Undertaking to Satisfy Award Is Not Waiver of Appeal: Supreme Court Restores Insurer’s Statutory Right

“High Court Could Not Shut Its Eyes to Merits Merely Because an Undertaking Was Given in Execution”, In a strongly worded and reportable judgment, the Supreme Court set aside the Telangana High Court’s orders dismissing the insurer’s first appeal against a Motor Accident Claims Tribunal (MACT) award solely on the basis of an undertaking given in execution proceedings.

A Bench comprising Justice Rajesh Bindal and Justice Vijay Bishnoi held that an undertaking to comply with an award cannot be treated as a waiver of the statutory right of appeal. The Court remitted the matter to the High Court for fresh adjudication on merits, emphasizing that the first appellate court is duty-bound to examine both facts and law.

₹2.72 Crore Award to 22-Year-Old Claimant with 100% Disability

The claimant, aged 22 at the time of the accident in February 2020, suffered severe injuries and was assessed with 100% functional disability. Though he had claimed ₹1 crore in compensation, the MACT awarded ₹2,72,03,416/- with interest at 6% per annum, assessing his monthly income at ₹25,000/- on the premise that he assisted his father in farming.

The insurer challenged the award before the High Court, contending that the computation was excessive and contrary to settled principles.

Meanwhile, the claimant initiated execution proceedings. The Executing Court issued warrants under Order XXI Rules 43, 64 and 66 CPC and proceeded to attach furniture, fixtures and computers of the insurer’s local office. In these circumstances, the local manager furnished an undertaking on 31 October 2025 stating that the award would be satisfied within two weeks.

Relying solely on this undertaking, the High Court dismissed the insurer’s appeal without examining the merits. The subsequent review petition under Order XLVII Rule 1 CPC was also dismissed on the same reasoning.

“Appeal Could Not Be Dismissed Without Even Touching the Merits”

The Supreme Court found the High Court’s approach legally unsustainable.

Justice Bindal observed:

“That cannot be a reason for not touching the appeal on merits. There was no undertaking given by the manager… that the appeal filed by it impugning the award… will not be pressed on merits.”

The Court underscored that even if the award had to be complied with in absence of a stay, that circumstance did not extinguish the insurer’s statutory right of appeal.

The High Court, being the first appellate court, was required to examine the award “on law as well as on facts.” Its failure to exercise jurisdiction warranted interference under Article 136 of the Constitution.

“Procedure Adopted in Execution Lacked Fairness”

The Supreme Court expressed serious concern over the manner in which execution was conducted.

Immediately after the execution petition was filed, warrants were issued attaching office furniture, fixtures and computers. The Court noted that such action would have “paralyz[ed] the working of the company.”

It observed:

“There were other modes to recover the amount… attachment of the accounts of the Insurance Company… The process adopted was apparently without application of any judicial mind.”

The Court also emphasized that the insurer is a public sector undertaking and recovery of compensation would not have posed difficulty. Coercive steps in execution cannot be allowed to indirectly deprive a party of its appellate remedy.

Review Dismissal Also Set Aside

The High Court had rejected the insurer’s review petition, reiterating that an undertaking had been furnished and that no grounds under Order XLVII Rule 1 CPC were made out.

The Supreme Court held that since the foundational dismissal of the appeal itself was erroneous, the rejection of the review petition could not stand.

Interim Relief: ₹1 Crore to Be Released Pending Remand

Balancing equities and noting that compensation had not yet been disbursed, the Supreme Court directed the insurer to release ₹1,00,00,000/- to the claimant within four weeks, subject to compliance with directions laid down in Parminder Singh v. Honey Goyal, (2025) 9 SCC 539.

The High Court has been requested to decide the remanded appeal preferably within six months.

“We Are Constrained to Notice…” – Supreme Court Flags Illegible Handwritten Orders

In an unusual but significant administrative observation, the Court deprecated the practice of handwritten and illegible order sheets by the Tribunal despite the ongoing e-Courts project.

The Bench recorded:

“We do not find any justification for the orders of the Tribunal to be handwritten, which otherwise are also not legible.”

The Registrar General was directed to place the order before the Chief Justice of the High Court, and copies were ordered to be circulated to all High Courts to ensure corrective steps, emphasizing the judiciary’s transition towards paperless courts.

The ruling reinforces three vital principles in motor accident jurisprudence and appellate procedure.

First, compliance with an award or an undertaking in execution does not amount to abandonment of a statutory appeal.

Second, appellate courts must discharge their obligation to examine the award on merits, especially in first appeals involving substantial questions of fact and law.

Third, execution proceedings must adhere to fairness and judicial application of mind; coercive measures cannot become tools to foreclose appellate remedies.

By restoring the insurer’s right to a merits-based adjudication while simultaneously directing partial release of compensation to the claimant, the Supreme Court struck a balance between procedural fairness and substantive justice.

Date of Decision: 23 January 2026