IMPORTANT POINT
National Insurance Co. Ltd. v. Nicolletta Rohtagi, (2002) 7 SCC 456 needs reconsideration. Matter referred to larger Bench.

Headnote:(a) Motor Vehicles Act, 1988 – Section 165 – A claim petition for compensation in regard to a motor accident is neither a suit nor an adversarial lis in the traditional sense – It is a statutory determination of compensation on the occurrence of an accident. (Para 5)
        (b) Motor Vehicles Act, 1988 – Section 149(2) – Section 149(2) requires the Insurer to be noticed – Being a noticee the insurer can only contest its liability on the grounds mentioned therein unless permission of the Tribunal is sought u/s 170 – Same position obtains even where the claim proceedings are initiated suo moto under sections 149(7) and 158(6) – On the other hand if the insurer is made a party respondent, it becomes entitled to contest the claim on all grounds available to it without any permission u/s 170. (Paras 8, 9 and 11)
        (2002) 7 SCC 456 – Assented to
        (1998) 3 SCC 140; (1998) 9 SCC 202; (2000) 4 SCC 130; (2000) 5 SCC 113 – Referred
        (c) Motor Vehicles Act, 1988 – Section 173 – Owner of the vehicle is entitled to maintain an appeal against award of the Tribunal – Therefore the appeal filed by the owner dose not become ‘not maintainable’ simply because it is filed jointly with the insurer as ‘co-appellant’. (Paras 12 and 16)
        (1998) 9 SCC 202 – Relied upon
        (2000) 4 SCC 130 – Distinguished
        (d) Motor Vehicles Act, 1988 – Section 149(2) – The insurer as ‘noticee’ can not ‘deny’ its liability on grounds other than those mentioned in section 149(2)(a) and (b) – However, it can always assist the Tribunal in arriving at the ‘just’ compensation by contesting the claim as for quantum. (Para 17)
        (1988) 1 SCC 626 – Relied upon
        (e) Motor Vehicles Act, 1988 – Section 173 – Appeal by insurer on behalf of owner – Question left open – Matter referred to larger Bench. (Para 21)
        (2002) 2 SCC 265; AIR 1959 SC 1331 – Referred
       Facts of the case:
        Correctness of the three-Judge Bench decision in National Insurance Co. Ltd., Chandigarh v. Nicolletta Rohtagi, (2002) 7 SCC 456 is under consideration in this case.
       Finding of the Court:
        Nicolletta Rohtagi needs reconsideration.

Judgement Key Points

Key Points: - Judgment clarifies that an insurer as noticee can contest only on grounds in section 149(2) while not denying liability on other grounds; and may assist in arriving at just compensation (p_17, p_18, p_92) (!) (!) (!) . - If insurer is impleaded as a party-respondent, it can contest on all grounds available to the insured, not limited to section 149(2) grounds (p_8, p_9, p_48, p_49, p_11) (!) (!) (!) (!) (!) . - Maintenability and propriety of joint appeals by owner and insurer; insurer’s presence does not automatically render the appeal not maintainable; but permissibility depends on grounds available to insurer under section 149(2) and pleadings (p_12, p_13, p_83, p_85, p_86) (!) (!) (!) (!) (!) . - The court indicates Nicolletta Rohtagi requires reconsideration on insurer’s right to contest and directs referral to larger bench for points (iii)-(v) relating to insurer rights beyond section 149(2) (p_69, p_70, p_101, p_103, p_104) (!) (!) (!) (!) (!) . - Proceedings before Tribunals involve statutory determination of compensation, not adversarial litigation, with notice to insurer under section 149(2) and potential impleadment under section 170 (p_54, p_58, p_46, p_48) (!) (!) (!) (!) . - Section 170 permits impleading the insurer when there is collusion or non-contest, enabling contest on grounds available to insured (p_48, p_46, p_11) (!) (!) (!) . - Appeals under section 173 allow aggrieved party to challenge Tribunal awards within 90 days, with deposit requirements for the paying party (p_50, p_51) (!) (!) . - The Act creates liability on insurer to satisfy judgments, subject to grounds in section 149(2), but insurer may contest quantum (p_21, p_92) (!) (!) . - The judgment concludes with a bifurcation: points (i)-(ii) in favor of insurers; points (iii)-(v) referred for larger bench consideration (p_103, p_104) (!) (!) .

