CASE COMMENT

UNITED INDIA INSURANCE CO LTD

V.
H LIANZELI

MACApp.4/2021

Aldrin Zothanmawia1

Appellant : United India Insurance Co Ltd, Aizawl Mizoram

Respondent : (1) H Lianzeli

(2) Mahinder Singh Jariya

Court : Gauhati High Court, Aizawl Bench

Bench : Michael Zothankhuma, J

Date of decision : 19-08-2021

PROLOGUE FROM THE AUTHOR

This manuscript was written after the attendance of a two weeks internship under Hon’ble
Mr. Justice Michael Zothankhuma, a sitting judge in Gauhati High Court, Aizawl Bench from
9th August 2021 to 20th August 2021. Being a very rare opportunity, I’ve had the best
experience throughout the said internship and though my internship had to be painstakingly
cut short because of internal exams, I have learned so many things during a short period of
time, thanks to the learned judge himself, the Registrars of Gauhati High Court, Aizawl
Bench, and the Registrar General, Gauhati High Court for allowing me to pursue the said
internship. With regards to my impression of the respected learned judge, I deem him to be
one of the most unpretentious and a down-to-earth person, albeit his intimidating stature.
After court proceedings, which I would silently observe carefully, we would have small
informal discussions inside his chambers where I would sometimes ask him a question to
which he was very capable of promptly giving me an eloquent response. We would also

1
VI Semester LLB, Govt. Mizoram Law College
deliberate on the issues of some of the cases listed and heard for the day, where I would
research that issue after going home, and then bring that research product to be perused
by the judge on the next day. During the course of this internship, interesting cases have
oftentimes emerged and this instant case was one of them. The learned judge even stated
to me that this was the first time that this kind of issue emerged in Mizoram.

I. INTRODUCTION

Before actually delving into the core of the case, it may be relevant for the sake of lucidity,
to briefly highlight the important provisions of law pertaining to this instant case. When a
person is met with an accident involving a motor vehicle that leads to his death, his
disability, or an injury to his property, he or his legal heirs, as the case may be, have a right
to claim compensation against the owner/driver/insurer of the vehicle causing the injury.
Such right is provisioned in various parts of the Motor Vehicles Act, 1988 (hereinafter
referred to as the Act) and varies depending on the nature of the case. The aforesaid Act
even stretches to third parties i.e., any person other than the insurer and the insured who
may bear injuries from such accidents so that they may claim compensation against the
other parties accordingly. The general provisions pertaining to compensation under the said
Act are:

1. Section 140 of the Act- This section implies that the owner(s) of a vehicle is/are
jointly and severally, as the case may be, liable to pay compensation to a claimant
where their use of their motor vehicle causes permanent disability or death. If the
accident results in the death of the claimant, the amount payable shall be Rs
50,000/- and whereas in the case of permanent disability Rs 25,000. Using this
provision, the claimant need not prove that the other party (the party liable to pay
the compensation) was committing any wrongful act, neglect, or default since this
provision operates on the principle of ‘no-fault liability’. Also, this provision further
states that such claim for compensation shall not be defeated by any wrongful act,
neglect, or default on the part of the person claiming the compensation i.e., the
claimant; and also such quantum of compensation recoverable be reduced because
of the participation of the claimant on the accident amounting to such permanent
disability or death.

What is to note is that this section gives a salient ‘proviso’ to be complied with.
Proviso simply means a condition that subjects and binds the instant section when it
functions and operates. The proviso of this section states that if compensation is
given under any other law, then the compensation given under that law shall be
 reduced from the amount of compensation payable under this section or under
Section 163A. For example, a claimant who is permanently disabled due to an
accident acquires Rs 10,000 from the other party under other laws. If he seeks to
invoke Section 140 of this Act, he will be given Rs 15,000. If he seeks to invoke
Section 163A, the actual amount payable to him (based on Structured Formula Basis
according to the provision) will be summed up after first subtracting Rs 10,000 which
he was being paid earlier under other laws.

