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UTTAR PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, LUCKNOW
Hon’ble Mr. Justice V.K. Mehrotra, President &
Mr. Banarsi Das, Member
NEW INDIA ASSURANCE CO. LTD.—Appellant
versus
BRIJENDRA SINGH SARNA—Respondent
Appeal No. 398/SC of 1992—Decided on 5.3.1997
A claim filed within two years of the date of repudiation of claim by the insurance company is not barred by limitation.
Headnote:
LIMITATION ACT - INSURANCE POLICY - SECTION 44(B) - CLAIM FILED WITHIN TWO YEARS OF REPUDIATION OF CLAIM BY INSURANCE COMPANY IS NOT BARRED BY LIMITATION.
Fact of the Case:
The complainant obtained a comprehensive insurance policy from the appellant company on 22 December 1987. On 25 December 1987, the insured truck met with an accident, resulting in the death of a child and the burning of the truck by an angry crowd. The insurance company repudiated the claim on 25 July 1990. The complainant filed a complaint before the District Forum on 3 June 1992, seeking compensation for the loss.
Finding of the Court:
The District Forum allowed the complaint and directed the insurance company to pay Rs. 65,000/- to the complainant. The insurance company appealed to the State Commission, arguing that the claim was barred by limitation as it was not filed within one year from the date of repudiation of the claim.
Issues: 1. Whether the claim was barred by limitation as it was not filed within one year from the date of repudiation of the claim. 2. Whether the Special Clause II of Condition 6 of the policy barred the filing of the complaint after expiry of 12 months from the date of repudiation.
Ratio Decidendi: 1. The court held that the claim was not barred by limitation as it was filed within two years of the date of repudiation of the claim by the insurance company. 2. The court relied on the decision of the National Commission in Hiran Tobacco Factory Pvt. Ltd. v. United India Insurance Company Limited, which held that the Special Clause II of Condition 6 of the policy was no bar to the filing of the complaint after expiry of 12 months from the date of repudiation.
Final Decision: The court dismissed the appeal and upheld the order of the District Forum.
Mr. Justice V.K. Mehrotra, President— We had heard this appeal in part on 28 February, 1997 and have heard Sarvsri B.P. Dubey and M.H. Khan Advocates for the parties further today.
2. The appeal is by the New India Assurance Company, which was opposite party be fore the District Forum against order dated 4 February, 1993 of District Forum, Lakhimpur Kheri in Complaint Case No. 84 of 1992. The complaint was allowed and the appellant Company was directed to pay to the complainant respondent a sum of Rs. 65,000/- for covering the loss occasioned to the complainant on account of the accident to a truck bearing registration No. USH-3521 which was insured with the Insurance Company.
3. A policy was taken on 13 November, 1987 under which the third party risk alone was covered. However, on 22 December, 1987 the complainant obtained a comprehensive policy from the Company. The truck met with an accident on 25 December, 1987. One person (child) got killed and the truck, it is said, was burnt by the crowd which has gathered at the site of the accident out of anger.
4. The Insurance Company deputed its Surveyor when information about the accident was given by the complainant. The Surveyor assessed the damage at Rs. 65,000/-. The claim was, however, repudiated by the Insurance Company on 25 July, 1990 on certain grounds. Aggrieved by the repudiation the complainant approached the District Forum for redress by filing the complaint on 3 June, 1992.
5. In the written reply filed before the District Forum the Insurance Company took the stand that on the date of the accident there was no valid subsisting policy because the amount of the cheque dated 22.12.1987 in respect of the amount of premium came to the realised long thereafter. It was also said that on the date of accident and for some time thereafter the complainant did not have sufficient funds in the Bank account to which the cheque related. As such, according to the Company, no concluded contract came into existence.
6. In respect of this submission the District Forum took the view that indisputably the cheque came to be subsequently realised and was never dishonoured by the Bank so that there was a valid policy on the date of the accident. This view of the District Forum is plainly correct in law because it is settled by repeated pronouncements of the Supreme Court that the date of payment of an amount for which a cheque is given relates back to the date of the cheque if the cheque is not dishonoured. The payment of premium, in the circumstances of the present case, would be said to have been made by the claimant-respondent on 22 December, 1987 itself.
7. Before the District Forum it was emphasised that the complaint filed on 3 June, 1992 was barred by time as it had not been filed within a period of one year from the date of the repudiation of claim. The District Forum took the view that the complaint was filed within time as it had been filed within three years of the date of repudiation.
8. On behalf of the appellant it has been urged with some emphasis by Mr. B.P. Dubey, referring to the stipulation in the policy conditions about a claim being made before the appropriate Court within a period of one year from the date of disclaimer, that it was a valid condition as held by the Supreme Court in Vulcan Insurance Company Ltd. v. Maharaj Singh and Another, (AIR 1976 SC 287) and that the claim filed beyond that period was not entertainable as held by the National Commission in the case of M/s. Paras Textile v. The New India Assurance Co. Ltd., I (1993) CPJ 126 (NC), relying upon the aforesaid Supreme Court decision.
9. In Paras Textiles the National Commission, while up-holding the decision of the State Commission, observed that the appellants having abandoned their right by not filing a suit or taking any action within 12 months from the date of the repudiation of their claim, the Company was not under any liability to pay the claim to the insured under the policy.
10. Mr. M.H. Khan has c
