State Consumer Disputes Redressal Commission
M/S.Jyoti Impex vs New India Assurance Co.Ltd. on 29 April, 2013
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
STATE CONSUMER
DISPUTES REDRESSAL COMMISSION
MAHARASHTRA,
MUMBAI
Complaint
Case No. CC/09/152
M/S JYOTI IMPEX
Vs.
THE NEW INDIA ASSURANCE
CO.LTD. and Others
BEFORE:
HON'BLE Mr.Justice S.B.Mhase PRESIDENT
HON'BLE MR. Narendra Kawde MEMBER
PRESENT:
Mr.A.V.Patwardhan-Advocate
......for the Complainant
Mr.Rajeev Verma-Advocate for the opponent
Dated : 29/04/2013
ORDER
Common order in Consumer complaint nos.CC/09/152, CC/00/324, CC/01/8, CC/05/15, CC/08/154, CC/09/58 below delay condonation applications filed by the complainants.
Per Honble Mr.Justice S.B.Mhase, President The facts in consumer complaint no.CC/09/152 are as under:-
This consumer complaint was filed on 20/08/2009 by the complainant against the opponent/Insurance Company. The complainants have claimed `60 lakhs as compensation plus punitive damages and costs from the opponents for several acts of deficiency of service. The complainant has taken the insurance policy on 15/06/2006 operative for a period 17/06/2006 to 16/06/2007 in respect of the property situated at Sharda Warehousing Corporation Godown no.18, Manish Estate, Choudhari Compound, Behind Gadge Patil, Bombay Agra Road, Purna Village, Taluka Bhiwandi 421 302 and the said policy is for the amount of `60 lakhs. It is in respect of the said godown and stocks stored. On 05/09/2006 the fire has taken place in the godown of the complainant and the complainant immediately informed on 05/09/2006. Complainant has also filed his claim on 11/09/2009 estimating the loss damages at `64 lakhs. The information in respect of this incidence was also given to the police station and the FIR was registered on 05/09/2006. On 07/09/2006, the opponent appointed surveyor M/s.Ashok Chopra & Company to assess the loss. However, the surveyor finalized assessment of loss on 02/04/2008 communicating to the complainant that the loss is assessed at `40,15,000/- and that, if this assessment is not accepted by the complainant on as is basis, then this offer for settlement stands totally withdrawn without further recourse to the complainant. He further informed that he will then issue his report on the basis of his inspections, discussions as well as the details and documents received. It further appears that the detailed assessment was given by M/s.Ashok Chopra & Company, surveyors on 02/04/2008 making compensation for `40,15,000/- and recommended that the loss is admissible under the terms and conditions and may be settled as indicated above. It appears that after receipt of the report dated 02/04/2008, the complainant has given unconditional consent to the offer of settlement @ `40,15,000/- but since nothing has turned up thereafter within a period of two months complainant communicated by letter dated 06/06/2008 to settle the claim as per the offer of settlement dated 02/04/2008 at the earliest. Complainant alleges that the said consent was given under duress as well as financial exigencies. However, opponents did not act upon the report of M/s.Ashok Chopra & Company and on 12/05/2008, appointed investigator named Decent Investigators to investigate the genuineness of bills of stock. The report of the investigator was submitted on 08/09/2008 and, thus, the opponents repudiated the claim of the complainant after a period of almost 2 years from the date of incidence i.e. 05/09/2006.
2. Complainant thereafter made a grievance to the Grievance cell and issued legal notice on 17/07/2009 and has filed the complaint on 20/08/2009.
It appears that the complaint was pending on sine die list. It was moved on 17/08/2009 and it appeared for admission before this Commission on 21/11/2009 and it was admitted. Thereafter, written version has been filed by the complainant on 19/04/2010. Therefore direction was given to the parties to lead the evidence u/sec.13(4) of the Consumer Protection Act, 1986 (Act for brevity).
Under these circumstances, in view of the Apex Courts judgement in the matter of Kandimalla Raghavaiah & Co. V/s. National Insurance Co.Ltd. III(2009) CPJ 75 (SC), (in short Kandimalla) the delay condonation application has been moved.
Reply to the said application has been moved in view of the objection raised in the written version of the opponent and, thus, delay of 350 days is being sought to be condoned by the delay condonation application. In this delay condonation application, we passed an order on 19/07/2012 as follows:-
Heard Adv. Anand Patwardhan on behalf of the Complainant and Adv. Rajiv Verma on behalf of the Opponent. Period of limitation is a vital question to be considered in the light of decision of the Apex Court in Kandimalla Raghavaiah & Co. V/s. National Insurance Co .Ltd. ~ III-(2009)-CPJ-75-(SC). Even though said decision of apex court speaks about commencement of cause of action, said apex court judgment has not dealt with Insurance Regulatory and Development Authority (Protection of Policyholders Interests) Regulations, 2000 qua cause of action and limitation. If these Regulations are followed then, in any circumstances a claimant gets an answer either way within the period stipulated in the Regulations, namely within a period of thirty days of the surveyors report. If the Regulations are complied with, a claim is decided much earlier to the end of cause of action and a consumer can in case of repudiation immediately approach the Consumer Forum. But it has been found that the insurance companies do not follow these Regulations and maintain silence and when the period of limitation is over, they repudiate the claim. Not only that but it has been also found that first surveyor, second surveyor and/or investigator are also appointed by the insurance companies beyond the period which is prescribed under the Regulations.
