Will cross-objections filed in motor insurance cases remain if original appeal is dismissed/withdrawn? What Supreme Court held

The Supreme Court Bench of Chief Justice SA Bobde and Justices BR Gavai and Surya Kant on Thursday made pertinent observations regarding the right to file cross-objections in motor vehicle insurance cases..The Bench was dealing with an appeal filed against a 2016 verdict of the Patna High Court, which had dismissed the cross-objection filed by claimants in a motor vehicle insurance case as not maintainable..The motor insurance claim in question was filed after a man died in a road accident. In 2011, the Motor Accident Claims Tribunal (MACT) directed the insurance company to pay Rs. 2,47,5000 to the claimants as compensation..An appeal was filed by the insurance company before the Patna High Court challenging the MACT’s decision. In this appeal, the company denied that they were liable to pay the compensation award. However, the appeal proceedings were later dropped, and the company informed the High Court that it was no longer interested in reviving the appeal..In light of this development, the High Court disposed of the appeal. Further, by a judgment passed in 2016, the Court also dismissed the cross objection filed in the matter as not maintainable. This was in view of the withdrawal of the appeal filed by the insurance company, which, the High Court had found, had challenged only the liability to pay compensation itself and not the quantum of compensation..The High Court held that the claimants would only have the right to file a cross-objection if the insurance company had challenged the quantum of the compensation award. Instead, since the company had restricted its challenge only to the liability to pay the compensation, the cross-objection by the claimants was not tenable, the High Court held..Challenging the dismissal of the cross-objection, the claimants moved the Supreme Court in appeal..To decide on the dispute, the Supreme Court took note of the Court’s observations in Municipal Corporation of Delhi & Ors. vs. International Security & Intelligence Agency Limited. Whereas that case concerned the filing of cross-objections in arbitration appeal cases, it was noted that the right to prefer a cross-objection partakes the right to appeal. Inter alia, the Bench observed,.“… taking any cross-objection to the decree or order impugned is the exercise of right of appeal though such right is exercised in the form of taking cross-objection. It has been held, that the substantive right is the right of appeal and the form of cross objection is a matter of procedure.”.The Court noted that when it comes to Arbitration law, particularly in view of Section 39 of the Arbitration Act, 1940, “the view taken by the Court is that the cross objection would be tenable only if appeal is validly tenable.”.However, this is not the case when it comes to motor vehicle insurance law, the Bench pointed out..A perusal of Section 173 of the M.V. Act would reveal that the said provision does not restrict the right to file an appeal as is restricted under Section 39 of the Arbitration Act, 1940.Supreme Court.As far as the instant case was concerned, the Court noted that the Bihar Motor Vehicles Rules, 1992 also provided that the relevant provisions of the Code of Civil Procedure (CPC) would apply mutandis mutandis, when it comes to appeals preferred in insurance cases before the High Court under Section 173 of the Motor Vehicle Act (which deals with appeals). The relevant provisions of the CPC in this case were Orders XLI and XXI in the First Schedule to the CPC..While this is the case, the Court pointed out that Order XLI, CPC specifically provides that even if an original appeal is withdrawn or dismissed, the cross-objection filed in the matter would have to be heard..“Subrule (4) of Rule 22 of Order XLI of the CPC specifically provides, that even if the original appeal is withdrawn or is dismissed for default, the cross-objection would nevertheless be heard and determined after such notice to the other parties as the Court thinks fit.”Supreme Court.On the facts, the Court also took note that the insurance company in this case had actually challenged the award as whole..“As a matter of fact, it could be seen from the prayer clause in the appeal preferred by the respondents herein (Insurance Company) before the High Court that the entire award was challenged by the respondents – Insurance Company. Not only that, but the appellants herein (the claimants) were also impleaded as party respondents to the said appeal.”.Such being the case, the Court found that the High Court had erred in dismissing the cross-objection filed by the claimants. The Supreme Court held,.“… even if the appeal of the Insurance Company was dismissed in default and the Insurance Company had submitted that they were not interested to revive the appeal, still the High Court was required to decide the cross-objection of the appellants herein on merits and in accordance with law.”.With these observations, the Supreme Court remitted the matter back to the High Court so that the cross-objection may be decided on merits..[Read the Judgment]