2. Section 163A of the Act- This provision was introduced under the Act after its
amendment in the year 1994. This section also operates under the principle of
no-fault liability similar to Section 140. Although in Section 140, the wording ‘any
person’ is used, Section 163A pertains especially to third parties as it is provisioned
under Chapter XI of the Act titled ‘Insurance of Motor Vehicles Against Third
Party Risks’. Before the insertion of this provision, claimants, in the event of death
or permanent disability only have the right to claim compensation limited to a sum of
Rs 50,000 and Rs 25,000 respectively, if they want to enjoy the operation of the
principle of no-fault liability. However, ever since the operation of this provision,
claimants now have a right to claim compensation on a ‘structured formula basis’
indicated in the Second Schedule of the Act. The said schedule laid down a
comprehensive scale for calculating the amount payable to the claimant which will be
determined by the age of the victim and his annual income during the time of the
accident. This means that the amount payable to the claimant as compensation can
exceed Rs 50,000 and Rs 25,000 respectively, which will be determined by the age
and annual income of the victim. However, according to Section 163B, a claimant has
the option to claim compensation either under Section 140 or 163A but cannot
simultaneously seek compensation under both provisions.

3. Section 166 of the Act- Unlike the aforesaid provisions, this section implies that
claims for compensation can be made- in respect of accidents involving death,
permanent disability, as well as bodily injury or damages to any property of a third
party, by the person who has sustained the injury, or by the owner of the property;
or where death has resulted from the accident, by all or any of the legal
representatives of the deceased; or by any agent duly authorised by the person
injured or all or any of the legal representatives of the deceased, as the case may be.
Hence, the scope of this provision is much wider. However, this provision is silent on
invoking the principle of ‘no-fault liability’, and therefore, the burden of proof to
establish that the person causing injury by a motor vehicle was negligent or at fault
 for the cause of the accident lies on the claimant and also, the claimant’s claim
against the opposite party can be negated or reduced if the other party can establish
that the claimant was also responsible for the cause of the accident. The absence of
the principle of ‘no-fault liability’ in Section 166 and its difference with Section 163A
has been even reiterated in the case of Sangeetha v. Krishna Chari2 where the court
stated:

“35. … The difference between Sections 163 A and 166 is, the need to
prove negligence under Section 166 and non-requirement of proving
negligence under Section 163 A. The other difference is unlimited liability
on the Insurer under Section 166 and payment of compensation on structured
formula basis as indicated in the Second schedule of M.V. Act in case of a
claim made under Section 163A. The only exception in Section 163 A is that a
claim petition could be maintained by an employee (or his legal heirs) being a
driver/rider having to plead and prove that the motor vehicle accident was
caused during the course of employment. As stated earlier, in the context of
chapter XI of the M.V. Act, wherever the word “employee” is used, it is
impliedly referable to the meaning it receives under the Workmen's
Compensation Act, 1923…”

4. Section 161 of the Act- If a person committing an injury by a motor vehicle flees from
the scene of an accident immediately, committing an offence of hit and run, and his
identity could not be ascertained in spite of reasonable efforts, according to this
provision, the General Insurance Corporation of India, formed under Section 9 of the
General Insurance Business (Nationalisation) Act, 1972 and the insurance companies
carrying on general insurance business in India are required to pay compensation to
the claimant in cases of death, or grievous hurt. In respect of death- a fixed sum of
Rs 25,000; and in respect of grievous hurt Rs 12,500.

This instant case deals with the implication of Section 163A of the Act.

2
ILR 2019 Kar 315 (Kant)
II. BACKGROUND OF THE CASE

This instant case arose out of an appeal filed against the Judgement & Award dated
27.07.2020 passed by the Motor Accident Claims Tribunal, Aizawl in MACT Case No.
33/2018. On 27th May 2018 around 4:20 PM, a Scooty bearing No. MZ01-N-7328 driven by
Mr Lalhmangaihzuala tried to overtake a Truck bearing No. NL01-Q-9257 but met with an
accident. The daughter of this instant’s case respondent/claimant, who was a pillion rider in
the said Scooty, fell off the Scooty and was crushed by the right rear wheel of the truck. As
a result of the accident, the claimant’s daughter died on the way to the hospital. Hence, the
respondent/claimant of this instant case filed a claim petition under Section 163A of the
Motor Vehicles Act, 1988 against the insurer of the truck i.e., the insurance company. In the
court of the MACT, the appellant of this instant case/Insurance Company submitted their
written statement stating that they were not liable in respect of any claim made by the
respondent/claimant and further, amongst other things, stated that the Police report did not
mention the availability of the Driving License of the driver/rider of the Scooty.

