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SUPREME COURT OF INDIA
SANJAY KISHAN KAUL, ABHAY S. OKA, JJ.
National Insurance Company Ltd. - Appellant
Versus
The Chief Electoral Officer & Ors. - Respondents
Civil Appeal No.4769 of 2022
Decided on : 08-02-2023.
(A) Insurance – Terms of insurance policy are to be strictly construed – Insurance contracts are in nature of special class of contracts having distinctive features such as utmost good faith, insurable interest, indemnity subrogation, contribution and proximate cause which are common to all types of insurances – Each class of insurance also has individual features of its own – Insurance contracts are in nature where exceptions cannot be made on ground of equity and Courts ought not to interfere with terms of an insurance agreement – Insured cannot claim anything more than what is covered by insurance policy – Clauses of an insurance policy have to be read as they are – Consequently, terms of insurance policy that fix responsibility of insurance company must also be read strictly – Rule of contra proferentem does not apply in case of commercial contract, for reason that a clause in a commercial contract is bilateral and has mutually been agreed upon. (Paras 26, 27, 28, 29 and 30)
(B) Insurance – Group Insurance Policy – Death of Police Constable due to sun stroke/heat stroke while performing election duty – There was no semblance of any violence being cause of death – In their own wisdom Respondent No.1 never thought that it was a case for which claim should be lodged with Appellant insurance company – Whether claim was admissible under insurance policy or not, conduct of Respondent No.1 would not entitle them to fasten liability on Appellant and would have to be borne by them if they are of view that such an amount ought to have been made – It would be negligence of Respondent No.1 in lodging claim – If it was not admissible then there is no reason to forward claim to Appellant – An unexpected accident and unforeseen consequence or result from a normal or routine activity may constitute an accident but it would not qualify as “accidental means” – Proximate causal relationship between accident and body injury is a necessity – Cause arising from a sun stroke cannot be included within parameters of ‘Scope of Cover’ in insurance policy defining when such insurance amount would become payable – Appellant insurance company is not liable – Impugned judgment of Division Bench of High Court set aside – Amount already paid by Insurance Company to widow of deceased not to be recovered. (Paras 24, 31, 32, 33, 34, 35 and 36)
Facts of the case:
Non-application of the general strict liability principle, in case of an insurance policy, is sought to be questioned, where an expanded meaning has been given to the relevant term of the insurance policy in order to grant insurance claim.
Findings of Court:
Impugned judgment of the Division Bench of the Patna High Court is clearly unsustainable and is set aside. In fact, the order passed by Single Judge was predicated on the own admission of Respondent No.1, which is now sought to be resiled from by giving a slightly different interpretation but then if the claim was not admissible, there was no reason for Respondent No.1 to forward the claim to the Appellant insurance company merely because it was made and with objective of somehow benefiting Respondent No.2 at the cost of the Appellant.
Result : Appeal allowed.
Certainly. Based on the provided legal document, here are the key points:
The insured cannot claim anything beyond the coverage specified in the insurance policy. The clauses of the policy must be interpreted as they are written, without extraneous considerations (!) (!) (!) (!) (!) .
Insurance contracts are of a specialized nature, characterized by features such as utmost good faith, insurable interest, indemnity, subrogation, contribution, and proximate cause. Each type of insurance has its own distinctive features, and courts are generally bound to interpret the terms strictly, without making exceptions based on equity. The responsibility of the insurer must be determined strictly by the terms of the policy, and the rule of contra proferentem does not apply in commercial contracts where clauses are mutually agreed upon (!) (!) (!) (!) (!) .
In the context of group insurance policies, the scope of coverage is crucial. Death resulting from causes not explicitly covered—such as natural causes like sunstroke or heatstroke—may not qualify for coverage if the policy specifies that death must result solely and directly from an accident caused by external violence (!) (!) .
The interpretation of the policy's language is paramount. A plain and literal reading of the policy clauses indicates that for a death to be covered, it must be caused solely and directly by an external violent accident. Death caused by natural causes, such as sunstroke, does not meet this criterion and therefore is not within the scope of the insurance coverage (!) (!) (!) (!) .
The timing of claim submission is critical. Claims must be made immediately upon the occurrence of the event within the policy period. Delayed claims, especially those made after the policy has expired, are generally not admissible, and the burden of timely claim lodgment lies with the insured or their representatives (!) (!) .
Conduct of the parties, including delays or neglect to lodge claims within the stipulated period, can impact liability. If the insured or their representatives fail to claim within the prescribed timeframe, the insurer is typically not liable, and any subsequent attempts to claim are viewed as negligence or improper conduct (!) (!) .