Not only that even though these Regulations require that in case of an insufficient survey report, the insurance company shall within a period of fifteen days send query to the same surveyor, insurance companies select another surveyor and flout the Regulations.
In the light of such conduct on the part of the insurance companies, namely disregard and disobedience to the Regulations and when there is a duty to speak, maintaining silence on their part whether affects the period of limitation of a consumer is a larger issue which requires consideration and, therefore, we direct the Registrar to give information of this point to all the lawyers appearing before the Commission on behalf of various insurance companies so as to provide an audience to them on this legal point only. Today besides Adv.
Patwardhan for the Complainant and Adv. Verma for the Opponent, Adv. A. S. Vidyarthi, Adv. J. S. Chandanani who frequently appear before the Commission on behalf of insurance companies are present. They are appraised of the point involved. We request them to convey this order to the other lawyers who represent the insurance companies so as to address us on this point. Stand over to 10/08/2012.
3. In view of the above order, matters of Insurance Company were listed before us to consider the point of delay and application of ratio in Kandimallas case on the point of commencement of the cause of action and provisions of section 24-A of the Consumer Protection Act, 1986.
4. We have heard Mr.A.V.Patwardhan-Advocate for the complainant and Mr.Rajiv Verma-Advocate for the opponent in the present complaint.
We have also heard the arguments of Learned Advocates Mr.A.S.Vidyarthi, Mr.G.F.Shirke, Mr.U.B.Wavikar, Mr.S.B.Prabhawalkar, Mr.S.R.Singh, Mr.H.G.Misar, Mr.Sanjay Mhatre, Mr.Sanjay Krishnan, Mr.J.S.Chandnani and Mrs.Kalpana Trivedi and Mr.J.B.Gai-Authorized representative.
5. The submission made on behalf of the Ld.counsel for the complainant that no doubt section 24-A which was inserted by an Act no.50 of 1993 and brought into force from 18/06/1993 states that the Consumer Fora shall not admit the complaint unless it is filed within a period of two years from the date on which cause of action has arisen. Ld.counsel submitted that in the present case the surveyor who was appointed has assessed the loss at `40,15,000/-
and obtained consent for the settlement.
Ld.counsel submitted that though the complainant is having any grievance in respect of the manner in which the offer was given by the surveyor and the consent was obtained, yet he submitted that the fact remains that the offer was made and, surveyor pointed out that incidence has taken place on 05/09/2006 and the surveyor was appointed by the opponent on 07/09/2006.
However, the surveyor finalized the report on 02/04/2008, made an offer to the complainant and submitted to the Insurance Company on 04/04/2008. Thereafter, from 04/04/2008 onwards though correspondence was going on yet claim was not settled and on 12/05/2008 the investigator was appointed and report of the investigator is dated 08/09/2008 and the letter of repudiation issued by the opponent is dated 21/01/2009. Thus, he submitted that total time of 2 years has been taken by the Insurance Company to decide the claim. He submitted that the complainant was hoping that the claim in view of report of the surveyor would be settled and though the investigator was appointed on 08/09/2008, there was nothing adverse on record till 21/01/2009 when the complainant was informed that his claim has been repudiated and, therefore, he submitted that till 21/01/2009 there is nothing on record to demonstrate that the claim has been disclaimed or repudiated by the Insurance company. According to him therefore cause of action commenced and started on 21/01/2009.
6. Ld.Counsel appearing for the opponent/Insurance Company submitted that it is a statutory provision u/sec.24-A that from the cause of action within a period of two years, the consumer complaint shall be filed. According to him, duty and obligation has been cast on Consumer Fora to admit the complaint. He submitted that along with the complaint itself the delay condonation application should have been filed. He submitted that section 24-A has come into force in 1993 and the case has been lodged in the year 2009 and, therefore, the complainant was very well aware of the provisions of law and he should have come forward with a delay condonation application along with the complaint. He submitted that the time taken by the Insurance Company for deciding the claim cannot be a ground for not filing the complaint within the time specified u/sec.24-A of the Act. He submitted that as per Kandimallas judgement, cause of action arose on the date when the incidence entitles party to claim insurance amount has taken place, in the present matter the day on which the fire has taken place i.e.05/09/2006 on which date the cause of action has arisen and, therefore, complaint which is filed in the year 2009 is absolutely time barred and it should not have been admitted by the State Commission. He submitted that the contention raised by the Ld.counsel for the complainant that law as it was in the year 2009 permitted complaints of such nature without delay condonation application because the cause of action for the complaint was accepted to be the date on which the repudiation takes place and, therefore, he submitted that from the date of repudiation i.e.2009, the complaint is within limitation. His submission is without any substance and it has no legal merit. He submitted that the moment the consumer find that the Insurance Company is not deciding the claim within two years period, without waiting for the decision, consumer shall file the consumer complaint because according to the counsel once the time starts to run it never stops and, therefore, it is for the complainant to file his complaint within a period of two years and it is for the Consumer Fora not to admit such a complaint unless they are filed along with delay condonation application and the delay is condoned by the Consumer Fora. According to Ld.counsel for the Insurance Company, belated delay condonation application is not tenable in law and, therefore, prayed for rejection of delay condonation application.
