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IN THE HIGH COURT OF KERALA AT ERNAKULAM
N.NAGARESH, J.
Abraham Ittoop - Appellant
Versus
Insurance Ombudsman, Office of The Insurance Ombudsman and Ors - Respondent
WP(C).No.2416 of 2021(B)
Decided On : 09-04-2021
Insurance Ombudsman Rules - Claim Limit Interpretation - The court held that the Insurance Ombudsman erred in rejecting the claim based on the total value of the stock exceeding the limit, when the claim amount was within the prescribed limit. The judgment highlights the interpretation of Rule 17(3) of the Insurance Ombudsman Rules and its application in determining the compensation limit for claims.
Fact of the Case:
The petitioner's goods stored in godowns were damaged due to torrential rains. The Insurance Ombudsman dismissed the claim, stating that the claimed amount exceeded the Ombudsman's limit of Rs.30 lakhs.
Finding of the Court:
The court found that the Ombudsman erred in rejecting the claim based on the total value of the stock exceeding the limit, when the claim amount was within the prescribed limit. The court allowed the writ petition, set aside the Ombudsman's award, and remitted the application back to the Insurance Ombudsman for reconsideration.
Issues: Interpretation of Rule 17(3) of the Insurance Ombudsman Rules, application of claim limit, and jurisdiction of the Ombudsman.
Ratio Decidendi: The Ombudsman should not reject a claim based on the total value of the stock exceeding the limit if the claim amount is within the prescribed limit. The Ombudsman's jurisdiction should be exercised in accordance with the Rules.
Final Decision: The writ petition is allowed, the Ombudsman's award is set aside, and the petitioner's application is remitted back to the Insurance Ombudsman for reconsideration.
JUDGMENT :
1. The petitioner, who is running a small time proprietary unit which is engaged in the business of Clearing, Forwarding and Transporting of Fertilisers, is aggrieved by Ext.P3 Award of the Insurance Ombudsman.
2. The petitioner states that he owns three godowns at different parts of Kottayam and all those godowns and goods stored therein are insured by the 2nd respondent. The policies taken by the petitioner are Standard Fire and Special Perils Policy. The petitioner has been paying a total premium of about Rs.3.5 lakhs every year.
3. On 09.08.2019, torrential rains hit the area. The materials stored in the godowns were totally damaged. The incident was intimated to the insurer. A Surveyor came and assessed the total value of the stock in the godown at Rs.30,72,808/-. Since the insurer did not consider the claim of the petitioner, he preferred a complaint before the Insurance Ombudsman invoking Rule 13 read with Rule 14 of the Insurance Ombudsman Rules, 2017.
4. Though the Insurance Surveyor had assessed the total value of the stock at Rs.30,72,808/-, the petitioner, after adjusting the salvage value, made a claim of Rs.25,05,611/-only, before the Insurance Ombudsman. The Insurance Ombudsman, however, dismissed the claim holding that the claimed amount exceeded the Ombudsman's limit of Rs.30 lakhs. The said Ext.P3 Award is challenged in this writ petition.
5. The counsel for the petitioner contended that Ext.P3 order/Award has been passed on a wrong interpretation of Rule 17(3) of the Insurance Ombudsman Rules. Ceiling limit of Rs.30 lakhs has to be tested against the loss claimed by the complainant and not against the total value of the stocks. The Ombudsman has failed to exercise the jurisdiction vested in him as per the Rules.
6. Heard.
7. It is discernible from Ext.P1 complaint filed by the petitioner before the Insurance Ombudsman that the petitioner had claimed quantum of relief of Rs.25,05,611/-along with interest at 8% per annum till the date of disbursement. The petitioner made that claim after adjusting the salvage value of the goods.
8. Rule 17 of the Insurance Ombudsman Rules, 2017 framed under Section 24 of the Insurance Regulatory and Development Authority Act, 1999, reads as follows:-
(1) Where the complaint is not settled by way of mediation under rule 16, the Ombudsman shall pass an award, based on the pleadings and evidence brought on record.
(2) The award shall be in writing and shall state the reasons upon which the award is based.
(3) Where the award is in favour of the complainant, it shall state the amount of compensation granted to the complainant after deducting the amount already paid, if any, from the award:
Provided that the Ombudsman shall – (i) not award any compensation in excess of the loss suffered by the complainant as a direct consequence of the cause of action; or (ii) not award compensation exceeding rupees thirty lakhs (including relevant expenses, if any).
(4) The Ombudsman shall finalise its findings and pass an award within a period of three months of the receipt of all requirements from the complainant.
(5) A copy of the award shall be sent to the complainant and the insurer named in the complaint.
(6) The insurer shall comply with the award within thirty days of the receipt of the award and intimate compliance of the same to the Ombudsman.
(7) The complainant shall be entitled to such interest at a rate per annum as specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999, from the date the claim ought to have been settled under the regulations, till the date of payment of the amount awarded by the Ombudsman.
(8) The award of Insurance Ombudsman shall be binding on the insurers.”
The proviso to sub-rule (3) lays down that the Insurance Ombudsman shall not award any compensation in excess of the loss suffered by the complainant as a direct consequence of the cause of action.
9. Ext.P3 Award passed by the Ombudsman would show
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