Oriental Insurance ... vs Smt.Uma Devi
2021 Latest Caselaw 11414 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

Court No. - 18								A.F.R.
 

 
Case :- MISC. SINGLE No. - 23973 of 2020
 

 
Petitioner :- Oriental Insurance Comp. Ltd. Thru. Div. Manager, Div.Office-2
 
Respondent :- Smt.Uma Devi and others
 
Counsel for Petitioner :- Waquar Hashim
 
Counsel for Respondent :- C.S.C.,Ajeet Kumar,Rinku Verma
 

 
Hon'ble J.J. Munir,J.

1. This petition under Article 227 of the Constitution has been filed assailing a judgment and order of the Permanent Lok Adalat, Lucknow dated 22.02.2020 passed in P.L.A. Case No.196 of 2017. By the impugned judgment and order, the Permanent Lok Adalat has granted the claim of respondent nos.1, 2 and 3 to the proceeds of a Group Insurance Policy for tenure-holder-farmers dying an accidental death. The Permanent Lok Adalat has ordered the petitioner, Insurance Company to pay the sum assured i.e. Rs.1 lakh together with penalty in the sum of Rs.1,50,000/-. Simple interest at the rate 9% per annum has been ordered on the aforesaid sum from the date of presentation of respondents' petition to the Lok Adalat. Costs in the sum of Rs.5000/- have also been awarded against the petitioner.

2. The facts giving rise to this petition are that a contract was entered into by the Commissioner and Secretary, Board of Revenue, U.P., Lucknow and the petitioner, Oriental Insurance Company Limited, whereby a Group Accidental Insurance Cover was provided to all the farmers of Uttar Pradesh, who were recorded tenure-holders and in the age group of 12 years to 70 years. Their eligibility was dependent on the fact that the farmer was duly recorded in the Khatauni and died an unnatural death in an accident. The said policy was in force from 19.11.2009 to 18.11.2010. The husband of respondent no.1-Smt. Uma Devi and father of respondent nos.2 and 3, Nishu and Bhola Singh, that is to say, the late Omkar Singh, was a resident of Village Sahurapur, Post Paunthia Buzurg, Police Station Lalpura, District Hamirpur. He died in a road accident on 08.10.2010. It is not in issue that the deceased, on the date of his demise, was in the eligibility zone according to his age group. Consequent upon Omkar Singh's death, respondent no.1 on behalf of herself and respondent nos.2 and 3, invoked the Insurance Policy and presented a claim, after completing all formalities, to the petitioner Insurance Company, routed through the District Magistrate, Hamirpur. After presentation of the claim, respondent no.1 pursued it regularly and with due diligence, visiting the office of the petitioner Insurance Company for the purpose. Despite lapse of a long period of time, she neither received the sum assured nor any communication in that regard from the Insurance Company.

3. When the first respondent did not receive any response from the Insurance Company for a considerable period of time, she presented a petition to the Permanent Lok Adalat at Lucknow. The Insurance Company filed a written statement, contesting the first respondent's claim. However, the factum of the contract of insurance was not denied. The Insurance Company, however, disputed the fact about the death of the assured in a road accident on 08.10.2010 on ground that no First Information Report had been lodged. There were other pleas raised that the postmortem report and the panchayatnama, that was presented, related to an unknown person, which could not be read to infer the death of the assured in a road accident. It was also averred in the written statement that on receipt of the first respondent's claim through the District Magistrate, Hamirpur, the Insurance Company had appointed a surveyor, who submitted his report on 08.03.2011, wherein it was mentioned the first respondent did not produce necessary documents. It was also pleaded that on 04.04.2011, the first respondent's claim was rejected by the Competent Authority in the Insurance Company and its information was given to the District Magistrate, Hamirpur. Amongst other things, it was also pleaded that if there is any dispute between parties to the contract, the same has to be resolved by a Committee headed by the District Magistrate, whose decision would be binding on the Insurance Company. There is also a plea that the petition was presented with a delay of seven years, with no explanation about it. The territorial jurisdiction of the Permanent Lok Adalat at Lucknow was also questioned. There were attempts for reconciliation by the Permanent Lok Adalat, but these failed and the matter went to trial. On 30.05.2018, five issues were framed, which read (translated into English from Hindi):

"(1) Whether the petitioner on the basis of grounds taken in the petition is entitled to the sum assured and penalty from the Insurance Company, opposite party no.1? If yes, what sum of money?*

(2) Whether the petition is bad for non-joinder of necessary parties?*

(3) Whether the petition is barred by limitation?

