State Consumer Disputes Redressal Commission
M/S Uniroyal Industries Limited, vs Export Credit Guarantee Corporation Of ... on 17 April, 2014
STATE CONSUMER DISPUTES REDRESSAL COMMISSION, U.T., CHANDIGARH First Appeal No. : 47 of 2014 Date of Institution : 12.02.2014 Date of Decision : 17/04/2014 M/s Uniroyal Industries Limited, 365, Industrial Estate Phase-II, Panchkula-134113, through its Managing Director Sh.Arvind Mahajan. Appellant/complainant V e r s u s Export Credit Guarantee Corporation of India Ltd., Chandigarh Branch, PHD Chambers (House), 1st Floor, Sector 31-A, Chandigarh, through its Branch Manager. ....Respondent/Opposite Party Appeal under Section 15 of the Consumer Protection Act, 1986. BEFORE: JUSTICE SHAM SUNDER (RETD.), PRESIDENT. MR. DEV RAJ, MEMBER.
MRS. PADMA PANDEY, MEMBER Argued by: Sh. Satpal Dhamija, Advocate for the appellant.
Sh. V.K. Diwan, Advocate for the respondent.
PER JUSTICE SHAM SUNDER (RETD.), PRESIDENT This appeal is directed against the order dated 16.12.2013, rendered by the District Consumer Disputes Redressal Forum-I, UT, Chandigarh (hereinafter to be called as the District Forum only) vide which, it dismissed the complaint, filed by the complainant (now appellant).
2. The facts, in brief, are that the complainant, with a view to secure the payment of any shipment, from its buyers, if got blocked, delayed or lost, due to commercial and political risks, availed of the services of the Opposite Party, and submitted proposal dated 15.09.2010, alongwith a cheque of premium. The Opposite Party, issued Insurance Policy No.SCR 0320000430, on 21.10.2010, for the period from 20.09.2010 to 30.09.2012, for the maximum limit of Rs.1 Crore, with a condition of monthly declaration of shipments, and due dates of payment of the same. After obtaining the said Policy, the complainant declared and submitted the monthly shipments, vide letters Annexures C-5 to C-8, for the months from Oct, 2010 to Dec., 2010 and Jan. 2011 and Feb., 2011. It was stated that the complainant, with a view to secure the payment of shipments from its buyers M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., to the extent of Rs.75 lacs and M/s A Tex Asia Ltd., Hongkong, to the extent of Rs.25 lacs, under the said Policy, submitted Credit Limit Applications dated 17.09.2010 Annexures C-9 and C-10. Credit Limit approval dated 09.11.2010, in respect of the buyers-M/s Bellwoven Label Co. Ltd., in the sum of Rs.75 lacs, and M/s A Tex Asia Ltd., Hongkong, to the extent of Rs.25 lacs, was given, against the said Policy, by the Opposite Party.
3. It was further stated that the buyer- M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., used to make the payment of shipments. Unfortunately, it had not released the payment of some shipments, even after the due date. The complainant tried its level best, in order to get the balance payment of its shipments, from the said buyer, M/s Bellwoven Label Co. Ltd., U.K., but all in vain. Ultimately, without any option, the complainant informed the Opposite Party, and sought advice for further course of action, regarding non-payment of amount of some shipments, which were duly covered under the Policy. Information, in this regard, was given by the complainant, to the Opposite Party, vide letter dated 17.03.2011, Annexure C-14. The Opposite Party, suggested the complainant, to take up the matter with the Commercial Collection Services 767 London Road, Surrey, U.K. The complainant was advised by the Opposite Party, to take up the matter with the High Commission of India, at U.K., for the said recovery. It was further stated that apart from that, the Opposite Party also cancelled the credit limit approval of Rs.75 lacs, vide letter dated 18.03.2011, Annexure C-16.
