# Oriental Insurance Comp. Ltd v. Smt. Uma Devi & Ors

- **Citation:** (2022) 1 ILRA 655
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2021-12-02
- **Case number:** Misc. Single No. 23973 of 2020
- **Bench:** J.J. Munir
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/oriental-insurance-comp-ltd-v-smt-uma-devi-ors-47489
- **Pages:** 6

## Headnote

Limitation Act, 1963 - Article 44(a) - The
policy here is a Group Accidental Insurance
Cover provided by the State Government for all
the farmers of Uttar Pradesh, who are recorded
tenure holders. It is for the said purpose that
claims are to be routed through the District
Magistrate. If the claim of the tenure holder is
rejected and the result communicated to the
District Magistrate, who in turn did not informed
the claimant, as happened in the present case,
then the period of limitation under the
provisions of Article 44 (a) cannot be held to
run. (Para 11& 12)
Writ Petition Partly Allowed. (E-10)

List of Cases cited:

## Text

1 All. Oriental Insurance Comp. Ltd. Vs. Smt. Uma Devi & Ors.
655
understanding of the manner in which a
quasi-judicial
inquiry
ought
to
be
undertaken. This Court does not propose to
determine the validity of the charges on
merits or the quantum of penalty inflicted,
it would require a re-determination of the
case by the authority of first instance.

16. In the result, this petition succeeds
and stands allowed in part. The impugned
orders dated 21.11.2020 passed by the Joint
Commissioner (Food), Lucknow, in Case
No. 3561 of 2018 and the order dated
19.03.2018 passed by the Sub-Divisional
Officer, Mitauli, District - Lakhimpur Kheri
are hereby quashed. The Sub-Divisional
Officer concerned shall now proceed to
inquire into the charges afresh and pass an
order in accordance with law, after hearing
the petitioner, bearing in mind the guidance
in this judgment, within a period of six
weeks of receipt of a copy of this order.

17. There shall be no order as to costs.

Note : Since my digital signature has
expired and its renewal will take some
time, the printout of the order has been
taken and has been manually signed by us.
This copy be uploaded with the stipulation
that as and when the digital signature is
renewed or a fresh digital signature is
obtained, the digital signature copy be
uploaded after deleting the scanned copy.
----------
(2022)01ILR A655
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 02.12.2021

BEFORE

THE HON'BLE J.J. MUNIR, J.

Misc. Single No. 23973 of 2020
Oriental Insurance Comp. Ltd.
 ...Petitioner
Versus
Smt. Uma Devi & Ors. ...Respondents

Counsel for the Petitioner:
Waquar Hashim

Counsel for the Respondents:
C.S.C., Ajeet Kumar, Rinku Verma

A. Practice & Procedure - Limitation -
Limitation Act, 1963 - Article 44(a) - The
policy here is a Group Accidental Insurance
Cover provided by the State Government for all
the farmers of Uttar Pradesh, who are recorded
tenure holders. It is for the said purpose that
claims are to be routed through the District
Magistrate. If the claim of the tenure holder is
rejected and the result communicated to the
District Magistrate, who in turn did not informed
the claimant, as happened in the present case,
then the period of limitation under the
provisions of Article 44 (a) cannot be held to
run. (Para 11& 12)
Writ Petition Partly Allowed. (E-10)

List of Cases cited:

1. The Oriental Insurance Co. Ltd. Through
Divisional Manager Vs Chhote Singh & ors. Misc.
Single No. 20736 of 2018 (followed)
(Delivered by Hon'ble J.J. Munir, J.)

1. This petition under Article 227 of
the Constitution has been filed assailing a
judgment and order of the Permanent Lok
Adalat, Lucknow dated 22.02.2020 passed
in P.L.A. Case No.196 of 2017. By the
impugned
judgment
and
order,
the
Permanent Lok Adalat has granted the
claim of respondent nos.1, 2 and 3 to the
proceeds of a Group Insurance Policy for
tenure-holder-farmers dying an accidental
death. The Permanent Lok Adalat has
ordered the petitioner, Insurance Company
656 INDIAN LAW REPORTS ALLAHABAD SERIES
to pay the sum assured i.e. Rs.1 lakh
together with penalty in the sum of
Rs.1,50,000/-. Simple interest at the rate
9% per annum has been ordered on the
aforesaid sum from the date of presentation
of respondents' petition to the Lok Adalat.
Costs in the sum of Rs.5000/- have also
been awarded against the petitioner.

