Skip to content


The Concord of India Insurance Company, Ltd. Vs. Kaveri Ammal and anr. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai High Court
Decided On
Reported in(1967)2MLJ446
AppellantThe Concord of India Insurance Company, Ltd.
RespondentKaveri Ammal and anr.
Cases ReferredVanguard F. & G.I. Co. v. Sarla Devi
Excerpt:
.....insurer is within the scope of its liability to contribute or indemnify. as the rule in order 8-a, civil procedure code is an exception to the well-known principle that the plaintiff is the dominant litus in a suit, it is to be observed that once a party is recognised as a third party, directions for contribution and indemnity against him follow as a matter of course, of such a claim is possible in the eye of law. if is clear that this section only reiterates the well-known doctrine that no one can be prejudiced without being heard, audi alteram partem. (7) sub-section (2) therefore clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it. it is not disputed that the second defendant is the insurer and conditions of..........the first defendant filed an application i.a. no. 1317 of 1962 under order 8-a of the code of civil procedure and prayed for the issue of a notice to the second defendant as a third party under the special provision of order 8-a, civil procedure code as by then the second defendant, though on record, had no effective part to play in the trial. it is seen that on such issuance of the notice, the second defendant entered appearance on 31st august, 1962 and in i.a. no. 1317 of 1962 leave was granted for such impleading of the second defendant as a third party. by then, the trial of the suit began. the second defendant therefore appears to have had ample opportunity even then to participate in the trial. the suit was decreed on 13th september, 1962 against the first defendant. the first.....
Judgment:
ORDER

T. Ramaprasad Rao, J.

1. The present Civil Revision Petition arises against the order of the learned District Munsif, Sankari at Salem in I.A. No. 51 of 1964 in O.S. No. 898 of 1959. The plaintiff whose husband was fatally killed in a motor accident, instituted this suit against the first defendant the lorry owner, and the Concord of India Insurance Company, Ltd., Madras, the insurer of the lorry, the second defendant. Soon after the pleadings were complete and issues were framed, the plaintiff gave up the second defendant. The result was that though the second defendant was a party to the suit and raised several defences to the action, it had no opportunity to agitate them and in fact, it did not. During the course of trial the first defendant, at one hearing, was absent and he was ex parte and the suit decreed as such. The first defendant filed an application I.A. No. 5 of 1961 to set aside the ex parte decree. An endorsement was made by the counsel for the first defendant that he was not claiming any relief against the second defendant in that application. I shall come to this aspect later. The ex parte decree was set aside and the suit was, as usual, listed for trial. On 23rd August, 1962, the first defendant filed an application I.A. No. 1317 of 1962 under Order 8-A of the Code of Civil Procedure and prayed for the issue of a notice to the second defendant as a third party under the special provision of Order 8-A, Civil Procedure Code as by then the second defendant, though on record, had no effective part to play in the trial. It is seen that on such issuance of the notice, the second defendant entered appearance on 31st August, 1962 and in I.A. No. 1317 of 1962 leave was granted for such impleading of the second defendant as a third party. By then, the trial of the suit began. The second defendant therefore appears to have had ample opportunity even then to participate in the trial. The suit was decreed on 13th September, 1962 against the first defendant. The first defendant took up the matter in appeal and the appeal A.S. No. 326 of 1963 on the file of the Subordinate Judge's Court, Salem (originally A.S. No. 505 of 1962, District Court, Salem) was dismissed on 10th December, 1963. On 12th December, 1963 the first defendant, persuant to the leave obtained by him earlier to implead and treat the second defendant as a third party under Order 8-A, Civil Procedure Code, filed an application I.A. No. 51 of 1964 for directions to the second defendant to meet the decree amount and other expenses incurred by him in the litigation on the foot of the insurance policy, as insurer and as the person who is bound under Section 96 of the Motor Vehicles Act to indemnify him to the extent of the damage suffered by him by reason of the suit and the ultimate decree. The above application was resisted by the second defendant on three grounds: (1) The endorsement on I.A. No. 5 of 1961 precludes the first defendant to claim any relief against the second defendant; (2) since the second defendant was a party to the suit, the special procedure provided under Order 8-A, Civil Procedure Code would not apply and the petition is not maintainable for directions to indemnify; and (3) in view of the order in I.A. No. 1317 of 1962 whereunder leave only was granted to issue notice to the second defendant as third party and no further directions were given, the present application is incompetent. The learned District Munsif considered the above objections and overruled them. As against the order of the learned District Munsif allowing I.A. No. 51 of 1964, this revision petition is filed by the second defendant.

