for the insurer for a notice through the Court of the bringing of any proceeding and entitling him to be made a party thereto. Clauses (a), (b) and (c) of that sub-section enumerate the grounds on which the insurer can defend the action. Those grounds are cancellation of the policy, breach of a specified condition of the policy enumerated in Sub-clause (b) and the policy being void. The grounds of defence available to the insurer are limited and as such it is not open to the insurer to contest the claim on the grounds, outside the preview of Sub-section (2) of Section 96. To understand the limitations clearly reference may be made to Sub-section (6) of Section 96 which reads as under:
Sub-section (6) No insurer to whom the notice referred to in Sub-section (2) (or Sub-section (2A) has been given shall be entitled to avoid his liability to, any person entitled to the benefit of any such judgment as is referred to in sub-section (1)(or Sub-section (2-A), otherwise than in the manner provided for in, Sub-section (2)(or in the Corresponding law of the reciprocating country, as the case may be).
9. The words otherwise than in the manner provided in Sub-section (2)' make it amply clear that the grounds a variable to the insurer are only those enumerated in that sub-section. To put it in other words the grounds available to the insured cannot be taken as defence by the insurer because of the limitation so imposed by the statute. There are however following two exceptions. (1) According to the provisions of Section 110 C(2-A) the insurer has the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made if the Claims Tribunal is satisfied that:
(i) there is collusion between the person making the claim and the person against whom the claim is made, or
(ii) the person against whom the claim is made has failed to contest the claim:
(2) The insurer can contest the claim on all or any of the grounds available to the insurer if through the conditions of the Policy i.e. the certificate of Insurance the insurer has reserved the right to defend in the name of the insured. If the right to contest on all the grounds available to the insured is claimed by the insurer under the first of the aforesaid exceptions permission of the Tribunal is required, because the Section envisages the satisfaction of the Court regarding the points mentioned in Sub-section (2-A) of Section 110 C of the Act. For a claim to contest on the second exception the insurer is to satisfy that the right to defend in the name of the insured has been reserved by the insurer.
10. The basic authority throwing light upon the right of the insurer to contest the claim is British India General Insurance Co. Ltd. v. Captain Itbar Singh and Ors. : 1SCR168 . Enunciating the principle that the defences open to the insurer are only those mentioned in Section 96(2) of the Act, their Lordships have been pleased to observe as under:
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. Sub-section (2) clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it. When the grounds of defence have been specified, they cannot be added to. The only manner of avoiding liability provided for in Sub-section (2) is through the defences therein mentioned. Therefore when Sub-section (6) talks of avoiding liability in the manner provided in Sub-section (2). it necessarily refers to these defences. It cannot be said that in enacting Sub-section (2) the legislature was contemplating only these defences which were based on the conditions of the policy.
11. Their Lordships were also pleased to opine that the statute does not cause any hardship to the insurer by expressly confining the right to avoid the liability to certain grounds specified thereunder. The reasons for this opinion were given as under:
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. Secondly, if he has been made to pay something which on the contract of the policy he was not bound to pay, he can under the proviso to Sub-section (3) and under Sub-section (4) recover it from the insured.
12. Both the learned Counsel have tried to strengthen their case by principles enunciated in the above referred case.
13. Mr. Nagori has stressed that the statute has limited the scope of defence available to the insurer. Mr. Maheshwari on the other hand emphasised that if the right is reserved in the policy to defend, all the grounds available to the insured to contest the claim are available to the insurer.
14. This is by now well settled, as evident from the various authorities to be discussed presently, that if a right is reserved and is properly exercised the insurer has the right to contest the claim on all the grounds available to the insured. This right however would depend on the conditions of the policy and the way in which the right is claimed.
15. Before considering the merits of the case on hand from this point of view, it would be profitable to refer to the various authorities, most of them based on the principles enunciated in the Supreme Court decision referred to above regarding the rights of the insurer to contest the claim and the limitations in that regard.
16. In the case of Mangilal v. Parasram and Ors. : AIR1971MP5 relying on the Supreme Court decision their Lordships were pleaded to enunciate the following principles:
The insurer may resist a claim proceedings in two ways: (a) that insurer is not liable although the insured may be liable; and (b) that the insurer is not liable because the insured is not liable. Section 96(2) limits the defences available to the insurer under the first head, but not under the second. The insurer can in the name of the insured raise every such defence as the insured can raise including absence of negligence provided he has reserved that right by policy.
