Partly allowed

Oriental Insurance Co. Ltd. Thru. Manager v. State of U.P. Thru. Spl. Secy. Institutional Finance and Ors.

Allahabad HC13 Jul 2023A227/3358/2021

Case brief

AI extract

What is this about?

The Court interpreted a beneficial insurance scheme, holding that legal heirs are entitled to compensation upon death irrespective of dependency. While the Permanent Lok Adalat's finding on heir entitlement was upheld, the direction for weekly penalties was set aside as unjustified, resulting in a partly allowed petition.

What did the court decide?

Petition partly allowed; penalty to be paid by Permanent Lok Adalat set aside; remaining provisions of award upheld.

Oriental Insurance Co. Ltd. Thru. Manager Vs State of U.P. Thru… — Insurance | Allahabad HC (2023)

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Neutral Citation No. - 2023:AHC-LKO:47575

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Court No. - 20

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Case :- MATTERS UNDER ARTICLE 227 No. - 3358 of 2021

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Petitioner :- Oriental Insurance Co. Ltd. Thru. Manager Respondent :- State Of U.P. Thru. Spl. Secy. Institutional Finance And Ors.

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Counsel for Petitioner :- Mrs. Pooja Arora Counsel for Respondent :- C.S.C.,Rinku Verma

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Hon'ble Manish Mathur,J.

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Heard Mrs. Pooja Arora learned counsel for petitioner, learned State Counsel for opposite parties 1 and 3 and Mr. Rinku Verma learned counsel for opposite parties 4,5 and 6. Opposite party No.2 being merely authority concerned, notices stand dispensed with.

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Petition under Article 227 of Constitution of India has been filed challenging order dated 06.11.2020 passed by Permanent Lok Adalat in P.L.A. Case No.323 of 2017 whereby claim of opposite parties 4 and 5 in terms of 'Samajwadi Kisan Evam Sarvhit Bima Yojna' (hereinafter referred to as scheme) has been allowed.

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At the very outset, learned counsel for petitioner submits that although objections regarding jurisdiction of the Permanent Lok Adalat had been raised before the Adalat itself but the same are not being pressed in the present petition and the impugned order is being challenged on merits itself.

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It has been submitted that the aforesaid scheme was entered into as a part of agreement dated 14.09.2016 between the petitioner Oriental Insurance Company Ltd. on one part and the Governor of Uttar Pradesh through the Special Secretary concerned on the other part indicating terms and conditions of memorandum of agreement which would form a part and parcel of the agreement.

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It is submitted that in pursuance of aforesaid scheme, Smt. Nirmala Devi, widow of Indra Pal Singh subscribed to the scheme and was covered thereunder on payment of premium. Subsequently, the insured lady passed away on 18.11.2016 as a result of injuries suffered in an accident which was within the coverage period of three years of the memorandum of understanding from 14.09.2016 to 13.09.2019. As a result of the aforesaid death, opposite party no.4 made an application claiming compensation in terms of aforesaid scheme. Initially the opposite parties no.5 and 6 who are also heirs of the deceased were not arrayed as claimant in the claim made by opposite party no.4 who claimed himself to be the sole heir of the deceased.

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It is submitted that claim was submitted to the District Magistrate who after scrutiny of the same forwarded it to the petitioner for payment of compensation amount but the said claim was rejected by the petitioner vide repudiation letter dated 07.03.2017 whereafter the application was preferred before the Permanent Lok Adalat, which has allowed the claim. 7. Learned counsel for petitioner submits that claim of petitioner was rejected primarily on two grounds that firstly, he was not dependent upon the deceased and secondly, that he had concealed material facts regarding other heirs of deceased also being in existence.

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Learned counsel has drawn attention to the conditions of scheme itself to submit that definition of 'family', as indicated in the scheme clearly stipulated the claimants who would be entitled in the event of the insured incident occurring and as per which the spouse, unmarried daughter, dependent son or parents of an unmarried male would be entitled for compensation. It is submitted that since in the present case, opposite party no.4 was a married person having his own income and was therefore not

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dependent upon the deceased, his claim was rightly rejected. 9. Learned counsel has challenged the judgment and award by the Permanent Lok Adalat with the submission that it has incorrectly reached the conclusion that the claimant would be entitled to compensation only in lieu of his being legal heir of deceased while aspect of dependent heir of deceased has been completely ignored. It is further submitted that even judgments relied upon by the Adalat were inapplicable in the facts and circumstances of this case. Learned counsel has placed reliance on Division Bench judgment of this Court in the case of Ram Piyare versus State of U.P. and others, Writ Petition No.13240(M/B) of 2019 to buttress her submission.

