NEW INDIA ASSURANCE CO LTD Vs. JANAK DULARI

JUDGEMENT

(1.) THIS is an application under Article 227 of the Constitution by the New India Assurance Company, Ltd., (hereinafter referred to as the Insurance Company) against the order of the Additional Civil Judge, Allahabad dated 23rd January, 1963 and the 16th August, 1963, whereby the Insurance Company was not permitted to take up pleas other than those specifically provided for under Section 96 Sub-clause (2) of the Motor Vehicles Act, 1939 (hereinafter referred to as the Act) and the rejection of the subsequent application wherein the Insurance Company had asked for permission to defend the suit in the name of the assured who was not coming forward to contest the suit.

(2.) THE facts lie within a narrow compass and they are these: A motor truck No. U. P. C. 5818 belonging to the assured, Sri Ram Swarup Shukla respondent No. 6, which was being driven by Shamlal the driver, respondent No. 7, was insured with the Insurance Company against third party risk as required under the provisions of the Motor Vehicles Act. On the 30th of March, 1961 while the said vehicle was plying on the public road it met with an accident near the crossing of the Thornhill Road and Lowther Road, Civil Lines, Allahabad as a result of which Sri Babu Ram Saxena the husband of the opposite party No. 1 and opposite parties Nos. 2 to 5 died. THE opposite parties Nos. 1 to 5 had filed a suit against the Insurance Company and the opposite parties Nos. 6 and 7 claimed a sum of Rs. 10,000 by way of damages --eight thousand was on account of the death and Rs. 2000 on account of the shocks suffered by the opposite parties Nos. 1 to 5. THE suit is No. 26 of 1962 and was filed in the Court of the Additional Civil Judge, Allahabad. THE Insurance Company has been arrayeu as a defendant in the said suit in the capacity of an insurer. THE owner of the vehicle opposite party No. 6 has put in appearance but opposite party No. 7 has not done so and neither of them have filed any written statement nor are they contesting the suit. In fact, the owner opposite party No. 6 has more or less admitted the claim of the assured and has made a statement that he does" not want to oppose or contest the proceedings.

(3.) THE second part of the question posed does not require much elaboration in view of the recent decision of the Supreme Court in British India General Insurance Co. Ltd. v. Capt. Itbar Singh, AIR 1959 SC 1331, which were appeals by the Insurance Company from a decision of the Punjab High Court reported in Itbar Singh v. P. S. Gill, (S) AIR 1955 Punj 187. Though the Supreme Court dismissed those appeals, nevertheless, it observed:-- "THE statute has no doubt created a liability in the insurer to the insured 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 further more not convinced that the statute causes any hardship. First, insurer has a right provided he has reserved it by the policy to defend the action in the name of the assured and if it is 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." THErefore, if the insurer has the full liberty, as laid down by the Supreme Court, to protect itself by contract or by inserting a clause in the policy itself that it will have a right to defend the action in the name of the assured then the insurer will not be limited by the defences open to it under Section 96 (2) of the Act but all the defences which could be taken by the assured himself would be open to it. THE Supreme Court, however, made it clear that in such a case the defence to the action will have to be in the name of the assured by the insurer.