2. Before me another ground is also taken that such directions for indemnity cannot in any event be taken after appeal. I may dispose of the last objection raised. Order 8-A, Rule 5, Civil Procedure Code as applicable to Madras provides as follows:

If the third party enters appearance, the defendant on whose behalf notice was issued may apply to the Court for directions and the Court may, if satisfied that there is a question to be tried as to the liability of the third party to make the contribution or pay the indemnity claimed, in whole or in part, order the question of such liability, as between the third party and the defendant giving the notice to be tried in such manner, at or after the trial of the suit, as the Court may direct, and, if not so satisfied, may pass such decree or order as the nature of the case may require.

3. It is seen from the language of the rule that directions for contribution or indemnity by the third party can be asked for 'at or after the trial of the suit.' An appeal being a continuation of the suit, such directions can therefore be asked for even after the appeal is disposed of. It is significant that in I.A. No. 1317 of 1962 the Court has exercised its judicial discretion in impleading the second defendant as a third party, apparently being satisfied that the claim against the insurer is within the scope of its liability to contribute or indemnify. I therefore hold that there is no substance in the contention that the application for directions to so indemnify is not maintainable after the disposal of the appeal by the first defendant against the decree of the trial Court.

4. I shall now consider the scope and applicability of Order 8-A, Civil Procedure Code as is applicable to Madras. In In re Thiruvannamalai Adhinam Sri Daivasigamani Arunachala Desika Paramacharya Swamigal A.I.R. 1955 Mad. 3910 , Ramaswami, J., held that in cases where indemnity and contribution is claimed, the third party procedure can be availed of. In his view:

The third party procedure is applicable only to cases of contribution or indemnity. In effect, a claim to contribution is a claim to a partial indemnity. Contribution is bottomed and fixed on general principles of justice and does not spring from contract, though contract may qualify it. A right to contribution may be created by statute. A right to indemnity may arise (i) from express contract, (ii) from some statute; or (iii) implied from some principle of law.

A right to indemnity exists where there is an obligation either in a law or in equity upon one party to indemnify the other; and insurer can be added as a third party in an action for personal injury in a road accident as the defendant is entitled to indemnity from that party.

As the rule in Order 8-A, Civil Procedure Code is an exception to the well-known principle that the plaintiff is the dominant litus in a suit, it is to be observed that once a party is recognised as a third party, directions for contribution and indemnity against him follow as a matter of course, of such a claim is possible in the eye of law. As observed by Ramachandra Iyer, J. (as he then was) in P.S. Pattabhiraman v. Ganapathy : AIR1962Mad202 :

Order 8-A, Rule 1, Civil Procedure Code restricts the application of the rule to cases where the defendant Would be entitled to contribution or indemnity against a third party. Before third party notice could issue, it is necessary to see whether the defendant is entitled to an indemnity or contribution from a third party. This principle does not depend on the right of the plaintiff to choose any one of the parties liable to him as a defendant in the suit; but it is for the protection of the defendant.

It is also common knowledge that the liability under an indemnity is coterminous with the obligation it is mainly intended to cover and it is separate and distinct from such liability on the part of others and is independant of the fact whether the others are made responsible on the same cause of action. Under the Insurance Policy it is not disputed that there is a promise on the part of the second defendant to become liable to compensate whenever the first defendant, as insured, becomes liable to pay to the aggrieved person. This is so in this case. Therefore, the second defendant is bound to indemnify the first defendant, subject however to the issues normally arising between the first and second defendants being tried by the Court below and the liability and its extent fixed. I shall also presenty consider this aspect under Section 96 of the Motor Vehicles Act. At this stage, it is sufficient to say that the application by the first defendant under Order 8-A, Civil Procedure Code is maintainable.