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Learned counsel appearing on behalf of answering opposite parties has refuted submissions advanced by learned counsel for petitioner with the submission that although claim was initially preferred by opposite party no.4 only but subsequently it included the opposite party No.5 as well since she was an unmarried daughter of the deceased. It is submitted that opposite party No.6 although being another heir of deceased gave an affidavit in favour of the opposite party No.4.

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Learned counsel has further submitted that memorandum of understanding which formed a part of agreement was clearly in two parts with first part referable to cases where the insured passes away as a result of accident whereas the second part is referable to a condition where treatment of the insured and family members is required as a result of accident. It is further submitted that with regard to first part of the agreement, it has been clearly stipulated that in the event of death of insured, compensation amounting to rupees five lacs would be payable to the nominee/legal heir of the deceased. As such learned counsel has sought to draw a distinction between part I and part II of the agreement to submit that definition of 'family' which

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has been relied upon by the petitioner would be referable only to part B of the agreement and not part I due to which all nominees/legal heirs of the deceased insured would be entitled to compensation.

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Learned counsel has placed reliance on a judgment by Coordinate Bench of this court in the case of National Insurance Company Limited versus State of U.P. and others, Writ-C No. 20554 of 2020 to buttress his submissions.

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Upon consideration of submissions advanced by learned counsel for parties and perusal of material on record, the primary question arising for adjudication would be:-

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(1) whether a claimant of deceased insured would be entitled to compensation only as a nominee/ legal heir of the deceased or whether such a claimant necessarily has to be dependent upon the deceased insured?

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(2)Whether the claimant would be dis-entitled for payment of compensation in terms of conditions of scheme since the other legal heirs of the deceased insured did not join in the claim petition/application and the disentitlement would extend in case of concealment of facts?

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(3)Whether the petitioner can be saddled with penalty in the event of failure to pay compensation in terms of the scheme?

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Question No.1

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With regard to aforesaid question, it is evident from a perusal of the conditions of scheme that in the defintion clause of 'family', it has been clearly stated that claimants entitled for compensation in respect of claim under the scheme would be limited to spouses or unmarried daughters, dependent son and parents of unmarried males. As such it is relevant from the definition clause that the same is restrictive in nature.

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However, the scheme also indicates that it considers two separate eventualities with part I being referable to those cases where the insured has died as a result of accident and part two being referable to those cases where treatment is required of insured or family members as a result of injury suffered due to accident. With regard to first part, it is also evident that a stipulation is indicated in the event of death of insured due to an accident that nominees/ legal heirs of the deceased would be entitled to payment of rupees five lac as compensation.

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A clear reading of the definition clause with the aforesaid clause contained in part I at first glance appears to be contradictory. However due to the fact that the provisions of agreement are beneficial in nature, the contradiction, if any, would be required to be harmonized in favour of the beneficiary.

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Upon contemplation of the supposed contradiction, it is quite evident that part I of the agreement itself indicates that it would be applicable only in case of death of insured as a result of accident whereafter compensation of rupees five lac has been provided as entitlement to nominees/legal heirs of the deceased. Although the definition clause of 'family' is restrictive in nature but in the considered opinion of this Court, would be applicable in case of only part II of the agreement since that is the only part which refers to benefits with regard to treatment alongside that which would be available to the surviving insured and not in case of death of insured. Since there is specific stipulation in part I that compensation would be payable to nominees/ legal heirs of the deceased, in the considered opinion of this Court, the said stipulation would have precedence over the general definition of 'family' as indicated in the earlier part of agreement particularly when part II does not contain any such stipulation as indicated in part I of the agreement.

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The impugned judgment and award has placed reliance on judgment rendered by Supreme Court in the case of General Insurance Co. Ltd. versus Chandumal Jai and others, AIR 1966 Supreme Court 1664 which clearly is a proposition for the law that in case of any ambiguity in interpretation of a contract, it is the duty of the Court to interpret the words in which the contract has been expressed by the parties itself. The award also refers to other cases with regard to strict interpretation of conditions of a contract.

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There can obviously be no truck with the proposition of law as enunciated by Supreme Court and relied upon in the impugned award.

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The Supreme Court in the case of K.H. Nazar versus Mathew K. Jacob reported in (2020) 14 SCC 126 has specifically held that in case of any ambiguity or difference in the terms of a beneficial provision for advancing social justice, the Courts would generally lean towards an interpretation which furthers the object of a beneficial scheme of provision in favour of beneficiary itself.

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Upon applicability of aforesaid judgment in the present facts and circumstances of case, it is evident that the very nature of scheme is beneficiary to provide succour to family members of insured. As such, keeping in view the enunciation of law in such aspects and particularly in view of the fact that part I of the scheme itself provides for payment of compensation to nominees/ legal heirs of the deceased insured, the restrictive definition of the word 'family' cannot be incorporated into part I of the scheme and as such no exception can be taken to such finding recorded in the impugned award. The aforesaid reasoning has also been taken by Co-ordinate Bench of this Court in the case of National Insurance Company Limited

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(supra) with which this Court is in respectful agreement.

