1. ' This appeal under section 47(1) of the Insurance Act, 1938 is directed against the impugned order dated 4th October 1976, of the Claims Settlement Board, Karachi, whereby the application of the appellant regarding claim in respect of truck accident was rejected under Order VII, rule 11, C. P. C.
2. ' Brief facts giving rise to this appeal are that on 2-11-74, appellant Mir Masih, while riding on a cycle, met with an accident on 'B' Road, Liaquatabad, Karachi, which came about as a result of rash and negligent driving of truck No, KA Z-5665 by respondent No, 1 namely Muhammad Saeed driver. The said truck belonged to Muhammad Arif respondent No, 2 and at the relevant time was insured with respondent No, 3 against third party risk vide Insurance Certificate No, EGI/HO/73-035415. The appellant having been injured in the accident aforementioned , was removed to the hospital, where it was found that his left leg had sustained severe fracture and ultimately' it was amputated rendering him as a cripple for the rest of his life. Before accident the appellant used to work in K. M.
3. C. And maintained his family of his wife and five minor children. He filed an application under section 47-C(1) of the Insurance Act, 1938 (hereinafter to be referred as the said Act) before the Claims Settlement Board constituted under the said Act for a claim of Rs, 20,000 as compensation for the loss suffered due to accident. In the said application Messrs Eastern General Insurance Company was also impleaded as defendant No,
3. Before the Board respondent No, 1 Muhammad Saeed entered appearance filed written statement on 16-2-76, and later on filed application under Orders VII, rule 11, C. P. C. For rejection of the application/plaint. By the impugned order it is held that there is no cause of action nor the proper parties have been joined with in the meaning of section 47-C of the said Act and the result application of the appellant is rejected.
4. ' I have heard the learned counsel for the parties. The reasons assigned for rejection of the application by the Board are that there is no cause of action to the applicant/appellant for the reason that within the ambit of section 47-C of the said Act there can be only two parties, i,e, Insurer and the insured as the liability under the insurance policy is contractual and secondly that there has been misjoinder of parties. Reliance is placed by the Board on Chaudhry Nazar Muhammad and others v. Shafiq Ahmad and others (1). Both the parties before the Board as well as in this Court put reliance upon this authority, hence in order to correctly appreciate the proposition laid down in this ruling it is necessary to recapitulate the historical background of this legislation as aptly stated in Rah-e-Manzil Transport v. Muhammad Amin (2) with relevant portion at page 192, para.
16. It is stated therein that before the enactment to the Motors Vehicles Act, 1939, and section 96 thereof an injured person claiming damages would have to bring an action against the person who caused the injury directly or vicariously, and if this action succeeded and the defendant satisfied the judgment be would then recover from the
(1) PLD 1963 Lah. 23 (2) PLD 1963 Kar. 182 insurance company to the extent of the insurance by instituting an action against the insurer. The injured person had no right to bring in the insurer in his action against the wrongdoer. Likewise, the insurer was not entitled to intervene in the action between the injured person and the wrongdoer. In view of the increasing number of running down accidents the Legislature made insurance against third party risk compulsory for the protection of the injured person and to advance this purpose it prescribed a procedure by which the claim for compensation by the injured person against the assured and the contractual claim of the assured against the insurer for indemnification could be decided in one suit.
5. ' In this background it is to be seen as to what are the requirements of section 96 of the Motor Vehicles Act, 1939, which relates to the duties of insurer to satisfy judgment against persons insured in respect of third party risk. Subsection (1) of section 96 provides that after a certificate of insurance is issued in favour of a person by whom a policy of third party risk is taken and then a judgment is obtained in respect of the liability created by the certificate the insurer is bound to pay the decretal amount the person entitled to the benefit of the decree as if he were the judgment- debtor. Subsection (2) further provides that no sum shall be payable by the insurer in respect of the judgment unless before or after the commencement of proceedings in which judgment is given, the insurer had notice through the Court. On being given such notice the insurer shall be entitled to be made a party to the proceedings to defend the action on any of the grounds so specified under that subsection. It is, therefore, indisputable that notice to the insurer is essential for the injured to give in a suit for compensation, which is filed by him. It is up to the insurer to participate in the proceedings or not and if he participates, he can defend the action on the grounds specifically available to him under subsection (2) of section 96 of the Motor Vehicles Act.