2. The facts giving rise to this petition
are that a contract was entered into by the
Commissioner and Secretary, Board of
Revenue, U.P., Lucknow and the petitioner,
Oriental
Insurance
Company
Limited,
whereby a Group Accidental Insurance
Cover was provided to all the farmers of
Uttar Pradesh, who were recorded tenureholders and in the age group of 12 years to
70 years. Their eligibility was dependent on
the fact that the farmer was duly recorded
in the Khatauni and died an unnatural death
in an accident. The said policy was in force
from 19.11.2009 to 18.11.2010. The
husband of respondent no.1-Smt. Uma
Devi and father of respondent nos.2 and 3,
Nishu and Bhola Singh, that is to say, the
late Omkar Singh, was a resident of Village
Sahurapur, Post Paunthia Buzurg, Police
Station Lalpura, District Hamirpur. He died
in a road accident on 08.10.2010. It is not
in issue that the deceased, on the date of his
demise, was in the
eligibility zone
according to his age group. Consequent
upon Omkar Singh's death, respondent no.1
on behalf of herself and respondent nos.2
and 3, invoked the Insurance Policy and
presented a claim, after completing all
formalities, to the petitioner Insurance
Company, routed through the District
Magistrate, Hamirpur. After presentation of
the claim, respondent no.1 pursued it
regularly and with due diligence, visiting
the office of the petitioner Insurance
Company for the purpose. Despite lapse of
a long period of time, she neither received
the sum assured nor any communication in
that regard from the Insurance Company.

3. When the first respondent did not
receive any response from the Insurance
Company for a considerable period of time,
she presented a petition to the Permanent
Lok Adalat at Lucknow. The Insurance
Company
filed
a
written
statement,
contesting the first respondent's claim.
However, the factum of the contract of
insurance was not denied. The Insurance
Company, however, disputed the fact about
the death of the assured in a road accident
on 08.10.2010 on ground that no First
Information Report had been lodged. There
were other pleas raised that the postmortem
report and the panchayatnama, that was
presented, related to an unknown person,
which could not be read to infer the death
of the assured in a road accident. It was
also averred in the written statement that on
receipt of the first respondent's claim
through the District Magistrate, Hamirpur,
the Insurance Company had appointed a
surveyor, who submitted his report on
08.03.2011, wherein it was mentioned the
first respondent did not produce necessary
documents. It was also pleaded that on
04.04.2011, the first respondent's claim was
rejected by the Competent Authority in the
Insurance Company and its information
was given to the District Magistrate,
Hamirpur. Amongst other things, it was
also pleaded that if there is any dispute
between parties to the contract, the same
has to be resolved by a Committee headed
by the District Magistrate, whose decision
would be binding on the Insurance
Company. There is also a plea that the
petition was presented with a delay of
seven years, with no explanation about it.
The territorial jurisdiction of the Permanent
Lok
Adalat
at
Lucknow
was
also
questioned. There
were
attempts
for
1 All. Oriental Insurance Comp. Ltd. Vs. Smt. Uma Devi & Ors.
657
reconciliation by the Permanent Lok
Adalat, but these failed and the matter went
to trial. On 30.05.2018, five issues were
framed, which read (translated into English
from Hindi):

"(1) Whether the petitioner on the
basis of grounds taken in the petition is
entitled to the sum assured and penalty
from the Insurance Company, opposite
party no.1? If yes, what sum of money?*

(2) Whether the petition is bad for
non-joinder of necessary parties?*

(3) Whether the petition is barred
by limitation?

(4) Whether the Permanent Lok
Adalat
had
jurisdiction
to hear
the
petition?*

(5) Whether the petitioner is
entitled to any relief?*"

(*Note: The description of parties
is according to the array before the
Permanent Lok Adalat)

4. The Permanent Lok Adalat
answered all the issues against the
petitioner-Insurance
Company
and
in
favour of respondent nos.1, 2 and 3.

5. Aggrieved, this petition has been
filed.

6. Heard Mr. Waquar Hashim, learned
Counsel for the petitioner, Mr. Rinku
Verma, learned Counsel appearing on
behalf of respondent nos.1, 2 and 3 and Mr.
P.K. Singh, learned Additional Chief
Standing Counsel appearing for respondent
nos.4 and 5.

7. Before this Court, Mr. Waquar
Hashim has confined his submissions to the
point of limitation. He has argued that the
claim was rejected by the petitionerInsurance Company on 04.04.2011. The
rejection was duly communicated to the
District Magistrate, Hamirpur. The petition,
therefore, filed before the Permanent Lok
Adalat on 18.02.2017 is hopelessly time
barred. He has invited the attention of the
Court to Article 44(a) of the Schedule to
the Limitation to submit that the prescribed
period of limitation is three years reckoned
from the date that the claim on the policy is
denied.

8. Mr. Rinku Verma, on the other
hand, has refuted the aforesaid submission
and said that the denial was never
communicated to respondent no.1 and until
that was done, the period of limitation
would not run. He has emphasized that the
District Magistrate, Hamirpur, to whom the
repudiation of the first respondent's claim
was communicated, never conveyed the
denial of the claim to the first respondent or
to respondent nos.2 and 3.

