Hdfc Standard Life Insurance Company ... vs Jyothi Madhavan U on 5 September, 2024

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Kerala High Court

Hdfc Standard Life Insurance Company ... vs Jyothi Madhavan U on 5 September, 2024

Appellants are the 2nd and 3rd respondents in W.P.(C)No.29499 of 2021. First respondent filed the writ petition challenging Ext.P4 award of Insurance Ombudsman. The said award was passed on the basis of a complaint filed under Rule 13(1)(b) read with Rule 14 of the Insurance Ombudsman Rules, 2017. Grievance in the complaint was regarding non-settlement of death claim with respect to the husband of the 1st respondent. Though the Ombudsman found merit in the contentions of the 1st respondent, the complaint was rejected holding that the claim amount was above the limit stipulated under proviso to Rule 17(2) of the Insurance Ombudsman Rules, 2017. Learned Single Judge, after considering the contentions elaborately, held that the 2024:KER:67308 W.A.No.2121 of 2023 4 Ombudsman was wrong in rejecting the complaint and allowed the writ petition. The learned Judge set aside Ext.P4 award and directed the Ombudsman to reconsider the complaint. Aggrieved by the interference by the learned Single Judge the insurance company has come up in appeal. Facts

2. Relevant facts are as follows:-

Petitioner's husband availed a housing loan from the 3rd respondent in November, 2018 to the tune of Rs.1,73,00000/-. Immovable properties owned by him were offered as security. As insisted by the 3 rd respondent, two insurance policies were also taken as security for the loan.

A separate account was opened with the 3 rd respondent for payment of premium. Both policies were subscribed on 30.11.2018 and premium was paid. According to the writ petitioner, EMIs were collected by the 3 rd respondent till May, 2021. The company did not issue policy with respect 2024:KER:67308 W.A.No.2121 of 2023 5 to proposal No.20924808, though premium was collected.

Unfortunately, the husband of the 1st respondent expired on 11.4.2021. The 1st respondent, on 26.5.2021, approached the office of the 3rd respondent and submitted claim forms with respect to both policies. On 17.06.2021, the insurance company issued a communication to the 1 st respondent stating that the application relating to policy proposal No.20924808 was withdrawn for the reason that requirements were not complied within the time limit. It is the case of the 1st respondent that no intimation was provided any time before the death of her husband by the appellants or the 3rd respondent regarding non-fulfillment of any conditions or about the policy not being in force. She therefore submitted before the Ombudsman that the stand of the insurance company is unjust and illegal and prayed that appropriate orders may be passed to provide the benefit of the policy.

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3. The insurance company resisted the complaint mainly relying on the proviso to Rule 17(3). Company contended that the Ombudsman is empowered to consider claims upto Rs.30,00,000/- only and claims with respect to any higher amounts cannot be entertained. As the claim involved in the case is much above the said limit, the Ombudsman is not competent to consider the same. On merits also the company refuted the claim. Ombudsman heard the parties and examined the materials. In Ext.P4 award the Ombudsman observed that there were lapses on the part of the insurer and found that the insurer is trying to wriggle out of their obligation under the contract, after retaining the premium for 2½ years. Nevertheless, the Ombudsman rejected the complaint holding that the claim amount being more than Rs.30,00,000/-, the complaint cannot be decided by the Ombudsman.

4. In the writ petition the 1st respondent contended that the rejection of the complaint was improper as the term 2024:KER:67308 W.A.No.2121 of 2023 7 "compensation" denotes a sum of money payable to a person on account of the loss or damage caused to him by the breach of a contract. Therefore, the interpretation of the proviso to Rule 17(3) of the Insurance Ombudsman Rules by the Ombudsman was incorrect. The 1st respondent contended on merits that the refusal to honour the claim by the company was illegal. The company on the contrary contended that the claim was not sustainable and proceedings before the Ombudsman was obviously not maintainable. The 3rd respondent supported the Insurance Company. The learned Single Judge, as noted at the outset, held that the rejection of the claim by the insurer was improper and laid down that the proviso to Rule 17(3) does not place any restriction in the matter of entertaining claims. The learned Judge held that the ceiling stipulated under the proviso is applicable only with regard to granting of compensation and not the claim.

