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

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

The applicants pleaded by challenging judgments passed under Section 173

The Bombay High Court has held that an ad-interim/interim stay can be granted on an award passed under the Motor Vehicles Act, 1988, even if the appellants’ application for condonation of delay in filing the first appeal against the award, is pending.

The Bench of Justice Abhay Ahuja was dealing with interim applications filed by three insurance companies and one individual in separate first appeals seeking a stay on execution of awards.

The applicants were seeking to file appeals challenging judgments and awards passed under the MV Act. Under Section 173, the appeals were time-barred, which meant those were filed after the stipulated limitation period.

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

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 was pending.

Appearing for the appellants, the counsels argued that if the impugned award was 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 the appeals.

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

Furthermore, it clarified that Rule 3-A applied to appellate Courts and not to trial Courts, wherein the appeal was filed. Rule 5(2) empowered the Court that passed the decree to order a stay of execution if the decree was appealable without limitations on the duration of the stay. However, Rule 3-A imposed restrictions on the Court's ability to grant a stay.

The Division Bench maintained that the legislature did not intend an ‘absurd result’ that while the trial Court that passed the decree could stay its execution beyond the limitation period for appeal. Therefore, even if it was for a few days, the Court could not stay the execution.

It stated that the word ‘shall’ in Rule 3-A(3) should be construed as permissive and not mandatory. This interpretation prevented appeals from becoming infructuous and maintained the regulatory content of Rule 3-A.

Thus, Justice Ahuja granted an interim stay till 19 October on the four judgments challenged in the appeals.

The Bench disagreed with the Andhra Pradesh High Court in the United India Insurance Co. v. Undamatla Varalakshmi case, 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.

The Court stated, "What the Andhra Pradesh High Court does not appear to have considered is what has been considered by the Division Bench of this Court in the Bhagwan Ganpatrao Godsay vs. Kachrulal Bastimal Samdariya case, 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 by then executed.”