9. The question of limitation for a
claim of insurance under the Group
Accident Insurance Scheme in question
came up for consideration before this Court
in The Oriental Insurance Company
Limited through Divisional Manager vs.
Chhote Singh and others, Misc. Single
No.20736 of 2018, decided on 13.08.2018.
In The Oriental Insurance Company
Limited vs. Chhote Singh (supra), it was
held:

"On the aspect of limitation this
Court would certainly note that there is no
period of limitation envisaged under the
Legal Services Authority Act for a claim
658 INDIAN LAW REPORTS ALLAHABAD SERIES
being instituted before the Permanent Lok
Adalat but it does not mean that a claim for
compensation can be delayed inordinately.
This would defeat the very purpose of
beneficial policy which is meant to mitigate
the financial hardship of an indigent family.
The benefit must flow to a victim promptly
and without any inordinate delay. It is for
this this reason that clause-11 of the
agreement provides for lodging a claim
within four months of mishap before the
Lekhpal. The limitation provided under
Clause 11 of the agreement is to aid the
quantum of penalty provided for under
clause 22 of the agreement but would not
constitute a bar for approaching the
permanent Lok Adalat where a claim is
delayed or denied.

The
proceedings
before
Permanent Lok Adalat under the Legal
Services Authority Act, 1987 are akin to
the proceedings before a civil court by
virtue of Section 22(3). The general law of
limitation prescribing three years period,
cannot be given a go-bye and in absence of
a prescription in the Act, the same has to be
understood to be a valid condonable bar
insofar as the aspect of limitation is
concerned.

In the present case, however, it is
clear that the Oriental Insurance Company
has not put up a definite stand before the
Permanent Lok Adalat except the date of
repudiation of the claim by letter dated
7.4.2011 of which the last paragraph reads
as under:

"di;k mDr nkok dks uks Dyse djus ls
iwoZ bl nkos ij vkidh fVIi.kh@er dh iqf"V
vkisf{kr gSA vkidks gqbZ vlqfo/kk ds fy, [ksn gSA"

From the above paragraph of the
letter dated 7.4.2011, it is clear that the
final repudiation was dependent upon the
consideration by the district committee or
any decision taken by the said committee.
There is no such communication placed on
record according to which the claim of the
opposite parties was finally repudiated in
the light of any shortcoming having been
finally affirmed against the claimants.

Learned counsel for the petitioner
also invited attention of this Court to clause
20 of the agreement which reads as under:

"20. If any objection is raised by
Insurance Company in settlement of claim
documents, the same will have to be
returned to District Magistrate positively
within two weeks and Committee headed
by District Magistrate of the concerned
districts would resolve the objection
within one month. The Committee can also
take a decision by circulation. The
decision of the Committee will be final and
binding
on
the
Oriental
Insurance
Company Limited."

Having regard to the condition
extracted above, it is argued that the
repudiation once conveyed to the district
authorities was never turned down within
the stipulated period of time and as such, at
least the letter dated 7.4.2011 followed by a
period of one month, would be a relevant
date from which the period of limitation
will have to be treated to commence.

This Court having regard to the
essence of clause 20 of the agreement is of
the opinion that the claim of a victim
cannot be defeated within the scope of
clause 20 of the agreement so long as there
is a communication of any shortcoming for
entitlement of a claim duly communicated
to the aggrieved claimant which in the
present case is none.
1 All. Oriental Insurance Comp. Ltd. Vs. Smt. Uma Devi & Ors.
659

Thus, the plea of limitation taken
up in the present case on the strength of
clause 20 of the agreement read with
Article 44 of the Schedule appended to the
Limitation Act, would not defeat the object
and purpose of the scheme so long as the
claim was kept pending constituting a
continuing cause, hence the plea raised
deserves rejection."

10. In the present case, Clause 21 of
the agreement is the same as that involved
in Oriental Insurance Company Limited
vs. Chhote Singh (supra). In what precise
terms
the
claim
was
declined
and
communicated to the District Magistrate is
not known. The Permanent Lok Adalat has
dealt with the matter under Issue No.3. The
Permanent Lok Adalat relied upon the
provisions of the Insurance Regulatory and
Development Authority (Protection of
Policyholders' Interests) Regulations, 2002
to hold that by dint of Regulation 7(2) of
the Regulations, the Insurer is obliged to
keep the insured periodically informed on
the requirements to be fulfilled regarding
lodging of a claim arising in terms of an
Insurance Policy and the procedures to be
followed by the assured in order to enable
the insurer to settle the claim.