How to contest motor accident compensation on merits beyond grounds in section 149(2)?

What is the maintainability and scope of a joint appeal by insured owner and insurer?

What are the rights and limitations of an insurer when it is merely a noticee under section 149(2) versus a party-respondent?

JUDGMENT

R.V.Raveendran, J. —

A Two Judge Bench of this Court made the following order of reference in this case on 3.12.2007:

“One of the contentions raised in these appeals is the correctness of a three-Judge Bench decision of this Court in National Insurance Co. Ltd., Chandigarh vs. Nicolletta Rohtagi and Ors., - 2002 (7) SCC 456, which is said to be pending consideration in a large number of cases before this Court. Assailing the correctness of the aforesaid decision Mr. Atul Nanda submits that therein the liability of the insurer to reimburse the insured on two premises, namely, (1) just compensation; and (2) whose liability would be to pay, as envisaged under sub-section (1) of section 149 vis-`- vis the right of the aggrieved persons (Which would include the insured) to prefer an appeal in terms of section 173 of the Motor Vehicles Act, had not been considered in the backdrop of the history in which sub-section (1) of section 149 was enacted.

Apart from the question raised by Mr. Nanda, we are of the opinion that the matter may be considered from other angles, namely, whether the insurer shall be wholly without any remedy even if the amount of compensation is determined in violation of the standard formula envisaged under the second schedule of the Act or in clear violation of the ratio (s) laid down by this Court. We, therefore, are of the opinion that it is a fit case where the matter should be referred to larger Bench. We direct accordingly. Let the records of the case be placed before Hon’ble the Chief Justice of India for appropriate orders.”

2. On the said reference made, the following questions arise for our consideration, in regard to the position of an Insurer, under the Motor Vehicles Act, 1988 (‘Act’ for short):

(i) Whether the insurer can contest a motor accident claim on merits, in particular, in regard to the quantum, in addition to the grounds mentioned in section 149(2) of the Act for avoiding liability under the policy of insurance?

(ii) Whether an insurer can prefer an appeal under section 173 of the Motor Vehicles Act, 1988, against an award of the Motor Accident Claims Tribunal, questioning the quantum of compensation awarded?

3. The insurance companies have urged the following five points for our consideration, which are independent grounds in support of their contention that insurance companies are not barred from questioning the quantum of compensation either before the Motor Accidents Claims Tribunal or in appeals arising from the awards of the Tribunal :

(i) There is a significant difference between insurer as a ‘noticee’ (a person to whom a notice is served as required by section 149(2) of the Act) in a claim proceedings and an insurer as a party-respondent in a claim proceedings. Where an insurer is impleaded by the claimants as a party, it can contest the claim on all grounds, as there are no restrictions or limitations in regard to contest. But where an insurer is not impleaded by the claimant as a party, but is only issued a statutory notice under section 149 (2) of the Act by the Tribunal requiring it to meet the liability, it is entitled to be made a party to deny the liability on the grounds mentioned in section 149(2).

(ii) When the owner of the vehicle (insured) and the insurer are aggrieved by the award of the Tribunal, and jointly file an appeal challenging the quantum, the mere presence of the insurer as a co-appellant will not render the appeal, as not maintainable. When insurer is the person to pay the compensation, any interpretation to say that it is not a ‘person aggrieved’ by the quantum of compensation determined, would be absurd and anomalous.

(iii) When an insurer is aggrieved by the quantum of compensation, it is not seeking to avoid or exclude its liability, but merely wants determination of the extent of its liability. The restrictions imposed upon the insurers to defend the action by the claimant or file an appeal against the judgment and award of the Tribunal will appl

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2011 Supreme(SC) 1008

IMPORTANT POINT National Insurance Co. Ltd. v. Nicolletta Rohtagi, (2002) 7 SCC 456 needs reconsideration. Matter referred to larger Bench.

How to contest motor accident compensation on merits beyond grounds in section 149(2)?

What is the maintainability and scope of a joint appeal by insured owner and insurer?

What are the rights and limitations of an insurer when it is merely a noticee under section 149(2) versus a party-respondent?

Cases Referred (10)

IMPORTANT POINT
National Insurance Co. Ltd. v. Nicolletta Rohtagi, (2002) 7 SCC 456 needs reconsideration. Matter referred to larger Bench.