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5. We heard Sri.Jithin Saji Isaac, learned counsel for the appellants, Sri.K.P.Sreekumar, learned counsel for the 1 st respondent and learned Senior Counsel Sri.K.K.Chandran Pillai appearing for the 3rd respondent. Arguments

6. The learned counsel for the appellants referred to Rule 17 and specifically to the proviso to sub-rule (3). He also relied on the judgments of this Court in 1) Abraham Ittoop v. Insurance Ombudsman, Ernakulam [2021 (3) KLT OnLine 1137] and 2) Gopakumar.N.S. v. Oriental Insurance Company Ltd., Ekm. [2024 (4) KHC 569 (DB)]. He also relied on the judgment of a learned Single Judge of Bombay High Court in Aditya Birla Sun Life Insurance Co. Ltd. v. Insurance Ombudsman Goa [AIR 2022 Bom. 307]. He contended that the interpretation of the proviso by the learned Single Judge is inconsistent with the law laid down in the judgments cited. He further contended that the 2024:KER:67308 W.A.No.2121 of 2023 9 claim is above Rs.30,00,000/- then the remedy lies elsewhere and not before the Insurance Ombudsman. He also challenged the findings of the learned Single Judge on merits of the claim. He submitted that the necessary medical examination was not undertook by the husband of the 1st respondent after initiating the process for obtaining policy. He pleaded that till the company concludes the proceedings by issuing policy certificate no liability can be fastened merely for the reason that a proposal was made and premium was remitted. On the other hand, Sri.K.P.Sreekumar, the learned counsel for the 1st respondent reiterated the grounds raised in the writ petition and submitted that the learned Single Judge has rendered the judgment after adverting to all factual and legal aspects and no interference is called for in this intra-court appeal. He submitted that the proviso to Rule 17(3) has been properly interpreted by the learned Single Judge to the effect that the same is not fixing any limit for the claims which can be 2024:KER:67308 W.A.No.2121 of 2023 10 considered by the Ombudsman. The learned Senior Counsel for the 3rd respondent also made submissions in support of case of the appellants and clarified that the interest of the 3rd respondent is in ensuring retrieval of the loan amount. Ombudsman

7. "Ombudsman", as generally known, is a concept originated in Scandinavia. The learned author H.R.Wade in his celebrated text on Administrative Law states thus about Ombudsman:

"One of the many proofs of the success of the ombudsman principle is its continual extension into new areas. Having been instituted in Britain for the central government, it has now been extended to the national health service and local government. Every year there are new extensions of the principle in other countries. Few indeed are the constitutional innovations for which such widespread success can be claimed. The principle has spread outside the sphere of government into that of business and finance. Voluntary ombudsman systems have been established successfully in the insurance and banking industries. There is a Financial Services Ombudsman with a wide 2024:KER:67308 W.A.No.2121 of 2023 11 jurisdiction over persons 'authorised' to provide regulated financial services. A Legal Services Ombudsman ensures that the professional bodies that exercise disciplinary functions over the various forms of legal professional (including licensed conveyancers) deal with complaints about misconduct properly. Prisoners have recourse to a non-statutory Independent Complaints Adjudicator. There is an independent Housing Ombudsman. The so-called Pensions Ombudsman, who has power to determine as well as to investigate complaints of maladministration in occupational or personal pension schemes, is in reality a statutory tribunal. His awards are legally enforceable and are subject to a right of appeal to the High Court on a point of law.

As this last example makes plain several of these more recently created 'ombudsmen' are strictly speaking not ombudsmen in the sense generally used in this chapter. They often have the power to give directions rather than simply make recommendations; and they are often concerned with the resolution of private disputes (with judicial review being used as an appeal against an ombudsman's award) rather than with holding government to account for maladministration. They might more properly be termed adjudicators or tribunals. But a cavil over a name should not divert attention from their success and usefulness."

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8. The purpose of establishing the institution of Ombudsman is generally to provide a domain specialized speedy, inexpensive, and efficacious grievance redressal mechanism. As pointed out by the learned authors on Administrative Law, in various fields, institutions of Ombudsman are being established in modern times for swift and effective resolution of disputes.

Insurance Ombudsman

9. We have to bear in mind the purpose of framing of Insurance Ombudsman Rules and establishing the institution of Insurance Ombudsman while interpreting the provisions of the Rules. Rule 2 of the Insurance Ombudsman Rules, 2017 reads thus:-

"2. The objects of these Rules is to resolve all complaints of all personal lines of insurance, group insurance policies, policies issued to sole proprietorship and micro enterprises on the part of insurance companies and their agents and intermediaries in a cost effective and impartial manner."

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10. It is clear from Rule 2 that the Insurance Ombudsman has been contemplated as an impartial adjudicator who shall resolve all complaints arising from deficiency of service on the part of the Insurance Companies, their agents and intermediaries in a cost- effective manner. No reservations or limitations are indicated in Rule 2 regarding the authority of the Ombudsman. On the other hand, the expression used is "to resolve all complaints", an expression of wide amplitude. We endeavor to analyse the relevant rules hereafter, keeping in mind the objects mentioned in Rule 2. Analysis of the Rules

11. On a perusal of Ext.P4, we find that the Ombudsman rejected the complaint solely on the ground that in view of the proviso to Rule 17(3), the claim is beyond the jurisdiction of the Ombudsman. On merits the 2024:KER:67308 W.A.No.2121 of 2023 14 Ombudsman has found in favour of the 1st respondent. Since the learned Single Judge remanded the matter to the Ombudsman after entering into a finding that the limit stipulated in the proviso to Rule 17(3) is not with respect to the claim but the compensation which may be granted, it is essential to examine the provisions of Rule 17. The said provision is extracted hereunder:-

"17.Award.-

(1) Where the complaint is not settled by way of mediation under rule 16, the Ombudsman shall pass an award, based on the pleadings and evidence brought on record.

(2) The award shall be in writing and shall state the reasons upon which the award is based. (3) Where the award is in favour of the complainant, it shall state the amount of compensation granted to the complainant after deducting the amount already paid, if any, from the award:

Provided that the Ombudsman shall, -(i) not award any compensation in excess of the loss suffered by the complainant as a direct consequence of the cause of action; or (ii) not award compensation exceeding rupees fifty lakhs (including relevant expenses, if any).

2024:KER:67308 W.A.No.2121 of 2023 15 (4) The Ombudsman shall finalise its findings and pass an award within a period of three months of the receipt of all requirements from the complainant. (5) A copy of the award shall be sent to the complainant and the insurer named in the complaint. (6) The insurer shall comply with the award within thirty days of the receipt of the award and intimate compliance of the same to the Ombudsman. (7) The complainant shall be entitled to such interest at a rate per annum as specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999, from the date the claim ought to have been settled under the regulations, till the date of payment of the amount awarded by the Ombudsman.

(8) The award of Insurance Ombudsman shall be binding on the insurers."

12. Careful reading of the provisions of sub rules (1) to (3) of Rule 17 of the Insurance Ombudsman Rules gives us the impression that sub rules (1) and (2) speak about the award to be passed by the Ombudsman based on the pleadings and evidence brought on record. Sub rule (2) mandates that the award shall be in writing, duly signed 2024:KER:67308 W.A.No.2121 of 2023 16 with reasons for passing such award. Sub rule (3) deals with "compensation", in case the award is in favour of the complainant. The scheme and arrangement of the sub rules make it clear the first two sub rules deal with passing of award on merits of the case. To understand the nature of awards that may be passed by the Ombudsman, reference to Rule 13 which deals with the duties and functions of Insurance Ombudsman is essential. Sub rule (1) of Rule 13 delineates the matters which may be considered and decided by the Ombudsman. Sub clauses (a) to (i) are extracted hereunder:-

"13. Duties and functions of Insurance Ombudsman.-(1) The Ombudsman shall receive and consider complaints alleging deficiency in performance required of an insurer (including its agents and intermediaries) or an insurance broker, on any of the following grounds:-

(a) delay in settlement of claims, beyond the time specified in the regulations, framed under the Insurance Regulatory and Development Authority of India Act, 1999;

(b) any partial or total repudiation of claims by the life 2024:KER:67308 W.A.No.2121 of 2023 17 insurer, General insurer or the health insurer;

c) disputes over premium paid or payable in terms of insurance policy;

(d) misrepresentation of policy terms and conditions at any time in the policy document or policy contract;

(e) legal construction of insurance policies in so far as the dispute relates to claim;

(f) policy servicing related grievances against insurers and their agents and intermediaries;

(g) issuance of life insurance policy, general insurance policy including health insurance policy which is not in conformity with the proposal form submitted by the proposer;

(h) non-issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance; and

(i) any other matter arising from non-observance of or non-adherence to the provisions of any regulations made by the Authority with regard to protection of policyholders' interests or otherwise, or of any circular, guideline or instruction issued by the Authority, or of the terms and conditions of the policy contract, insofar as such matter relates to issues referred to in clauses (a) to

(h).

[Explanation. For the purpose of this sub-rule, the term "deficiency" shall have the meaning as assigned to it in clause (11) of section 2 of the Consumer Protection Act, 2019 (35 of 2019).]"

2024:KER:67308 W.A.No.2121 of 2023 18 Therefore, the award under Rule 17 can be with respect to any of the issues specified in sub clauses (a) to (i) of Rule 13(1). Granting compensation for damages, loss sustained, etc., on account of deficiency in performance is not a matter specifically provided for under Rule 13(1). Hence, the provisions of sub rule (3) of Rule 17 dealing with granting of compensation can be understood as a specific provision conferring power on the Ombudsman to grant compensation, in addition to passing awards with reference to the matters specifically mentioned in sub rule (1) of Rule

13. "Compensation"

13. The word "compensation" is not defined in the Rules. Insurance Ombudsman Rules were promulgated in exercising of the powers conferred on the Central Government by Section 24 of the Insurance Regulatory and 2024:KER:67308 W.A.No.2121 of 2023 19 Development Authority Act, 1999. In the said Act also the word "compensation" is not defined. When an expression used in an enactment is not defined in the Act or the Rules made thereunder, it is permissible to look into the meaning of the expression given in the dictionaries. Meaning of the word in common parlance becomes relevant. Apex Court in State of Orissa and Ors. v. Titaghur Paper Mills Company Limited and Ors. [AIR 1958 SC 1293] held thus;

"104. In view of this state of the record we must seek to ascertain the meaning of these two terms in common parlance with such aid as is available to the Court. It is now well settled that the dictionary meaning of a word cannot be looked at where that word has been statutorily defined or judicially interpreted but where there is no such definition or interpretation, the court may take the aid of dictionaries to ascertain the meaning of a word in common parlance. In doing so the court must bear in mind that a word is used in different senses according to its context and a dictionary gives all the meanings of a word and the court, therefore have to select the particular meaning which would be relevant to the context in which it has to interpret that word."

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14. In K. Prabhakaran and Ors. v. P. Jayarajan and Ors. [AIR 2005 SC 688], the Apex Court referred to the Principles of Statutory Interpretation by Justice G.P.Singh (9 th Edition, 2004) wherein it is stated (at p.302) thus-

"When a word is not defined in the Act itself, it is permissible to refer to dictionaries to find out the general sense in which that word is understood in common parlance. However, in selecting one out of the various meanings of a word, regard must always be had to the context as it is a fundamental rule that "the meanings of words and expressions used in an Act must take their colour from the context in which they appear". Therefore, "when the context makes the meaning of a word quite clear, it becomes unnecessary to search for and select a particular meaning out of the diverse meanings a word is capable of, according to lexicographers".

( Emphasis supplied )

15. Therefore, analysis of the meaning of words not defined in the Act/Rules by looking into the meaning given in dictionaries is an established practice in interpretation of statutes.

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16. The word 'compensation' is given the following meanings in the Oxford dictionary (Tenth edition) :-

1. Something awarded to compensate for loss, suffering, or injury;

2. Something that compensates for an undesirable state of affairs.

It has been defined in P. Ramanatha Aiyar's Advanced Law Lexicon as follows:

"An act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss, or be made whole in respect of his injury; the consideration or price of a privilege purchased; some thing given or obtained as an equivalent; the rendering of an equivalent in value or amount; an equivalent given for property taken or for an injury done to another; the giving back an equivalent in either money which is but the measure of value, or in actual value otherwise conferred; a recompense in value; a recompense given for a thing received recompense for the whole injury suffered; remuneration or satisfaction for injury or damage of every description; remuneration for loss of time, necessary expenditures, 2024:KER:67308 W.A.No.2121 of 2023 22 and for permanent disability if such be the result; remuneration for the injury directly and proximately caused by a breach of contract or duty; remuneration or wages given to an employee or officer".

This definition in the Advanced Law Lexicon was relied on by the Apex Court in Sandvik Asia Ltd. v. Commissioner of Income Tax-I, Pune and Ors. [AIR 2006 SC 1223].

17. Apex Court dealt with and explained the term "compensation" as follows in The Divisional Controller KSRTC v. Mahadeva Shetty and Ors. [(2003) 7 SCC 197]:

"11. The "Rule of Law" requires that the wrongs should not remain unredressed. All the individuals or persons committing wrongs should be liable in an action for damages for breach of civil law or for criminal punishment. 'Compensation' means anything given to make things equivalent, a thing given or to make amends for loss, recompense, remuneration or pay; it need not, therefore, necessarily be in terms of money, because law may specify principles on which and manner in which compensation is to be determined and given. Compensation is an act which a Court orders to be done, or money which a Court orders to be paid, by a person whose acts or omissions have caused loss or injury to another in order that thereby the person damnified may receive equal value for his loss; or be made whole in respect of his injury; something given or obtained as equivalent; rendering of 2024:KER:67308 W.A.No.2121 of 2023 23 equivalent in value or amount; an equivalent given for property taken or for an injury done to another; a recompense in value; a recompense given for a thing received; recompense for whole injury suffered; remuneration or satisfaction for injury or damage of every description. The expression 'compensation' is not ordinarily used as an equivalent to 'damages', although compensation may often have to be measured by the same rule as damages in an action for a breach. The term 'compensation' as pointed out in the Oxford Dictionary signifies that which is given in recompense, an equivalent rendered; 'damages' on the other hand constitute the sum of money, claimed or adjudged to be paid in compensation for loss or injury sustained. 'Compensation' is a return for a loss or damages sustained. Justice requires that it should be equal in value, although not alike in kind."

18. In Ghaziabad Development Authority v. Balbir Singh [(2004) 5 SCC 65], it was held as follows :-

"6. ......The word 'compensation' is again of very wide connotation. It has not been defined in the Act. According to dictionary it means, 'compensating or being compensated; thing given as recompense;'. In legal sense it may constitute actual loss or expected loss and may extend to physical mental or even emotional suffering, insult or injury or loss. therefore, when the Commission has been vested with the jurisdiction to award value of goods or services and compensation it has to be construed widely enabling the Commission to determine compensation for any 2024:KER:67308 W.A.No.2121 of 2023 24 loss or damage suffered by a consumer which in law is otherwise included in wide meaning of compensation. The provision in our opinion enables a consumer to claim and empowers the Commission to redress any injustice done to him. Any other construction would defeat the very purpose of the Act. The Commission or the Forum in the Act is thus entitled to award not only value of the goods or cervices but also to compensate a consumer for injustice suffered by him."

19. In Rustom Cavasjee Cooper v. Union of India [(1970) 1 SCC 248] it was held thus:-

"101. In its dictionary meaning "compensation"

means anything given to make things equal in value: anything given as an equivalent, to make amends for loss or damage. In all States where the rule of law prevails, the right to compensation is guaranteed by the Constitution or regarded as inextricably involved in' the right to property."

20. Meaning of the expression "compensation", as obtained from the Oxford dictionary and Law Lexicon extracted supra and the legal connotation, as explained by the Apex Court in the judgments referred above are in consonance. It normally signifies a sum given to make things equal in value: anything given as an equivalent, to make amends for loss or damage. Expressed in a different way, 2024:KER:67308 W.A.No.2121 of 2023 25 the term "compensation" denotes an amount to be paid by a person for loss, suffering, injury or damage sustained to another on account of any omission or commission by him.

21. In the light of the above discussion, we are of the view that sub rule (3) of Rule 17 of the Insurance Ombudsman Rules has to be understood as incorporated with the intention to confer authority on the Ombudsman to award appropriate sum of money for loss, suffering, injury or damage sustained on account of deficiencies on the part of insurers as "compensation", in addition to the main claim/relief sought in the complaint. First part of the proviso to sub rule (3), - "(i) not award any compensation in excess of the loss suffered by the complainant as a direct consequence of the cause of action", strengthens this conclusion. As a matter of fact, the proviso is restrictive in nature. Restriction imposed by the proviso is two fold. First part of the proviso restrains the Ombudsman from awarding compensation in excess of the loss suffered as a direct 2024:KER:67308 W.A.No.2121 of 2023 26 consequence of the cause of action. The 2 nd part imposes an additional restriction by fixing a cap of Rs.30,00,000/- in awarding compensation. Thus, the limit fixed in the proviso to sub rule (3) is not to be mistaken as a provision dealing with the pecuniary jurisdiction of the Ombudsman. On the other hand, the said limit ingrained in the proviso restricts the power of the Ombudsman only in the matter of granting compensation. This cannot be interpreted to mean that the monetary value of the claim considered by the Ombudsman shall not exceed Rs.30,00,000/-. Doing so, in our opinion, would frustrate the objective of establishing the institution of Insurance Ombudsman. Interpreting the provisions of the Rules, so as to restrict the powers of the Ombudsman to entertain complaints involving disputes above the monetary value of Rs.30,00,000/- will not be in tune with the objects of framing the Rules and establishing the authority of Insurance Ombudsman. Adopting any interpretation restricting the authority of the Ombudsman and depriving it 2024:KER:67308 W.A.No.2121 of 2023 27 of the power to grant compensation in appropriate cases in addition to granting reliefs with respect to the matters specifically enumerated in sub rule (1) of Rule 13 will militate against the very purpose and object of the idea of Ombudsman and also of the framing of the Insurance Ombudsman Rules. We cannot therefore subscribe to the views of the learned Single Judge of the Bombay High Court in in Aditya Birla Sun Life Insurance Co. Ltd. v. Insurance Ombudsman Goa [AIR 2022 Bom. 307]. We respectfully disagree with it. In the judgments cited of this Court, we do not find anything contrary to the opinion arrived at by us. In none of those cases, the issue adjudicated was the impact of the proviso to Rule 17(3).

Conclusion

22. We therefore concur with the view of the learned Single Judge regarding the effect of the proviso to sub rule (3) of Rule 17. Consequently we affirm the direction issued 2024:KER:67308 W.A.No.2121 of 2023 28 by the learned Single Judge to the Ombudsman to consider the matter afresh. It is to be noted that the findings on merits by the Ombudsman were upheld by the learned Single Judge, after referring to various judgments of the Apex Court. Nonetheless, with a view to provide a fresh opportunity to both sides before the Ombudsman, we modify the judgment of the learned Single Judge to the limited extent that the parties shall be free to raise all contentions on merits.

The writ appeal is disposed of as above.

Sd/-

A.MUHAMED MUSTAQUE, ACTING CHIEF JUSTICE Sd/-

S.MANU, JUDGE skj

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