4. The complainant also responded, vide letter dated 28.03.2011 Annexure C-17. Reminder dated 15.06.2011, Annexure C-18, in this regard, was also sent by the complainant, to the Opposite Party. It was further stated that despite submission of documents and making requests, for the release of legitimate claim of the complainant, the Opposite Party adopted lukewarm attitude. It was further stated that the Opposite Party, did not disburse the claim amount of Rs.11,21,125.50Ps., which was due against the buyer- M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., but, on the other hand, it sent a letter dated 16.02.2012, Annexure C-22, vide which the claim was repudiated by it, on flimsy grounds. It was further stated that the aforesaid acts of the Opposite Party, amounted to deficiency, in rendering service, as also indulgence into unfair trade practice. When the grievance of the complainant, was not redressed, left with no alternative, a complaint under Section 12 of the Consumer Protection Act, 1986 (hereinafter to be called as the Act only), was filed, directing the Opposite Party, to reimburse the amount of Rs.11,21,125.50Ps., referred to above, alongwith interest @12% P.A., from the date of loss, till realization; pay compensation, to the tune of Rs.1 lac, on account of deficiency, in rendering service, and adoption of unfair trade practice; and cost of litigation, to the tune of Rs.44,000/-
5. The Opposite Party, in its written version, admitted the issuance of Insurance Policy, in favour of the complainant, valid for the period from 20.09.2010 to 30.09.2012, whereas, the date of declaration of export, by the complainant was 15.10.2010, as per the terms and conditions of the Policy. It was stated that the complainant had submitted the proposal form dated 15.09.2010, to the Opposite Party, for Shipments (Comprehensive Risk) Policy/Small Exporter`s Policy, Annexure C-4. The proposal form, required on the part of the exporter, to give details of export, made by it, for the last 12 months. It was further stated that, however, in the said proposal form, in column No.9, the complainant gave information as Newly Started. It was further stated that the complainant also submitted Credit Limit Application dated 17.09.2010, Annexure R-1, to the Opposite Party. The said Credit Limit Application was one of the basis, for approval of credit limit, to any exporter. It was further stated that, in the said Credit Limit Application, the exporter was required to give the basic information, on the buyer. It was further stated that the exporter was also required to give the experience details, with the said buyer, for at least past one year, alongwith the details of due dates and realization dates of various bills. It was further stated that such information about past experience, with the said buyer was vital for the Opposite Party, to underwrite the risk, on the buyer. It was further stated that the complainant, intentionally and willfully, with a view to mislead the Opposite Party, gave wrong information, in column No.10 of the said Credit Limit Application, as New Customer, whereas, it had already sent as many as 41 shipments to the buyer(s), before the commencement of the Policy, out of which 21 shipments were outstanding/overdue.
6. It was further stated that, thereby, the complainant concealed the basic information, for the reasons, best known to it. It was further stated that whatever information was given by the exporter, was accepted by the Opposite Party, on utmost good faith, while underwriting the risk. It was further stated that the complainant had also not submitted the details of all shipments, made by it, during the currency of the Policy, as per Condition No.8 of the same (Policy). It was further stated that since the complainant, at the time of filling up the proposal form, as also in the Credit Limit Application, referred to above, concealed the material facts, and was successful in obtaining the Policy, as per the terms and conditions of the same, it (Policy) became void, and it (complainant) was not entitled to any claim, under the same. It was further stated that the claim of the complainant, was, thus, legally and validly repudiated by the Opposite Party. It was further stated that neither there was any deficiency, in rendering service, on the part of the Opposite Party, nor it indulged into unfair trade practice. The remaining averments, were denied, being wrong.
7. Rejoinder was filed by the complainant, wherein, it reasserted all the averments, contained in the complaint, and repudiated those, contained in the written version of the Opposite Party.
8. The Parties led evidence, in support of their case.
9. After hearing the Counsel for the parties, and, on going through the evidence, and record of the case, the District Forum, dismissed the complaint, as stated above.
10. Feeling aggrieved, the instant appeal, has been filed by the appellant/complainant.
11. We have heard the Counsel for the parties, and, have gone through the evidence, and record of the case, carefully.
12. The Counsel for the appellant, submitted that the complainant obtained the Policy, in question, covering the risk to the tune of Rs. 1 crore, on payment of Rs.10,000/-, for the period from 20.09.2010 to 30.09.2012, as is evident from the Policy Schedule, at page 31 of the District Forum file. He further submitted that the complainant did not conceal any material fact, from the Opposite Party, at the time of filling up the proposal form, and obtaining the Policy. He further submitted that, it was the duty of the Opposite Party, to verify the facts, which were given by the complainant, in the proposal form, as also the Credit Limit Application, as it had charged fees, for the same, and if it failed in its duty, then the fault did not lie, on the shoulders of the complainant. He further submitted that the District Forum was wrong, in coming to the conclusion, that there was concealment of material facts, on the part of the complainant, at the time of filling up the proposal form, as also the Credit Limit Application, and the contract of insurance being based on utmost good faith, the Opposite Party was right, in repudiating its claim. He further submitted that the order of the District Forum, being illegal, is liable to be set aside.
