Patna High Court
National Insurance Company Limited vs Ram Babu Prasad Yadav on 8 September, 2025
Author: Arun Kumar Jha
Bench: Arun Kumar Jha
IN THE HIGH COURT OF JUDICATURE AT PATNA
CIVIL MISCELLANEOUS JURISDICTION No.1823 of 2018
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National Insurance Company Limited, Patna Regional Office through the
Chief Regional Manager and its constituted Attorney, Regional Office,
National Insurance Company Limited, Sone Bhawan, 4th Floor, Birchand
Patel Marg, Patna.
... ... Petitioner/s
Versus
Ram Babu Prasad Yadav, Son of Sri Ram Sakal Rai, Resident of Tata Colony,
Maner, Madhopur, Police Station Maner, District Patna.
... ... Respondent/s
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Appearance :
For the Petitioner/s : Mr.Rupak Kumar, Advocate
Mr. Vikrant Kumar, Advocate
For the Respondent/s : Mr. Balram Kapri, Advocate
======================================================
CORAM: HONOURABLE MR. JUSTICE ARUN KUMAR JHA
CAV JUDGMENT
Date : 08-09-2025
The present petition has been filed for setting
aside the order dated 13.07.2018 passed by learned Permanent
Lok Adalat, Patna in P.L.A. Case No. 04 of 2018, whereby and
whereunder the respondent has been found entitled for payment
of Rs.2,82,500/- along with interest at the rate of 9% per annum
from 19.01.2018 within a period of one month from the date of
the order.
2. The respondent brought a case before learned
Permanent Lok Adalat that his Mahindra Bolero vehicle bearing
Registration No. BR-01PB/3756 was parked in the field of the
school where the son of the respondent was Principal and it was
stolen in the intervening night of 23/24/01.2017 for which
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
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Naubatpur P.S. Case No. 20 of 2017 was instituted by the son of
the respondent. The case was found to be true but final report
was submitted stating the case to be clueless. The petitioner was
the insurer of the stolen vehicle and it is stated that the petitioner
was informed about alleged theft on 20.04.2017. The respondent
filed P.L.A. Case No. 04 of 2018 for grant of compensation of
Rs. 2,82,500/- against his stolen vehicle before Permanent Lok
Adalat, Patna stating that the claim of respondent was
repudiated and closed by the petitioner on 22.02.2018. The
petitioner appeared before the learned Permanent Lok Adalat,
Patna and filed written statement and supplementary written
statement on 23.02.2018 denying its liability on factual and
legal grounds. The learned trial court after consideration of the
case of the respective parties, vide order dated 13.07.2018,
found that the respondent was entitled to receive the claim of
Rs.2,82,500/-, the value of the vehicle, as assessed by the
petitioner and accordingly, directed the petitioner to pay
Rs.2,82,500/- along with interest at the rate of 9% per annum
from the date of the filing of the case, i.e., 19.01.2018, within a
period of one month from the date of the passing of the order.
This order is under challenge before this Court.
3. Learned counsel for the petitioner submitted
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
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that the impugned order is not sustainable and the same is liable
to be set aside as the learned Permanent Lok Adalat has
exceeded its jurisdiction to decide the same under Section 22-C
of the Legal Services Authorities Act, 1987 (in short 'the Act').
The learned Permanent Lok Adalat cannot entertain such claim
which is the subject matter of Consumer Protection Act, 1986.
