Parshotam Dutt vs UNITED INDIA INSURANCE COMPANY Limited

VEHICLE No. JKO2-A 3212 is said to have met with an accident on 10.4.1991. It is stated that it fell into a deep nallah. In this fall which was more than 200 ft. deep, the vehicle in question is said to have suffered total loss. As a matter of fact the vehicle was not traced. It was pleaded that the vehicle was parked on a hilly road. On account of the land-slide it was pushed down. The loss was accordingly held to be on account of land-slide and not on account of floods. The claim of the claimant was however, rejected on the ground that it was not lodged within one year from the date it was dis- claimed by the respondent-Insurance Company. As the argument depends upon the meaning, scope and content of the clause fixing the period of limitation, it would be apt to notice the same : "It is hereby further agreed and declared that after the Company shall disclaim liability to the insured for any claim herein and such claim shall not within 12 calender months from the date of such disclaimer have been made the subject matter of a suit in a Court of law then the claim shall for all practical purposes be deemed to have been abandoned and shall not thereafter be recoverable."

THE Commission which looked into the merits of the controversy as indicated above came to the conclusion that the loss was in fact caused by a reason other than flood but negatived the claim on the ground that this was not lodged within one year from the date of its dis-claimer. It is this aspect of the matter which is subject matter of challenge in this appeal. Before noticing the arguments put across by the learned Counsel for the appellant it would be apt to notice that complainant Parshotam Dutt did not appear in the witness box. It was his attorney, who stepped in to depose in the matter. He stated that he had no personal knowledge about the method and manner in which loss was caused. The attorney stated that he was not aware as to what was written in the complaint. About the rejection of the claim on the part of the Insurance Company, the attorney expressed his ignorance. He further deposed that he does not know whether any Investigator was appointed or not.

With regard to the plea that the complaint should have been filed within one year of the rejection of the claim, the factual assertions made in the objections preferred by the respondent- Insurance Company be noticed. It was stated in para (D) of the preliminary objections that the matter was considered at the highest level. The claim of the appellant was held to be not maintainable. The detailed reasons for repudiation of the claim were communicated to the appellant. These letters were placed on the record. The first letter in this regard was sent on 10.2.1993. The second letter is stated to have been written on 22.2.1994. The complaint in this case came to be lodged with the State Commission on 27.3.1995. The question arises as to whether on account of Clause 12 as noticed above the period for lodging the claim is within one year from its rejection. Another question would be as to when was the claim of the appellant was repudiated. So far as the factual aspect of the matter is concerned the categoric stand taken by the Insurance Company is that the letter repudiating the claim of the appellant was specifically sent at the address indicated in the Insurance Policy. The first letter in this regard was despatched on 10.2.1993 and the second letter was sent on 22.2.1994. The first letter is addressed at the address which was given by the appellant. The second letter was addressed C/o M/s. Frontier Transport Company, 6-C Nehru Market, Jammu. This is said to have been sent by Registered A/D cover. So far as the first letter is concerned it was returned with the remarks the ''no such person is available''. So far as the second letter is concerned, it was not received back by the respondent Company. In these circumstances a presumption can be drawn that the letter must have reached the person to whom it was addressed. A specific plea as a matter of fact was taken by Raj Kumar, Branch Manager of the Insurance Company that the letter was sent under Registered A/D cover. What was said in paragraph 6 of the affidavit is re-produced below : "6. That in reply to letter of the complainant dated 8.2.1994 which was received by the deponent on 11.2.1994, the deponent again sent a registered letter No. 3490/94 dated 22.2.1994 addressed to the complainant on his address mentioned in his letter i.e. C/o Frontier Transport Company, 6-C Nehru Market, Jammu. Vide this letter also the deponent informed the complainant that his claim has been minutely considered by various authorities and after examining the facts it has been found that alleged loss was due to land- slides which are covered by flood perils, hence no claim could be paid to the complainant under the terms of the policy."

RAJ Kumar, Branch Manager was cross- examined on other matters, but no question was put to him vis-a-vis the stand taken by him in para 6 above. On the other hand, Parshotam Dutt who was the best person to indicate as to whether he received the letter or not, did not appear in the witness box. His attorney was not aware as to the fact as to whether any letter was received by the principal or not. In this regard the finding has rightly been recorded that the letter in fact was received by Parshotam Dutt-appellant. The question as to what would be the effect of repudiating the claim be now examined. The precise question was considered by the Supreme Court of India in the case of National Insurance Company Limited v. Sujir Ganesh Nayak and Company, II (1997) CPJ 1 (SC). The clause which was being interpreted by the Supreme Court of India is re-produced below : "Condition No. 19 - In no case whatever shall the Company be liable for any loss or damage after the expiration of 12 months from the happening of loss or the damage unless the claim is the subject of pending action or arbitration."

On the basis of the provisions contained in Section 20 of the Act, the Supreme Court of India has observed that the claim, if any, can be lodged within the period as mentioned in Condition No. 19, referred to above. In para 15 the following observations were made : "15. From the case law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provides for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible in view of Section 28 but extinction of the right itself unless exercised within a specified time as permissible and can be enforced. If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. Such a clause would fall outside the scope of Section 28 of the Contract Act. This in brief, seems to be the settled legal position. We may now apply it to the facts of this case."

THUS, it was concluded that if there is extinguishment of the right itself unless exercised in a specific time, it cannot be enforced. The afore-mentioned judgment squarely applies to the facts of the present case. 8 The learned Counsel for the appellant has placed reliance on a decision given by a Division Bench of this Court in C.I.M.A. No. 22/99 decided on 1.4.1999. There are same observations. The factum of repudiation was taken note of. It was observed that on account of the facts pleaded and on account of the militancy in the State, the delay in the matter of approaching even beyond the period limited by the relevant clause could be over-looked. It be seen that the Supreme Court of India judgment which is direct on the point was not brought to the notice of the Division Bench who decided it. The afore- mentioned judgment of the Supreme Court of India is direct on the point, and is binding on us. In view of the above position we are of the opinion- (i) that the fact that the respondent- Company had disclaimed the claim of the appellant was duly proved; (ii) that the claim having not been filed within one year as contemplated by the clause referred to above, the Commission was right in its conclusion that the right to claim by the complainant-appellant has become extinct. In view of the above, we find no merit in this appeal, which is dismissed. Appeal dismissed.