13. On the other hand, the Counsel for the respondent/Opposite Party, submitted that, no doubt, the complainant obtained the Policy, in question, covering the risk for the period from 20.09.2010 to 30.09.2012, to the tune of Rs. 1 crore, on payment of premium of Rs.10,000/-. He further submitted that, at the time of filling up the proposal form, as also the Credit Limit Application, referred to above, the complainant, intentionally and willfully concealed the material facts, and gave wrong information, therein, with regard to the export details and past experience, with the buyer(s). He further submitted that, Annexure R-9, statement of shipments, made prior to the commencement of the Insurance cover, which was furnished to the Opposite Party, clearly showed that before the date of commencement of the Policy, as many as 54 shipments had been sent to M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., and M/s A Tex Asia Ltd., Hongkong. He further submitted that even there were overdue payments, in respect of some of the shipments, against the buyers. He further submitted that, had this information been disclosed, at the time of filling up the proposal form, and Application for Credit Limit, the Opposite Party would not have issued the Policy. He further submitted that the overdue amount of the shipments against the buyer(s), at the time of commencement of the Policy was to the extent of Rs.50 lacs, against the amount of Rs.11,21,125.50Ps., as per the claim of the complainant. He further submitted that, by not disclosing the export details, as also the past experience with the buyer(s), the complainant suppressed the material facts, at the time of applying for Policy, and, at the time of applying for the credit limit. He further submitted that since the material facts were not disclosed at the time of submitting the proposal form, and the Credit Limit Application, the terms and conditions of the Policy stood violated, and, as such, the claim was rightly repudiated by the Opposite Party vide letter dated 16.02.2012, Annexure C-22. He further submitted that the order of the District Forum, being legal and valid, is liable to be upheld.
14. After giving our thoughtful consideration, to the rival contentions, advanced by the Counsel for the Parties, and, on going through the evidence and record, we are of the considered opinion, that the appeal is liable to be dismissed, for the reasons to be recorded hereinafter. It has been repeatedly held that the contract of insurance falls in the category of contract of UBERRIMAE FIDEI meaning thereby, a contract of utmost good faith, between the parties. When information, on a specific aspect, is asked for, in the proposal form, the insured is under a solemn obligation, to make a true and full disclosure of the same (information), on the subject, which is within his/its knowledge. Of course, obligation to disclose, extends only to the facts, which are known to the assured, and not to what he ought to have known. The Hon`ble Supreme Court of India in United Insurance Co. Ltd. Vs. M.K.J. Corporation, III (1996) CPJ 8 (SC)= (1996) 6 SCC 428, laid down the principle of law, that it is a fundamental principle of the Insurance Law, that utmost good faith must be observed, by the contracting parties. Good faith forbids either party from non-disclosure of the facts, which the party privately knows, to draw the other into a bargain, from his/its ignorance of that fact and his/its believing to the contrary. To the similar effect, the principle of law, was laid down, in Modern Insulators Ltd. Vs. Oriental Insurance Co. Ltd., II (2000) SLT 323 = I (2000) CPJ 1 (SC) In P.C. Chacko and Anr. Vs. Chairman, Life Insurance Corporation of India and Ors, III (2008) CPJ 78 (SC), it was observed as under:-
11 Section 45 of the Insurance Act reads as under:-
45. Policy not to be called in question on ground of mis-statement after two years- No policy of life insurance effected before the commencement of this Act shall after the expiry of two years from the date of commencement of this Act and no policy of life insurance effected after the coming into force of this Act shall after the expiry of two years from the date on which it was effected, be called in question by an insurer on the ground that a statement made in the proposal for insurance or in any report of a medical officer, or referee, or friend of the insured, or in any other document leading to the issue of the policy, was inaccurate or false, unless the insurer shows that such statement was on a material matter or suppressed facts which it was material to disclose and that it was fraudulently made by the policy-holder and that the policy-holder knew at the time of making it that the statement was false or that it suppressed facts which it was material to disclose.
Provided that nothing in this section shall prevent the insurer from calling for proof of age at any time if he is entitled to do so, and no policy shall be deemed to be called in question merely because the terms of the policy are adjusted on subsequent proof that the age of the life insured was incorrectly stated in the proposal form.