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The Division Bench judgment relied upon by learned counsel for petitioner however with all due respect does not appear to be applicable in the present facts and circumstances of the case firstly because it pertains to conditions indicated in a government order dated 20.06.2016 and does not refer at all to the present agreement. Even otherwise the said judgement refers only to clause 7 of the aforesaid government order defining the word 'family' but apparently the said government order did not contain any clause as indicated in part I of the scheme. The judgment as such would be inapplicable to the present case.

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In view of the aforesaid discussion, it is held that the claimant would be entitled to compensation as legal heir of the deceased irrespective of the fact whether he was dependent upon the deceased or not.

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Question No.1, as such, is answered negatively against the petitioner.

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Question No.2

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With regard to aforesaid question, although it is quite evident that despite the fact that deceased had other legal heirs alive and surviving but it is only the opposite party no.4 who had filed the claim indicating himself to be the only legal heir. However, the said factor cannot be consideration for repudiation of claim since repudiation of claims are required to be under the conditions indicated in the agreement itself wherein there is no such stipulation for repudiation of claims and therefore in the considered opinion of this Court, the petitioner exceeded its jurisdiction in rejecting claim on that ground.

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It is also material that subsequently claim has been filed

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impleading the other legal heirs of the deceased. In the award also, compensation has been awarded to other legal heirs of the deceased as well.

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In view of the aforesaid, it is held that the petitioner insurance company erred in repudiating claim of opposite party no.4 on this ground.

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Question No.2 accordingly is answered against the petitioner negatively.

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Question No.3

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So far as the direction for payment of penalty is concerned it emerges that initially the claim had been rejected by the insurance company vide the order dated 07.03.2017 on the ground of the claimant not being entitled for the aforesaid amount as he does not fall within the definition of "family". Though the said ground has not found favour with the Adalat while passing the order impugned dated 06.11.2020, a perusal of the Scheme terms and conditions would indicate that so far as the penalty is concerned the said penalty would be payable where despite the claimant having applied for the insured amount within the stipulated period of time the amount is not paid.

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In the instant case the petitioner withheld payment of compensation when the claimant had applied for it since the insurance company found the amount to be not payable vide order dated 07.03.2017 and the claim of the claimant was rejected. The rejection order was based on the terms and conditions of the Scheme whereby it was found that the claimant did not fall within the definition of "family". Thus, it cannot be said that the claim of the claimant had been rejected arbitrarily rather it was rejected, even though erroneously, on one of the terms and conditions of the Scheme. However, as

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already indicated above, the said rejection did not find favour of the Adalat while passing the impugned order dated 06.11.2020. As such it cannot be said that there has been any deliberate non payment of the insurance amount within the stipulated time when the claimant had applied for the same. Consequently this Court does not find any reasonable ground to affirm the order of the Adalat so far as it has directed for payment of penalty of Rs 1000 per week.

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In view of aforesaid, the penalty imposed against the petitioner is found unsustainable and the award to that effect is set aside.

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Question No.3, as such, is answered in favour of the petitioner positively.

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In view of the aforesaid discussion, the petition is partly allowed only to the extent of imposition of penalty and to that extent, the impugned judgment and award dated 06.11.2020 passed by Permanent Lok Adalat in P.L.A. Case No.323 of 2017 is set aside. The petitioner is directed to adhere to the remaining portion judgment and award dated 06.11.2020 passed by permanent lok adalat. It is made clear that setting aside of penalty amount has been found to be in favour of the petitioner but the interest component is kept intact against the petitioner.

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Learned counsel for the petitioner submits that in compliance of the impugned judgment and award, the entire payment of compensation has been made and has been deposited before the permanent lok adalat in terms of interim directions issued by this Court on 04.02.2021. In view of the fact that claim of answering opposite party has been allowed, permanent lok adalat is directed to ensure payment of compensation to the claimants in proportion of their share expeditiously. In the event of any excess payment having been

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deposited by the petitioner over and above the amount of compensation and interest, the same shall be returned to the petitioner company.

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Resultantly, the petition is partly allowed in the aforesaid terms. Parties to bear their own cost.

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Order Date :- 13.7.2023 prabhat

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Digitally signed by :- PRABHAT KUMAR High Court of Judicature at Allahabad, Lucknow Bench

Oriental Insurance Co. Ltd. Thru. Manager v. State of U.P. Thru. Spl. Secy. Institutional Finance and Ors.

Case brief

What is this about?

What did the court decide?

Oriental Insurance Co. Ltd. Thru. Manager v. State of U.P. Thru. Spl. Secy. Institutional Finance and Ors.

Case brief

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