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2023 Supreme(All) 314
IN THE HIGH COURT OF ALLAHABAD
MANISH MATHUR, J.
Oriental Insurance Co.Ltd.Thru.Divisional Manager – Appellant
Versus
State Of U.P.Thru.Dir.General Institutional Finance And Ors. – Respondents
Matters Under Article 227 No.27 of 2021
Decided on : 15-03-2023
Advocate Appeared:
For the Appellant : Anchal Mishra
For the Respondent: Rinku Verma
Point of Law : It is apparent that neither any statutory provision has been indicated for grant of interest nor does agreement dated stipulate grant of any interest.
Headnote:
Constitution of India,1950 - Article 227 - Insurance company - Seeking compensation - Agreement was entered into between petitioner-company and the State - It is further submitted that said scheme was to be implemented with effect from the date it was entered into and as per provisions of scheme, in case of death arising out of an accident pertaining to head of family/bread earner of family during operation of agreement, insurance company was bound to make compensation at rate of R.5,00,000/- to nominee/legal heir - Whether award of interest in addition to penalty indicated in agreement amounts to double jeopardy? - Apparently, imposition of penalty upon Insurance Company is a measure not only of encouragement to adhere to terms and conditions of agreement but is also in nature of cost imposed upon the Insurance Company in case the claim is wrongly repudiated and compensation is not made to nominee/legal heir of the insured. [Para 15]
Finding of Court : It appears that a steep penalty of Rs.1000/-per week has been imposed upon insurance Company for repudiating or not providing compensation in terms of the insurance scheme - Award of penalty by Permanent Lok Adalat as such appears to be in conformity with agreement dated - So far as award of interest at rate of 9 percent per annum is concerned, Permanent Lok Adalat in its impugned order does not indicate any provision or condition of agreement under which interest has been awarded over and above penalty imposed in terms of agreement nor does agreement contain any clause regarding payment of interest to claimant over and above penalty clause - As such, in considered opinion of Court, permanent Lok Adalat travelled beyond conditions of agreement dated in granting interest while ignoring fact that a steep penalty of Rs.1,000/-per week has already been imposed and is payable by Insurance Company in terms of agreement.
Result : Petition as such is partly allowed
JUDGMENT :
1. Heard learned counsel for petitioner, learned State Counsel for opposite parties 1 and 2 and Mr. Rinku Verma, learned counsel for opposite parties 3 to 6.
2. Petition has been filed under Article 227 of the Constitution of India challenging order dated 27.12.2019 passed in PLA Case No.15 of 2018 by the Permanent Lok Adalat, Lucknow whereby claim of private opposite parties for seeking compensation in terms of the Mukhya Mantri Kisan Evam Sarvhit Bima Yojna has been allowed.
3. Learned counsel for petitioner submits that aforesaid scheme of the State Government was floated in which various insurance companies were a party to the memorandum of understanding for the purposes of providing services for implementation of the said insurance scheme for indemnifying farmers of the State from accident and death arising therefrom.
4. Learned counsel for petitioner submits that agreement was entered into between the petitioner-company and the State on 14.09.2016. It is further submitted that the said scheme was to be implemented with effect from the date it was entered into and as per provisions of the scheme, in case of death arising out of an accident pertaining to head of family/bread earner of family during the operation of the agreement, the insurance company was bound to make compensation at the rate of R.5,00,000/- to the nominee/legal heir.
5. It is submitted that in the present case, admittedly the predecessor in interest of opposite parties 3 to 6, Late Usman Khan was involved in an accident on 12.09.2016 and as a result thereof, passed away on 17.09.2016. It has been submitted that upon claim being made by legal heirs of Late Usman Khan, the same was rejected by the insurance company on 23.02.2017 on the ground that accident resulting in death of Late Usman Khan took place on 12.09.2016, which was prior to enforcement of agreement dated 14.09.2016. As such, the said incident was not covered within the insurance period.
6. Learned counsel for petitioner submits that since the cause of action, i.e. the accident occurred on 12.09.2016, which was prior to enforcement of insurance agreement dated 14.09.2016, the claim of answering opposite parties has been rightly rejected. It is further submitted that the date of death of Late Usman Khan would be totally immaterial since cause of action has accrued to answering opposite party due to the accident which took place on 12.09.2016. Learned counsel has also adverted to the fact that by means of impugned order, the petitioner-insurance company has been put to double jeopardy since penalty amounting to Rs.1,000/-per week as provided in the agreement has been imposed along with interest at the rate of 9% per annum, which could not have been done since award of interest is beyond the stipulations indicated in agreement dated 14.09.2016.
7. Learned counsel appearing on behalf of opposite parties 3 to 6 has refuted the submissions advanced by learned counsel for petitioner with the submission that a perusal of agreement dated 14.09.2016 makes it evident that claim for compensation in terms of aforesaid insurance scheme arises from the date of death of an insured and not from the date of accident and as such cause of action will accrue from the date of death and not from the date of accident as is being submitted by learned counsel for petitioner. Learned counsel has also adverted to Part-I of the agreement dated 14.09.2016 to indicate the specific provision with regard to same.
8. With regard to double jeopardy, it is submitted that agreement dated 14.09.2016 itself stipulates grant of penalty in case compensation is not made upon claim being made under the scheme. It is submitted that the grant of penalty is an issue separate from grant of interest which is awarded in terms of the Interest Act, 1978.
9. Upon consideration of submissions advanced by learned counsel for the parties and perusal of material on record, the two questions requiring adjudication, are as under:-
(i) Whether cause
