Where in the course of any inquiry, the Claims Tribunal is satisfied that
(a) there is collusion between the person making the claim and the person against whom the claim is made, or
(b) the person against whom the claim is made has failed to contest the claim, it may, for reasons to be recorded 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, without prejudice to the provisions contained in sub-section (2) of [section 150], 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.
Legal Commentary & Landmark Judgments: Section 170
Section 170 of the Motor Vehicles Act, 1988 empowers the Claims Tribunal to allow the insurance company to contest the claim on all grounds (including negligence and quantum) if there is collusion or failure by the insured to contest.
However, Section 170 provides that where the Tribunal is satisfied that there is collusion between the claimant and the insured, or the insured has failed to contest the claim, the Tribunal may direct that the insurer be impleaded and permitted to contest the claim on all grounds.
Obtaining permission under Section 170 is a critical procedural milestone for insurance companies: without a reasoned order granting Section 170 leave, the insurer is legally precluded from challenging the quantum of compensation or the finding of driver negligence in an appellate challenge before the High Court.
Section 170 is vital for insurance defense counsel. Where the owner/driver remains ex-parte or fails to file a written statement, the insurer must file a formal application under Section 170 seeking permission to contest on merits. If the Tribunal grants this application, the insurer acquires full standing to cross-examine witnesses on negligence, dispute medical bills, and maintain a comprehensive appeal under Section 173.