11. It has also been recorded by the
Permanent Lok Adalat that the District
Magistrate
has
not
conveyed
any
information to the first respondent. Thus,
whatever decision was taken by the
Insurance Company regarding the first
respondent's claim on 04.04.2011, or soon
thereafter when it was rejected, it is
difficult to hold that the period of limitation
would run from 04.04.2011, in terms of
Article 44 (a) of the Limitation Act, when
the Insurance Company-petitioner rejected
the first respondent's claim. This difficulty
about reckoning the period of limitation
seems to have arisen because Article 44 (a)
of the Limitation Act takes into account a
transaction of the nature leading to the
taking out of an Insurance Policy by an
insured.
Invariably,
the
person,
who
purchases the policy or the beneficiaries are
privy to the Insurance Policy in some
manner, where the Insurance Company,
after a claim is laid on the policy,
communicates the result to the claimants.
The policy here, is, in its nature, different,
which is a Group Accidental Insurance
Cover provided by the State Government
for all the farmers of Uttar Pradesh, who
are recorded tenure-holders. It is for the
said purpose that claims are to be routed
through the District Magistrate.

12. Now, if the claim is rejected and
the result communicated to the District
Magistrate, as is the case here, who does
not, in turn, communicate the factum of
rejection to the claimants, it would be an
absurd construction to place on the
provisions of Article 44(a) of the Schedule
to the Limitation Act that period of
limitation would run from the date of such
rejection. The factum of rejection of the
claim in the case of a policy of the kind in
hand would never be known to the
claimants, like the first respondent. If the
fact of rejection is not communicated by
the Insurer, the period of limitation under
the provisions of Article 44 (a) cannot be
held to run. The rejection of a claim by the
Insurer for the purpose of Article 44(a)
carries with it implicitly a reasonable
communication of the Insurer's decision to
the claimant. It is precisely on the basis of
this reasoning that this Court in the
Oriental Insurance Company Ltd. vs.
Chhote Singh (supra), held the claim not
to be barred by time. This is the reasoning
660 INDIAN LAW REPORTS ALLAHABAD SERIES
that the Permanent Lok Adalat has adopted
and we do not find any flaw with it. The
first respondent's claim cannot, therefore,
be said to be barred by limitation as urged
by the learned Counsel for the petitioner.

13. Learned Counsel for the petitioner
has also questioned the imposition of
penalty in the sum of Rs.1,50,000/- on the
ground that the penalty imposed is
disproportionate, considering the fact that
the Insurance Company believed that they
validly conveyed the rejection of the claim
laid by the first respondent to the District
Magistrate.

14. In the totality of circumstances,
this Court finds that there is some
communication gap between the petitionerInsurance Company, the District Magistrate
and the claimant-respondent no.1, that has
all contributed to the delay in the ultimate
enforcement of the claim before the
Permanent
Lok
Adalat.
In
the
circumstances obtaining, equity would be
best adjusted if the penalty imposed by the
Permanent Lok Adalat is reduced by 50%
and determined at a figure of Rs.75,000/-,
instead of Rs.1,50,000/-.

15. In the circumstances that this is a
case where there was a miscommunication
between parties, this Court is of opinion
that Simple Interest at 9% per annum
ordered by the Permanent Lok Adalat from
the date of presentation of the petition,
ought to be substituted by an order
directing payment at the rate of 9% per
annum Simple Interest on the substantive
award of Rs.1,00,000/- from the date of the
award till realization.

16. In the result, this petition succeeds
and is allowed in part. The impugned
order dated 22.02.2020 passed by the
Permanent Lok Adalat in P.L.A. Case
No.196 of 2017 is modified to the extent
that in substitution of the direction to pay
penalty in the sum of Rs.1,50,000/-, the
penalty payable by the petitioner shall be a
sum of Rs.75,000/-. Also, the Simple
Interest awarded by the Permanent Lok
Adalat at the rate of 9% per annum on the
sum of Rs.2,50,000/- shall be substituted by
a direction to pay simple interest at the rate
of 9% per annum on the substantive award
of Rs.1,00,000/- from the date of the order
impugned, passed by the Permanent Lok
Adalat, until realization. The rest of the
award made by the Permanent Lok Adalat
is upheld.

17. Parties will bear their own costs
before this Court.
----------
(2022)01ILR A660
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 27.10.2021

BEFORE

THE HON'BLE RAKESH SRIVASTAVA, J.
THE HON'BLE SHAMIM AHMED, J.

Misc. Bench No. 24704 of 2021

Prem Shankar Chaturvedi ...Petitioner
Versus
State Of U.P. & Ors. ...Respondents

Counsel for the Petitioner:
Anil Kumar Upadhyay, Bhup Chandra
Singh

Counsel for the Respondents:
C.S.C.

A.
Practice
&
Procedure
-
Indian
Constitution, 1950 - Article 226 - The
present matter pertains to the private rivalry
between the parties therefore the writ is not
maintainable. (Para 7)