SUPREME COURT OBSERVES THAT THE TERMS OF THE INSURANCE POLICY ARE TO BE STRICTLY CONSTRUED WHILE DECIDING A CLAIM
A Two Judge Bench of the Supreme Court presided by Justice Sanjay Kishan Kaul and Justice Abhay S. Oka passed a Judgment dated 08.02.2023 in the case of National Insurance Company Ltd Versus The Chief Electoral Officer & Ors. bearing Civil Appeal No.4769 Of 2022 and elucidated the principles, on which a claim under any Insurance Policy is examined, while observing that the terms of the Insurance Policy are to be strictly construed.
The Appellant, National Insurance Company (“NIC”), and Respondent No.1, the Chief Electoral Officer, Bihar, Patna, entered into a Memorandum of Understanding (as ‘MoU’) on 09.02.2000 to provide insurance cover to the persons deployed for election related work for Bihar Legislative Assembly Elections in the year 2000. The duration of the insurance scheme was extended from 24.05.2000 to 23.06.2000 due to the period of the by-polls. The husband of Respondent No.2, Late Deval Ravidas, Constable, Shivhar District Force, was a member of the Static Armed Force, who died due to a sun stroke/heat stroke while performing election duty for the Bihar Legislative Assembly during the extended period of the Insurance Policy. Respondent No.2, raised the issue of compensation vide her letter dated 21.11.2008 i.e, after 7 years.
The Assistant Election Officer, Bihar-cum-Under Secretary to the Government, vide letter dated 20.11.2009 addressed to the Under Secretary to the Lokayukta, Patna, Bihar, noted that the death of the deceased Constable had occurred on account of heat stroke on 26.05.2000 during election duty and had not occurred on account of any external violent activity/accident. Thus, compensation to Respondent No.2 was not found admissible for payment.
Respondent No.2 filed a Writ Petition before the High Court of Patna for quashing the aforementioned Letter dated 20.11.2009 and sought payment of compensation amount of Rs.10 Lakhs as per the Insurance Policy. The Single Bench of the High Court opined that the primary responsibility to raise the claim under the Policy was with the officials of the State Government and that they did not raise the claim within the duration of the policy i.e., 24.05.2000 to 23.06.2000. Therefore, the liability to pay the amount to the deceased wife was assigned to the Respondent No.1 and the District Magistrate, Vaishali.
The Respondent No.1 preferred an Appeal before the Division Bench of the High Court against the Order dated 17.05.2011, the High Court opined that no time limit was prescribed and since all pre-requisites to the claim for the Insurance Policy were available, it was the exclusive liability of the NIC to pay the insured amount. Aggrieved by the above Order dated 03.10.2017, the Appellant, NIC filed an appeal before the Supreme Court.
Supreme Court Observations:
The Hon’ble Supreme Court decided the matter observing that there were two aspects which were needed to be flagged: Firstly, the consequences of delay in claiming the amount from the Appellant; Secondly, whether at all the Insurance Policy covered the scenario of the death of the constable. The Court on the first aspect observed that, the admitted position is that Respondent No.2 never raised a claim even on the Respondent No.2 seeking an entitlement of the claim till the letter dated 21.11.2008 after seven and a half years. Thus, by any standards this claim was beyond any reasonable time period. On the second aspect, the Court further observed that even if the wife had not claimed and the Appellant were of the view, that the case was covered by the policy, then it was the bounden duty of Respondent No. 1 to have lodged that claim. It cannot countenance the submission that while on one hand the claim made by the wife was initially rejected, subsequently; it was re-examined, almost as if making it a pre-condition to fasten the liability on the Appellant. Also, the conditions of the MoU required the claim to be made immediately on the occurrence.
The Apex Court was of the opinion that Respondent No.1 never thought that it was a case for which claim should be lodged with the Appellant. Thus, whether the claim was admissible under the Insurance Policy or not, the conduct of Respondent No.1 would not entitle them to fasten the liability on the Appellant and would have to be borne by them if they are of the view that such an amount ought to have been made. It would be negligence of Respondent No.1 in lodging the claim. If it was not admissible then there is no reason to forward the claim to the Appellant. Respondent No.1 has been actually playing ducks and drakes with this issue for reasons best known to them.
The Hon’ble Supreme Court while further elucidating the principles on which a claim under any insurance policy is examined, observed that the terms of the insurance policy are to be strictly construed. The insurance contracts are in the nature of special class of contracts having distinctive features such as utmost good faith, insurable interest, indemnity subrogation, contribution and proximate cause which are common to all types of insurances. Each class of insurance also has individual features of its own. The law governing insurance contracts is thus to be studied in three parts, namely, (1) general characteristics of insurance contracts, as contracts; (2) special characteristics of insurance contracts, as contracts of insurance, and (3) individual characteristics of each class of insurance.
The Hon’ble Supreme Court while deciding the liability part, turned to the specific clause in the MoU, and observed that, “on a plain reading itself, leave aside the question of strict interpretation of the clauses, it is quite apparent that the admissibility of the claim is in the event of death. The second part of the same clause begins with “only”. Thus, even in the event of a death, it is only in the scenario where the consequent situation arises, i.e., it has to be solely and directly from an accident caused by external violence”. Here the death was by sun stroke. The last aspect which reads as “any other visible means” would be an expression to be read in the context of ejusdem generis with the external violent death and cannot be read in isolation.
Reliance was further placed on the Judgement in the case of Alka Shukla v. Life Insurance Corporation of India., (2019) 6 SCC 64, which emphasizes the importance of a plain reading of the policy as a guiding principle and existence of a proximate causal relationship between the accident and the body injury as a necessity. On the basis of the aforesaid Judgement, the Supreme Court observed that even after the analysis of the policy, the cause arising from a sun stroke cannot be included within the parameters of the ‘Scope of Cover’ in the Insurance Policy. Thus, on the second account also the Court was of the view that the Appellant was not liable.
Thus, based on the aforesaid reasoning, the Supreme Court allowed the appeal and Impugned Judgment dated 03.10.2017of the Division Bench of the Patna High Court was set aside. Since the amount was already paid by Respondent No.1 to Respondent No.2 in pursuance of the Judgment of the Ld. Single Judge, it was found inappropriate to permit Respondent No.1 to recover any amount from Respondent No.2 and therefore, that aspect was also closed.
The Indian Lawyer
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