6. ' Insurance Act, 1938, was amended by Insurance (Amendment) Ordinance of 1970 (Ordinance XXV of 1970, and section 26 thereof amended section 47 and introduced therein 47-B. 47-C, 47-D, 47-E, 47-F, 47-G, 47-H, 47-I, 47-J, 47-K and 47-L. In these new provisions which have been added, section 47-G relates to the dispute over motor insurance claim. It is held by the Board in the impugned order that appellant/injured cannot be treated as a party to the dispute under this section as only two parties i,e,, insured and insured are intended to be covered for a dispute which arises from contractual liability under the insurance policy. This line of reasoning is not correct and is not consistent with the manifest intent as reflected by the relevant provisions on the subject. The language used in section 47-C is clear and unambiguous and caters for two contingencies firstly where a dispute arises under a policy insuring a motor vehicle, this dispute necessarily arises between insurer and insured. Secondly where dispute arises covering any liability of its owner arising out of use of the vehicle. Now this use of vehicle involves third party who accidentaly becomes injured and claims compensation from the owner of the policy, who in turn claims the same from the insurer. The section further provides that in both the cases any partly to the dispute may make an application for adjudication to the Claims Settlement Board. The use of words "any party to the dispute" is made on purpose to include the third party, i,e, injured as a legitimate party to the dispute arising from the use of the vehicle to be competes to make an application to the Board. Another reason which gives support to this view is that section 47-K which has also been added by the same amending Ordinance mentioned above provides that when application is made to the Board for the adjudication of a dispute, the Board shall, unless the insurer has himself made the application or has been made a party thereto, send to the insurer a copy of the application together with an intimation of the date fixed for hearing thereof and shall give him an opportunity of being heard. Now had the intention been to cover only two parties, i,e, insurer and the insured then this section mentioned above becomes redundant. It is very clear from this provision that it would apply in a case where dispute is between two parties and notice is to be given additionally to the insurer. It is, therefore, obvious that under section 47-C any party to the dispute covers injured also, who is a third party and such application for settlement of claim can be made by him to the Board.
7. ' The other reason assigned by the Board in the impugned order is that contents and terms and conditions of the insurance policy are not known to the appellant nor any breach of the terms and conditions of the policy has been alleged nor any dispute has arisen between the proper parties, On the other hand application made by ,the appellant to the Board clearly states that the said truck stood insured with the respondent insurance company vide Insurance Certificate No, EGI/HO/73-035415 since 6th November 1973 for a period of one year and the accident took place on 2-11-74. Appellant had sent legal notice to respondent No, 1 Muhammad Saeed owner of the truck and in that notice stated that he had found out about the insurance from the record of Excise and Taxation Office at Karachi. The record of the Board also shows that respondent No, 1 Muhammad Saeed owner of the truck and the insured was served and participated in the proceedings. Respondent No, 2 Muhammad Arif could not be served and attempts were being continued. Respondent No, 3 the insurance company was served and on their behalf Mr. Riazul Hassan Advocate had filed power but subsequently respondent No, 3 remained absent and was made ex parte vide order dated 17-5-1976. This shows that insured and insurer had both appeared before the Board. Dispute as clearly stated in the application was with regard to the compensation for injuries sustained in the accident. Written statement has been filed by respondent No, 1 Muhammad Saeed insured in which ownership of the truck involved in the accident is admitted and it is further stated in para. 8 of the written statement that the amount claimed is payable under the insurance policy for which respondent No, 3, i,e, the insurance company is liable. In these circumstances the remarks made by the Board in the impugned order as stated above are not in conformity with the record.
8. ' Reliance is placed in the impugned order on the decision in Nazar Muhammad v. Shafiq Ahmad (1). The ratio decidendi is different and not properly reflected in the impugned order. The main point decided in the reported case was with regard to the application for permission to sue in forma pauperis under Order XXXIII, rule 7, C. P. C. And as to what would be the effect when during the pendency of such application the plaintiff undertakes to pay the requisite court-fees. During the arguments counsel for the petitioner had feebly contended that the Manager of the Insurance Company with which the car involved in accident was insured against third party risk was also necessary party. In this context it was observed
(1) PLD 1963 Lah. 23 that the Manager was not liable for the reason that the contractual relationship was between the insurance company of which he was the Manager and the firm of the petitioners (owners of the motor car involved in the accident). It was further held that if the owners of the car are saddled with any liability then the question could arise whether or not, the insurance company with which the car was insured was liable to make payment. This is a well-settled principle with which nobody can have any cavil. First of all injured has to establish his claim against the insured and then insurer, who has limited defence available to contest in the proceedings as laid down in section 96 of the Motor Vehicles Act and if he had been given notice before or after commencement of proceedings, can be made liable to make the payment. This proposition does not help the Board to say that appellant/injured cannot be treated as a party to the dispute under section 47-C of the Insurance Act, which came into existence by way of amendment in the year 1970, particularly when the other relevant provisions of the said Act are very clear and support the assertion that injured can be a necessary party.
9. ' For the facts and reasons stated above I set aside the impugned order and remand the case back to the Board for further proceedings according to law, There will be no order as to the costs.