JUDGMENT <NAME>, J.

1. A common question of law as to whether it is open to an insurance company to challenge the quantum of compensation awarded by <ORG> in an appeal filed in <ORG> arises in the three appeals which are under consideration by us. The matter was referred to <ORG> because when one appeal, i.e., Civil Misc. First Appeal No. 80 of 1977, came up for disposal before a <ORG> of this court, comprising <NAME>, Chief Justice and <NAME>, their Lordships were of the opinion that there was some divergence of opinion on this subject in the different <ORG> in the country and, consequently, they made the following order of reference on October 27, 1979.

" The point sought to be raised in this appeal relates to the quantum of compensation awarded by <ORG> in favour of the respondents.

A preliminary objection has been raised on behalf of the respondents that it is not open to the appellant to challenge the quantum of compensation awarded by the <ORG>. The argument is founded on the language employed in Section 96(2) and Sections 110C and 110D of the Motor Vehicles Act.

Mr. <NAME> has sought to meet this point by enunciating the view that it is open to the insurer to challenge the very quantum of compensation. Sections 96(2) read with Sections 110C and 110D do not operate as a bar to the raising of such a plea in the appeal.

It'seems that there is divergence of opinion among the Indian <ORG> on the question of law debated before us. <CITATION> , AIR 1977 All 330 ;  ACJ 252, <CITATION> , AIR 1971 Mys 207 and <CITATION> , AIR 1969 MP 190;  ACJ 164, support the contention of the respondent, whereas <CITATION>  MACJ 103;  ACJ 101, have laid down the contrary view. We are given to understand that there is a recent judgment of this court rendered in Civil Misc. First Appeal No. 15 of l978, ( <CITATION> ) dealing with the point at issue.

In view of the divergence of opinion expressed by the Indian <ORG> on this subject and in view of the recent judgment of this court, it would be appropriate to refer the case to <ORG>.

Accordingly the case is referred to <ORG> for an authoritative pronouncement. The date and the venue will be communicated to the counsel for the parties. "

2. In the other two appeals also, this question was involved and they were also directed to be heard along with Civil Miscellaneous First Appeal No. 80 of 1977.

3. The fact in all the three appeals are somewhat different and I propose to first deal with the legal question and then deal with each of the three appeals on merits.

4. At the outset, Lwould like to point out, with due respect to the referring Bench, that in all the judgments noticed in the order of reference, there is no divergence of opinion and all the judgments noticed therein lay down the proposition that it is not open to an insurer to question an award of the <ORG> on the question of quantum only except on the grounds contained in Section 96(2) of the M.V. Act. This position is conceded by Mr. <NAME> also but his argument is that Section 96(2) of the Act is not exhaustive and that there are no limitations prescribed by Section 110D of the Act, of the nature and character of Section 96(2) of the Act, and, therefore, an insurer has a right to challenge an award of the <ORG> on all the grounds, including the challenge to the quantum of compensation, in an appeal in <ORG>. Before proceeding to examine these submissions, it would be advantageous to notice some of the relevant provisions of the Act.

" Section 96 . Duty of insurers to satisfy judgments against persons insured in respect of third party risks.--(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 as 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 procedings, or in respect of any judgment so long as execution is stayed thereon pending an appeal; and an insurer to whom notice of the bringing of any such proceeding is so given shall be entitled to be made a party thereto and to defend the action on any of the following grounds, namely:--

(a) that the policy was cancelled by mutual consent or by virtue of any provision contained therein before the accident giving rise to the liability, and that either the certificate of insurance was surrendered to the insurer or that the person to whom the certificate was issued has made an affidavit stating that the certificate has been lost or destroyed, or that either before or not later than fourteen days after the happening of the accident the insurer has commenced proceedings for cancellation of the certificate after compliance with the provisions of Section 105 ; or

(b) that there was been a breach of a specified condition of the policy, being one of the following conditions, namely :--

(i) a condition excluding the use of the vehicle --

(a) for hire or reward, where the vehicle is on the date of the contract of insurance a vehicle not covered by a permit to ply for hire or reward, or

(b) for organised racing and speed testing, or

(c) for a purpose not allowed by the permit under which the vehicle is used, where the vehicle is a public service vehicle or a goods vehicle, or

(d) without side-car being attached, where the vehicle is a motor cycle ; or

(ii) a condition excluding driving by a named person or persons or by any person who is not duly licensed, or by any person who has been disqualified for holding or obtaining a driving licence during the period of "

disqualification ; or

(iii) a condition excluding liability for injury caused or contributed to by conditions of war, civil war, riot or civil commotion ; or

(c) that the policy is void on the ground that it was obtained by the non-disclosure of a material fact or by a representation of fact which was false in some material particular.

(2A) Where any such judgment as is referred to in Sub-section (1) is obtained from a court in the State of Jammu and Kashmir or in a reciprocating country and in the case of a foreign judgment is, by virtue of the provisions of Section 13 of the Code of Civil Procedure, 1908, conclusive as to any matter adjudicated upon by it, the insurer (being an insurer registered under the Insurance Act , 1938, and whether or not he is registered under the corresponding law of the reciprocating country) shall be liable to the person entitled to the benefit of the decree in the manner and to the extent specified in Sub-section (1), as if the judgment were given by a court in India:

Provided that no sum shall be payable by the insurer in respect of any such judgment unless, before or after the commencement of the pro ceedings in which the judgment is given, the insurer had notice through the court concerned of the bringing of the proceedings and the insurer to whom notice is so given is entitled under the corresponding law of the State of Jammu and Kashmir or the reciprocating country, to be made a party to the proceedings and to defend the action on grounds similar to those specified in Sub-section (2).

(3) Where a certificate of insurance has been issued under Sub-section (4) of Section 95 to the person by whom a policy has been effected, so much of the policy as purports to restrict the insurance of the persons insured thereby by reference to any conditions other than those in Clause (b) of Sub-section (2) shall, as respects such liabilities as are required to be covered by a policy under Clause (b) of Sub-section (1) of Section 95 , be of no effect:

Provided that any sum paid by the insurer in or towards the discharge of any liability of any person which is covered by the policy by virtue only of this sub-section shall be recoverable by the insurer from that person.

(4) If the amount which an insurer becomes liable under this section to pay in respect of a liability incurred by a person insured by a policy exceeds the amount for which the insurer would apart from the provisions of this section be liable under the policy in respect of that liability, the insurer shall be entitled to recover the excess from that person.

(5) In this section the expressions "material fact" and "material particular " mean, respectively, a fact or particular of such a nature as to influence the judgment of a prudent insurer in determining whether he will take the risk, and, if so, at what premium and on what conditions, and the expression "liability covered by the terms of the policy" means a liability which is covered by the policy or which would be so covered but for the fact that the insurer is entitled to avoid or cancel or has avoided or cancelled the policy.

(6) No insurer to whom the notice referred to in Sub-section (2) or sub-Section (2A) has been given shall be entitled to avoid his liability to any person entitled to the benefit of any such judgment as is referred to in Sub-section (1) or Sub-section (2A) otherwise than in the manner provided for in Sub-section (2) or in the corresponding law of the State of Jammu and Kashmir or of the reciprocating country, as the case may be."

Section 110B lays down :

" On receipt of an application for compensation made under section 110A <ORG> shall, after giving the parties an opportunity of being heard, hold an enquiry into the claim and may make an award determining the amount of compensation which appears to it to be just and specifying the person or persons to whom compensation shall be paid; and in making the award <ORG> shall specify the amount which shall be paid by the insurer."

Section 110C provides:

" Procedure and powers of Claims Tribunals.--(1) In holding any inquiry under Section 110B , <ORG> may, subject to any rules that may be made in this behalf, follow such summary procedure as it thinks fit.

(2) <ORG> shall have all the powers of <ORG> for the purpose of taking evidence on oath and of enforcing the attendance of witnesses and of compelling the discovery and production of documents and material objects and for such other purposes as may be prescribed ; and <ORG> shall be deemed to be <ORG> for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898 (Vof 1898).

(2A) Where in the course of any inquiry, <ORG> is satisfied that--

(i) there is collusion between the person making the claim and the person against whom the claim is made, or

(ii) the person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded by it in writing, direct that the insurer who may be liable in respect of such claim, shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made.

(3) Subject to any rules that may be made in this behalf, <ORG> may, for the purpose of adjudicating upon any claim for compensation, choose one or more persons possessing special knowledge of any matter relevant to the inquiry to assist it in holding the inquiry."

"110D. Appeals.--(1) Subject to the provisions of Sub-section (2), any person aggrieved by an award of a Claims Tribunal may, within ninety days from the date of the award, prefer an appeal to <ORG>:

Provided that <ORG> may entertain the appeal after the expiry of the said period of ninety days if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.

(2) No appeal shall lie against any award of <ORG>, if the amount in dispute in the appeal is less than two thousand rupees."

5. Thus, Section 96 of the Act enables the claimant, the assured and the insurer, interested in any litigation arising out of a motor vehicle accident to be made parties to the claim petition. The section maintains the respective rights and liabilities of one qua the other. Whereas Sub-section (1) of Section 96 is only a declaratory provision; it deems an insurer to be a judgment-debtor when a decree is passed against an insured under certain circumstances rendering him liable to a third party, Sub-section (2) of this section lays down that an insurer, to whom notice of the proceeding is given, would be entitled to be made a party thereto and to defend the action on any of the grounds specified in various clauses of the sub-section. Section 110C (2A) provides that in a case where <ORG> is satisfied that there is collusion between the insured and the claimant it may, for reasons to be recorded in writing, direct that the insurer, who may ultimately be found liable in respect of the claim, if not already a party, be impleaded as a party to the proceedings and the insurer so impleaded shall have the right to resist the claim on all or any of the grounds which are available to an insured. Section 110D provides that an appeal may be filed in <ORG> against an award of the <ORG> if the amount in dispute in the appeal is not less than two thousand rupees. Such an appeal may be filed within 90 days from the date of the award, although <ORG> can, if satisfied that the appellant was prevented by sufficient cause to file the appeal in time, condone the delay.

6. From a plain reading of Section 96 it at once emerges that an insurer apart from the rights under the statute has no right, to be impleaded as a party to a petition for compensation and once impleaded as a party, it can exercise only those rights which are provided to it by the statute and it is Section 96(2) which details the grounds which are available to an insurer. A reference to Sub-section (6) of Section 96 which provides that no insurer shall be entitled to avoid his liability except in the manner provided for in Sub-section (2) also support this view. Dealing with this aspect of the law, their Lordships of <ORG> in <CITATION>  29 Comp Cas (Ins) 60, 64; AIR 1959 SC 1331, 1333 opined as follows:

" To start with it is necessary to remember that apart from the statute an insurer has no right to be made a party to the action by the injured person against the insured causing the injury. Sub-section (2) of Section 96 , however, gives him the right to be made a party to the suit and to defend it. The right, therefore, is created by statute and its content necessarily depends on the provisions of the statute. The question then really is, what are the defences that Sub-section (2) makes available to an insurer ? That clearly is a question of interpretation of the sub-section.

Now the language of Sub-section (2) seems to us to be perfectly plain and to admit of no doubt or 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. 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. When the grounds of defence have been specified, they cannot be added to. To do that would be adding words to the statute.

Sub-section (6) also indicates clearly how Sub-section (2) should be read. It says that no insurer to whom the notice of the action has been given shall be entitled to avoid his liability under Sub-section (1) 'otherwise than in the manner provided for in Sub-section (2)'. Now the only manner of avoiding liability provided for in Sub-section (2) is by successfully raising any of the defences therein mentioned. It comes then to this that the insurer cannot avoid his liability except by establishing such defences. Therefore, Sub-section (6) clearly contemplates that he cannot take any defence not mentioned in Sub-section (2). If he could, then he would have been in a position to avoid his liability in a manner other than that provided for in subjection (2). That is prohibited by Sub-section (6).

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

7. Though, in the <ORG> judgment, the question involved directly was not as to what defences are available to an insurer, in an appeal against an award, because that case arose at a stage before any award was made, yet the guidelines given in the judgment and the interpretation placed on Section 96 is helpful. The following observations of the <ORG>, throw a flood of light on the question which is before this Bench (p. 1335 of AIR 1959 and p. 66 of 29 Comp Cas (Ins.)):

" The statute has no doubt created a liability in the insurer to the injured 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 furthermore not convinced that the statute causes any hardship. First, the insurer has the right, provided he has reserved it by the policy, to defend the action in the name of the assured and if he does 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."

8. Apart from the judgment of <ORG>, this precise question has been the subject-matter of debate before various <ORG> in the country. Reference to some of those judgments, before considering the validity of the submission of the learned counsel for the insurance company before us, would be helpful.

9. In <NAME> v. <NAME> [1966] ACJ 101, <ORG> held that an insurer cannot question the quantum of compensation awarded by a <ORG> in an appeal, except on the defence available to it under Section 96(2) of the Act. The court repelled the argument raised on behalf of the insurance company that since it was a party to the action before the <ORG>, it was entitled to challenge the award on all grounds available at law, including the grounds on which the insured himself could have relied.

10. In <ORG> v. <NAME> [1969] ACJ 60, <ORG> had also an occasion to consider this question in some depth. After noticing a number of authorities the court opined ;

" An insurance company is not entitled to raise any defence other than the defences enlisted in Section 96(2) of the Motor Vehicles Act, 1939. It cannot, therefore, be permitted to dispute the quantum of compensation awarded by <ORG>. It makes no difference whether the proceedings for the recovery of compensation were by way of a suit in a civil court, before the Amendment Act of 1956, or by way of an application in <ORG>, after the said amendment. It also makes no difference whether the insurer entered appearance and filed his written statement after a notice was issued to him under the provisions of Section 96(1) of the said Act or whether he has impleaded as a party at the very inception."

11. A Division Bench of <ORG> in <CITATION>  ACJ 164; AIR 1970 MP 190 held that in an appeal under Section 110 filed by an insurance company, where the insured had not filed any appeal or applied for being transposed as an appellant, the appellant could be permitted to raise only those defences which are prescribed by Section 96(2) of the Act and no other defence. <CITATION>  ACJ 86; AIR 1971 MP 5 ;  42 Comp Cas 102 a Full Bench of <ORG> laid down that Section 96(2) limits the defences available to the insurer, where the insured is held liable to pay compensation. However, the insurer can in the name of the insured raise every such defence as an insured can raise, including the absence of negligence, provided it has reserved that right by policy of insurance.

12. This question also came up for consideration before Mr. Justice <NAME> (as his Lordship then was) in <CITATION>  ACJ 219 (Ker) and his Lordship held that an insurer was entitled to take up only those defences as are specified in Section 96(2) of the Act and that it could not question the award of the <ORG> on any other grounds.

13. In <ORG> v. <NAME> [1972] ACJ 261, it was opined that apart from the defences which came within the scope of Section 96(2) of the Act, an insurer could not jtake up any other defence, either in the original claim petition or in an appeal arising from an award given by the <ORG>.

14. <CITATION>  ACJ 420 (Mys); AIR 1973 Mys. 107, itwasopined (at p. 107 of AIR 1973 Mys):

"...it is clear that insurer can urge all the defences open to the insured, only when the insurer defends the action in the name of the insured. But, in the present case, it has not been shown that before the <ORG>, the appellant defended the action in the name of the insured. On the other hand, the insured (the owner of the lorry) and the driver of the lorry who were respondents 1 and 2 before the <ORG>, had filed their objections and the appellant had filed a separate statement of objections. Unless the appellant had defended before the <ORG>, the action in the name of the insured, the only defences which it (the appellant) could urge before the <ORG> and which it can urge in this appeal are those specified in Clauses (a) to (c) of Sub-section (2) of Section 96 of the Act."

15. Similar view was also expressed by a Single Judge of <ORG> in <NAME> v. Dunna Mukanda Rao [1973] ACJ 229 and by <ORG> in <CITATION>  ACJ 18. <ORG> in <CITATION>  ACJ 159 after holding that an insurance company is not allowed any plea outside the scope of the pleas specified in Section 96(2) , added that in case the insurance company has reserved a right in the policy itself to defend an action in the name of the insured, it could raise all such pleas as may be open to an insured both at the trial of the petition as well as in an appeal against the award.

16. The matter came up for consideration before a Full Bench of <ORG> in <CITATION> , AIR 1976 <NAME> 175 ;  ACJ 239. In that case, though the insured as well as the insurer had contested the claim before <ORG>, after the award, an appeal was filed only by the insurance company and not by the insured. In that appeal both the quantum of compensation as also the liability of the insured on grounds of negligence were challenged by the insurance company. The Full Bench, after a review of a catena of authorities, came to the conclusion that the insurance company could defend an action only on the grounds specified in Section 96(2) of the Act and not on other grounds unless it had obtained leave of <ORG> under Section 110C(2A) of the Act. The mere non-filing of the appeal by the insured, however, was not considered enough for allowing the insurance company to challenge the award on the grounds other than those specified in Section 96(2) of the Act. The following observations of <ORG> are significant (at p. 191 of AIR 1976 <NAME>):

" As the facts of this case show, the insured had entered contest and there is no reason to hold in the absence of any allegation, and something more, that the insured has been colluding with the claimant. Leave of the <ORG> had admittedly not been taken under Section 110C(2A) of the Act. There exists a clause in the policy bond authorising the insurer to defend in the name of the insured. As we have already noted, the insured and the insurer simultaneously wanted to defend, the insured defending in his own name and the insurer in its own name. The term in the policy bond did not authorise such defence by the insurer. In the instant case, therefore, to the insurer the restriction under Section 96(2) of the Act applies and he could not travel beyond the restriction imposed by the statute either before the <ORG> or in appeal before this court. None of the grounds in the memorandum of appeal appertains to a defence raised within Section 96(2) of the Act and what is being mainly challenged is the quantum and liability on a ground not covered by Section 96(2) of the Act. On these grounds the insurer was not entitled to contest the claim for the award. The appeal filed on its behalf, therefore, is not maintainable."

17. Similar view was reiterated in <ORG> (now <ORG>) v. <NAME> [1977] ACJ 283.

18. A Division Bench of <ORG> in <CITATION>  ACJ 137 opined as follows:

"That apart Section 110C (Sub-section (2A)) provides that where in the course of any inquiry, <ORG> is satisfied that (1) there is collusion between the person making the claim and the person against whom the claim is made has failed to contest the claim, it may for reasons to be recorded by it in writing, direct that the insurer who may be liable in respect of such claims shall be impleaded as a party to the proceeding and the insurer so impleaded shall thereupon have the right to contest the claim on all or any of the grounds that are available to the person against whom the claim has been made. None of the conditions as provided in this section exists in the present case. This sub-section empowers an insurer to contest the claim for compensation only if these conditions are satisfied. Unless these conditions are satisfied, the insurer cannot contest the claim on any ground other than those specified in clauses (a) to (c) of Sub-section (2) of Section 96 of the Act."

19. A Division Bench of <ORG> also had an occasion to consider the point at issue in <CITATION> , AIR 1977 All 330;  ACJ 252. Their Lordships stated the law thus (at p. 334 of AIR 1977):

" Almost every other <ORG> has taken the view that the defences open to an insurance company in a claim under Section 110 of the Motor Vehicles Act are restricted to those specified in Section 96 of the Act, See <ORG> v. <NAME>  ACJ 156 (Cal), <NAME> v. State Insurance Officer  ACJ 219 (Ker), <ORG> v. <NAME>  ACJ 49 (Orissa), <NAME> v. Prabhakar  ACJ 1; AIR 1971 MP 145, <CITATION>  ACJ II (Delhi), <ORG> v. <NAME>  ACJ 245 (All), <NAME> v. Gurbaksh Singh  ACJ 460; AIR 1973 Raj 317, <NAME> v. <NAME>  ACJ 222 ( <CITATION>  ACJ 420; AIR 1973 Mys 107.

We accordingly find that it is not permissible for the appellant in F.A.F.O. No. 422 of 1975 to assail the findings of <ORG> on merits. It may, however, be added that, as we shall show while considering the appeal by the truck owner even on merits there is no substance in this appeal."

20. <CITATION>  ACJ 526, a Division Bench of <ORG> following the law laid down in <CITATION>  ACJ 101, held that an insurance company cannot avoid liability except on the grounds contained in Section 96(2) of the Act.

21. <ORG> and Haryana also reiterated the same view following its earlier judgments and the <ORG> judgment in Captain <NAME>'s case [1959] 29 Comp Cas (Ins.) 60, in <CITATION>  ACJ 203.

22. <CITATION>  ACJ 169 (P & H), it was held that an insurance company cannot raise any argument regarding quantum of compensation either before the tribunal or in an appeal.

23. A Division Bench of <ORG> in <NAME> v. <NAME> [1980] ACJ 470, again reiterated that an insurer cannot question the quantum of compensation under the defences enumerated in Section 96(2) of the Act.

24. <ORG> of <ORG> also took the same view in Kantilal and Bros. v. <NAME>, AIR 1979 Cal 152; [1980] ACJ 501. Their Lordships stated the <ORG> thus (at p. 154 of AIR 1979 (Cal)):

" Now, in view of the provision of subjection (2) of Section 96 of the the Motor Vehicles Act, 1939, the appeal challenging the claim of the petitioners is limited within the grounds mentioned therein. Clearly the insurer, here the insurance company, as appellant had no available ground to challenge the award in the appeal. The insurer-appellants cannot challenge the quantum of compensation fixed by the <ORG> and have, therefore, no ground to urge in this appeal challenging the award. In this view of the matter, the insurance company had no legal ground to prefer this appeal to challenge the award."

25. Thus, from a review of the aforesaid judgments it becomes clear that an insurer cannot resist the claim before the <ORG> or challenge the award of the <ORG> in appeals on grounds other than those enumerated in Section 96(2) of the Act, except where the insurer has reserved a right in the policy of insurance to defend the claim in the name of the assured himself or where the <ORG> or the court is satisfied that the assured and the claimant have colluded with each other and in exercise of the powers under Section 110C(2A) have granted permission to the insurer to defend the claim on all the grounds on which an assured could defend the claim. An insurer can, however, limit his liability under the terms of insurance, otherwise the liability extends to the statutory limits set out in the Act itself.

26. I shall now consider the arguments raised by Mr. <NAME>.

27. Mr. <NAME> has argued that Section 110D of the Act does not impose any limitation on the grounds on which a party can file an appeal against an award of the <ORG>. It is urged that Section 96(2) is not exhaustive and that it does not cover cases in which compensation has been granted arbitrarily and that in any event the limitations contained in it cannot be read into Section 110D to restrict the grounds on which an appeal can be filed. It is urged that the insurer on whom the ultimate liability to satisfy the award falls, must have the right to question the quantum of compensation awarded by the <ORG>.

28. To appreciate the arguments raised at the <ORG>, it would be relevant to remember that the Motor Vehicles Act is a complete code in itself. Chapter 8 of the Act deals with matters relating to claims for compensation arising out of a vehicular accident. Sections 94 to 96 of the Act provide for compulsory insurance of a motor vehicle before it can be used on any public road and lay down the liability of the insurer to pay to the claimant directly, whenever there is a decree or the judgment of a tribunal or a court, as the case may be. It also fixes the limits of the pecuniary liability on the insurer in certain cases. Section 96 provides that the liability of an insurer shall arise only if the insured is found liable because the policy of insurance is a policy of indemnity. Section 97 deals with the right of a third party against the insurer on the insolvency of the insured while Section 98 casts a duty on a person against whom a claim is made to give information as to his insurer. Section 103 sets out the effect of a certificate of insurance policy. Where the specified sum is less than the sum payable under Section 95(2) of the Act, the maximum liability of the insurer will be as laid down in Section 95(2) . However, if the sum specified in the insurance policy exceeds the sum fixed under Section 95(2) the maximum liability shall be to the extent of the sum specified in the insurance policy. Sections 110A to 110F were introduced in the Act by Act No. 100 of 1956 to substitute the ordinary remedy of a civil suit by a special remedy, which is summary in nature. Section 110 provides for the constitution of <ORG> and confers jurisdiction on it to adjudicate upon claims for compensation in respect of accidents involving death or bodily injuries to persons resulting from a motor vehicle accident. Section 110A deals with the procedure for setting up a claim for compensation. Section 110B relates to an award made by the <ORG>, after an enquiry into the claim. Section 110C deals with the procedure and powers of the <ORG>, while Section 110D provides for an appeal from an award made by the Claims <ORG>. Section 110E provides for the recovery, from the insurer, of compensation money awarded by the <ORG>, as arrears of land revenue and Section 110F excludes the jurisdiction of civil courts to entertain any question relating to claims for compensation, arising out of a motor vehicle accident, in such areas where there exists a duly constituted Claims <ORG>. This, broadly speaking, is the scheme of Chapter 8 of the Act and it is this scheme which one has to keep in mind while appreciating the contentions raised at the <ORG>.

29. An award made under Section 110B has three components: firstly, it specifies the amount of compensation, if any, payable to the claimants, which appears to the <ORG> to be " just and reasonable " ; secondly, it specifies the person or persons to whom the compensation is to be paid ; and, thirdly, it specifies the amount out of the awarded compensation which is required to be paid by the insurer. In specifying this sum, the <ORG> has to take into account both the contractual as well as the statutory limits fixed under Section 95 of the Act.

30. The argument of Mr. <NAME> that the limitations which are set out in Section 96(2) of the Act in the matter of defending a claim petition before the <ORG> do not extend to appeals filed under Section 110D of the Act by an insurer or that Section 96(2) is not exhaustive is not sound. The limitations which are set out in Section 96(2) of the Act are implicit and inherent in Section 110D of the Act and have to be read into that section. Before a person can file an appeal under Section 110D of the Act, he has to be an " aggrieved party ". The expression "aggrieved party " contains the inherent limitations in the matter of filing an appeal. The expression " aggrieved " in the context of Section 110D of the Act has to be interpreted and understood in common parlance. (See in this connection <CITATION> , AIR 1976 SC 578). It is not possible to give an exhaustive definition of the expression " aggrieved party " and the expression has to be interpreted in the context in which it appears in a particular statute. As a general principle, it has been held by the courts that a person who feels disappointed with the result of a case is not necessarily a " person aggrieved ", to be so classified, he must be disappointed of a benefit which he would have received if the order had gone the other way. The order must cause him the legal grievance by wrongfully depriving him of something. If he was not entitled to that relief in the first place, he cannot be aggrieved if the relief was denied to him but if he was entitled to it and the same has been denied to him, he would be a " person aggrieved ". Thus, a party would be regarded as an " aggrieved party" for the purposes of Section 110D where the claim or defence available to that party did not find favour with the <ORG> in making an award. The party would be " aggrieved " only to that extent and no further. It is unimaginable that an insurer, which before the <ORG> had only limited defences can file an appeal on other grounds also. An appeal is a rehearing of the claim petition and is, therefore, a continuation of it. It is elementary that in an appeal, a party cannot be allowed to raise a defence which was not available to it in the forum below. It, therefore, follows that an "aggrieved party " for the purpose of Section 110D would only be such a party which is aggrieved of the award on the ground that its defence or claim as was available to it and was set up before the <ORG>, did not find favour with it. If a particular defence was not available to a party before the <ORG>, the question of it not having found favour with the <ORG> does not arise because no party can be aggrieved of any adverse decision on a ground which was not available to it. Thus, it is manifest that whereas an insured would have the right to challenge an award on all the grounds which were available to it before the <ORG>, an insurance company would be entitled to challenge the award only on the grounds which were available to it under Section 96(2) of the Act.

31. Before the Tribunal an insurer can resist the claim against him in two ways: (1) by urging that the insurer is not liable even though the insured may be liable, and (2) by pleading that the insurer is not liable because the insured is not liable.

32. Under the first head, an insurer is entitled to escape his liability by showing that the policy of insurance is void as it had been obtained on false representation or concealment of material facts or that the policy had been cancelled before the accident or that there had been a breach of any condition of the policy and the like grounds. The insurer is not entitled to raise any other ground of defence to avoid his liability, where the insured is found to have incurred the liability because of the simple reason that a policy of insurance being in the nature of a contract of indemnity, the insurer takes upon himself to discharge the liability of the insured arising out of a motor vehicle accident, subject, of course, to the terms and conditions of the policy and the maximum statutory liabi lity. He cannot, under the first head, avoid his liability except on the grounds mentioned above. When a party takes out a policy of insurance, it does so after paying the premium for the sum assured and unless the contract between him and the insurer can be avoided, the insurance com pany which has been benefited by the premium cannot back out of its commitment to indemnify the insured. This is manifest from the plain phraseology of Section 95(5) of the Act, which reads thus:

" Notwithstanding anything elsewhere contained in any law, a person issuing a policy of insurance under this section shall be liable to indemnify the person or classes of persons specified in the policy in respect of any liability which the policy purports to cover in the case of that person or those classes of persons. "

33. However, no sum shall be payable by an insurer under Section 96(1) in respect of any award unless before or after the commencement of the proceeding in which the award is given, the insurer had notice through the <ORG> of the bringing of those proceedings. It is only an insurer to whom notice of the bringing of any such proceedings is given who shall be entitled to be made a party to the proceedings and to defend the action on the grounds contained in Section 96(2) of the Act, unless the insurer had reserved in the policy of insurance a right to defend the action in the name of the insured, in which event he can defend on all the grounds on which the insured could defend.

34. Under the second head, an insurer can plead that there was no negligence on the part of the insured and raise all such pleas in defence to the claim as are available to an insured to show that the insured had not incurred any liability. This, however, can be done by the insurer only if the insurer had reserved in the policy of insurance a right to defend the claim in the name of the insured. If there is no such reservation made in the policy of insurance, then Section 96(2) strictly debars an insurer from taking any defence, other than those enumerated therein, to show that the insurer was not liable although the insured has incurred liability.

35. Where an insurer finds that it has not reserved such a right but that the insured and the claimant have colluded with each other, as it is a possibility that cannot be ignored, it is open to an insurer to bring that fact to the notice of the <ORG> and seek its permission under Section 110C(2A) to contest the claim on all the grounds available to an insured. On being satisfied that there is such a collusion, the <ORG> would grant permission and on such permission being granted, the insurer steps into the shoes of the insured and defends the claim on all available grounds If the award goes against the insurer, it can challenge it in appeal also on all such grounds on which it had contended the claim before the <ORG>. Right of appeal against an award of the <ORG> is the creation of the statute. The Act had confined the right to avoid the liability of the insurer to the injured on certain grounds specified in it. It is not open to this court to add to those grounds on the plea that hardship would be caused to the insurer. An insurer can avoid any hardship by remaining vigilant during the trial of the claim petition and also by providing, in the policy of insurance, for a right to defend the action in the name of the assured and that he had full liberty to do. Where the insurer has failed to do it, he cannot avoid the liability if the insured is found liable.

36. The aforesaid discussion leads to the conclusion (1) that an insurer is not entitled to resist the claim or the award, where the insured has been found liable, on grounds not enumerated under Section 96(2) of the Act; (2) where the term of the policy of insurance provides that the insurer has the right to defend the action in the name of the insured, the insurer shall have the right to defend and, if he does so, all the defences as are open to the insured can be urged by the insurer both to resist the claim as well as the award; (3) if it appears that the claimant and the insured have colluded, then after receiving permission of the <ORG> under Section 110C(2A) the insurer can defend the claim as well as the award on all grounds which are available to the insured; and (4) except for the aforesaid contingencies, an insurer cannot question an award in appeal and unless the case of the insurer is covered by (2) or (3) conclusions, as noticed above, an insurer cannot, in an appeal against the award, question the quantum of compensation only.

37. It is in the light of the aforesaid conclusions that I shall now deal with the three appeals :

Civil Misc. First Appeal No. 80 of 1977 In this case, respondents Nos. 1 to 3 filed a petition for grant of compensation amounting to Rs. 50,000 before <ORG> in 1973, against the appellant and respondents Nos. 4, 5 and 7 (the insured and his driver) on the ground that <NAME> had died as a result of accident caused by the rash and negligent driving of Taxi No. JKT 699 at Badshah Chowk, Srinagar, on 23rd April, 1973. During the proceedings the owners of the vehicle were set ex parte and the claim for compensation was resisted only by the appellant and the driver of the vehicle. From the pleadings of the parties the following issues were framed ;

1. Whether the deceased, <NAME>, had died due to the injuries sustained in the accident that took place on 23rd April, 1973, at Badshah Chowk caused by <NAME> who was driving the vehicle No. JKT 699 while the deceased was crossing the road ? OPP.

2. Whether the said accident was caused by the rash or negligent driving of <NAME>, driver, while driving his motor taxi No. JKT 699 ? OPP.

3. In case issue Nos. 1, 2 are proved, to what amount of compensation the petitioners are entitled and in what proportion and from whom ? OPP.

4. Whether the vehicle involved in the accident was insured with NA No. 3 ?

5. Whether the claim petition does not comply with the requirement of Section 110A of the M.V. Act and, as such, is liable to be dismissed ? OP No. 3.

6. Whether the petition is not signed by the petitioners or any person representing them and, as such, is liable to rejection. If so, how......? OP NA 3. 7. Whether the deceased himself was negligent and rash in crossing the road and the driver of the said taxi could not avoid the said accident ? OP NA's. 8. Whether the claim petition is not within time and is liable to be dismissed. If so, how...... ? OP NA 5. 9. Whether the vehicle involved in the accident had been sold by NA 2 to NA 1 on 19th April, 1973. If so, what is its effect on the case. OP NA 2. 38. The insurer had neither sought the permission of the <ORG> under Section 110C(2A) nor had it reserved any right in the policy to defend the claim in the name of the insured. As a matter of fact, perusal of the record reveals that the insurer did not, at the trial of the petition, resist the action on grounds other than those enumerated under Section 96(2) of the Act.

39. The learned <ORG> found that the accident had taken place due to the negligence of <NAME>, driver of taxi No. JKT 699, and that the deceased could not be held liable for any contributory negligence. The <ORG> also found that at the time of his death, the deceased had an income of Rs. 205 p.m. and that his age at the time of the accident was 58 years. An amount of Rs. 30,000 was awarded as compensation and the liability to pay that amount was fixed on the appellant. Neither the driver nor the owner filed an appeal and the award has been questioned by the insurance company only. A preliminary objection has been raised by the learned counsel for the respondent to the maintainability of the appeal. It is urged that it is not open to the insurer to question the finding of negligence or to challenge the award on quantum of compensation. It is then argued that the respondent has filed cross-objections and claimed enhancement of compensation and that these cross-objections merit acceptance.

40. Since, as already noticed, the insurance company had not reserved in the insurance policy any right to defend in the name of the insured and further since the insurance company did not seek any leave of the <ORG>, expressly or impliedly, under Section 110C(2A) to defend in the name of the insured, who had been set ex parte, it is not now open to the appellant to challenge the quantum of compensation or the finding of the <ORG> about negligence of the driver of taxi No. JKT 699. Thus, the preliminary objection has merit and must succeed. The compensation awarded is not outside the limits of the liability of the insurer, under the policy or the statute, and as such the insurer cannot avoid the liability to pay the awarded amount.

41. This appeal, therefore, is not competent and consequently the cross-objections also must be dismissed. Even otherwise, the cross-objections have no merit and there is no scope for enhancement of the compensation. The <ORG> while awarding compensation took into account that at the time of death, the deceased aged 58 years, was having an income of Rs. 205 p. m. and taking the life span as 70 years, the <ORG> awarded compensation by using the multiple of 12 years for the yearly income of the deceased, i.e., (205 X 12 X 12) and awarded Rs. 30,000 to the claimants. This was not a correct approach. The <ORG> while calculating the amount did not take into consideration the loss suffered by the family of the deceased and did not determine as to what sum out of Rs. 205 p. m. was the deceased spending on his family, to assess the loss suffered by the family. It also made no allowance for accelerated payment. Thus, the compensation awarded definitely erred on the higher side and no further enhancement can be made in the cross-objections.

42. Both the appeal and cross-objections, therefore, fail and are dismissed as such but without any order as to costs.

Civil Misc. First Appeal No. 21 of 1979 In this case respondent No. 1 filed a petition for grant of compensation amounting to Rs. 50,000, through his father, against the appellant and respondents Nos. 2 and 3 (owner and driver of vehicle No. JKB 5190) on the ground that on July 4, 1975, <NAME>, respondent No. 1, was hit by Truck JKB 5190 insured with the appellant, as a result of which accident, <NAME> had suffered fracture of his leg and the injured leg had later to be amputated at <ORG> where the injured had been removed after initial treatment at <ORG>, Srinagar. The <ORG> awarded compensation amounting to Rs. 50,000 to respondent No. 1 and placed the liability of payment of the entire amount on the insurer, <ORG> Aggrieved, the insurance company alone has filed this appeal. Mr. <NAME>, appearing for the appellant, has urged that the claim petition was barred by time and, therefore, no compensation could have been awarded by the <ORG> to the claimant. Alternatively, it is urged that the quantum of compensation awarded is very excessive and has been fixed arbitrarily. An objection has been raised by the learned counsel for the respondent to the very maintainability of the appeal by the insurer.

43. A, perusal of the file reveals that in the claim petition which was filed on August 2, 1976, it was stated in para. 14 that respondent No, 1 had remained in <ORG> for about three months and, thereafter at <ORG>, New Delhi, for about eight months and that for these reasons the petition could not be filed in time and that the petition was filed soon after the return of respondent No. 1 and his father from New Delhi. To this petition, no objections were filed by any of the parties and no plea of limitation was ever raised before the <ORG> by any of its respondents. It is also transpires from the record that notice of the claim petition was issued to the respondents, including the appellant, but they avoided service and consequently on an application filed by the claimant, service on the respondents was effected by publication in a newspaper. Despite the publication of that notice, nobody appeared and the case was set ex parte against all the respondents, including the insurer. Mr. <NAME> then filed an application before the <ORG> for setting aside the ex parte proceedings against the insurance company and notice of the said application was given to respondent No. 1 on January 29, 1977. By order of the <ORG> dated February 8, 1977, the ex parte proceedings taken against the appellant were set aside, subject to payment of costs and the appellant herein was given an opportunity to file objections to the claim petition by February 18, 1977. On February 18, 1977, neither costs were paid nor objections were filed and an adjournment was sought for by learned counsel for the appellant. The case was, on his request, adjourned to March 10, 1977. On that date, again no objections were filed and another adjournment was sought for and granted to the appellant subject to payment of further costs and the case was adjourned to April 4, 1977. On the said date, i.e., on April 4, 1977, again neither the objections were filed nor costs were paid by the appellant and the <ORG>, once again, granted an adjournment to the appellant on payment of costs to file objections to the claim petition, by April 19, 1977. However, neither costs were paid nor any objections were filed to the claim petition by the appellant and on April 19, 1977, the appellant-insurance company again absented itself and the case was set ex parte against it, and the claimant was directed to produce ex parte evidence on May 6, 1977. On that date, it transpires, Mr. <NAME> again appeared for the appellant and sought permission of the <ORG> to take part in the proceedings " from that stage onward" without filing objections to the claim petition. Permission was granted and the insurance company participated in the proceedings. While the evidence was being recorded, on June 17, 1977, again nobody appeared for the insurance company, and onnce again the case was set ex parte against it. Thereafter, after seeking leave of the <ORG>, on one or two occasions, Mr. <NAME> put in his appearance and participated in, the proceedings but mostly the insurance company remained absen,t. Respondent No. 1, the claimant, filed an application on April 10, 1978, seeking permission to examine two more: witnesses. At that stage, Mr. <NAME> appeared and sought time to file objections to that application. The case was adjourned to May 10, 1977, when on that date again some more time was sought for by Mr. <NAME> to file objections. The case was adjourned to May 19, 1978. However, despite obtaining two opportunities, no objections were filed and, consequently, the application was allowed and witnesses named in the application were directed to be examined on June 22, 1978. On that date, i.e., on June 22, 1978, Mr. <NAME> appeared before the <ORG> and stated that he was taking up the matter with the insurance company to get it settled by mutual negotiations and prayed for an adjournment. The case was adjourned to July 8, 1978, and again to July 19, 1978, and to August 19, 1978, every time at the request of Mr. <NAME>. On August 19, 1978, it was reported by Mr. <NAME> that no compromise could be arrived at and the case was put up for further proceedings for September 16, 1978. The insurance company again did not appear on that date and the case was, for the fifth time, set ex parte against it.

44. The aforesaid narration of events shows the erratic manner in which the appellant had conducted the case before the <ORG>. In the face of these facts, it does not now lie in the mouth of Mr. <NAME> to say that the claim petition was barred by time and that no award could have been made in respect thereof. It was open to him to take that objection and controvert what had been stated by the claimant in para. 14 of the claim petition before the <ORG> but he chose not to do so, despite numerous opportunities granted to him. Even though all the respondents had been set ex parte, the insurance company, on its own request, had been given permission to take part in the proceedings but it chose not to avail of that permission and neither the explanation for the delay in filing the claim petition nor the fact that the accident had been caused due to the negligence of the truck driver was controverted before the <ORG>, by the insurer and despite numerous opportunities granted, it did not file any objections to the claim petition. The <ORG>, after a proper appreciation of the evidence, returned the findings and made the award. Keeping in view the manner in which the insurance company had conducted its defence before the <ORG> and also the fact that at no stage during the trial of the claim petition did it either raise the plea of limitation or question the allegation of negligence, the objection raised by learned counsel for respondent No. 1 to the maintainability of the appeal is well merited. More so, when Mr. <NAME> has been unable to show how the insurer can avoid, the liability, when the insured has been found liable. It is also not shown by Mr. <NAME> that the liability of the insurer could not extend to Rs. 50,000 under the policy of insurance. In the facts and circumstances of the case, I hold that this appeal has no merits and I dismiss the same, with costs.

Civil Misc. First Appeal No. 24 of 1979 The salient facts giving rise to this appeal are : that on December 3, 1975, at <NAME> <NAME>, father of respondent No. 1, met with an accident caused by truck No. JKN 2811, owned by respondent No. 2 and which was being driven at the time of the accident by respondent No. 3. As a result of the accident, father of respondent No. 1, received injuries and died. The daughter of the deceased, respondent No. 1, through her next friend, submitted a claim petition before <ORG> claiming Rs. 50,000 as compensation for the death of her father, who it was alleged was aged 31 at the time of the accident and was the sole bread-earner of the family. <ORG> awarded the sum as claimed together with interest at the rate of 6% p.a. from the date of the claim petition till the payment, and made the appellant insufance company liable for payment of the entire awarded compensation, vide award dated March 16, 1979. The insurer has filed this appeal questioning the award on all the grounds.

45. From a perusal of the record, it transpires that despite due service, respondents Nos. 2 and 3, the owner and the driver of the truck respectively, did not appear before the <ORG> and the case was set ex parte against them. The insurance company, however, appeared and participated in the proceedings. Objections were filed to the claim petition by the appellant and it was pleaded therein that the accident had not been caused due to the alleged rash or negligent driving of the vehicle by the driver of the truck. It was also pleaded that the vehicle was being plied in contravention of the conditions of the insurance policy and further that the owner-insured had procured the policy of insurance by not disclosing material facts and on representing false facts in material particulars. It was on this basis, asserted that even if the insured and the driver are held to be liable to pay compensation, the insurance company was not liable to pay any compensation to the claimant, yet another objection raised was that all the legal representatives of the deceased had not preferred the claim and, therefore, the case could not be adjudicated upon. The question of compensation claimed was also disputed by the insurance company. Since neither the owner of the vehicle nor the driver had contested the claim petition, the <ORG> permitted the insurance company to defend the claim petition on all grounds, of course without expressly making an order under Section 110C(2A) of the Act. The insurer, therefore, with the permission of the <ORG>, and without any objection having been raised by the claimant, contested the claim petition on all grounds on which an insured could defend the action. In this appeal also, Mr. <NAME>, learned counsel for the claimant, has conceded that since the insurer had been permitted by the <ORG> to contest the action on all the grounds, the insurer could challenge the award also on all those grounds, but it is maintained that neither the finding regarding negligence nor the amount of compensation awarded by the <ORG> called for any interference. I shall, therefore, deal with this appeal on merits.

46. From the pleadings of the parties the <ORG> framed the following issues :

1. Has not non-applicant No. 3 any liability to pay the compensation as the vehicle was being plied in contravention of the policy conditions of the route permit granted for its use. OP non-applicant No. 3.

2. Does the claim need to be dismissed as it has not been preferred by all the legal representatives of the deceased ? OP non-applicant No. 3.

3. Was the accident caused due to rash and negligent driving of the driver which resulted in causing the death of the father of the applicant. OP Applicant.

4. In case issue No. 3 is proved, to how much compensation the applicant is entitled and from whom and in what proportion OP Applicant.

5. Relief.

Issue No. 1

The insurer did not lead any evidence in respect of issue No. 1 and consequently the said issue was decided against the insurer.

Issue No. 2

It transpires from the record that before evidence was led, the attorney for the claimant filed an affidavit to the effect that there were no other legal representatives of the deceased, except the minor daughter. Learned counsel for the insurance company did not controvert that affidavit and consequently, vide order of the <ORG> dated February 8, 1977, issue No. 2 was not pressed before the <ORG> and the same was also decided against the insurance company.

Issue No. 3

The claimant examined, <NAME>, <NAME>, <NAME> alias <NAME>, <NAME>, <NAME>, <NAME>, <NAME>, <NAME>. The insurance company in rebuttal examined <NAME>.

47. According to <NAME>, A.W., the deceased <NAME>, was collecting leaves outside the garden when Truck No. JKN 2811 came from the side of Sopore at a very fast speed and ran over <NAME>. The said truck was being driven by respondent No, 3 at that time. That many people collected there and police also arrived at the spot. The body of <NAME> was taken out from under the truck. That the accident had been caused due to rash and negligent driving of the driver of truck No. JKN 2811. That <NAME> was earning about 200/300 rupees p.m. during those days. <NAME>, A.W., corroborated <NAME>, A.W., in all material particulars both as regards the manner in which the accident took place and the negligence of the driver in causing the accident. During his cross-examination, he stated that the deceased was drawing about Rs. 300 p.m. at the time of the death and was about 30 years old at that time. He went on to add that when the body was pulled out from under the truck, the deceased was breathing heavily and that he died soon thereafter.

48. <NAME>, A.W., <NAME>, A.W., <NAME> and <NAME>, A.Ws., also corroborated the statement of the aforesaid witnesses as regards the rash and negligent manner in which the truck was being driven by its driver and the manner in which the accident, causing the death of <NAME>, <NAME>, took place. All these witnesses also deposed that the deceased was about 30 years of age at the time of the accident and that he was earning about Rs. 300 p.m. at the time of his death. All these witnesses categorically asserted that the deceased had died as a result of the accident.

49. <NAME>, A.W., brother of the deceased, deposed that the deceased was earning about Rs. 300 p.m. and that the claimant <NAME>, is his only daughter. That she has no other relations and that her mother had married another person, leaving her all alone and uncared for. He also gave the age of the deceased at the time of the accident as about 30 years.

50. In rebuttal, <NAME>, SHO, stated that the investigation of the case relating to the accident in question was undertaken by him and that according to <ORG> it was a simple case of accident and that during the investigation, the complainant was unable to establish that the accident had occurred due to rash and negligent driving of the driver of the truck. He went oh to add that the magistrate had agreed with the police report arid the case closed. The witness, however, did not produce the final report nor disclosed which of the witnesses he had examined in the investigation. This is all the evidence in the case.

51. The evidence of the eye witnesses, <NAME>, <NAME> and others, as noticed above, conclusively establishes that the accident took place due to rash and negligent driving of the truck by its driver. Those eye witnesses were not at all challenged on this aspect of the case during cross-examination and their testimony inspires confidence. From "their evidence, it emerges that <NAME> had been run over by the truck and that he died due to the injuries received by him in the accident. No rebuttal whatsoever of the evidence led by the claimant was given by the insurance company. The fact that the accident took place on the main road, opposite a garden, and the 'truck ran over the deceased, whose body had to be pulled out from under the truck, also lends credence to the evidence led by the claimant about the manner in which the accident took place. It stands clearly established that the accident was caused by the rash and negligent driving of the truck by respondent No. 3. The statement of <NAME>, SHO, is hardly of any consequence. He did not produce either the final report nor did he disclose as to what investigation he had carried out or the names of the witnesses1 he had examined. His evidence, thus, does not create any dent in the evidence led by the claimant. As a matter of fact, instead of disproving the case of the claimant, his evidence lends credence to her case inasmuch as he did not dispute that the accident in question had taken place on the date and the time alleged and that the deceased had died as a result of the accident. His bald assertion that the complainant had failed to establish the charge against the driver or it was a simple case of accident is wholly insufficient to discard the trustworthy testimony of the witnesses produced by the claimant. The <ORG> was, in the face of the evidence led before it, perfectly right in deciding issue No. 3 in favour of the claimant and holding that the accident had been caused due to rash and negligent driving of the driver and also that the death of the father of the claimant was caused as a result of that accident. Learned counsel for the appellant has been unable to show any error in the finding arrived at by the <ORG> and from what I have said above, I find no reason to take a different view either. The finding of the <ORG> on issue No. 3 is, therefore, confirmed.

Issue No: 4 Findings on this issue has been seriously assailed by learned counsel for the appellant and it is argued that the method adopted by the <ORG> for assessing compensation was faulty and not proper.

52. In support of this issue, the evidence led by the claimant, as noticed above, shows that the father of the claimant was earning about Rs. 300 p.m. at the time of his death. He was about 31 years of age at that time. The evidence also reveals that the deceased was a healthy man and was not suffering from any ailment and but for the accident had reasonable chances to live a long life. The <ORG> awarded Rs. 50,000 as compensation to the claimant. In the opinion of the <ORG>, for at least 15 years more the deceased would have lived and earned at the rate of Rs. 300 p.m. and, thus, the claimant had been put to a loss of Rs. (300 X 12 X 15) = Rs. 54,000 by the death of her father. Since the claimant had herself claimed only Rs. 50,000, therefore, the same was awarded to her even though her loss was assessed at Rs. 54,000.

53. Mr. <NAME>, learned counsel for the appellant, has urged that the <ORG> applied wrong principles in determining the compensation, inasmuch as it failed to work out the monthly dependency of the family to assess the loss of the claimant. It is pointed out that Rs. 300 p.m. was not the loss of the claimant because the deceased must have been spending some amount on his own upkeep also. It is also urged that the <ORG> should have taken into account the effect of accelerated payment and made some deduction on that account. To me there appears to be considerable force in the submissions of Mr. <NAME> and for what shall follow, I am of the opinion, the <ORG> had misdirected itself while assessing the just and fair compensation.

54. Indeed, for assessing compensation, no rigid formula can be laid down and each and every case depends upon a number of factors peculiar to the life and circumstances of the family concerned. However, courts have from time to time held that the compensation should be, ' just and fair ' and that it should not be a windfall. Some guidelines were prescribed by this court. <CITATION>  ACJ 403, where <ORG> of this court, comprising <NAME> (as his Lordship the Acting Chief Justice then was) and myself, while dealing with the principles which should govern the working out of the amount of compensation, gave the following illustrative guidelines :

" A principle which has generally been accepted by most of the courts in India, including <ORG>, for working out the amount of compensation one is to ascertain the annual income of the deceased, after making allowance for the estimated amount which the deceased was spending on himself during his lifetime and then capitalising the same by multiplying that amount by the number of years of purchase of dependency. Out of that amount an allowance is made for any amount which the family of the deceased receives on account of the death of the deceased. The basic factor for working out compensation, which generally guides the courts, is that the compensation must be ' just and fair'. The family of the deceased of course do not have to get a windfall or derive any undue benefit from the unfortunate death of the deceased, yet they are entitled to at least receive so much of the amount which is essential for their upkeep and to meet other necessary expenses which, had the deceased been alive, would have been provided by him. These considerations assume very great importance in cases where the deceased happens to be the sole bread-earner of the family. "

55. In <NAME> case 1979 ACJ 403, the deceased was about 35 years of age. He was earning about Rs. 476 at the time of his death. The Bench found that the deceased must have been spending about Rs. 360 p.m. out of his salary of Rs. 476 p.m. on his dependants. The court accepted the evidence that the deceased would have continued to earn Rs. 476p.m. "till his retirement at the age of 55, i.e., for the next 20 years. The basic figure was then worked out by this court by adopting a multiple of 20 (the gap between the age at the time of death and the age of superannuation). The court came to the conclusion that the loss to the dependants Was (360 X 12 X 20) = Rs. 86,400. Out of this amount, the extent of the pecuniary benefits received by the family of the deceased (according to the evidence) amounting to Rs. 26,614 were deducted. From the remainder, a further deduction of 1/6th of the amount was made on account of accelerated lump sum payment. Thus, the total compensation was worked out as Rs. 49,905 rounded up to Rs. 50,000.

56. In the instant case, the deceased was 31 years of age on the date of his death. Though, keeping the normal life expectancy in the villages as 60 years, the deceased might have lived for about 29 years more, he would have supported the claimant, his 6 year old daughter, for another 15 years only, till she got married. He would have then spent some amount on her marriage also. Since the claimant and her father were the only two persons in that family and the deceased was the sole bread-earner it would not be unrealistic to assume that the deceased must have been spending about Rs. 100 p.m. on his own maintenance and the balance of Rs. 200 from his earnings he must be spending on his daughter as well as saving some amount for her marriage. Therefore, for capitalising the loss suffered by the claimant in this case, the multiple of 15 for arriving at the basic figure should have been adopted. The amount of compensation would then wort out to (200 X 12 X 15) = Rs. 36,000. Out of this amount, deduction for accelerated lump sum payment at 1/6th was required to be made. So deducting Rs. 6,000 from Rs. 36,000 the compensation payable would come to Rs. 30,000 and that in my opinion would be the " fair and just" compensation to be paid to the claimant. I am conscious that in arriving at this figure, some amount of conjecture has crept in; but in a case like the present, as observed by the Supreme : Court in <CITATION>  ACT 110 ; AIR 1=970 SC 376 (at p/380):

" In assessing damages, the court must exclude all considerations of matter which rest in speculation or fancy though conjecture to some ex tent is inevitable."

--it is unavoidable.

57. I, accordingly, accept this appeal partially and reduce the amount of compensation from Rs. 50,000, awarded by the <ORG>, to Rs. 30,000. The claimant snail also be entitled to receive interest'at the rate of 6% on this amount from the date of tne application till the realisation of the awarded amount.

58. The claimant is still a minor and her mother has remarried. She is being looked after by her uncle, <NAME>. I, therefore, consider it proper to direct that the sum of Rs. 30,000 shall be deposited by her uncle, <NAME>, in the name of <NAME> (minor) infixed deposit with any Scheduled bank f6f a period of five years initially and, thereafter, it shall be renewed from time to time till <NAME> gets married. The amount of interest shall be withdrawn by her uncle, <NAME>, every month for meeting the expenses of <NAME>. The- entire amount of Rs. 30,000 shall be withdrawn by her uncle at the time of her marriage, and after meeting the necessary expenses of marriage, the remaining amount shall be given over to <NAME>.

59. Since the appeal has partially succeeded, I leave the parties to bear their own costs of this appeal.

<NAME>, Actg. C.J.

I agree.

Kotwal, J.

I also agree.


JUDGMENT <NAME>, J.

1. This is an appeal by the first defendant, in a suit for declaration that the plaintiff has a four annas share in the shebaitship of a deity, Syamsundar, established by his paternal grandfather and for confirmation or recovery of possession of the corresponding share of the properties of the endowment. The claim was contested by the widow of the step-brother of the father of the plaintiff. The Subordinate Judge held that the title of the plaintiff to the shebaitship was established and made a decree accordingly. On the present appeal, that decision has been assailed as founded on an erroneous construction of the Will of the founder. The relationship between the parties may be elucidated by the annexed genealogical table:

First wife= Jasmant Das =Second wife <NAME> [Will, 22-7-1882. <NAME> | Died, 20-9-1882.] | ___________|_____ _______________________________|_____________ | | | | | | <NAME>, <NAME>, <NAME>, | Defendant No. 2, Died June, 1890. Died 12-1-1807. Died 30-8-1887 Died 30-8-1887 | | Window <NAME>, | | Defendant No. 1. | | | | <NAME>, | | Plaintiff, | _______| | | | <NAME>, Two daughters. Died after 25-9-1882

2. <NAME> died on the 25th September 1882, and the question in controversy turns upon the true construction of the Will he executed on the 22nd July 1882. The testator provided that all his properties would devolve on his family deity Syamsundar and his widow <NAME> would be executor in respect of the same. He further laid down that on the death of his widow, his youngest son Jagadanand and on the death of the latter, his son <NAME> would be successively installed in the office of executor, and all acts would be done under their management. The Will concluded that his sons by his first wife were disobedient and accordingly would not be appointed executors.

3. On the death of the testator, <NAME> proved his Will, but died before she could take out Probate. Meanwhile, <NAME> also died. Probate was accordingly granted to <NAME>, who himself died not many years later on the 30th August 1887. <NAME> then took out Letters of Administration with copy of the Will annexed, but he died on the 12th January 1897, leaving a widow <NAME>, the first defendant in the present suit, as also two daughters by her. <NAME> died on the 10th February 1898, unmarried, like his brothers <NAME> and <NAME>. <NAME> died in June 1890 leaving an infant son <NAME>, who is plaintiff in this suit. <NAME> had applied for Letters of Administration after the death of <NAME>, but he died before orders were passed. After this, applications were made for the same purpose by <NAME>, <NAME> and others, but on the 3rd September 1902, this Court held that no Letters of Administration could be issued as the estate had been completely administered, and the only object of the rival applicants was to secure indirectly a decision upon the question of title to the shebaitship. In 1906, a suit was instituted by <NAME> against <NAME> and some of the kinsmen of his father for declaration that she was the shebait of the deity Syamsundar. The Court held that she was shebait to the extent of an eight annas share and made a decree accordingly. <NAME> had not been made a party in that suit and he consequently instituted the present litigation on the 26th September 1910 for declaration that he himself was interested to the extent of a four annas share in the shebaitship. This claim was unsuccessfully contested by <NAME> in the Court below and the substantial question in controversy now is, whether the plaintiff has the title claimed.

4. We are of opinion that the effect of the Will was to constitute <NAME>, <NAME> and <NAME> successive shebaits of the endowment, though they are described as executors in respect of the endowed property. The testator did not prescribe how the shebaitship would devolve after the death of <NAME>. In these circumstances, the devolution of the office of shebait follows the line of inheritance from the founder; in other words, it passes to his heirs unless there has been some usage or course of dealing which points to a different mode of devolution: <NAME> v. Perianayagam 1 I.A. 209; Rajah Vurmah Valia v. Ravi Vurmah Kunhi Kutty 4 I.A. 76; 1 M. 235; 1 Ind. Jur. 134; 3 Sar. P.C.J. 687; 3 Suth. P.C.J. 382; <CITATION> 10 I.A. 32; 9 C. 766; 13 C.L.R. 30; 4 Sar. P.C.J. 411; 7 Ind. Jur. 218; <CITATION> 16 I.A. 137; 17 C. 3; 13 Ind. Jur. 211; 5 Sar. P.C.J. 350; <NAME> v. <NAME> 27 I.A. 69; 23 M. 271; 4 C.W.N. 329; 10 M.L.J. 29; 2 Bom. L.R. 597; <CITATION> 31 I.A. 203; 3.2 C. 129; 7 Bom. L.R. 765; 8 C.W.N. 809; 1 A.L.J. 585; <CITATION> 19 Ind. Cas. 337; 40 I.A. 97; 35 A. 283; 17 C.L.J. 612; 17 C.W.N. 741; 11 A.L.J. 548; 15 Bom. L.R. 606; (1913) M.W.N. 536; 14 M.L.T. 27; <CITATION> 3 Ind. Cas. 408; 11 C.L.J. 2; <CITATION> 29 A. 663; A.W.N. (1907) 210; 4 A.L.J. 565; <CITATION> 6 Ind. Cas. 77; 32 A. 461; 7 A.L. 3. 430. In this connection, we must bear in mind the observation of Sir <NAME> in <NAME> v. <NAME> 27 I.A. 69; 23 M. 271; 4 C.W.N. 329; 10 M.L.J. 29; 2 Bom. L.R. 597 that the rule in <NAME> v. <NAME> I.A. Sup. 47 at p. 66; 9 B.L.R. 377; 18 W.R. 359; 2 Suth, P.C.J. 692; 3 Sar. P.C.J. 85 is applicable to an hereditary office and endowment quite as much as to other immovable property and that the Hindu Law of inheritance does not permit the creation of successive life-estates in an endowment [see also <CITATION> 31 C. 166; 8 C.W.N. 273; <CITATION> 29 C. 716]. What then is the result of the application of these principles to the case before us? The founder had nominated <NAME>, <NAME> and <NAME> as successive shebaits, and had given no further direction as to the devolution of the office thereafter. Consequently, upon the death of <NAME> the shebaitship vested in <NAME>, <NAME>, <NAME> and <NAME>, who were the heirs of the founder at the time. On the death of <NAME> the interest in the shebaitship vested in him passed to his son <NAME>. Upon the death of <NAME> his interest devolved upon his widow <NAME>. Upon the death of <NAME> his interest in the office passed to his step-brother <NAME>. Consequently, at the date of the institution of the suit, <NAME> had a half share in the office, while <NAME> and <NAME> had one-fourth share each.

5. But it has been argued for the appellant that <NAME>, <NAME> and <NAME> took successive life-estates in the office, with the result that the remainder at the death of the founder constituted a vested interest in the hands of his six sons. In this view, <NAME> would get through his father <NAME> one-sixth share, while <NAME> would ultimately receive a half share by transmission to him of the interests vested in <NAME> and <NAME>; <NAME> would thus have a third share by absorption of the interest of <NAME>. We are of opinion that this contention is unsound and that the principle of vested interest while the actual enjoyment of the expected interest is postponed till the termination of the life-estate, as expounded by their Lordships of <ORG> in <NAME> v. <NAME> 4 M.I.A. 137; 7 W.R. (P.C.) 35; 1 Suth. P.C.J. 172; 1 Sar. P.C.J. 327; 18 E.R. 651, has no application to cases of the description now before us. No doubt, a shebait holds his office for life [ <CITATION> 35 C. 226; 12 C.W.N. 323; 7 C.L.J. 315]; but this does not signify that he has a life-interest in the office with the remainder presently vested in the next taker. The entire office is vested in him, though his powers of alienation are qualified and restricted. [<NAME> v. <NAME> 27 M. 435 at p. 442; 14 M.L.J. 105, where <NAME>, J., describes the spiritual head of a <ORG> as a "corporation sole".] The position of a shebait is analogous to that of a Hindu female (widow, daughter or mother) in possession of the estate of the last full owner rather than to that of the holder of a life-estate. When a Hindu female is thus in possession, she represents the estate completely and though her powers of disposition may be of a restricted character, no one else has a vested interest in the estate during her life-time. Similarly, when a founder has given valid directions as to the devolution of the shebaitship, as in the present case, upon the death of the last shebait, the office vests in persons who at the time constitute the heirs of the founder, provided the last shebait has not taken it absolutely; when the office has so vested in them, upon the death of each member of the group, it passes by succession to his heir, subject to the important qualification formulated by <ORG> in <CITATION> 19 Ind. Cas. 337; 40 I.A. 97; 35 A. 283; 17 C.L.J. 612; 17 C.W.N. 741; 11 A.L.J. 548; 15 Bom. L.R. 606; (1913) M.W.N. 536; 14 M.L.T. 27, namely, that the rule that when a worship of a thakoor has been founded, the shebaitship is vested in the heirs of the founder in default of evidence that he has disposed of it otherwise or of there being some evidence of usage, course of dealing or some circumstances to show a different mode of devolution, cannot be applied so as to vest the shebaitship in persons who, according to the usages of the worship, cannot perform the rights of the office. We hold accordingly that on the death of <NAME>, the last shebait named by the founder, the office vested in the four sons of the founder then alive; and this, notwithstanding the fact that the founder intended to exclude his sons by his first wife, for as <NAME> said in <NAME> v. <NAME> I.A. Sup. 47 at p. 66; 9 B.L.R. 377; 18 W.R. 359; 2 Suth, P.C.J. 692; 3 Sar. P.C.J. 85, the heir at law, though in terms excluded from benefit under the Will, cannot be excluded from his general right of inheritance without a valid devise to some other person. We may add that precisely the same result follows if we hold, on the authority of the decision of <ORG> in <CITATION> 17 Ind. Cas. 696; 40 I.A. 37; 40 C. 274; 17 C.L.J. 159; 17 C.W.N. 145; 13 M.L.T.4; (1913) M.W.N.34; 15 Bom. L.R. 72, that the shebaitship vested absolutely in <NAME>, and, on his death, devolved on his heirs, namely, his four surviving brothers, <NAME>, <NAME>, <NAME> and <NAME>. The decree made by the Subordinate Judge correctly determines the rights of the parties and as no question of limitation really arises on the evidence, that decree must be affirmed.

6. The result is that the appeal is dismissed with costs. We assess the hearing fee at ten gold mohurs.


PETITIONER: STATE OF OF MADHYA PRADESH Vs. RESPONDENT: <NAME> & ANR. DATE OF JUDGMENT28/03/1985 BENCH: <NAME>, R.B. (J) BENCH: <NAME>, R.B. (J) FAZALALI, SYED MURTAZA CITATION: 1985 AIR 901 1985 SCR (3) 561 1985 SCC (2) 544 1985 SCALE (1)609 CITATOR INFO : RF 1990 SC 313 (16) RF 1991 SC1676 (65) ACT: Madhya Bharat Essential Supplies (Temporary Powers) Act 1948. Supply price and ex-factory price-Difference between-Credited to <ORG>-Refund of-To whom payable-Persons not identified-Can be utilized for the purpose of the creation of the Fund. HEADNOTE: Respondents are owners of sugar mill situated in erstwhile Jaora State which merged in the State of Madhya Bharat. After the merger, the Madhya Bharat Essential Supplies (Temporary Powers) Act, 1948 came into force. By a notification dated 5th September, 1949 the said Act included 'sugar' in the list of articles as an essential commodity. By another notification dated 5th September, 1949 the Government delegated its powers to the Director, Civil Supplies to issue orders under the Act. The Director of Civil Supplies by a notification dated 14th January, 1950 fixed ex-factory prices for different sugar factories, which were to supply and despatch sugar of Grade E-27 at Rs. 32.400 per maund F.O.R. destination. The supply price was higher than ex-factory price. The difference between the supply price and the ex-factory price was to be credited to <ORG>. On demand by appellants, the respondents deposited a sum of Rs. 50,000 under protest in the said <ORG>. The respondents instituted a suit for the refund of the amount deposited by them towards <ORG> and Rs. 10,000 towards interest. Tho suit was dismissed. On appeal, <ORG> set aside the Judgment and Decree of the trial Court and decreed the suit. Allowing the appeal of the State, ^ HELD: 1. The respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same.[568C] 562 2. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund was created, namely, the development of sugarcane. There is no question of refunding the amount to the Respondents who had not eventually paid the U amount towards the Fund. Doing so would virtually amount to allow the respondents unjust enrichment. [568D-E] <ORG> v.. The State of Orissa & Ors. [1962] I SCR 549. <CITATION> .  SCR 1096, <ORG> etc. v. State of Haryana  1 SCR 1170., <CITATION> .  1 SCR 803., <CITATION> ,  SCR 1350., M s <CITATION> ., 1984 (2) SCALE 796, relied upon. JUDGMENT:

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 149 of 1971.

On appeal by Certificate from the Judgment and Decree dated 28.4.69 of <ORG> in First Appeal No. 14 of 1963.

<NAME> for the Appellant.

<NAME>, <NAME>, <NAME> and <NAME> for the Respondents.

The Judgment of the Court was delivered by <NAME> The present appeal by certificate is directed against the judgment deted 28th April, 1969 of <ORG>, Indore Bench.

The facts leading to this appeal are brief. The respondents are the owners of Jaora Sugar Mills situated at Jaora in the earlier State of Madhya Bharat. The erstwhile State of Jaora merged in the State of Madhya Bharat. After the merger the Madhya Bharat Essential Supplies (Temporary Powers) Act, 1948 came into force. By a notification No. 5163/XXX (49) dated 5th September, 1949 <ORG> in exercise of the Powers vested under the said Act included 'sugar' in the list of articles as an essential commodity- By another notification l No. 5166/XXX(49) dated the 5th September, 1949 '<ORG> delegated its powers to issue orders under the said Act in favour of the Director, Civil Supplies, Madhya Bharat. In exercise of the powers conferred on him under the Madhya Bharat Sugar Control Order, 1949 the Director of Civil Supplies issued a notification No. 1. C.S. 15/50 dated the 14th January, 1950 fixing ex-factory prices for different sugar factories. Under the said notification all sugar factories in Madhya Bharat were to supply and despatch sugar of Grade E-27 at Rs. 32.4.0 per maund F.O.R. destination. The supply price was a little higher than the ex-factory price. The difference between the supply price and the ex-factory price was to be credited of <ORG>.

The appellant made several demands on the respondents, the proprietors of <ORG>, to credit such difference in the account of <ORG> and the respondents ultimately deposited Rs 50000 under protest.

On the 10th September, 1953 the respondents instituted a suit in the court of Fifth Additional District judge, Indore against the erstwhile State of Madhya Bharat for the refund of the sum of Rs. 50,000 which the respondents had deposited towards Sugar Fund and Rs. 10,000 towards interest at the rate of 6 per cent per annum from the date of deposit of the aforesaid sum of Rs. 50,000. The suit continued against the newly formed State of Madhya Pradesh as provided by law.

The grievance of the respondent in the main was that the change and modification made by <ORG> in the definition of essential commodities given in the Act by including sugar therein was against the law, that the Director of Civil Supplies had no authority before 6th September, 1949 to issue the Sugar Control order, 1949 which had been issued on 5th September, 1949; that the <ORG> Government or the Director of Civil Supplies, Madhya Bharat had no power under the Essential Supplies (Temporary Powers) Act and the Sugar Control Order to impose a levy styled as 'Sugar Fund' and to recover the same; that the levy and collection of tax/impost styled as 'Sugar Fund' by the Director of Civil Supplies being violative of Art. 265 OF the Constitution, was illegal and invalid; that the provisions of Sugar Control Order, 1949 did not empower the Director of Civil Supplies to fix any price other than ex-factory wholesale or retail price or to fix a price which be called supply price or to impose and collect levy as 'Sugar Fund'; that is was illegal and unconstitutional for the Director of Civil Supplies to fix different ex-factory prices for different sugar mills in the same <ORG>; that it was illegal and unconstitutional to collect money through certain mills for creating Sugar Fund when other factories in the same <ORG> were being exempted from doing so that there was clear discrimination in fixing ex-factory price of sugar in respect of respondents' mill lower than ex-factory price fixed for; certain other mills in the <ORG> without there being a rational basis for the same; and that the levy and collection of certain money from the respondents being without lawful authority and without legislative competence, the <ORG> was bond to refund the same.

The <ORG> resisted the claim of the plaintiff- respondents and refuted the allegation on the points. The trial court decided all the issues against the plaintiffs and consequently it dismissed the suit. On appeal by the plaintiffs <ORG> set aside the judgment and decree of the trial court and decreed the suit for refund of Rs. 50,000 deposited by plaintiffs under protest and Rs. 10,000 as interest thereon calculated at the rate of 6 per cent from the date of suit till realisation. <ORG> repelled the contention of the <ORG> that the impost was not intended to augment general revenues of the <ORG> but was meant for a special purpose, i.e., for creating a fund which could be utilised for augmenting the production of sugarcane in the <ORG> so that the supply of sugar might be increased. <ORG> observed that legislative competence was necessary for such imposition irrespective of the fact whether the impost was intended to augment general revenues of the <ORG> or for a special purpose, i.e., for creating a fund for augmenting the production of sugar. It further held that Art. 277 of the Constitution only saves such taxes, cesses or fees which immediately before the commencement of the Constitution were being lawfully levied by the Government of any <ORG> notwithstanding that those taxes, duties, cesses or fees are mentioned in the Union List. But in the instant case levy of 'Sugar Fund' was imposed by means of an order which was published for the first time in <ORG> dated 28th January, 1950 two days after the Constitution came into force.

<ORG> proceeded further to hold that the power Conferred on the Director of Civil Supplies did not authorise him to fix different prices in his discretion in different parts of Madhya Bharat under s. 5 of the Sugar Control Order which in the case of some mills was higher than ex-factory price. The fixing of supply price higher than ex-factory price had nothing to do with the enforcement of the order as it does not deal with licensing, ex-factory sale price, movement or distribution of sugar. Nor did ss. 11 and 12 justify the Director of Civil Supplies recovering additional Amount apart from ex-factory price from the purchasers.

Thus, in the opinion of <ORG> the <ORG> had levied and collected under the purported legal authority certain money from the plaintiffs for which it had no legislative competence to do and therefore the <ORG> must restore the same to the persons from whom it was collected and cannot keep the same on the ground that plaintiffs too have been wrongly allowed to collect, and that the persons who could claim the same were the corresponding purchasers. <ORG> omitted to decide the question whether the particular purchasers can recover hereafter from the plaintiffs whatever they had collected in excess of the ex- factory sale price on the ground that it need not be determined in this case.

Feeling aggrieved the <ORG> has come up in appeal. It vainly tried to support its stand that the recovery of Rs. 50,000 from the respondents was perfectly lawful and proper and there was no discrimination as contemplated by Art. 14 of the Constitution.

On the question of refund of the amount to the plaintiffs respondents reliance was placed on <CITATION> (1). In that case the appellants who were registered dealers under the Orissa Sales Tax Act, 1947 used to collect sales tax from the purchasers on all sales effected by them, including sales to dealers in other States. They very assessed to and paid tax on their turnover which included sales outside the State of Orissa. After the decision of this Court in <CITATION> (2). the dealers applied under s.14 of the Act for refund of tax paid on the ground that sales outside the State were not taxable under cl. (l)(a) of Art. 286 of (1) 1 SCR 549.

(2) [1953] SCR 1069 the Constitution read with the Explanation. Refund was refused by <ORG> and <ORG>. <ORG>, however, ordered refund of tax paid for certain period but refused it in regard to other periods. The Orissa Sales Tax Act was, however, amended in 1958 with retrospective effect incorporating s.14A which provided that refund could be claimed only by the person from whom the dealer had realised the amount by way of sales tax or otherwise. On these facts it was held by this Court that under s.14 A of the Act incorporated by the Orissa Sales Tax (Amendment) Act, 1958 refund of tax which the dealer was not liable to pay could be claimed by the person from whom the dealer had actually realised it whether as sales tax or otherwise and not by the dealer.

In <ORG> etc. v. State of Haryana (1) the appellants and the petitioners who had paid under mistake the excess sums demanded a direction to the effect that these amounts be refunded. It, however, transpired that many of the traders had themselves recovered the excess percentage from the next purchasers. It was held that to the extent the traders had paid out of their own, they were entitled to keep them, but not where they had in turn collected from elsewhere. <CITATION> (a). this Court in a similar situation devised a new procedure to deal with a new situation where equity demanded redistribution but procedural expensiveness and cumbersomeness effectively thwarted legal action. It directed the Registrar of <ORG> to receive and dispose of claims from the ultimate consumers for excess price paid on proper proof, out of the security money.

<CITATION> (3 the levy of sales tax on forward transaction was held to be ultra vires. The respondents, therefore, applied for a refund of the amounts paid by a petition under Art. 226 of the Constitution. This Court, however, took the view that the term 'mistake' under s. 72 of the Indian Contract Act comprises within its scope a mistake of law as well as a mistake of fact and that, under that section a party is entitled to recover (1)  1 S.C.R. 1177.

(2) [1976] 1 S.C.R. 803.

(3) [1959] S.C.R. 1350.

money paid by mistake or under coercion and if it is established that the payment, even though it be of a tax, has been made by the party labouring under a mistake of law, the party receiving the money is bound to repay or return it though it might have been paid voluntarily subject, however, to questions of estoppel, waiver, limitation or the like.

Recently this Court in M/s <NAME> & Ors. v, The State of Punjab & Ors (1). had the occasion to consider the question of refund to the dealers in a similar situation and it observed:

'...We do not see how a mere declaration that the levy and collection of fee in excess of Rs.2 per hundred would automatically vest in the dealer the right to get at the excess amount when in fact he did not bear the burden of it and when the moral and equitable owner of it was the consumer-public to whom the burden had been passed on.

The primary purpose of sec. 23A is seen on the face of it; it prevents the refund of license lee by the market committee to dealers, who have already passed on the burden of such fee to the next purchaser of the agricultural produce and who went to unjustly enrich themselves by obtaining the refund from the market committes. S. 23A in truth, recognises the consumer-public who have borne the ultimate burden as the persons who have really paid the amount and so entitled to refund of any excess fee collected and therefore directs the market committee representing their interests to retain the amount. It has to be in this form because it would, in practice, be a difficult and futile exercise to attempt to trace the individual purchasers and consumer who ultimately bore the burden.

It is really a law returning to the public what it has taken from the public, by enabling the commitee to utilise the amount for the performance of services required of it under the Act. Instead of allowing middlemen to profiteer by illgotten (1) [1984] 2 SCALE 769.

gains, the legislature has devised a procedure to undo the wrong that has been done by the excessive levy by allowing the committees to retain the amount to be utilised hereafter for the benefit of the very persons for whose benefit the marketing legislation was enacted."

The principles laid down in the aforesaid cases were based on the specific provisions in those Acts but the same principles can safely be applied to the facts of the present case inasmuch as in the present case also the respondents had not to pay the amount from their coffers. The burden of paying the amount in question was transferred by the respondents to the purchasers and, therefore, they were not entitled to get a refund. Only the persons on whom lay the ultimate burden to pay the amount would be entitled to get a refund of the same. The amount deposited towards the Fund was to be utilised for the development of sugarcane. If it is not possible to identify the persons on whom had the burden been placed for payment towards the Fund, the amount of the Fund can be utilised by the Government for the purpose for which the Fund Was created, namely, development of sugarcane. There is no question of refunding the amount to the respondents who had not eventually paid the amount towards the Fund. Doing so would virtually amount to allow the respondents unjust enrichment.

For the foregoing discussion the appeal must succeed. It is accordingly allowed and the judgment and decree of <ORG> for the refund of the amount of Rs.50,000 and interest thereon is set aside. In the circumstances of the case the parties shall bear their own costs.

A.P.J. Appeal allowed.