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2024 Supreme(Online)(NCDRC) 1834
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
MR. A. P. SAHI, PRESIDENT, MR. BHARATKUMAR PANDYA, MEMBER
NATIONAL INSURANCE CO. LTD. & ANR. – Appellant
Versus
LALITA GOYAL & ORS. – Respondent
REVISION PETITION NO. 1071 OF 2011 | Appeal No. 18/2005
For the Petitioners:MR. MANOJ RANJAN SINHA, ADVOCATE, MR. VISHAL AGRAWAL, ADVOCATE
For the Respondents: R-5 EX-PARTE
Insurers must comply with communication and refund conditions in cancellation terms; failure to do so maintains liability under the policy.
Headnote:(A) Consumer Protection Act, 1986 - Section 2(1)(g) and 2(1)(o) - Insurance Policy Cancellation - Issues of policy compliance and notice requirements discussed - Insufficient communication regarding cancellation deemed contrary to contractual terms, rendering the complainants entitled to relief. (Paras 4, 9, 15, 18).
(B) Insurance Contracts - Terms of Insurance binding - Principle of contra proferentem affirmed only where ambiguity exists; not applicable in the case of clear communication of terms. Findings detailed with reference to established legal precedents. (Paras 20, 23).
Facts of the case:
Petition filed by an insurance company challenging the order allowing a complaint for claim despite the cancellation of the policy, arguing contract compliance and notification issues.
Findings of Court:
The Commission found that the policy cancellation was inadequately communicated, thus the complaint was maintainable, and the insuring parties were liable for the claim.
Issues: The primary issue examined was whether the cancellation of the policy was communicated compliant with the contractual terms.
Ratio Decidendi: The Court found that compliance with insurance policy termination notice and refund of premiums were insufficiently demonstrated, leading to the conclusion of continued liability under the policy.
Result: Revision petition allowed, previous orders set aside.
ORDER
This revision petition was admitted and notices were issued by this Commission vide order dated 10.05.2011 extracted hereunder:
“Heard learned counsel for the petitioner.
The revision petition is directed against the concurrent findings of the District Consumer Forum and the State Commission.
Issue notice limited to the question “whether the petitioner was liable to pay the amount of compensation, though the policy was reportedly cancelled and there was no privity of contract between the parties as alleged by the petitioner.?. Notice returnable on 20.09.2011.
In the meanwhile, the impugned order shall remain stayed till the next date.”
The petition has been moved by the Insurance Company, questioning the correctness of the orders of the DCDRC Bathinda, Punjab (hereinafter referred to as the District Commission) dated 03.12.2004 as affirmed in Appeal by the SCDRC Punjab (hereinafter referred as the State Commission) vide order dated 15.02.2011, contending that both the Fora below have committed a patent error in allowing the Complaint by ignoring the communicated condition no.5 of the policy which is not in dispute. It is urged that the terms of the policy are binding and condition no.5 had been complied with by the Insurance Company before terminating the policy, hence the conclusion drawn by the Fora below is not only erroneous on facts but as well in law, inasmuch as, even if the Consumer Fora provides for a Forum to aggrieved parties as a beneficial piece of legislation, the learned counsel urges that the parties cannot travel beyond the terms of contract of insurance to pray for reliefs even beyond the same unless any breach is established. Learned counsel submits that once it has been accepted by the District Commission that condition no.5 has been complied with, then there was no occasion to have proceeded further to treat insufficient communication and compliance of condition no.5 as there was no breach at all. It is urged that the conclusions drawn are mutually destructive and incoherent, hence the findings are perverse and are liable to be interfered with. It is submitted that the same error has been committed by the State Commission in proceeding to confirm the said finding, hence the impugned orders suffer from patent illegality and are liable to be set aside in the exercise of revisional jurisdiction by this Commission.
As noted above, notices were issued to the respondents who had put in appearance and Mr. Rajat Bhardwaj, Advocate, had appeared as counsel for respondents no. 1 to 4. Respondent no. 5 had been proceeded ex-parte. This is evident from the order sheets and it is also evident that a counter affidavit was filed on behalf of respondents no.1 to 4.
Nonetheless on 29.10.2015 the Commission was intimated about the pendency of Civil Writ Petition No. 3445 of 2004 before the High Court of Punjab and Haryana filed by the State Bank of India Staff Association (Respondent No.5 herein) assailing the terms and conditions of the policy. The challenge is that the said condition is arbitrary and the Insurance Company cannot clothe itself with any such unguided power in order to terminate the policy at any time. A copy of the said Writ Petition has been filed along with a compilation that was filed on 09.12.2015 vide diary no. 35503. It is on this ground that the petition came to be adjourned on several occasions where-after the Pandemic intervened. According to the learned counsel for the petitioner/Insurance Company, the Writ Petition still remains pending before the High Court without any orders thereon and this is also evident from the information downloaded from the website of the High Court of Punjab and Haryana that is available on record.
It is evident that the respondents no.1 to 4 counsel had been appearing till 2020 but thereafter none of them have appeared continuously till date as is evident from the order sheets whenever the case was listed and was adjourned simply on the ground of pendency of the Writ Peti