The learned Permanent Lok Adalat entertained the matter
relating to an offence not compoundable under the law and
therefore, the order dated 13.07.2018 passed by it suffers from
jurisdictional error. Learned counsel further submitted that the
impugned order is bad in the eye of law and illegal and suffers
from non-application of judicial mind. Learned counsel further
submitted that the theft of the stolen vehicle took place in the
night of 23/24.01.2017 but information was given to the
petitioner only on 20.04.2017, i.e., after delay of 87 days which
is clear violation of the terms and conditions. The respondent
was required to give notice of the theft of the vehicle insured to
the petitioner company immediately upon the occurrence but the
respondent failed in his duty. This delay in intimating the
petitioner company goes to the root of the agreement and it is
not a merely technical matter but an essential condition for
making a valid claim by the insured. On this aspect learned
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counsel relied on the case of M/s Sonell Clocks and Gifts
Limited Vs. The New India Assurance Company Limited in
(2018) 9 SCC 784, wherein the Hon'ble Supreme Court held
that the stipulation contained in Clause 6 of the policy to
forthwith give notice to the insurer is not a technical matter but
sine qua non for a valid claim to be pursued by the insured, as
agreed upon between the parties and the respondent insurer had
not waived the condition relating to delay stipulated in the said
clause of general conditions of the policy, by appointing a
surveyor. The Hon'ble Three Judges Bench in Sonell Clocks
(supra) overruled by implication the decision of a Bench of Two
Judges of Hon'ble Supreme Court in the case of Om Prakash
Vs. Reliance General Insurance and Another in (2017) 9 SCC
724, wherein it has been held that genuine claim of the appellant
ought not to be rejected on technical ground, keeping in mind
that the Consumer Protection Act is a beneficial legislation
warranting liberal construction and thus Three Judges Bench
observed that the said contention cannot be taken forward at the
instance of the appellant who failed to fulfill the threshold
stipulation contained in Clause 6 of the general conditions of the
policy and for this reason must suffer the consequence. Learned
counsel next referred to the decision in the case of Oriental
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Insurance Company Limited Vs. Parvesh Chander Chadha in
(2018) 9 SCC 798, wherein the Hon'ble Supreme Court held that
the repudiation of claim on ground of delay was proper and
observed that the respondent insured was duty bound to inform
forthwith of the loss of the vehicle so that the insurer could
immediately inquire into the cause of theft and nature of loss as
per the terms of insurance policy. Insured was duty bound to
inform it about the theft of the vehicle immediately after the
incident and on account of delayed intimation, the insurer was
deprived of its legitimate right to get an inquiry conducted into
the cause and nature of loss. Learned counsel thus submitted
that the respondent did not give explanation for unusual delay in
informing the appellant about theft of his vehicle which gave
rise to claim of compensation. In the case of Oriental
Insurance Company Limited (supra) the theft was committed
on 18.01.1995 and the information was given by the letter on
22.05.1995
and on the ground of delay, the repudiation of the
claim was held to be proper. The insurance company cannot be
saddled with the liability to pay compensation as the insured did
not comply the terms of agreement for giving intimation to the
insurance company forthwith.
4. Learned counsel for the petitioner further
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
submitted that Section 22-C(3) and 22-C(4) of the Act provide
that when an application is made to the Permanent Lok Adalat
under sub-section (1) and when pleadings have been filed, the
Permanent Lok Adalat shall conduct conciliation proceedings
between the parties to the application in such manner as it thinks
appropriate taking into account the circumstances of the dispute.
Only when the parties fail to reach an agreement under sub-
section (7) of Section 22-C then under sub-section (8), the
Permanent Lok Adalat shall, if the dispute does not relate to any
offence, decide the dispute. Learned counsel further submitted
that the learned Permanent Lok Adalat has not taken any steps
for conciliation between the parties and this provision is
mandatory as the word shall have been used in Section 22-C(4)
of the Act but this mandatory provision was not followed.
Further, sub-section (8) of Section 22-C makes it clear that only
when the parties fail to reach an agreement after conciliation,
then only Permanent Lok Adalat will decide the dispute if the
dispute does not relate to any offence. Learned counsel further
submitted that the Hon'ble Supreme Court has also held that
conciliation proceedings under Section 22-C of the Act are
mandatory when Permanent Lok Adalat decides the dispute on
its merit and in this regard relied on the case of Canara Bank
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
Vs. G.S. Jayarama in (2022) 7 SCC 776.
5. Learned counsel for the petitioner further
submitted that proviso to Section 22-C(1) provides that the
Permanent Lok Adalat shall not have jurisdiction in respect of
the claim in the matter relating to an offence not compoundable
under any law. In the present case, the offence is not
compoundable and for violation of provisions of Section 22-C,
the impugned order is bad and illegal. In this regard, learned
counsel relied on the decision of United India Insurance
Company Limited Vs. Ajay Sinha and Another in (2008) 7
SCC 454, wherein the Hon'ble Supreme Court held that provisos
appended to Section 22-C(1) limits the jurisdiction of Permanent
Lok Adalat. These provisos must be interpreted in an expansive
manner. Therefore, the term related to an offence appearing in
first proviso must be interpreted broadly, and as the
determination before Permanent Lok Adalat involves as to
whether or not offence, which is non-compoundable, have been
committed, this falls outside the jurisdiction of Permanent Lok
Adalat.
6. Thus, learned counsel submitted that taking
into consideration the above noted infirmities, the impugned
order suffers from a number of illegalities and is fit to be set
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
aside.