The MACT hence, framed two issues:

i) Whether the present claim application is maintainable in its present form and style?

ii) Whether the Claimant is entitled to compensation, and if so, to what extent and
who is liable to pay?

After perusing evidence submitted by the respondent/claimant and the appellant/insurance

company, the learned Tribunal holds that the claim petition was maintainable and that the
respondent/claimant was entitled to payment of compensation.

Thereafter, the appellant/Insurance Company pleaded to the Tribunal that the liability for
payment of compensation must be shared by the appellant along with the driver/owner of
the Scooty @ 50%.

The MACT had gone through the following Apex Court judgements:

1) Ramkhiladi v. The United India Insurance AIR 2020 SC 527, (2020) 2 SCC 550
2) United India Insurance Co. Ltd. v. Sunil Kumar AIR 2017 SC 5710
3) Shivaji and Anr v. Divisional Manager United India Insurance Co. Ltd. 2018(3) TAC
673 SC

and held that the claimant was entitled to make a claim against both the owners or either of
the owners of the involved vehicles.
Hence, the Judgement and Award issued by the MACT, awarding the claimants/respondents
of this instant case a compensation amount of Rs 5,50,000/- along with an interest @ 7%
per annum from the date of filing the claim petition i.e., 25th July 2018 was challenged
before this instant Gauhati High Court, Aizawl Bench.

III. THE APPELLANT/INSURANCE COMPANY’S ARGUMENT ADVANCED

The appellant submits that the Tribunal erred, in fastening the liability for payment of
compensation, only upon the owner of the Truck as two vehicles were involved in the
accident. Hence, argued that the liability for payment of the compensation would have to be
apportioned equally upon both the vehicles’ owners @ 50%.

It can be discerned that either the appellant failed to substantiate his argument/claim with
the help of a precedent/case law or the learned judge in this instant judgement did not
reflect the authorities submitted by the appellant.

IV. THE RESPONDENT/CLAIMANT’S ARGUMENT ADVANCED

The respondent/claimant submitted that by virtue of the judgements of the Apex Court,
referred to by the Tribunal:

1) Ramkhiladi v. The United India Insurance AIR 2020 SC 527, (2020) 2 SCC 550
2) United India Insurance Co. Ltd. v. Sunil Kumar AIR 2017 SC 5710
3) Shivaji and Anr v. Divisional Manager United India Insurance Co. Ltd. 2018(3) TAC
673 SC

the learned Tribunal did not commit any error in holding that a claim petition could be filed
against either of the owners of the vehicles involved in the accident, even though more than
one vehicle was involved in the accident. The respondent also submits that there is no
infirmity with the learned Tribunal fastening the liability for payment of the entire
compensation amount upon the appellant/insurance company which had insured the Truck.
Further, the respondent also submits that the owner/rider of the Scooty was not required to
be made parties in the claim petition and neither did the appellant/insurance company make
an application for impleadment of the said persons before the Tribunal. Submitting that
since the accident occurred when the Scooty tried to overtake/pass the Truck, the
respondent advanced that there was no collision between the two vehicles and that the
pillion rider/deceased (the daughter of the claimant) fell off the Scooty and the right rear
wheel of the Truck ran over the deceased.

Also discerning the submission of the respondent, it can either be conceived that the
learned judge in this instant judgement did not reflect other authorities cited by the counsel
for the respondent or either the respondent has no submission of authorities to substantiate
his claim, other than merely reiterating the operation of the Apex Court judgements referred
by the Tribunal. What can also be noticed is that the respondent is bothered by the usage of
the word ‘collision’ indicated in the Police report of the accident; as if establishing the fact
that there was no ‘collision’ is crucial for his contention.