(4) Whether the Permanent Lok Adalat had jurisdiction to hear the petition?*

(5) Whether the petitioner is entitled to any relief?*"

(*Note: The description of parties is according to the array before the Permanent Lok Adalat)

4. The Permanent Lok Adalat answered all the issues against the petitioner-Insurance Company and in favour of respondent nos.1, 2 and 3.

5. Aggrieved, this petition has been filed.

6. Heard Mr. Waquar Hashim, learned Counsel for the petitioner, Mr. Rinku Verma, learned Counsel appearing on behalf of respondent nos.1, 2 and 3 and Mr. P.K. Singh, learned Additional Chief Standing Counsel appearing for respondent nos.4 and 5.

7. Before this Court, Mr. Waquar Hashim has confined his submissions to the point of limitation. He has argued that the claim was rejected by the petitioner-Insurance Company on 04.04.2011. The rejection was duly communicated to the District Magistrate, Hamirpur. The petition, therefore, filed before the Permanent Lok Adalat on 18.02.2017 is hopelessly time barred. He has invited the attention of the Court to Article 44(a) of the Schedule to the Limitation to submit that the prescribed period of limitation is three years reckoned from the date that the claim on the policy is denied.

8. Mr. Rinku Verma, on the other hand, has refuted the aforesaid submission and said that the denial was never communicated to respondent no.1 and until that was done, the period of limitation would not run. He has emphasized that the District Magistrate, Hamirpur, to whom the repudiation of the first respondent's claim was communicated, never conveyed the denial of the claim to the first respondent or to respondent nos.2 and 3.

9. The question of limitation for a claim of insurance under the Group Accident Insurance Scheme in question came up for consideration before this Court in The Oriental Insurance Company Limited through Divisional Manager vs. Chhote Singh and others, Misc. Single No.20736 of 2018, decided on 13.08.2018. In The Oriental Insurance Company Limited vs. Chhote Singh (supra), it was held:

"On the aspect of limitation this Court would certainly note that there is no period of limitation envisaged under the Legal Services Authority Act for a claim being instituted before the Permanent Lok Adalat but it does not mean that a claim for compensation can be delayed inordinately. This would defeat the very purpose of beneficial policy which is meant to mitigate the financial hardship of an indigent family. The benefit must flow to a victim promptly and without any inordinate delay. It is for this this reason that clause-11 of the agreement provides for lodging a claim within four months of mishap before the Lekhpal. The limitation provided under Clause 11 of the agreement is to aid the quantum of penalty provided for under clause 22 of the agreement but would not constitute a bar for approaching the permanent Lok Adalat where a claim is delayed or denied.

The proceedings before Permanent Lok Adalat under the Legal Services Authority Act, 1987 are akin to the proceedings before a civil court by virtue of Section 22(3). The general law of limitation prescribing three years period, cannot be given a go-bye and in absence of a prescription in the Act, the same has to be understood to be a valid condonable bar insofar as the aspect of limitation is concerned.

In the present case, however, it is clear that the Oriental Insurance Company has not put up a definite stand before the Permanent Lok Adalat except the date of repudiation of the claim by letter dated 7.4.2011 of which the last paragraph reads as under:

"di;k mDr nkok dks uks Dyse djus ls iwoZ bl nkos ij vkidh [email protected] dh iqf"V vkisf{kr gSA vkidks gqbZ vlqfo/kk ds fy, [ksn gSA"

From the above paragraph of the letter dated 7.4.2011, it is clear that the final repudiation was dependent upon the consideration by the district committee or any decision taken by the said committee. There is no such communication placed on record according to which the claim of the opposite parties was finally repudiated in the light of any shortcoming having been finally affirmed against the claimants.

Learned counsel for the petitioner also invited attention of this Court to clause 20 of the agreement which reads as under:

"20. If any objection is raised by Insurance Company in settlement of claim documents, the same will have to be returned to District Magistrate positively within two weeks and Committee headed by District Magistrate of the concerned districts would resolve the objection within one month. The Committee can also take a decision by circulation. The decision of the Committee will be final and binding on the Oriental Insurance Company Limited."

Having regard to the condition extracted above, it is argued that the repudiation once conveyed to the district authorities was never turned down within the stipulated period of time and as such, at least the letter dated 7.4.2011 followed by a period of one month, would be a relevant date from which the period of limitation will have to be treated to commence.

This Court having regard to the essence of clause 20 of the agreement is of the opinion that the claim of a victim cannot be defeated within the scope of clause 20 of the agreement so long as there is a communication of any shortcoming for entitlement of a claim duly communicated to the aggrieved claimant which in the present case is none.

Thus, the plea of limitation taken up in the present case on the strength of clause 20 of the agreement read with Article 44 of the Schedule appended to the Limitation Act, would not defeat the object and purpose of the scheme so long as the claim was kept pending constituting a continuing cause, hence the plea raised deserves rejection."