17. In the case of Mst. Kamla Devi v. Navin Kumar and Anr. AIR 1973 Raj. 79 in reference to this Court by the Workmen's Compensation Commissioner, Udaipur, the question as to whether the insurer has a right to take only the statutory defences as provided in Section 96(2) of the Motor Vehicles Act, 1939 as per British India Central Insurance Co. Ltd, v. Captain Itbar Singh and Ors. : 1SCR168 and whether he can take all the defences as an ordinary defendant was answered as under:
The insurer has a right to take only the statutory defences as provided in Section 96(2) of the Motor Vehicles Act, 1939, unless by the terms of the policy the right to defend the action in the name of the assured has been reserved, as held by their Lordships of the Supreme Court in the case of British India General Insurance Co. Ltd. v. Captain Itbar Singh and Ors. : 1SCR168 .
18. Mr. B.L. Maheshwari, learned Counsel for the appellant strenuously contended that by inserting a term in the policy the insurer has reserved the light to defend on behalf of the insured and has therefore, the right to raise in appeal the grounds which the insurer could have raised in case he would have filed the appeal.
19. In the case of Indian Mutual General Insurance Society Ltd. Mount Road, Madras v. Relen Minozem and ors. AIR 1971 Mysore 207 holding that the defences open to the insurer are only those which were mentioned in Section 96(2) and it is not open to the insurer to urge before the Tribunal that there was no negligence on the part of the person driving the vehicle and that the compensation claimed is excessive, their Lordships were pleased to hold that the insurer cannot prefer the appeal on these grounds.
20. In the case of Ramesh Chandra v. Randhir Singh and Ors. : AIR1977All330 it was held that in an appeal against the award of compensation defences open to the insured company are restricted to those specified in Clauses (a), (b) & (c) of subSection (2) of Section 96 and as such the findings of the claim Tribunal could not be assailed.
21. In the case of The New India Assurance Co. Ltd. v. Shiv Kumar and Ors. 1978 ACJ 137 the insurance company alone filed an appeal against the award challenging the quantum. The insured, insurer and driver defended the claim separately before the Claims Tribunal. The question was as to whether the insurance company could take up plea on merits. Their Lordships answered the question in negative.-
22. Similar were the circumstances in the case of New India Assurance Co. Ltd. v. O.V. Radhakrishnan and Ors. 1983 ACJ 475. The insurer of the vehicle alone preferred an appeal against the a ward. According to their Lordships the insurer-appellant was not entitled to agitate its contention against the award' on the grounds which do not fall within the ambit of Section 96(2).
23. Mr. Maheshwari emphatically urged that the reservation of right to defend in the name of insured by the terms of the policy has created a light for the insurance to challenge the award in appeal on all the grounds available to the insured. In support of his argument Mr. Maheshwari referred to Clause (vi) of Section II 'liability to third party' and condition (2) of the 'conditions' of the policy. Clause (vi) of Section II reads as under:
The company may at its own option (A) arrange for representation at any Inquest or Fatal Inquiry in respect of any death which may be the subject of indemnity under this section and (B) undertake the defence of proceedings in any Court of Law in respect of any act of alleged offence causing or relating to any event which may be the subject of indemnity under this Section.
24. This clause does not create an absolute right for the company for defence of proceeding in any way or at any stage. The second part of the clause, relevant for the present purpose, only gives on option to the Company to undertake the defence of proceedings in any court. That does not enlarge the scope of defence provided in Section 96(2) of the Act. According to Mr. Maheshwari, Condition (6) of the 'Conditions' of the policy entitles the Company to contest the claim even on the grounds not covered by Section 96(2). That condition reads as under:
No admission offer promise payment or indemnity shall be made or given by or behalf of the insured without the written consent of the Company which shall be entitled if it so desires to take over & 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.
25. The pertinent question in view of these terns and conditions of the policy is as to whether the insurer has opted to defend the claim in the name of the insured. On the verge of repetition it may be stated that the insurer and the insured have individually contended the claim and the defences available to the insured has been taken by him. The learned Counsel for the appellant does not dispute the position that the insured has not sought permission of the Court to defend or the grounds available to the insured. He however submits that implied permission can be inferred from the fact that the insured was allowed to cross examine certain witnesses on the grounds available by the insured.
26. The perusal of the record above that the learned Counsel for the company had cross-examined PW 2 on the points available to the insured. That cross examination does not strengthen the arguments of the learned Counsel for the appellant that there was an implied permission of the Tribunal to the insurer to defend the claim on the grounds available to the insurer. That cross examination, which, if objected to by the other party, could not have been done by the learned Counsel for the insurer, does not create a right for the Company to appeal on tint line. Hence the argument of Mr. Maheshwari that from that cross examination it should be assumed that the insurer was defending the case in the name of the insured and therefore, the present appeal should have been taken to be in the name of the insured, has no force.