12. Section 45 postulates repudiation of such policy within a period of two years. By reason of the aforementioned provision, a period of limitation of two years had, thus, been specified and on the expiry thereof the policy was not capable of being called in question, inter alia on the ground that certain facts have been suppressed which were material to disclose or that it was fraudulently been made by the policy holder or that the policy holder knew at the time of making it that the statement was false. Statute, therefore, itself provides for the limitation for valid repudiation of an insurance policy. It takes into account the social security aspect of the matter.
13. There are three conditions for application of Second Part of Section 45 of the Insurance Act which are:
(a) the statement must be on a material matter or must suppress facts which it was material to disclose;
(b) the suppression must be fraudulently made by the policy-holder; and
(c) the policy-holder must have known at the time of making the statement that it was false or that it suppressed facts which it was material to disclose.
15. The purpose of taking a Policy of insurance is not, in our opinion, very material. It may serve the purpose of social security, but then the same should not be obtained with a fraudulent act by the insured. Proposal can be repudiated, if a fraudulent act is discovered. The proposer must show that his/its intention was bonafide. It must appear from the face of the record. In a case of this nature, it was not necessary for the insurer to establish that the suppression was fraudulently made by the Policy holder or that he/it must have been aware at the time of making the statement that the same was false or that the fact was suppressed, which was material to disclose. A deliberate wrong answer, which has a great bearing on the contract of insurance, if discovered, may lead to the Policy being vitiated in law.
16. In Rampreeti Yadav Vs. U.P.Board of High School & Intermediate Education & Ors, V (2003) SCT 394= JT 2003 (Supplt.I) SC 25, the principle of law, laid down, was to the effect, that it is well settled law, that mis-representation itself amounts to fraud, in some cases.
17. Keeping in view the principle of law, laid down, in the aforesaid cases, now let us see, as to whether, in the instant case, the insured (appellant/complainant), at the time of obtaining the Policy, in question, suppressed the material facts, by answering the questions, put to it, fraudulently, or had made a wrong declaration or not. It is evident, that proposal form, copy whereof is Annexure C-4 dated 15.09.2010, was filled in and signed by the Managing Director of the complainant. Column No.9 of the proposal form, reads as under:-
9. Statement of export turnover for the past 12 months to be submitted by the exporter Country Commodity DP DA/OD L/C (Rs.In lacs) Advance NEWLY STARTED While submitting information, in relation to the particulars, contained in this Column, the complainant stated Newly Started.
18. Annexure R-1 dated 17.09.2010, is a copy of the Credit Limit Application, submitted by the complainant. Column No.10, of this Application reads as under:-
Experience with the buyer for the last one year if any, (Please attach separate sheet) Sl No Date of Shipment Value (Rs.) Terms of Payment Due Date Date of Realiza-tion Reason for Delay/ overdue NEW CUSTOMER While submitting information, in relation to the particulars contained in this Column, the complainant stated New Customer. The information given by the complainant, in Column No.9 of the proposal form, Annexure C-4 and Column No.10 of the Credit Limit Application, referred to above, was totally false, as would be discussed hereinafter. Annexure R-9 is the statement of shipments, made for the years 2009-2010. It is evident, from the statement of shipments Annexure R-9, that, as many as, 54 shipments, from
19.04.2010 to 17.09.2010, had been sent by the complainant to M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., and M/s A Tex Asia Ltd., Hongkong. The date of commencement of Policy, in the instant case, was 20.09.2010. From the document Annexure R-9, it was, thus, proved that before the commencement of Policy, the complainant had made a number of shipments, and amount with regard to some of these shipments, was outstanding/overdue, and not realized. The total amount against the said shipments overdue, before the commencement of Policy, as per Annexure R-9, was to the extent of Rs.50 lacs, against the claim amount of Rs.11,21,125.50Ps., filed with the Insolvency Administrator. By not disclosing the past experience and overdue position of payments, with the buyer(s), at the time of submission of the proposal form and Credit Limit Application, aforesaid, the complainant suppressed the material facts, within his knowledge, fraudulently, for obtaining the Policy. It was not the immaterial and innocuous facts, having no bearing, on merits of the case, which were not disclosed by the complainant. By stating in column No.9 of the proposal form Annexure C-4, with regard to the export turnover, for the past 12 months, as Newly Started and in column No.10, of the Credit Limit Application Annexure C-9, with regard to past experience, with the buyer, for the last one year, as New Customer, there was definite suppression of material facts, going to the root of the validity of the Policy. Not only this, even during the currency of the Policy, as per Condition No.8 thereof, the complainant also failed to intimate the shipments from 21.09.2010 to 04.12.2010, as mentioned in para 3 on merits, of the written reply, duly supported by Annexure R-3. Since, the complainant suppressed the material facts, aforesaid, within its knowledge, by answering the questions aforesaid, falsely, it violated the fundamental Conditions 1, 2 and 8 of the Policy. Thus, it is to be seen, as to what was the effect thereof.