10. In the present case, Clause 21 of the agreement is the same as that involved in Oriental Insurance Company Limited vs. Chhote Singh (supra). In what precise terms the claim was declined and communicated to the District Magistrate is not known. The Permanent Lok Adalat has dealt with the matter under Issue No.3. The Permanent Lok Adalat relied upon the provisions of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002 to hold that by dint of Regulation 7(2) of the Regulations, the Insurer is obliged to keep the insured periodically informed on the requirements to be fulfilled regarding lodging of a claim arising in terms of an Insurance Policy and the procedures to be followed by the assured in order to enable the insurer to settle the claim.

11. It has also been recorded by the Permanent Lok Adalat that the District Magistrate has not conveyed any information to the first respondent. Thus, whatever decision was taken by the Insurance Company regarding the first respondent's claim on 04.04.2011, or soon thereafter when it was rejected, it is difficult to hold that the period of limitation would run from 04.04.2011, in terms of Article 44 (a) of the Limitation Act, when the Insurance Company-petitioner rejected the first respondent's claim. This difficulty about reckoning the period of limitation seems to have arisen because Article 44 (a) of the Limitation Act takes into account a transaction of the nature leading to the taking out of an Insurance Policy by an insured. Invariably, the person, who purchases the policy or the beneficiaries are privy to the Insurance Policy in some manner, where the Insurance Company, after a claim is laid on the policy, communicates the result to the claimants. The policy here, is, in its nature, different, which is a Group Accidental Insurance Cover provided by the State Government for all the farmers of Uttar Pradesh, who are recorded tenure-holders. It is for the said purpose that claims are to be routed through the District Magistrate.

12. Now, if the claim is rejected and the result communicated to the District Magistrate, as is the case here, who does not, in turn, communicate the factum of rejection to the claimants, it would be an absurd construction to place on the provisions of Article 44(a) of the Schedule to the Limitation Act that period of limitation would run from the date of such rejection. The factum of rejection of the claim in the case of a policy of the kind in hand would never be known to the claimants, like the first respondent. If the fact of rejection is not communicated by the Insurer, the period of limitation under the provisions of Article 44 (a) cannot be held to run. The rejection of a claim by the Insurer for the purpose of Article 44(a) carries with it implicitly a reasonable communication of the Insurer's decision to the claimant. It is precisely on the basis of this reasoning that this Court in the Oriental Insurance Company Ltd. vs. Chhote Singh (supra), held the claim not to be barred by time. This is the reasoning that the Permanent Lok Adalat has adopted and we do not find any flaw with it. The first respondent's claim cannot, therefore, be said to be barred by limitation as urged by the learned Counsel for the petitioner.

13. Learned Counsel for the petitioner has also questioned the imposition of penalty in the sum of Rs.1,50,000/- on the ground that the penalty imposed is disproportionate, considering the fact that the Insurance Company believed that they validly conveyed the rejection of the claim laid by the first respondent to the District Magistrate.

14. In the totality of circumstances, this Court finds that there is some communication gap between the petitioner-Insurance Company, the District Magistrate and the claimant-respondent no.1, that has all contributed to the delay in the ultimate enforcement of the claim before the Permanent Lok Adalat. In the circumstances obtaining, equity would be best adjusted if the penalty imposed by the Permanent Lok Adalat is reduced by 50% and determined at a figure of Rs.75,000/-, instead of Rs.1,50,000/-.

15. In the circumstances that this is a case where there was a miscommunication between parties, this Court is of opinion that Simple Interest at 9% per annum ordered by the Permanent Lok Adalat from the date of presentation of the petition, ought to be substituted by an order directing payment at the rate of 9% per annum Simple Interest on the substantive award of Rs.1,00,000/- from the date of the award till realization.

16. In the result, this petition succeeds and is allowed in part. The impugned order dated 22.02.2020 passed by the Permanent Lok Adalat in P.L.A. Case No.196 of 2017 is modified to the extent that in substitution of the direction to pay penalty in the sum of Rs.1,50,000/-, the penalty payable by the petitioner shall be a sum of Rs.75,000/-. Also, the Simple Interest awarded by the Permanent Lok Adalat at the rate of 9% per annum on the sum of Rs.2,50,000/- shall be substituted by a direction to pay simple interest at the rate of 9% per annum on the substantive award of Rs.1,00,000/- from the date of the order impugned, passed by the Permanent Lok Adalat, until realization. The rest of the award made by the Permanent Lok Adalat is upheld.

17. Parties will bear their own costs before this Court.

Order Date :- 2.12.2021

Anoop

(J.J. Munir, J.)