V. JUDGEMENT- WITH AN ANALYSIS FROM THE AUTHOR

The learned judge, before proceeding with the crux of his observation, reflected the
authorities referred to by the Tribunal individually.

Although the learned appellate court in this instant judgement merely highlighted the
holdings made in the authorities referred by the Tribunal and did not disclose how and why
the authorities referred by the Tribunal were relevant or not, and whether they were or
were not playing a determinant factor in issuing its Judgement and Award dated 27th July
2020, an effort will be given to scour and highlight the supposed relevant dictums of the
aforementioned Apex Courts and an attempt will be made to ascertain whether they are
even relevant for resolving the issue at hand:

1) Ramkhiladi v. The United India Insurance AIR 2020 SC 527, (2020) 2 SCC 550

In short, this court held that a claim under Section 163A cannot be invoked by a
borrower/permissive user of a vehicle against the owner and/ or insurer of the said
vehicle itself as such borrower/permissive user “steps into the shoes of the owner”.
Hence, this court deems that the position of such a permissive user is the same as
that of an owner, and held that an owner cannot both be a claimant and a recipient.
In order to claim compensation under Section 163A, the claimant needs to be a third
party in relation to the vehicle in question. If, however, the claimant claims
compensation against the other vehicle involved in the accident(the offending
vehicle), to whom he is a third party, instead of claiming the said compensation
against the owner/insurer of the vehicle itself which he himself was driving, then the
said section would be operable. Also, if it was established that the claimant was in
the employment of the owner of the borrowed vehicle, the outcome would have been
 different and the claimant would have acquired a remedy provisioned under Section
163A. This court also held that the non-requirement of establishing the liability of the
offending vehicle under Section 163A does not mean that it is unnecessary to even
file Section 163A against the driver/owner/insurer of the offending vehicle.

This judgement is of no relevance to the issue at hand and cannot be used to substantiate
why the claimant in this instant case was entitled to make a claim against both the owners
or either of the owners of the involved vehicles.

2) United India Insurance Co. Ltd. v. Sunil Kumar AIR 2017 SC 5710

The Supreme Court in this judgement basically stresses the non-consideration and
redundancy of raising negligence as a defence, provisioned in Section 163A of the
Act. The court also observed that to permit a defence to be introduced by the insurer
and/or to understand the provisions of Section 163A to be contemplating any such
situation would go contrary to the very legislative object behind the introduction of
Section 163A of the Act. Further, this court also held that to permit an insurer to raise
the defence of negligence would be to bring a proceeding under Section 163A on a
par with the proceeding under Section 166, which would not only be
self-contradictory but also defeat the very legislative intention.

Other than reiterating the principle of no-fault liability provisioned in Section 163A of the
Act, this judgement also serves no purpose to substantiate why the claimant in this instant
case was entitled to make a claim against both the owners or either of the owners of the
involved vehicles.

3) Shivaji and Anr v. Divisional Manager United India Insurance Co. Ltd. 2018(3) TAC
673 SC

In this case, the Supreme Court set aside a High Court Judgement pertaining to the
application of Section 163A, wherein the said court allows an appeal made by an
insurer on grounds of the negligence of the claimant. The Supreme Court in this case
relies on the dictum laid down in United India Insurance Co. Ltd. v. Sunil Kumar3 and
restores the order of the Tribunal.

3
AIR 2017 SC 5710
Also, just like the aforementioned cases, this judgement has no relevance to be used as a
precedent to substantiate why the claimant in this instant case was entitled to make a claim
against both the owners or either of the owners of the involved vehicles.