27. In the case of The Premier Insurance Co. Ltd. v. The Member, Motor Accident Claims Tribunal Jorhat and ors. AIR 1973 Gau 97 his Lordship was pleased to hold that the insurer cannot prefer an appeal on the grounds which, thought not available, were not taken before the Claims Tribunal, because he can defend the action only on grounds specified in Section 96(2). Reliance was placed on the principles enunciated in the case of British India General Insurance Co. Ltd. v. Itbar Singh : 1SCR168 .
28. The insured had contested the claim but merely because he did not prefer to file an appeal, the appeal filed by the insurer cannot be treated as an appeal in the name of the insured. In the appeal the insurer has challenged the award on merits and not on any of the grounds specified on any clause of Sub-section (2) of Section 96 of the Act. Mr. Maheshwari does not dispute this position.
29. In an appeal Under Section 110 of the Act the grounds available to the appellant are only those which he could have taken in the original Court and has really taken. Even in cases where the insurer and the insured file joint appeal the former can agitate only on the grounds specified in Section 96(2) of the Act. In the case of the Premier Insurance Co. Ltd. v. Smt. Gitarani Ghosh and Ors. AIR 1973 Cal 239 the insurer and the insured owner of the vehicle presented a joint appeal challenging the correctness of the decision of the Claims Tribunal on grounds not covered by Section 96(2). The appeal preferred by the owner of the vehicle was held maintainable but not that of the insurer.
30. Mr. Maheshwari contended that the appeal is maintainable as per the provisions of Section 110 C of the Act. The relevant portion i.e. Sub-section (2-A) of this Section has been reproduced in the earlier part of the judgment, Neither of the two clauses of Sub-section 2-A of this Section may help to the Company. It is not a case where the insured might have failed to contest the claim. No plea of collusion was raised in the inquiry before the Tribunal so as to satisfy it on that score., In the memo of appeal also there is no allegation of any collusion. All that has been stated in this concern is that the insured is not co-operating and has not filed the appeal.
31. In the Case of National Insurance Co. Ltd. v. Magikhia Das and Ors. 1976 ACJ 239 it was contended on behalf of the insurer that there was a term in the policy of insurance that the insurer could take any defence available to the insured in the name of the insured and the insured having net preferred any appeal and the entire liability for payment of compensation awarded by the Tribunal having come on the shoulders of the insurer it must be held eligible to challenge the quantum of compensation as also its basis. The provisions of the Act regarding the restrictions, on the insurer to defend the claim in the light of the decision of the Supreme Court in the case of British India General, Insurance Co. Ltd. v. Itbar Singh : 1SCR168 were discussed. Their Lordships considered the provisions of Section 110C(2 A) of the Act in the background of Section 96(2) of the Act and were pleased to observe as under:
In the eventuality indicated in Section 110-C (2-A) and in the absence of a provision in the policy bond in the line indicated in the case, it is open to the Court to permit the insurance company to step in to defend.
32. The power Under Section 110 C 2-A) as she Act can be exercised even when the insured has entered contest and, while giving an appearance of contest, is actually colluding with the claimant. The insurer is not required to defend with the leave of the Court in the name of the insured. It can enter contest in its own right once permitted by the Tribunal. Thus the contractual right under the policy bond may well be exercised in addition to the enabling provision under subSection (2-A) of Section 110-C of the Act. In the case referred to above there was a clause in the policy bond authorising the insurer to defend in the name of the insured. The insured had entered contest and their Lordships found ho reason to hold in the absence of any allegation, and something more that the insured had been colluding with the claimant. The insurer and the, insured simultaneously wanted to defend, the insured defending in his own name and the insurer in its own name. The term in the policy bond did not authorise such defence by the insurer. That being the position, their Lordships held that the restriction Under Section 96(2) of the Act applied and the insurer could not travel beyond the restriction imposed by the statute either before the Tribunal or in appeal before that Court.
33. In the case of United India Fire & General Insurance Co. Ltd. v. Paravathy and Anr. 1979 ACJ 101 the question of applicability of Section 110-C(2-A) came for consideration and the provision were not held to be attracted because of the facts and circumstances of that case. The insured had resisted the claim before the Tribunal but had not chosen to file an appeal. According to their Lordships the mere fact that the insurer had not filed the appeal does not mean that there is a collusion between him and the claimant. The insured had not remained ex-parte before the Tribunal and therefore, their Lordships did not consider it to be a case where the insured might be said to have abandoned the defence. Though it was not shown that there was any clause in the policy enabling the insurer to raise all defence that are open to the insured in the proceedings under the policy, still their Lordships assuming that there was an enabling provision in the policy held that the insurer can himself raise all contentions that are open to the insured only if it defends the action in the name of the insured. The provisions of Section 110-D of the Act were taken help of by the learned Counsel for the appellant and it was submitted that the limitations contained in Section 96(2) as to the defences that are open to the insurance company will apply only to the proceedings before the Tribunal and not before the appellate court and that once an appeal is filed under Section 110-D of the Act, the insurance company is entitled to question the award on all grounds that can be raised by the insured. The submission was not accepted and it was held that the fact that the appeal by the insurance company is maintainable Under Section 110-D of the Act will not mean that the insurer company can raise all contentions that are open to the insured and that the statutory limitations contained in Section 96(2) will still apply and it cannot be said that those limitations will govern only the proceedings, before the Tribunal.