7. We have found that the controversy of delay condonation application has arisen in the pending cases especially in view of the judgement of Kandimalla wherein the Apex Court has observed that the cause of action for the claimant arise on the date of happening of the incidence which entitles the person taking the insurance to claim insurance amount and from that date onwards the complaint shall be filed within a period of two years. We have noticed that several complainants have come into difficulty as a result of said judgement. However, it is well established principle in respect of cause of action that the cause of action is a bundle of facts, which entitles the party to get a relief as claimed in the plaint, suit or in the present matter, complaint. Concept of cause of action can be considered in the light of jurisdiction, delay, etc. as observed by the Apex Court. We consider concept of cause of action in the light of period of limitation. What we find from perusal of the Act that section 24-A was introduced by the Amendment Act 50 of 1993 and it is in force from 18/06/1993.
This provision contemplates that Consumer Fora shall not admit the complaint unless it is filed within two years from the date on which the cause of action has arisen. It is further to be noted that earlier to 15/03/2003 in section 13 there was no stage of admission of complaint and it provided a procedure on receipt of complaint by the Consumer Fora. But the stage of admission was introduced by the Act no.62 of 2002 w.e.f. 15/03/2003. Thus, the obligation has been created by the Statute on Consumer Fora to scrutinize the complaint at the time of admission itself and find out whether the complaint is within limitation from the date on which the cause of action has arisen. It is a statutory obligation of the Consumer Fora. However, after introduction of section 24-A equally a provision was inserted in section 24-A itself giving right to the complainant to file delay condonation application explaining that the complaint could not be filed because of the several causes and on such delay being condoned, delay can be condoned and for the reasons stated the complaint can be admitted. This, we find in sub-section ii of section 24-A.
8. Thus, so far as period of limitation is concerned, section 24-A is a Code itself. At this juncture we may mention that the complaint is an original proceeding in respect of the grievance of the complainant like a suit or application but, however, if the suit is barred by a period of limitation, there is no provision for condonation of delay provided in the Indian Limitation Act.
Indian Limitation Act provides for condonation of delay in respect of appeal, revision, etc. and not in respect of suits except the suits which are bonafidely prosecuted in the wrong forums, etc. Therefore, this is a most benevolent legislation to protect the rights of the consumer.
It further requires to be mentioned that the delay on behalf of consumer has not taken place in respect of informing incidence of mishap to the Insurance Company and equally there is no delay in making the claims, but it has to be observed that in number of matters the Insurance Companies keeps the claims undecided for years together asking the complainant to submit various papers. It has been many times observed that all defects in the claim proposals are not identified by the Insurance Company at one time and they go on taking objections and raising new objections at every time and asking the claimants to comply with and, thus, the settlement of the claim is delayed by them. However, earlier this conduct of the Insurance Company was not affecting rights of the consumers. Therefore, we would like to consider the case of the consumers at three stages.
9. First stage is a period from coming into force the Consumer Protection Act, 1986 i.e. from 25/12/1986 to 17/06/1993 i.e. the date on which section 24-A came into force. The second period is a period from 18/06/1993 to 14/03/2003 and third period commences from 15/03/2003 onwards in view of coming into force of IRDA (Protection of Policy Holders Interest) Regulations 2002 (herein after referred as IRDA Regulations for brevity). Earlier to 1993 there was no specific provision in Consumer Protection Act, 1986 providing for period of limitation for filing of complaints and, therefore, only period of limitation which we can refer to for insurance claim is Article 44 of the Indian Limitation Act of 1963 and we need not dilate on this issue much more because there is already judgement of the Apex Court in the matter of New India Assurance Co.Ltd. v/s.B.N.S AIR 1997 Supreme Court Page 292. In that case the Article 44 was applied by the Apex Court in view of the fact that the facts involved in the matter which was considered by the Apex Court were of the period prior to coming into force of section 24-A of the Act. Apex Court proceeded on admitted facts that section 24-A came into force on 18/06/1993 and it was not disputed that earlier to this Consumer Fora have been applying Indian Limitation Act 1963 to find out if the complaint was barred by limitation or not. Thus, if the case involves the facts which are of the period prior to 18/06/1993, the question of limitation has to be considered by the Consumer Fora under Article 44 of the Indian Limitation Act, 1963.
10. Then we have to come to this second and third period mentioned above. We have to consider them together because section 24-A of the Act is applicable to both the periods.
Reason for making difference or distinction for this period is coming into force of the IRDA Regulations w.e.f. 01/10/2002. Therefore, the period from 01/10/2002 onwards for settlement of the insurance claims will have to be considered in view of IRDA (Protection of Policy Holders Interest) Regulations 2002. However, these regulations have been issued in exercise of the powers conferred by clause (zc) of sub-section (2) of section 114A of the Insurance Act, 1938 r/w. sections 14 & 26 of the Insurance Regulatory and Development Authority Act of 1999. Earlier to Act of 1999, the Act which governs the field was Insurance Act of 1938. However, under the said Act, no specific rules and regulations were framed as to how and in what manner and within what period the insurance claim shall be settled. No doubt there were guidelines issued but those guidelines are for the internal settlement of the claims. What we specially want to mention in this order that those guidelines were in respect as to how the claim shall be made to the Insurance Company but those guidelines have not provided in what manner and within what period the insurance claims shall be settled by the Insurance Company. It is the IRDA Regulations 2002, which came into force on 01/10/2002, which have provided and made arrangements for the protection of the rights of the policy holders interest. We would like to quote these regulations for our consideration. We find that regulation no.8 & 9 are relevant for our consideration.