5. In Chockalingam v. Alagammai Achi : AIR1953Mad927 , Raghava Rao, J., held that the third party procedure can be availed of as against a person already on record; if this were not so, co-defendants who can avail themselves of the third party procedure will be greatly embarrassed and indeed prejudiced. In fact, Order 8-A, Rule 8, warrants such a procedure as between co-defendants. Venkataramana Rao, J., in Venkatakrishna Naidu v. Narayanaswami Iyer : AIR1939Mad172 , held that the principle applicable to the procedure under Order 8-A, is that governing Order 1, Rule 10, Civil Procedure Code. If a party has an existing legal or even equitable interest and, not of course a commercial interest, such a party would be a necessary or a proper party to the lis and even so can properly be impleaded as a third party under Order 8-A, Civil Procedure Code. I am not therefore inclined to accept the argument of Mr. Prabhu, learned Counsel for the petitioner, that the application to implead his client as a third party is not maintainable since the second defendant is already a party on record.

6. I shall now consider the impact of Section 96 of the Motor Vehicles Act (IV of 1939). Sections 96(1) and 96(2) provide:

(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 and 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 as 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...

The necessary elements of this section, so far as this case is concerned, are (1) The issuance of a certificate of insurance, (2) A judgment has been obtained against the insured, (3) The insurer shall 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, and (4) The insurer had notice through Court of the proceedings against the insured or in respect of any judgment so long as execution is stayed thereon pending an appeal. The insured can of course avail himself of various remedies provided for in Section 96 of the Motor Vehicles Act. If is clear that this section only reiterates the well-known doctrine that no one can be prejudiced without being heard, audi alteram partem. The insurer is entitled to the notice of such proceedings so that he can defend in his own name or assist the insured in defending the case properly. As pointed by Chagla, C.J., in Royal Insurance, Co. v. Abdul Mahomed : AIR1955Bom39 ..the subject 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 section 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.

In so far as the liability of the insurance company is concerned, the section provides that the insurer is liable as if he is the judgment-debtor. The circumstances under which an Insurance Company is liable under Section 96 are fully set out and laid clown in B.I.C. Insurance Co. v. Itbar Singh : [1960]1SCR168 .

(1) Apart from the statute an insurer has no right to be made a aparty to the action by the injured person against the insured causing the injury.

(2) Sub-section (2) of Section 96, however, gives him the right to be made a party to the suit and to defend it.

(3) The right therefore is created by statute and its content necessarily depends on the provisions of the statute.

(4) The language of Sub-section (2) seems to us to be perfectly plain and to admit of no doubt by 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.

(5) 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.

(6) (When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute.

(7) Sub-section (2) therefore clearly provides that an insurer made a defendant to the action is not entitled to take any defence which is not specified in it.

(8) 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 the instance case, the insurer has been added as a party defendant and after the written statement was filed, the insurer was given up and no relief was claimed. I do not think that by reason of the action as above on the volition of the plaintiff, the rights of the insured under Section 96 are in any way affected.

7. As pointed out in Vanguard F. & G.I. Co. v. Sarla Devi at 298.

The mere fact that the plaintiffs originally impleaded the Insurance Company cannot possibly affect the position and cannot negative the provisions of Section 96. The impleading of the insurers by the plaintiffs at the time of filing of the plaint cannot negative the effect of Section 96 and cannot add to the insurer's rights qua third parties.

8. It should also be noted that Courts should not refuse to issue a third party notice merely became a difficulty may arise. Each case has to be adjudged on its merits.

9. Judging from the above principles, the facts of the instant case can now be considered. It is not disputed that the second defendant is the insurer and conditions of Section 96 are satisfied. I have already stated the objections mainly raised by the learned Counsel for the petitioner. I do not think that the endorsement in I.A. No. 5 of 1961 operates as an estopped against the first defendant. Even so, I overruled the contention that because the second defendant was a party to the suit, Order 8-A, Civil Procedure Code, is not applicable. Further, it is indeed too difficult to comprehend as to what direction can be asked for at the stage when notice to the second defendant was issued in I.A. No. 1317 of 1962. It was for the second defendant to look after its interests and contemporaneously safeguard the interests of the first defendant as well by effectively participating in the suit. Apparently he failed to do so. For no fault of the first defendant, he should not suffer. I agree with the finding of the lower Court that the application by the first defendant is maintainable in law. The Civil Revision Petition is therefore dismissed, but in the circumstances there will be no order as to costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //