MV Act | Award Can Be Stayed Even If Insurer's Application For Condonation Of Delay In Filing Appeal Is Pending: Bombay High Court

The Bombay High Court recently held that an ad-interim/interim stay can be granted on an award passed under the Motor Vehicles Act (MV Act) even if the appellants’ application for condonation of delay in filing the First Appeal against such award is pending.

“the applications for stay of the impugned judgment and award passed under the MV Act in a proposed First Appeal can be considered for ad-interim/interim stay even if the condonation of delay application is pending”, Justice Abhay Ahuja held.

The court was dealing with interim applications filed by three insurance companies and one individual in separate first appeals seeking a stay on execution of awards passed under the MV Act).

The applicants were seeking to file appeals challenging judgments and awards passed under the Motor Vehicles Act. These appeals, filed under Section 173 of the MV Act, were time-barred, i.e., they were filed after the stipulated limitation period.

Section 173(1) of the MV Act provides that an appeal against an award of a Claims Tribunal must be filed before the High Court, within 90 days from the date of the award. The second proviso to Section 173(1) bars the appeal after expiry of 90 days, but if the High Court is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time, it may entertain the appeal.

According to Rule 3-A(3) of Order 41 of the CPC, “Where an application has been made under sub-rule (1), the Court shall not make an order for the stay of execution of the decree against which the appeal is proposed to be filed so long as the Court does not, after hearing under rule 11, decide to hear the appeal.”

The question before the court was whether the term "shall" in Rule 3-A(3) should be interpreted as mandatory or permissive. If interpreted as mandatory, it would imply that an appeal cannot be entertained until the court decides on the application of condonation of delay in filing the appeal. If interpreted as permissive, it would allow the court to grant an interim stay on execution of the decree even when the application for condonation of delay is pending.

The counsels for the appellants argued that if the impugned award is not stayed till the disposal of the application for condonation of delay, it could get executed and render the appeal infructuous.

The court noted that the legislative intent behind Rule 3-A was to curb the practice of courts admitting appeals and then delaying the consideration of the question of limitation. The objective was to ensure that courts first consider the application for condonation of delay before admitting appeals, the court said.

The court relied on a judgment of the Bombay High Court in Bhagwan Ganpatrao Godsay v. Kachrulal Bastimal Samdariya, in which a Division Bench observed that while fulfilling the legislative intent of transformation of proposed appeal into an appeal, the appeal should not be frustrated by execution of a decree.

The judgment further clarified that Rule 3-A applies to appellate courts, not trial courts from which the appeal is filed. Rule 5(2) empowers the court that passed the decree to order a stay of execution if the decree is appealable, without limitations on the duration of the stay. However, Rule 3-A imposes restrictions on the appellate court's ability to grant a stay.

The Division Bench opined that the legislature did not intend an "absurd result" that while the trial court which passed the decree can stay its execution beyond limitation period for appeal, the Appellate Court seized of the proposed appeal cannot stay the execution even for a few days.

The judgment of the Division Bench stated that the word "shall" in Rule 3-A(3) should be construed as permissive and not mandatory, in alignment with the legislative intent to ensure a fair consideration of condonation of delay applications before admitting appeals. This interpretation prevents appeals from becoming infructuous and maintains the regulatory content of Rule 3-A.

Considering that the views of the Division Bench of a High Court are binding on a Single Judge of that High Court, the court held that the term “shall” in Rule 3A(3) is directive and granted ad interim stay till October 19 on the four judgments challenged in the appeals.

The court disagreed with Andhra Pradesh High Court in M/s United India Insurance Co. v. Undamatla Varalakshmi which held that in a time barred appeal under the MV Act, execution of the award cannot be stayed unless the delay condonation matter is decided finally.

"What the Hon’ble Andhra Pradesh High Court with respect, does not appear to have considered is what has been considered by the Division Bench of this Court in Bhagwan Ganpatrao Godsay Vs. Kachrulal Bastimal Samdariya and connected matters (supra) that if the word “shall” in sub-rule (3) is construed as mandatory the appeal may become infructuous as the decree may have been executed by then," Court said.

Advocate Rahul Mehta represented appellants Shriram General Insurance and IFFCO Tokio General Insurance Co. Ltd.

Advocates Yuvraj P Narvankar and Sandesh S Darade represented appellant Hiralal Bhansilal Khinvasara.

Advocate Varsha Chavan represented appellant United India Insurance Co. Ltd.

Case no. – Civil Application No. 656 of 2018 with two connected cases

Case Title – Shriram General Insurance Co. Ltd v. Sou. Jyoti Vithoba Nahire and Anr. with connected cases