The court then finally laid down its observations. The learned judge firstly stressed and
pointed out that the claimants had preferred a claim only against one of the two vehicles
involved in the accident i.e., against the owner/insurer of the Truck. Other than this, the
learned judge was steadfast in identifying an inconsistency with regard to the language
used in the Police report exhibited before the learned Tribunal purporting to be the way the
accident occurred. In the Police Report dated NIL, exhibited as Ext. P-2, it was implied that
the Truck “collided” with the Scooty and as a result, the pillion rider fell under the Truck and
was run over by the Truck itself. The court pointed out that though the said police report
was exhibited, the author of the police report was not examined by the Court; and also
observed that there is no statement made by either of the parties which indicates that there
was any collision between the two vehicles. Furthermore, this court pointed out that there
was no evidence to show that the Scooty was not under the control of the rider at any time,
nor there was any damage caused to the Scooty. The learned judge then cited an authority
LIC & Anr v. Ram Pal Bisen4 where in the said precedent, the Supreme Court held that at
the most, admission of documents may amount to an admission of contents, but not its
truth. The said authority further held that mere making of an exhibit on a document does
not dispense with its proof, which is required to be done in accordance with the law. This
instant court, other than its reasons stated, used the aforementioned precedent to
substantiate its holding- that the contents of Ext P-2 indicating that there was a collision in
the accident, is not the true fact narrative of how the deceased died, and hence is
inadmissible as evidence.

The primary purpose of establishing the said fact is to ascertain that there was prima facie,
no negligence on the part of the driver of the truck or the rider of the Scooty. Since the
issue of this case deals with the operation of Section 163A, there is no need to prove that
the parties are negligent in contributing to the accident. Even if the court disregards
establishing that there was a collision or not, it will not affect the outcome of this judgement
as Section 163A operates under ‘no-fault liability’. The extra effort exerted by the learned
judge going to great lengths to merely ascertain that there was no collision, clearly shows
that the learned judge had a profound and far-reaching intuition of the issues at hand as it
is indirectly ascertained that the provision invoked is an appropriate provision as other
provisions for claiming compensation such as Section 166 of the Act, requires negligence to
be proved for a claim and also makes it open to the parties to use negligence as a defence.

4
(2010) 4 SCC 491
Finally, the learned judge dealt with the crux of the issue- Whether it was necessary for the
claimant/respondent to implead both the owners/insurers of both the vehicles involved in
the accident?

The court held that a claim under Section 163A of the Act can be made against the
owner/insurer of any or all of the vehicles involved in the accident/death of the deceased,
putting reliance on the following authorities:

1) United India Insurance Co. Ltd. v. Ratheesh & Ors5:

In this Division Bench judgement of the Kerala High Court, the question determined
was “when plurality of vehicles are involved in an accident, does the victim have the
unfettered option/right to claim compensation under Section 163A of the Motor
Vehicles Act against either or both the owners/insurers of the vehicles?”. The Division
Bench of the Kerala High Court in the above case, relied upon another Division Bench
case of the Kerala High Court in the case of United India Insurance Co. Ltd. Vs.
Madhavan6, wherein the provisions of Section 140 and Section 163A of the Motor
Vehicles Act were analyzed as well. The Division Bench of the Kerala High Court in
both the above cases came to the conclusion that in a claim under Section 163A of
the MV Act, the claimant has the unfettered option/choice to stake his claim against
either or both (any or all) the owners/insurers of the vehicles involved in the
accident.

2) New India Assurance Co. Ltd. v. Vivek Thakur & Ors7:

The Delhi High Court in this case while observing that there is no escape from the
conclusion that a claimant choosing a remedy under Section 163-A of the Motor
Vehicles Act is entitled to sue and recover compensation as per the structured
formula from the owner/insurer of any or all the vehicles involved in the accident,
had held that as the claimants in this specific case had made a claim against both the
accident vehicles, the Delhi High Court held that the liability being joint and several,
both the owners of the vehicles involved in the incident were equally liable to pay the
compensation in equal proportion.

5
Case No. MACA No. 2414/2008
6
2011 (3) KLT 452
7
Mac App. No. 692/2007
 It is to note that this court held that the liability is also several, other than being a
joint liability.

3) Khenyei v. New India Assurance Co. Lts. & Ors8

This Supreme Court case, although pertaining to the provisions of Section 166 of the
Act, was reflected by this instant High Court. In the aforementioned Supreme Court
ruling, injuries were sustained by the claimants when two vehicles collided with each
other. A claim was made under Section 166 of the MV Act for compensation for the
combined wrongful act of joint tortfeasors. The Apex Court held that the claimants
could sue both or any one of the owners/insurers of the vehicles.