19. The terms and conditions of the Policy, in question, are at page 118 of the District Forum file. Under the heading Representations and disclosures by the insured conditions No.1 and 2, read as under:-
Proposal and Declaration
1.
The proposal and the declaration therein shall be the basis of this Policy and shall form part thereof and if any of the statements, contained in the Proposal or the Declaration be untrue or incorrect in any respect, this policy shall be void but the Corporation may retain any premium that has been paid.
Disclosure of Facts
2. Without prejudice to any rule of law it is declared that this Policy is given on condition that the insured has, as at the date of issue of this Policy disclosed and will at all times during the operation of this policy promptly disclose all facts in any way affecting the risks insured
20. Condition No.8 of the Policy reads as under:-
8. The insured shall deliver to the Corporation on or before the 15th day of each calendar month-
(a) a declaration of shipments in the prescribed form giving information on all the shipments made by him during the previous month. If no shipment has been made during a month, NIL declaration shall nevertheless be submitted;
(b) a declaration of overdue payments in the prescribed form giving information on all such shipments as were insured under this policy and in respect of which the payment due from the buyer remained wholly or partly unpaid after having become overdue for not less than thirty days as at the close of the preceding month and shall continue to deliver such declarations of overdue payments so long as any such payment remained outstanding.
21. It is evident, from the afore-extracted Condition No.1, that the proposal and the declaration therein, shall be the basis of the Policy, and shall form part thereof, and, if any statement, contained in the proposal or the declaration, was untrue or incorrect, in any respect, the Policy shall be void, but the Corporation may retain any premium that had been paid. It is further evident, from the afore-extracted Condition No.2, that the Policy was given on the condition that the insured had, as at the date of issue of the same (Policy) disclosed and would at all times during the operation of the same (Policy), promptly, disclose all facts, in any way affecting the risks insured. As stated above, at the time of submitting the proposal form Annexure C-4, the complainant in column No.9 stated that it was its newly started business, whereas, it had sent shipments from 19.04.2010 to 17.09.2010, numbering about 54, before the commencement of the Policy, on 20.09.2010, and in Column No.10 of the Credit Limit Application Annexure R-1, it stated that the buyer(s) was/were the new customer(s). The parties were bound by the terms and conditions of the Policy, and while construing the same, the Consumer Foras cannot add, subtract or delete any words therefrom. It was held by the Hon`ble Supreme Court, in Export Credit Guarantee Corporation of India Ltd. v. Garg Sons International, II (2013) CPJ 1 (SC)=I (2013) SLT 614, as under:-
It is a settled legal proposition that while construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled, that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed in order to determine the extent of the liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words used in the contract in the manner that will best express the intention of the parties .
22. Thus, the information given by the complainant, was totally untrue. Since there was a complete suppression of material facts, by the complainant, at the time of obtaining the Policy, in question, in our considered opinion, the same became void, and, as such, the repudiation of its claim was legal and valid. The District Forum was, thus, right in holding that the Opposite Party was neither deficient, in rendering service, nor indulged into unfair trade practice.
23. Coming to the plea of the Counsel for the appellant, that the Opposite Party could, at their level, verify the shipments, if any, sent by the complainant to the buyers aforesaid, earlier to the commencement of the Policy, and the amount overdue, in respect thereof, and, as such, the entire blame could not be fastened on the complainant, it may be stated here, that it was the utmost duty of the complainant, in the first instance, to disclose all the true facts. By stating that it was a newly started business or that the buyer was a new customer, whereas, according to Annexure R-9, already 54 shipments had been sent to M/s Bellwoven Label Co. Ltd., Bellwoven House, New Market Street, Colne Lancashire, BB 89 DA, U.K., and M/s A Tex Asia Ltd., Hongkong, before the commencement of the Policy, and amount in respect of some shipments was overdue, there was deliberate suppression of material facts. Under these circumstances, the complainant could not shift its blame, on to the shoulders of the Opposite Party. The Opposite Party was, thus, right in repudiating the claim of the complainant, as per the terms and conditions of the Policy, extracted above.
24. No other point, was urged, by the Counsel for the parties.
25. In view of the above discussion, it is held that the order passed by the District Forum, being based on the correct appreciation of evidence, and law, on the point, does not suffer from any illegality or perversity, warranting the interference of this Commission.
26. For the reasons recorded above, the appeal, being devoid of merit, must fail, and the same is dismissed, with no order as to costs. The order of the District Forum is upheld.
27. Certified copies of this order, be sent to the parties, free of charge.
28. The file be consigned to Record Room, after completion.
Pronounced.
17/04/2014 Sd/-
[JUSTICE SHAM SUNDER (RETD.)] PRESIDENT Sd/-
(DEV RAJ) MEMBER Sd/-
(PADMA PANDEY) MEMBER Rg STATE COMMISSION (First Appeal No. 47 of 2014) Argued by: Sh. Satpal Dhamija, Advocate for the applicant/appellant.
Sh. V.K. Diwan, Advocate for the respondent.
Dated the 17th day of April 2014 ORDER Alongwith the appeal, an application for condonation of delay of 27 days, as per the applicant/appellant (as per the office report, 25 days), in filing the same (appeal) has been moved, by the applicant/appellant, stating therein, that, on receipt of certified copy of the order impugned, on 19.12.2013, the Counsel concerned, sent the case file to the Management, with his opinion, for further course of action for filing an appeal. However, in the month of January 2014, the Managing Director of the applicant/appellant, was out of station, on account of which, the Board Meeting, with regard to decision, on filing an appeal, against the order impugned was delayed, which (decision) was finally taken on 31.01.2014. It was further stated that, in these circumstances, the delay of 27 days, (as per the office report, 25 days), in filing the appeal occurred. It was further stated that the delay, in filing the appeal, was neither intentional, nor willful. Accordingly, the prayer, referred to above, was made.
2. Notice of this application, was given to the respondent/Opposite Party, which filed reply, stating therein, that the application deserved to be dismissed, as no sufficient cause, was constituted, for condonation of delay.
3. No doubt, there is delay of 27 days, as per the applicant/appellant (as per the office report, 25 days), in filing the appeal. The question arises, as to whether, the delay was intentional, or on account of the reasons, beyond the control of the applicant/appellant. Before discussing this question, let us have a look at law, laid down by the Hon`ble Supreme Court, and the Mumbai (Maharashtra) High Court, regarding the condonation of delay. In Lanka Venkateswarlu (D) By Lrs. vs State Of A.P. and Ors., A.I.R. 2011 S.C. 1199: (2011) 4 S.C.C. 190, the Apex Court held as under:-
(i). The Courts generally adopt a liberal approach in considering the application for condonation of delay on the ground of sufficient cause under Section 5 of the Limitation Act.
(ii). Rules of limitation are not meant to destroy the rights of parties. They are meant to see that the parties do not resort to dilatory tactics, but seek their remedy promptly.
(iii). Once a valuable right has accrued in favour of one party as a result of the failure of the other party to explain the delay by showing sufficient cause and its own conduct, it will be unreasonable to take away that.
(iv). Whilst considering applications for condonation of delay under Section 5 of the Limitation Act, the Courts do not enjoy unlimited and unbridled discretionary powers. All discretionary powers, especially judicial powers, have to be exercised within reasonable bounds, known to the law.
4. In N.Balakrishnan v. M.Krishnamurthy (1998) 7 Supreme Court Cases 123, there was a delay of 883 days, in filing application, for setting aside exparte decree, for which application for condonation of delay was filed, the Apex Court held as under:-
It is axiomatic that condonation of delay is a matter of discretion of the court. Section 5 of the Limitation Act does not say that such discretion can be exercised only if the delay is within a certain limit. Length of delay is no matter, acceptability of the explanation is the only criterion. Sometimes delay of the shortest range may be uncondonable due to a want of acceptable explanation whereas in certain other cases, delay of a very long range can be condoned as the explanation thereof is satisfactory. Once the court accepts the explanation as sufficient, it is the result of positive exercise of discretion and normally the superior court should not disturb such finding, much less in revisional jurisdiction, unless the exercise of discretion was on wholly untenable grounds or arbitrary or perverse. But it is a different matter when the first court refuses to condone the delay. In such cases, the superior court would be free to consider the cause shown for the delay afresh and it is open to such superior court to come to its own finding even untrammeled by the conclusion of the lower court.
10. The primary function of a court is to adjudicate the dispute between the parties and to advance substantial justice.
The time- limit fixed for approaching the court in different situations is not because on the expiry of such time a bad cause would transform into a good cause."
The Court further observed in paragraphs 11, 12 and 13 which run thus:-
"11. Rules of limitation are not meant to destroy the rights of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. The law of limitation fixes a lifespan for such legal remedy for the redress of the legal injury so suffered. Time is precious and wasted time would never revisit. During the efflux of time, newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a lifespan must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. The law of limitation is thus founded on public policy. It is enshrined in the maxim interest reipublicae up sit finis litium (it is for the general welfare that a period be put to litigation). Rules of limitation are not meant to destroy the rights of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time.
12. A Court knows that refusal to condone delay would result in foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi Jain v. Kuntal Kumari (1969) 1 SCR 1006 and State of W.B. v. Administrator, Howrah Municipality (1972) 1 SCC 366.
13. It must be remembered that in every case of delay, there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time, then the court should lean against acceptance of the explanation. While condoning the delay, the court should not forget the opposite party altogether. It must be borne in mind that he is a loser and he too would have incurred quite large litigation expenses. "
5. In Jyotsana Sharda vs Gaurav Sharda, (2010-3) 159 P.L.R. D15,Mumbai (Maharashtra) High Court, while condoning 52 days delay, in filing the appeal, observed as under:-
No doubt, originally the Apex Court in Ram Lal Vs. Rewa Coalfield AIR 1962 SC 351 had held that while seeking condonation of delay under Section 5 of the Limitation Act the application must not only show as to why he did not file the appeal on the last day of limitation but he must explain each day`s delay in filing the appeal. The later judgments of theApex Court have considerably diluted this requirement of explaining each days delay by a party. The latest trend and the ratio cases which the Apex Court has laid down in the judgments is that the Court must adopt a liberal approach rather than pedantic approach while doing so. It must see the bonafides of the person who is preferring the appeal rather than seeing the quantum of delay which has been occasioned. Reliance in this regard can be placed on Collector, Land Acquisition, Anantnag and Anr. Vs. Mst. Katiji & Ors. AIR 1987 SC 1353.
6. The principle of law, laid down, in the aforesaid cases, is fully applicable, to the facts of the instant case. It is evident, from the record, that delay, in this case, occurred due to the cumbersome procedure, which was required to be followed, to obtain approval for filing the appeal.
Certified copy of the order impugned, after having been received, alongwith necessary documents, was, in the first instance, sent to the Management of the applicant/appellant, by the Counsel concerned, with his opinion, for seeking approval of the Competent Authority, as to whether, appeal was to be filed or not, and the decision was finally taken on 03.01.2014, by the applicant/appellant, when its (applicant/ appellant) Managing Director, who was to take final decision, in the matter, in the Board Meeting, gave approval for the same. For taking decision by the Company, as to whether, an appeal against the order, was to be filed or not, the file had to pass through many channels. No single person, could take the decision, at his own level independently, for filing an appeal. The delay of 27 days, as per the applicant/appellant (as per the office report, 25 days), in filing the appeal, cannot be said to be so huge, as to deny the substantial justice. Even otherwise, it is settled principle of law, that normally every lis, should be decided, on merits. When substantial justice and the procedural wrangles are pitted against each other, then the former shall prevail over the latter. Under these circumstances, it could be held that delay in filing the appeal, was neither intentional nor willful, but, on account of the reasons, explained in the application. There is, thus, sufficient cause, for condoning the delay. The application. thus, deserves to be accepted.
7. For the reasons recorded above, the application for condonation of delay of 27 days, as per the applicant/appellant (as per the office report, 25 days), in filing the appeal, is allowed, and the delay is, accordingly, condoned.
8. Admitted.
9. It be registered.
10. Arguments, in the main appeal have already been heard.
11. Vide our detailed order of the even date, recorded separately, the appeal has been dismissed, with no order as to costs.
12. Certified copies of this order, alongwith the certified copy of the main order, be sent to the parties, free of cost.
13. The file be consigned to the record room, after due compliance and completion.
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(DEV RAJ) MEMBER (JUSTICE SHAM SUNDER (RETD.)) PRESIDENT (PADMA PANDEY) MEMBER Rg