Regulation no.8 applies for the claimants procedure in respect of life insurance policies and regulation no.9 provides a procedure in respect of general insurance policy. Those regulations are as follows:-
8. Claims procedure in respect of a life insurance policy (1) A life insurance policy shall state the primary documents which are normally required to be submitted by a claimant in support of a claim.
(2) A life insurance company, upon receiving a claim, shall process the claim without delay. Any queries or requirement of additional documents, to the extent possible, shall be raised all at once and not in a piece-meal manner, within a period of 15 days of the receipt of the claim.
(3) A claim under a life policy shall be paid or be disputed giving all the relevant reasons, within 30 days from the date of receipt of all relevant papers and clarifications required. However, where the circumstances of a claim warrant an investigation in the opinion of the insurance company, it shall initiate and complete such investigation at the earliest. Where in the opinion of the insurance company the circumstances of a claim warrant an investigation, it shall initiate and complete such investigation at the earliest, in any case not later than 6 months from the time of lodging the claim.
(4) Subject to the provisions of section 47 of the Act, where a claim is ready for payment but the payment cannot be made due to any reasons of a proper identification of the payee, the life insurer shall hold the amount for the benefit of the payee and such an amount shall earn interest at the rate applicable to a savings bank account with a scheduled bank ( effective from 30 days following the submission of all papers and information).
(5) Where there is a delay on the part of the insurer in processing a claim for a reason other than the one covered by sub-regulation (4), the life insurance company shall pay interest on the claim amount at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.
9. Claim procedure in respect of a general insurance policy (1) An insured or the claimant shall give notice to the insurer of any loss arising under contract of insurance at the earliest or within such extended time as may be allowed by the insurer. On receipt of such a communication, a general insurer shall respond immediately and give clear indication to the insured on the procedures that he should follow. In cases where a surveyor has to be appointed for assessing a loss/ claim, it shall be so done within 72 hours of the receipt of intimation from the insured.
(2) Where the insured is unable to furnish all the particulars required by the surveyor or where the surveyor does not receive the full cooperation of the insured, the insurer or the surveyor as the case may be, shall inform in writing the insured about the delay that may result in the assessment of the claim. The surveyor shall be subjected to the code of conduct laid down by the Authority while assessing the loss, and shall communicate his findings to the insurer within 30 days of his appointment with a copy of the report being furnished to the insured, if he so desires. Where, in special circumstances of the case, either due to its special and complicated nature, the surveyor shall under intimation to the insured, seek an extension from the insurer for submission of his report. In no case shall a surveyor take more than six months from the date of his appointment to furnish his report.
(3) If an insurer, on the receipt of a survey report, finds that it is incomplete in any respect, he shall require the surveyor under intimation to the insured, to furnish an additional report on certain specific issues as may be required by the insurer. Such a request may be made by the insurer within 15 days of the receipt of the original survey report.
Provided that the facility of calling for an additional report by the insurer shall not be resorted to more than once in the case of a claim.
(4) The surveyor on receipt of this communication shall furnish an additional report within three weeks of the date of receipt of communication from the insurer.
(5) On receipt of the survey report or the additional survey report, as the case may be, an insurer shall within a period of 30 days offer a settlement of the claim to the insured. If the insurer, for any reasons to be recorded in writing and communicated to the insured, decides to reject a claim under the policy, it shall do so within a period of 30 days from the receipt of the survey report or the additional survey report, as the case may be.
(6) Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within 7 days from the date of acceptance of the offer by the insured. In the cases of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed by it.
11. These are the statutory regulations prescribing a procedure for settlement of the claims. On perusal of regulation no.8, which applies to the claims under the Life insurance policies, it states that the claimant shall submit a primary document in support of the claim. On receipt of the claim, the Insurance Company shall process the claim without delay. What is important that any queries of the requirement of additional documents shall be raised at once and not in piecemeal manner within a period of 15 days of the receipt of the claim. Sub regulation no.(3) provides that the claim under life policy shall be paid or disputed giving all relevant reasons within 30 days from the date of receipt of all relevant papers and clarification required. It is also provided that if Insurance Company desires to have investigation, it shall initiate and complete the investigation as early as possible. However, there is a mandate that where the Insurance Company finds investigation necessary, it shall initiate and complete the investigation at the earliest, in any case, not later than six months from the time of lodging of the claim. It is further provided that sub-regulation no.(4) states that subject to provisions of 47 of the Act, if the claim cannot be made due to any reasons of a proper identification of payee, etc. the insurer shall hold the amount for the benefit of the payee and the amount shall earn interest at the rate applicable to the Saving Bank Account of Scheduled Bank (effective from 30 days following the submission of all papers and information). Sub-regulation no.(5) has directed to pay 2% additional interest if there is delay on the part of the insurer in processing the claim.
12. If we come to regulation no.9, it also contemplates that the information of the incidence shall be given immediately as early as possible and the Insurance Company shall immediately respond and, in any case, where the surveyor is required to be appointed surveyor shall be appointed within 72 hours from the receipt of an intimation from the insured.