When assessing whether an incident falls within the scope of coverage, the primary consideration is whether the cause of death aligns with the policy’s defined scope. In cases where death results from natural causes not caused by external violence, the insurer is not liable, regardless of whether the death occurred during the policy period (!) (!) .
The court emphasizes that insurance policies are to be interpreted strictly, and any ambiguity or deviation from the explicit language can lead to the denial of claims. The policy's language regarding what constitutes an insurable event is to be given paramount importance (!) (!) (!) .
The decision underscores that the insurer's liability is limited to the terms explicitly agreed upon, and courts will not extend coverage beyond what is clearly stipulated in the policy. Any attempt to broaden the scope through interpretation or extrinsic evidence is generally not permissible (!) (!) .
Finally, the court set aside the judgment favoring broader liability and confirmed that the insurer was not liable for the claim, especially since the cause of death did not match the coverage criteria. The amount paid to the claimant by the insurer was not to be recovered, and the parties were to bear their own costs (!) (!) .
Please let me know if you need further analysis or specific legal advice regarding this case.
JUDGMENT :
SANJAY KISHAN KAUL, J.
1. The non-application of the general strict liability principle, in case of an insurance policy, is sought to be questioned, where an expanded meaning has been given to the relevant term of the insurance policy in order to grant insurance claim, now assailed before us by the insurance company, the Appellant herein, in view of the order dated 03.10.2017 passed by the Division Bench of Patna High Court in favour of Respondent No. 1 herein. The original claim was made by a writ petition filed by the prospective beneficiary i.e. Respondent No.2 herein, but while granting the benefits to the beneficiary, a liability was placed on Respondent no.1 and not on the insurance company, which aspect was reversed by the Division Bench vide its judgment dated 03.10.2017 fastening the liability on the insurance company.
Facts:
2. The Appellant, insurance company, and Respondent No.1, the Chief Electoral Officer, Bihar, Patna, entered into a Memorandum of Understanding (hereinafter referred to as ‘MoU’) on 09.02.2000 to provide insurance cover to the persons deployed for election related work for Bihar Legislative Assembly Elections in the year 2000. The relevant Clause in question of the MoU is Clause 3, which reads as under:
“Scope of Cover
The insurance is intended to provide for the payment of compensation in the event of death only resulting solely and directly from accident caused by external violent and any other visible means.”
On the MoU being executed, the State Government opted for a Group Insurance Scheme vide letter dated 10.02.2000 to cover its premium paying employees, who were appointed for election related activities. It appears that keeping in mind the period of the by-polls, the duration of the insurance scheme was extended from 24.05.2000 to 23.06.2000 by way of a supplementary policy. The incident, we are concerned with, was during these by-poll elections.
3. The husband of Respondent No.2, late Deval Ravidas, Constable, Shivhar District Force, was a member of the Static Armed Force, posted at Booth no.67, Primary School, Mathura Sultanpur, Police Station Bidupur, District Vaishali, who died due to a sun stroke/heat stroke while performing election duty for the Bihar Legislative Assembly. As stated, this was during the extended period of the insurance policy. It appears that the matter rested at that for a fairly long time and it is only in the year 2008 that Respondent No.2, wife of the deceased Constable Deval, sought to raise the issue of compensation vide her letter dated 21.11.2008.
4. The Assistant Election Officer, Bihar-cum-Under Secretary to the Government, vide letter dated 20.11.2009 addressed to the Under Secretary to the Lokayukta, Patna, Bihar, noted that the death of the deceased Constable had occurred on account of heat stroke on 26.05.2000 during election duty and had not occurred on account of any external violent activity/accident. Thus, compensation to Respondent No.2 could not be found admissible for payment.
5. Respondent No.2 wife filed a Writ Petition, being CWJC No.1781/2011, before the High Court of Judicature at Patna for quashing the aforementioned letter dated 20.11.2009 and sought payment of compensation amount of Rs.10 lakhs as per the insurance policy since her husband had died while performing election duty. Apparently, on account of some directions of the learned Single Judge, the District Election Officer placed a notice of claim dated 24.04.2011 to the Appellant insurance company regarding the claim for insurance. This was, however, not accepted.
6. The learned Single Judge in the Writ Petition, CWJC No.1781/2011, decided not to go into the issue whether the accidental death was in terms of the policy because the Chief Electoral Officer in a supplementary counter affidavit had already acknowledged the eligibility for payment to the wife of the deceased police official. The Court, relying on the judgment in Lilawanti Devi v. The State of Bihar & Ors, 1998 (2) P
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