As is evident from the above, the learned High Court is correct and is able to clear the law,
relying on relevant precedents, which the learned Tribunal had earlier failed to do. Even in
the absence of submission of authorities to be perused by the judge, from the counsels of
the parties, the learned judge in this instant case is sufficiently able to substantiate why the
claimant in this instant case has the unfettered right to make a claim against both the
owners or either of the owners of the involved vehicles; by relying on the precedents laid
down by 2 Division Bench and a Bench of similar hierarchy. This instant court even went the
extra mile to ascertain that when pertaining to claims made under Section 166 of the Act,
the claimant also has the unfettered right to sue both or any one of the owners/insurers of
the offending/ opposing vehicles.

The Gauhati High Court even enlightened the appellant/insurance company of the leeway
for making the driver/owner/insurer of the opposing party liable to pay 50% of the
compensation. The court implies that it was always open for the appellant/insurance
company to make a submission before the learned Tribunal for impleading the
owner/insurer of the Scooty, which it had failed to do so. Finally, due to all of those reasons
stated, this instant court does not find a ground to interfere with the impugned Judgement
and Awards dated 27th July 2020 passed by the MACT, Aizawl and thereby dismisses the
appeal.

8
(2015) 9 SCC 273
VI. CRITICAL ANALYSIS

The implications of this legal decision, although the principle is derivative but fresh, enables
ostensibly claimants to choose to claim compensation against either or both the
owners/insurers of the vehicles involved. However, as sound and reasonable this principle
may appear, caution has to be noted because it has a tendency of suffering from a technical
oversight. To elaborate, with regards to accidents involving a plurality of vehicles, the level
of negligence/fault (even though factors of negligence have no relevance when invoking
Section 164A) cannot be the same for each vehicle involved. Since the claimant has the
unfettered option of claiming compensation against either or both the owners/insurers of
the vehicles involved, if he used this privilege to claim compensation only against one
owner/insurer of the vehicle who, unfortunately had much less participation of negligence or
merely participated as compared to the other party who had much greater participation and
was even the actual party responsible for the accident, it would be inequitable for the party
to bear the whole cost of compensation and disallowed to implead the other owner/insurer
company at the appropriate stage, especially if he has much less contribution with regards
to the accident and taking into consideration barred to put forth a contention of his punitive
levels of negligence compared with the other party because of the operation of Section
163A. Hence, the way forward would be to avail the affected party who sought that the
compensation is to be paid as well by other owners/insurers vehicles involved in the
accident for impleading the aforesaid parties, making them a party in the case before the
Tribunal as even suggested by this instant court of appeal.

Another implication of this instant Gauhati High Court judgement, along with the relied
Division Bench judgements of Karnataka High Court, also the judgement of the Delhi High
Court is that it creates an opportunity for the courts in India, to interpret and supplement
such principles laid down to be an absolute right- meaning that the court’s discretion of
reasonably disallowing the parties to invoke such right, depending on the case, would be
taken away. Interpreting that a claimant has an unfettered right of claiming compensation
against the owner/insurer of any or all of the vehicles involved in the accident, held by the
Apex Court in Khenyei v. New India Assurance Co. Ltd. & Ors9 is reasonable when it pertains
to Section 166 of the Act, as parties can use negligence as a defence. However, the same
cannot be said to be entirely judicious when it comes to Section 163A as the said provision
operates under the principle of no-fault liability, and also due to the aforementioned
reasons.

Hence, it would be prudent that Courts, when relying on the principle laid down in the
aforesaid Division Bench judgements of Karnataka High Court, the judgement of the Delhi

9
(2015) 9 SCC 273
High Court, and the judgement of this instant Gauhati High Court itself, subject such
unfettered right under the discretion of the Court accordingly to the facts of the case, and
treat each claim cautiously so as to unnecessarily avoid prejudicing the affected parties who
are already disadvantaged because of their incapacity in raising negligence as a defence
because of the operation of Section 163A and additionally due to the likelihood of injury
sustained by them as well in the accident.