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1989 Supreme(HP) 185
High Court Of Himachal Pradesh
P.C.BALAKRISHNA MENON
ORIENTAL INSURANCE CO. - Appellant
Versus
KRISHNA RANI - Respondent
Civil Revision No. 129 of 1989
Decided On : 12/27/1989
For the appellant(s)/petitioner(s) Sh. K.D. Sood, Advocate. For the respondent(s):Sh. Devinder Gupta, Advocate.
A clause in a policy of insurance limiting the period of time within which a suit or other proceeding to enforce the claim after its disclaimer is to be filed is valid and binding on the parties.
Headnote:
INSURANCE - POLICY - LIMITATION - VALIDITY OF CLAUSE LIMITING TIME FOR FILING SUIT - SECTION 28 OF THE INDIAN CONTRACT ACT - ARTICLE 44(B) OF THE LIMITATION ACT.
Fact of the Case:
The plaintiff filed a suit against the defendant insurance company for recovery of compensation for the loss sustained by the plaintiff in an accident to his vehicle insured with the defendant. The accident occurred on 14-1-1983 and the plaintiff submitted a claim to the defendant on 5-9-1983. The defendant repudiated the claim on 18-6-1984. The suit was filed on 18-1-1986. Issue No. 2 in the suit was "Whether the claim is within time"?
Finding of the Court:
The court held that the clause in the policy of insurance limiting the period of time within which a suit or other proceeding to enforce the claim after its disclaimer is to be filed is an integral part of the contract of insurance, as per which the parties have agreed that the insurer will not be liable for any loss or damage after the stipulated time, such a clause is not opposed to section 23 or section 28 of the Indian Contract Act and it is perfectly valid and binding between the parties.
Issues: Whether the clause in the policy of insurance limiting the period of time within which a suit or other proceeding to enforce the claim after its disclaimer is to be filed is valid and binding on the parties?
Ratio Decidendi: The court relied on the decisions in AIR 1914 Bombay 225, AIR 1949 Calcutta 390, AIR 1950 (East) Punjab 352, and AIR 1976 SC 287 to hold that a clause in a policy of insurance limiting the period of time within which a suit or other proceeding to enforce the claim after its disclaimer is to be filed is valid and binding on the parties.
Final Decision: The court set aside the finding of the court below on issue-2 and dismissed the suit as not maintainable.
P.C. Balakrishna Menon, C.J.-This Civil Revision by the defendant, namely, The Oriental Insurance Company is against the finding of the court below, on issue No. 2, in the suit for recovery of a sum of Rs. 11,19,255.14 p. as compensation for the loss sustained by the plaintiff in an accident to his vehicle insured with the defendant. The accident was on 14-1-1983 the plaintiff submitted a claim to the defendant on 5-9-1983. The defendant repudiated the claim on 18-6-1984. The suit was filed on 18-1-1986. Issue No. 2 in the suit is "Whether the claim is within time"? The court below following the decision of the Karnataka High Court in AIR 1988 Knt 185, The Secretary Taluka Agricultural Produce Co-operative Marketing Society Ltd. Shidlaghatta v. The Custodian New India Assurance Co. Ltd., Bombay and another, decided the issue against the defendant and has held that the suit is within time.
2. Ex. RA is the Policy of Insurance of the vehicle involved in the accident. The Policy contains a clause stipulating that the Insurance Company shall not be liable for any loss or damage if no suit is filed within 12 months after the date of the disclaimer. The present suit is filed long after 12 months after the disclaimer and the Insurance Co. has raised the contention that the Insurer is not liable for any loss or damage to the vehicle The Court below has held that the period of limitation is three years under Article 44 (b) of the Limitation Act and the suit is within time.
3. The decisions in AIR 1914 Bombay 225, The Baroda Spinning and Weaving Co. Ltd. v. Satyanarayan Marine and Fire Insurance Co. Ltd, AIR 1934 Rangoon 15, A.N Ghose v. Reliance Co. and another, AIR (36) 1949 Calcutta 390, Dawood Tar Mahomed Bros, and others v. Queensland Insurance Co Ltd., AIR (37) 1950 (East) Punjab 352, The Ruby General Insurance Co Ltd. v The Bharat Bank Ltd. and others, and AIR I960 Punjab 236 (Full Bench), Pearl Insurance Co. v. Atma Ram, had considered a similar question and it was held that an agreement restricting the insurers liability with reference to the time within which the claim is to be enforced is perfectly valid in law The decisions in AIR 1914 Bombay 225, AIR 1949 Calcutta 390 and AIR 1950 (East) Punjab 352 (supra) were approved by the Supreme Court in AIR 1976 SC 287, The Vulcan Insurance Co. Ltd, v. Meharaj Singh and another.
4. A.N. Ghoses case in AIR 1934 Rangoon 15, (supra) arose out of a suit on a policy of Fire Insurance. It was a condition of the policy that the Insurer will not be liable for any loss or damage after the expiry of 12 months from the happening of the loss or damage unless the claim was the subject of a pending action or arbitration. The question was whether the suit filed within the period of three years provided for under Article 86 of the Limitation Act, 1908 but after the 12 months period provided for in the policy of insurance was within time. After considering the decisions in AIR 1926 Rangoon 3, G Rainey v. Burma Fire and Marine Insurance Co. Ltd, AIR 1914 Bombay 225, and AIR 1924 Calcutta 186 (supra), Leach, J. (as he then was) came to the following conclusion at page 17 : "It is not a case of the clause stating that the insured shall not have the right to sue after 12 months. If it did that, it would, in my opinion, be void, but it is a case where the parties have agreed that in certain circumstances the insurance company shall be under no liability under its policy. The policy-holder is prohibited from bringing a suit, but having brought it the insurance company is entitled to say : "We are under no liability by reason of the provisions of the policy." I, therefore, hold that the clause in question does not contravene the provisions of section 28 Contract Act. For the same reasons I hold that it does not offend against Article 86 of the Limitation Act I also hold that the clause is not contrary to public policy and does not defeat the provisions of any law. The decision of the preliminary issue