34. The principles enunciated in the aforesaid case were followed in case of Reddipillli Chimna Rao and etc. v. Smt. Reddi Lorudu and Ors. : AIR1980AP279 and their Lordships were pleased to hold that Sub-section (2-A) of Section 110-C is an exception to Section 96(2) and that being so, the requirements contemplated under that provision should be satisfied.
35. In the case of New India Assurance Co. Ltd. v. P. Paul and Ors. 1984 ACJ 192 the owner of the vehicle had contested the claim before the Tribunal but failed to file appeal. The Insurer alone filed the appeal. The question was whether this act tantamounts to collusion between the insured and the claimant and the insurer could raise objections falling outside the preview of Section 96(2). The insurer assailed the award on the grounds that the vehicle insured was not involved in the accident. The two exceptions of Section 96(2) of the Act were also taken into consideration. The insurance policy was not provided to point out whether there was any condition reserving any right and if so in what manner. Discussing the provisions of Section 110-C (2-A), their Lordships opined that as the owner of vehicle did contest the case and did not remain ex-parte, he cannot be stated to have abandoned his defence before the Tribunal. There was no possibility to spell out a theory of collusion between the insured and the claimant. The mere fact that the insured had not filed any appeal against the award was not found sufficient to lend support to the proposition that there must have been a collusion between the insured and the claimant.
36. From the principles propounded by the above discussed authorities, the conclusion to be drawn would be that the defence available to the insured is only the grounds specified in Section 96(2) of the Act. There are two exceptions (i) when the permission is sought under the provisions of Section 110-C (2-A) and (ii) when there is any right reserved under the terms of the policy. I have considered the present case in the light of both the exceptions. The insured has contested the claim before the Tribunal through out the proceedings. The insurer did not come with the case at the enquiry before the Tribunal that the insured had colluded with the claimant nor were there circumstances to lead to such an inference. The learned Counsel for the appellant, even before this Court, could not point out any material to suggest that there was any collusion between the insured and the claimant before the Tribunal or thereafter.
37. The arguments of the learned Counsel for the appellant company regarding collusion between the insured and the claimant are based on the contents of Para 13 of the memo of appeal. It has been stated therein that the insured had not filed the appeal and was not co-operating. There may be many reasons for the insurer not preferring an appeal. But it is only when the insurer comes with the specific case and satisfies the Court that there was a collusion between the insured and the claimant and for that reason the insured did not file the appeal, that the insurer with the permission of the Court can challenge the award on the grounds available to the insured. This not being the position in the present case, the provisions of Section 110-C(2-A) are not attracted and the company cannot be permitted to challenge the award on the grounds other than those specified in Section 96(2) of the Act. If by the terms and conditions the insurer reserves the right to defend the claim in the name of the insured the former can contest the claim on the grounds available under Section 96(2) as well as those available to the insured. In such circumstances, the insured can also challenge the award on the line the insured could have done. But in order to avail of the right so reserved the insured will have to conduct the case in the names of the insured.
38. As discussed earlier the provision to that effect in the policy do not come to the help of the insurer in the present case. The reason is that the insurer and the insured both have simultaneously contested the claim. If the insurer wanted to take benefit of condition (2), it should have conducted the case in the name of the insured. The words 'take over and conduct' appearing in condition (2) are of significance. To take over & conduct the case in the name of the insurer means to proceed with the defence or settlement of any claim or to prosecute in place of the insured. If the insurer allows the insured to take all the defence available and contest the claim in the enquiry in its own name, the reservation clause would not apply. It is pertinent to note that even in appeal, the insurer has filed the appeal in its own name and not in the name of the insured. The insured and the driver have rather been made respondents in the appeal. Thus the insurer appellant cannot get out of restrictions imposed by Section 96(2) of the Act.
39. The points taken in the appeal are not of the nature of any of the clauses of Sub-section (2) of Section 96 of the Act. All the grounds taken in the appeal are those available to the insured. In such circumstances, the preliminary objection regarding the maintainability of the appeal raised by the learned Counsel for respondent one prevails and the appeal is dismissed as not being maintainable.