Sub regulation no.(2) contemplates that the surveyor shall submit his report within 30 days of his appointment. Where because of special circumstances or complicated nature of claims, the surveyor shall seek an extension from the insurer with an intimation to the insured, but in no case surveyor shall take more than six months from the date of his appointment to furnish the report. It has been made obligatory for the Insurance Company that on receipt of the report, if it is incomplete in any respect they shall inform to the insurer and require the same surveyor to furnish additional report on certain specific issues as desired by the insurer. However, such a request shall be made within 15 days of the receipt of the original survey report. The proviso states that facility for calling of an additional report by the insurer shall not be resorted to more than once in case of a claim. It is further obligatory for the surveyor to submit additional report within three weeks of the date of receipt from the communication of the insurer. What is important is that on receipt of survey report or additional report, as the case may be, an insurer shall within a period of 30 days shall offer settlement of the claim to the insured. If the insurer for any reason to be recorded in writing and communicated to the insured, decides to reject the claim under the policy, it shall do within a period of 30 days from the receipt of survey report or additional report. It has been made further obligatory that where the settlement is accepted, the payment shall be made within 7 days, otherwise, Insurance Company shall pay 2% interest above the bank rate prevalent at the beginning of financial year in which the claim is reviewed by it.
13. It we look to these regulations, it becomes abundantly clear that a specific time has been provided for surveyor and the Insurance Company to settle the claim. It is important to be noted that the life insurance claim has to be settled within a period of 30 days and, in any case, within a period of six months as ruler time limit and so far as general insurance claims are concerned, after receipt of the survey report or an additional survey report within 30 days. There is an obligation on Insurance Company to settle the claim either way i.e. to accept the liability and make payment and/or deny the claim with reasons. Same is a case in respect of life insurance claim. Therefore, the insurance claim has to be decided as per regulation no.8 or regulation no.9 within the stipulated periods.
But sub-regulation (3) and sub-regulation no.(5) make it obligatory that after receipt of report, the Insurance Company must speak either way. It is for the Insurance Company to accept the claim fully or partially and communicate to the consumer or to claimant. It is equally open for the Insurance Company within a period of 30 days to deny the claim. Acceptance of the claim is an act as against the company, in a sense the company accepts the obligation to pay but in a repudiation of claim the company gets absolved or relieved from the liability. Therefore, regulation contemplates decision either way, namely, either in favour of claimant and/or partially in favour of claimant and partially in favour of company and/or total repudiation of the claim which is an act favourable to the company. This period has been provided as 30 days from the date of receipt of survey report or in respect of life insurance, the investigation report. Question arises what happens if the Insurance Company is not acting as per the regulations. It is important to be noted that in case of an acceptance of the claim either partially or fully, if the claim is not paid within the stipulated period under the said regulations, the Insurance Company is liable to pay 2% interest on and above the bank rate prevailing at the beginning of the financial year. In case of life insurance, the interest become payable from the 30 days following the submission of all papers and information under sub regulation no.(4) and under sub regulation no.(5). What we feel that therefore since we are considering cause of action to file a consumer complaint and the limitation in this respect, it is appropriate that the consumer gets information that the Insurance Company is not accepting the liability of his claim as early as possible so that it will be open for him to follow an appropriate remedy under the law and initiate legal proceeding. Therefore, from the point of the cause of action to file consumer complaint the denial of claim or disclaimer of the claim of the complainant is very much relevant. On the contrary, when there is a duty to speak, namely, either to accept and/or denial, Insurance company has to perform the said duty and especially when the person is called upon to deny the things and he is not denying it, it is well settled principle of law that such person accepts it. Silence in the adverse circumstances is an acceptance of the fact which is adverse to the party. Law requires that if there is anything adverse to a party, the party must open a mouth and shout as against that. Failure on the part of the party to do that results into an acceptance of the allegations and/or facts which are adverse to the party. In the present matter if the Insurance Company fails to deny the claim within a period of 30 days as required under the above referred two regulations, it will have to be inferred that the Insurance Company has accepted the claim. Because even though it was open for them to deny it, they have omitted and/or failed to deny it for the reasons best known to them and have submitted themselves to the adverse position of law. We have analysed this for this purpose that no doubt cause of action commences on the date of incidence which entitles the claimants to claim an insurance claim i.e. cause of action for filing the complaint but if we find that after the arisen of cause of action and on immediate information and receipt of the report, the Insurance Company has failed to deny the claim, we have to infer that the Insurance Company has accepted the claim and if within stipulated period there is no denial, statutory inference follows that there is acceptance of the claim then question arises why such a consumer shall approach the Consumer Fora for getting a claim. On the contrary, because of the statutory provisions and, more specifically, regulations referred to above, the claims stands accepted and satisfied and the claimant/consumer is entitled to claim interest over the said amount as provided in the regulations and, therefore, cause of action stands satisfied if within the stipulated period the Insurance Company fails to deny the claim. This is because, if the Insurance Company accepts the claim, nobody will approach the Consumer Fora. Only in case of partial acceptance of the claim it may be necessary for the consumer/claimant to approach the Consumer Fora. Therefore, if the decision is taken either way as stipulated in the regulations, the consumer becomes aware as to whether he has to follow the legal remedy by initiating legal proceeding and/or wait for getting the amount in view of statutory admission of a claim as analysed above.
In short, what we want to emphasize that whenever the claim is accepted by positive act of the Insurance Company and/or by a deemed statutory inference as stated above, claimant need not approach the Consumer Fora. Therefore, from the view point of the limitation, it is the repudiation of claim and/or denial of a claim, which warrants some claimants to file a consumer complaint and/or initiate legal proceeding. In order to enable consumer to exercise his right available to him to approach Legal Fora namely, Consumer Fora, the Insurance Company shall have to decide and deny the claim fully or partially as provided under the regulations. We have already analysed the fact of non performance of such duty by the Insurance Company. But if the Insurance Company fails to discharge its duty under regulations, the rights of the parties are likely to be affected or prejudiced. We want to state here that these regulations have been passed to protect the interest of the policy holders and they have statutory force. For the regulations consequence has been provided for, namely, the imposition of the additional interest and, therefore, they have a penal consequence in acceptance of the claim. What we find that the words used in the regulations are of the mandatory nature. The word shall has been used everywhere but only because the word shall has been used, we are not impressed to hold that it is not mandatory i.e. one of the factor which persuades us to hold it mandatory but what we find that the object of the regulations is to protect the interest of the policy holders and along with that for non performance of the regulations, some penal consequence has been provided for and, therefore, these regulations are mandatory in nature.
14. There is one more reason that if these regulations are not followed and acted upon by the Insurance Companies, the right of the claimant/consumer in approaching and filing legal proceeding is likely to be prejudiced by a period being lapsed and, therefore, these regulations have to be interpreted as a mandatory one and the Insurance Company cannot avoid their obligation statutorily created by the regulations. The prompt disposal of the claim is a social requirement. Various insurance acts have been passed by the Legislature to provide social security and, therefore, they are social benevolent legislations. The money with the Insurance Company is a public money invested for the indemnification as per insurance policies and, therefore, the claim has to be decided as contemplated under the regulations and, if not decided, there is failure to implement mandatory regulations on the part of the Insurance Company, which results into an acceptance of the claim as analysed above and, thereby, a cause of action will come to a standstill at the stage where the claim stands accepted statutorily. If such an accepted claim is denied at a subsequent stage, that will be a fresh cause of action for filing a complaint and the period of limitation for section 24-A will have to be calculated from the date when the repudiation or denial of a claim has taken place in spite of acceptance of the claim earlier and while considering such case, bundle of facts are required to be considered from the date of incidence till the date of denial. The Insurance Company will be only relieved of their obligation and will be entitled to raise the ground of limitation only in cases where as per regulations they have denied the claim within a period stipulated in the regulation and there is failure on the part of the consumer/claimant to file a dispute within a period of two years from the date of cause of action, namely, occurrence of incidence. But where the Insurance Company has not denied the claim and/or has kept it pending for more than two years period and at a later stage repudiated the claim, it will not be open for the Insurance Company to raise the ground of limitation as against the consumer/claimant.
15. In a later case the period of limitation will have to be calculated holding that the non communication of denial resulted into acceptance of the claim and only scrutiny left out for the Consumer Fora is to find out whether the complaint has been filed within a period of two years, but if such are not the things and the facts of the case, then the Insurance Company cannot be allowed to raise the ground of limitation relying upon the judgement of Kandimalla.
16. However, this discussion will show in what manner the period of limitation and cause of action has to be co-related in the consumer complaints which are instituted after 01/10/2002. But the other period is left out, namely, from 1993 to 2002. In this period there are no statutory regulations.
They are only guidelines. However, those guidelines also do not provide for any specific period, within what period the decision shall be taken even though claim has been made.
In this respect we would like to state that under the insurance contract, the Insurance Company is supposed to indemnify the claim in respect of damage sustained depending upon the reasons for which the Insurance policy has been taken. Therefore, whenever the claim is made, the claim has to be decided as early as possible. Because the basic purpose of the insurance policy is to indemnify the claimant and restore him as far as possible in the original position.
A delayed claim settlement affects the very object of the consumer contract. Therefore, in absence of any statutory limitation or period for settling the claim, the Insurance Company must settle the claim within a reasonable period. What should be a reasonable period is a matter of fact of law in the facts and circumstances of each case. But what is to be kept in mind that the Insurance Company cannot keep the claim pending for an infinite period, especially, after passing of the Consumer Protection Act, 1986 as modified in 1993 by introduction of section 24-A because earlier to introduction of section 24-A the period of limitation was being calculated by the Consumer Fora under Article 44 of the Indian Limitation Act, 1963. The said Article provides Description of the suit Period of limitation Time from which period begins to run
44.(b) On a policy of insurance when the sum insured is payable after proof of the loss has been given to or received by the insurers.
Three years The date of the occurrence causing the loss, or where the claim on the policy is denied either partly or wholly, the date of such denial.
17. Mere perusal of this Article, it reveals that the period of limitation is three years and it starts to run on the date of occurrence causing the loss or where the claim of the policy is denied either partly or wholly, the date of such denial. Therefore, under Article 44 the period starts to run
1. On the date of occurrence of causing loss
2. On the date of denial of the claim partly or wholly.
18. Therefore, if the claim is pending without denial and without acceptance for more than three years period, then the cause of action will commence on actual denial of the claim either partly or wholly and, therefore, keeping the claim pending even for a period beyond the three years was not affecting the rights of the claimant because the claimants use to get the fresh period of limitation of three years from the date of denial.
However, as a result of introduction of section 24-A, the Parliament has given a starting point of commencement on the happening of cause of action and the cause of action in the insurance matters according to Apex Court as stated in the judgement of Kandimalla, is the occurrence of the incidence entitling claimant consumer to get a relief under the insurance policy or agreement and once the cause of action is said to have occurred on the happening of the incidence, it comes to an end of completion of two years u/sec.24A and, if thereafter, there is denial partly or wholly by the Insurance Company that wont help the claimant to state that his complaint is within a period of limitation and the advantage of this position is being tried to be taken by the Insurance Companies in several pending matters after the decision of Kandimalla has been referred by the Apex Court. It has resulted into giving benefit to the wrong doer namely, Insurance Company, because they themselves are responsible for not deciding the claims even within period of three years specified in Article 44 Part I and they are opposing the consumer complaints on the basis of section 24-A. It is well settled principle that the wrong doers or persons who place the other party in adverse position shall not be allowed to take benefit of his own wrong so as to defeat the claim of other party. Since we have observed that the benefit of Article 44 is not available in respect of consumer complaints filed after introduction of section 24-A, we have to find out that in case where claims have not been decided within a period of two years as desired under section 24-A, whether the consumer/claimant should be non suited in the Consumer Courts.
19. To overcome this situation, Mr.J.B.Gai who appeared as intervener in the matter has invited our attention to some of the cases of the Foreign Courts.
More specifically, those cases are under Motor Vehicles Act. However, they deal with the Insurance Companies. In the matter of Harbert D. Bruce and Carol Bruce v/s. E.C.Smith, d/b/a A & A Duraclean Service, Appellant, Duraclean Company, a Corporation and ISAAC MAGDALENO, Defendants, 204 Kan.
473 (1970) 464 P.2d.224, the court has observed, while it is true the record discloses no affirmative statements of ownership made by Mr.Smith to Mrs.Bruce, silence itself may give rise to an estoppels where, under the existing circumstances, there should have been a disclosure. Where a duty to speak exists, silence is tantamount to dissimulation.
20. In the matter of Hartford Insurance Company, Respondent, v/s. County of Nassau, Appellant and Richard A. Jaeger, Respondent, et.al., Defendants; 46 N.Y. 2d 1028 (1979), the court has observed as under:-
In the instant case, which was submitted to the courts upon an agreed statement of facts, the insurer was first notified of the accident on November 4, 1976, more than 45 months after the date of the accident. Rather than sending any notice of disclaimer of liability or denial of coverage to the insured, the insurer instead commenced this action seeking a declaration of its obligations under the policy on January 5, 1977, some two months after it first received notice of the accident. No explanation whatsoever was given for this two-month delay by the insurer. The only thing which the record indicates that the insurer did during the two-month period was to send a letter to the insured agreeing to defend it in the pending tort suit but reserving any rights the insurer might otherwise have. This letter, of course, could not serve as a notice of disclaimer of liability or denial of coverage, and would be relevant only in the event that the insured should claim that the insurer had waived its right to disclaim by conducting the defense. A reservation of rights letter has no relevance to the question whether the insurer has timely sent a notice of disclaimer of liability or denial of coverage (see Allstate Ins. Co. v Gross, supra, at p 269). As for the commencement of this action, even assuming arguendo that it could serve as a notice of disclaimer of liability or denial of coverage, we conclude that where, as here, no explanation is offered for the delay in disclaiming liability or denying coverage, a delay of two months is unreasonable as a matter of law, and hence the [ 46 N.Y.2d 1030 ] insurer may not disclaim liability or deny coverage in this case.
Normally the question whether a notice of disclaimer of liability or denial of coverage has been sent "as soon as is reasonably possible" is a question of fact which depends on all the facts and circumstances, especially the length of and the reason for the delay (see Allstate Ins. Co. v Gross, supra, at p 270). It is only in the exceptional case that it may be decided as a matter of law. Where, however, as here, there is absolutely no explanation for the delay provided by the insurer, a delay of two months is, as a matter of law, unreasonable.
In the matter of James T.Klepper, Appellee, v/s. Henry David Stover and Theresa Stover, Appellants; 193 Kan. 219 (1964) 392 P.2d 957, the court observed as under:-
Defendants also call our attention to the recent case of Rex v. Warner, 183 Kan.
763, 332 P.2d 572. An equitable note and mortgage were the gist of that action. Plaintiffs petition therein clearly showed the statute of limitations had run but the effect was sought to be avoided on the ground the defendants were estopped to rely upon the statute of limitations. We held the facts alleged were not sufficient to invoke the doctrine of equitable estoppel in pais, and there stated:
". . . to invoke the doctrine, the debtor or defendant must have done something that amounted to an affirmative inducement to plaintiff to delay bringing the action." (p. 771.) While from a factual standpoint the Rex case is distinguishable from our present one, the above statement of the rule of law indicates there are exceptions to the application of statutes of limitation based upon equitable estoppel. Generally speaking, in equity where mistake is sought to be corrected, limitation statutes do not begin to run on the cause of action until the time when the [193 Kan. 222] mistake is discovered or when by use of due diligence it ought to have been discovered. (34 Am. Jur., Limitation of Actions, ? 174, p. 139.) This is particularly true where a mistake is the basis of the gravamen of the action (53 C.J.S., Limitations of Actions, ? 91, b., p. 1067, c., p. 1069.) Mistake and fraud are closely akin to each other. To apply the doctrine of estoppel to defendants here upon the ground of the statute of limitations requires an element of deception upon which the plaintiff acted in good faith in reliance thereon to his prejudice whereby he failed to commence the action within the statutory period. Whether the acts, promises, or representations of defendants lulled plaintiff into a sense of security, preventing him from filing suit before the running of the statute is a question of fact. (34 Am. Jur., Limitation of Actions, ? 412, pp. 324, 325.) If a defendant, electing to rely on the statute of limitations, has previously by deception or in violation of his duty toward plaintiff, caused him to subject his claim to the statutory bar, defendant must be charged with having wrongfully obtained an advantage which the court will not allow him to hold, and this can be done by his silence when under an affirmative duty to speak. (53 C.J.S., Limitations of Actions, ? 25, Estoppel, pp. 963, 964.)
21. All these cases show that the Insurance Company and/or the party who is under obligation to deny certain facts, if keeps silence, it amounts to acceptance.
All these cases also show that the duty to speak contemplates that you should speak within a reasonable period or time. Belated exercise prejudicing the rights of other side is not permissible. If there is statutory period, that period will have to be observed and if there is no statutory period provided for, then the duty to speak must be discharged within a reasonable period. What should be a reasonable period is a matter to be considered in the facts and circumstances of each case. What we feel therefore that the Insurance Companies were and are under obligation to speak for either way and, especially, speak for denial of the claim of the consumer in a period from 18/06/1993 onwards upto 30/09/2002 till IRDA regulations are introduced. Question arises what should be a reasonable period. What we find that section 24-A contemplates two years period to file the complaint from the cause of action. IRDA while framing the regulations of 2002 have found a reasonable period to decide the claim as stated in the regulation nos.8&9.
They are the best persons to have a knowledge, experience in the business of the insurance and the practices and mal practices in the said business and considering the said aspects, the period has been provided in regulation nos.8 & 9. Therefore, we find that for a second period, namely, 18/06/1993 till promulgation of IRDA Regulations 2002, reasonable period within which claim should have been decided by the Insurance Companies is six months from the date of the claim and if it is not decided within that period by the Insurance Company, the claim shall be treated as accepted one and subsequent denial of the claim will result into providing fresh cause of action for filing a consumer complaint u/sec.24-A of the Act.
In the present facts of the case what we find that the claim has been denied after 2 years of the occurrence of an incident. Not only that but the first surveyor was appointed and the surveyor has recommended the claim for `40,15,000/-. If that was not accepted or had any doubt, the Insurance Company should have referred it within 15 days to the same surveyor. That procedure was not followed and, belatedly, claim has been rejected which according to our discussions above was an accepted claim as a result of non communication of denial as per sub-regulation no.(5) of regulation no.9.
Therefore, denial on 21/01/2009 will give a fresh cause of action and from that date the complaint is within limitation. Since the application has been made by abundant precaution, we hold that the complaint is within limitation and the application is being allowed. Therefore, following order:-
ORDER
1. To sum up, if the insurance claim involves the facts prior to coming into force of section 24-A of Consumer Protection Act, 1986, the period of limitation shall be considered on the basis of an Article 44 of the Indian Limitation Act as has been done by the Apex Court in the matter of New India Assurance Co.Ltd. v/s. B.N.Sainani AIR 1997 Supreme Court 2938. However, in such matters in absence of provision, the delay condonation application cannot be entertained.
2. In consumer complaints wherein facts giving rise to the insurance claim are from 18/06/1993 onwards upto 30/09/2002 i.e. day earlier of the promulgation of IRDA (Protection of Policy Holders Interest) Regulations 2002, the Consumer Fora shall consider as to whether the claim has been decided by the Insurance Company within a reasonable period of six months from the date it is lodged and if there is no denial by the Insurance Company within a period of six months, it be held that the claim was accepted by the Insurance Company and, therefore, fresh limitation shall be calculated from the date of denial of the said statutorily deemed accepted claim by the Insurance Company.
3. In consumer complaints which are filed after coming into force IRDA (Protection of Policy Holders Interest) Regulations 2002, if the Insurance Company has failed to intimate the denial partially or totally within a period stipulated in Regulation 8 or 9, it shall be treated that the Insurance Company has accepted the said claim statutorily and, therefore, limitation shall be calculated from the date of denial of the claim, which was deemed to be accepted under the regulations as a result of not intimating denial or disclaimer of claims with the reasons to the claimant/consumer.
4. Lastly, application for condonation of delay is allowed. Delay is condoned but we observe that this was a case wherein there was no delay in the facts and circumstances and the law as discussed in this order in the above paragraphs.
5. Accordingly, we dispose of delay condonation application. Complaint s/o. to 24/07/2013.
6. Copy of this order be circulated to all the District Fora in the State of Maharashtra.
[HON'BLE Mr.Justice S.B.Mhase] PRESIDENT [HON'BLE MR.
Narendra Kawde] MEMBER Ms.