7. Learned counsel appearing on behalf of the
respondent vehemently contended that there is no infirmity or
illegality in the impugned order and the same is proper and
correct. Learned counsel submitted that the insurance company
failed to settle the claim of respondent only on the ground of
delay. Even from plain reading of the FIR it is clear that the
vehicle was registered in the name of respondent and he was
aged about 60 years at the time of occurrence and had been
suffering from illness. The petitioner accepted that the vehicle
was stolen. Police investigated the matter and submitted charge
sheet finding the case to be true but without clue. There could be
no challenge to the jurisdiction of Permanent Lok Adalat for
deciding the matter when the petitioner repudiated the claim of
the respondent. Learned counsel referred to the decision of
Canara Bank (supra) in support of his contention that the
Permanent Lok Adalat has got adjudicatory powers and thus
submitted that on mere technicalities, the claim of the
respondent could not be rejected by the petitioner. Learned
counsel further submitted that the settlement of insurance claim
under the existing laws is a beneficial provision and if the
reason for delay in making claim is satisfactorily explained,
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
such a claim cannot be rejected on ground of delay. Further, the
condition regarding delay shall not be taken shelter of to
repudiate the insurance claim which has otherwise been proved
to be genuine and referred to the decision of Hon'ble Supreme
Court in the case of Om Prakash (supra). Learned counsel
reiterated that the police has found the case true for theft of the
vehicle of the respondent and insurer has no power to reject the
genuine claim which has already been verified and found to be
correct. Thus, learned counsel submitted that the impugned
order needs no interference by this Court.
8. I have given my thoughtful consideration to the
rival submission of the parties and perused the record.
Admittedly, the intimation to the insurance company, has been
given after delay of 87 days. Now condition no. 1 of the
insurance agreement between the parties reads as under:-
"1. Notice shall be given in writing to the
Company immediately upon the occurrence
of any accidental loss or damage in the event
of any claim and thereafter the insured shall
give all such information and assistance as
the Company shall require. Every letter
claim writ summons and/or process or copy
thereof shall be forwarded to the Company
immediately on receipt by the insured. Notice
shall also be given in writing to the
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
Company immediately the insured shall have
knowledge of any impending prosecution,
inquest or fatal inquiry in respect of any
occurrence which may give rise to a claim
under this Policy. In case of theft or criminal
act which may be the subject of a claim
under this Policy the insured shall give
immediate notice to the police and co-
operate with the Company in securing the
conviction of the Offender."
9. The Hon'ble Supreme Court in Sonell Clocks
(supra) took into consideration the case of Om Prakash (supra),
wherein it has been held that genuine claim of the appellant
ought not to be rejected on technical ground, keeping in view
the fact that the Consumer Protection Act is a beneficial
legislation warranting liberal construction. However, the
Hon'ble Supreme Court held that it is not a technical matter but
sine qua non for a valid claim to be pursued by the insured, as
agreed upon between the parties. In the same vain is the another
decision of Hon'ble Supreme Court in the case of Oriental
Insurance Company Limited (supra) where the repudiation
claim on the ground of delay to be held to be proper. The
Hon'ble Supreme Court held that in insurance policy the
respondent was duty bound to inform it about theft of the
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
vehicle immediately after the incident. On account of delayed
intimation, the appellant was deprived of its legitimate right to
get an inquiry conducted into the alleged theft of vehicle and
make an endeavour to recover the same. Thus, learned Supreme
Court held that the appellant cannot be saddled with the liability
to pay compensation to the respondent despite the fact that he
had not complied with the terms of the policy. The situation is
somewhat similar in the present case. The respondent failed to
intimate the petitioner company about the theft of the vehicle
immediately after the occurrence and gave intimation only after
87 days of the occurrence. Therefore, there is violation of the
terms of the policy. Hence, the impugned order has been passed
without consideration of the law laid down by the Hon'ble
Supreme Court.
10. Further, it is evident from the record that
conciliation proceeding never took place before the Permanent
Lok Adalat when there is specific provision under Section
22-C(4) of the Act. The Permanent Lok Adalat is bound to
follow the mandatory conciliation proceedings. Therefore, it is
obvious that no attempt was made by the learned Permanent Lok
Adalat for conciliation and to propose terms of settlement
between the parties at their instance under Section 22-C(7) of
Patna High Court C.Misc. No.1823 of 2018 dt.08-09-2025
the Act. Therefore, violation to abide by the mandatory
provision of law makes the impugned order bad. Reliance could
be placed on the case of Canara Bank (supra) about the
mandatory nature of Section 22-C of the Act about conciliation
proceeding before the Permanent Lok Adalat.
11. Though other grounds have also been taken
challenging the impugned order, since there is apparent illegality
in the impugned order emanating from non-consideration of the
mandatory provision of law as well as violation of the essential
condition of policy, I am of the considered opinion that the
impugned order dated 13.07.2018 could not be sustained and the
same is set aside.
12. Accordingly, the present petition is allowed.
13. However, it is made clear that this Court has
not made any observation on the merit of the dispute between
the parties and all rights and contentions of the parties are left
open.
(Arun Kumar Jha, J)
DKS/-
AFR/NAFR NAFR
CAV DATE 08.08.2025
Uploading Date 08.09.2025
Transmission Date NA
