New India Assurance Co. Ltd. vs VISHWA MITTER SOODAN (DR.)

-THIS appeal is taken from an order dated 10.12.2003 passed by the learned Divisional Forum, Jammu (hereinafter to be referred to as the Forum) by which the appellant has been ordered to pay a sum of Rs. 2,64,100/- (wrongly stated Rs. 2,49,100/- in the impugned order) along with interest @ 6% per annum on Rs. 1,70,000/- from the said awarded amount.

THE facts of the case in brief are that respondent had obtained Insurance Policy which is known as "Doctor''s Composite Package Insurance Policy" and during its currency he was prosecuted by one Mr. O.P. Baru (Grand father of the child patient) who was operated by the former on 27.3.1991 in his Private Nursing Home to cure foot deformity. THE operation was unsuccessful and the child lost his life. Complaint was lodged before the Judicial Magistrate, Jammu who framed a charge against the respondent under Section 304A, RPC while co-accused was charged under Section 304A, RPC read with Section 34, RPC. THE order of the Magistrate was challenged by the respondent under Section 561A, Cr.P.C. in the J & K High Court where it was confirmed. THE respondent filed SLP before the Hon''ble Supreme Court against the order of the High Court where the matter was finally settled on 17.4.1998 and respondent was directed to deposit a sum of Rs. 2.00 lacs in the office of Jammu University for a noble cause as specified therein out of which respondent had paid a sum of Rs. 1,70,000/- only. After the initiation of the criminal proceedings, before the Magistrate, the respondent on 8.8.1992 informed the appellant to indemnify him but his request was turned down on the plea that the expenditure incurred by him was not covered under the terms of the Insurance Policy. THE respondent 2nd time also approached the appellant for indemnification in respect of Rs. 1,70,000/- which he had deposited in the Jammu University as per the directions of the Hon''ble Supreme Court and Rs. 79,100/-were claimed as Advocate''s fee in contesting the proceedings of the case upto the Apex Court. Rs. 20,000 were claimed as travelling and lodging expenses spent from Jammu to Delhi and back during the proceedings and additionally Rs. 5,000/-were claimed for conveyance charges in connection with litigation. After receiving the communication from the respondent, the appellant again considered the claims and vide registered letter dated 10.6.1998, the respondent was informed about its non-availability. After this, respondent filed complaint before the Forum where proceedings were conducted and the claims of the respondent to the tune of Rs. 2,64,100/- from claimed amount of 2,74,100/- were allowed which comprised of payment of Rupees one lac seventy thousand made in terms of the order of Hon''ble Supreme Court, Rs. 79,100/- as Advocate''s fee paid at different stages of the litigation, Rupees ten thousand as compensation for mental agony and Rupees five thousand were reimbursed as transportation charges. The order has been challenged on the following grounds : (i) That on 2.2.1993; the appellant had validly repudiated the claims of the respondent As per terms and conditions of the Insurance Policy, the respondent had failed to prefer any suit or complaint within 12 months from such rejection so later on he was legally estopped from initiating or agitating the matter before any legal Forum. The Forum by ignoring this legal aspect of the case wrongly took cognizance of the complaint and decided in favour of the respondent in violation of the terms and conditions of the Insurance Policy.

(ii) That as per the terms and conditions of the Insurance Policy, the appellant was liable to indemnify the respondent only for any civil liability which included damages that may have arisen during the currency of the policy and in no way any criminal proceedings or liability fixed thereunder was covered by the Insurance Policy but the Forum has wrongly held that the respondent had informed the appellant regarding the lodging of the criminal proceedings against him within time and the appellant had failed to make any arrangement for the defence and this act amounted to deficiency in service.

(iii) The Forum has given a legally wrong finding that it was not a case of criminal proceedings but a settlement arrived at between the appellant and the complainant before the Hon''ble Supreme Court and in this manner had become a case of civil liability. On the facts and in the circumstances of the case; it was a finding given in the criminal proceedings which were not covered by the Insurance Policy.

(iv) The respondent never had obtained prior consent of the appellant before entering into a settlement with the complainant of the criminal complaint and this amounted to the commission of breach of the terms and conditions of the Insurance Policy and this fact has not been correctly appreciated by the Forum.

(v) The Forum had failed to appreciate the terms and conditions of the policy. According to the relevant conditions of the policy, the appellant could become legally liable to pay compensation to the respondent only against a claim regarding damages as a result of an accident/injury sustained by the latter''s negligence, omission or error. In the present case none of the conditions had been satisfied, as there was no finding of any Court to that effect.

Heard the arguments.

THE learned Counsel of the appellant at the outset referred to the Insurance Policy and contended that policy is a contract between the parties and both parties are bound by its terms and conditions. He has quoted Special Exceptions incorporated at internal page-8 of the Policy where the heading is : "Doctors Professional Indemnity Insurance" and it reads : "THE Company will indemnify the insured such sums not exceeding the limits stated in the Schedule hereto which the insured shall become legally liable to pay for compensation by reason of any claim made against the insured or damages as a result of accidental bodily injury sustained during the said period directly and solely caused by the negligence omissions or error wherever the same was or may have been committed by the insured personally in his professional capacity as a medical practitioner or by any body else acting on his behalf, more particularly described in the schedule hereto."

From these conditions he has tried to make out a case that the appellant had to indemnify the respondent only in respect of any claim made against him or damages claimed against him as a result of accidental bodily injury sustained during the currency of the policy either directly or solely caused by his negligence, omission or error committed by him personally in his professional capacity as a medical practitioner and since the present claim has sprung up after launching criminal proceedings against him so appellant is not liable to indemnify respondent because criminal act is not covered under the terms of the policy. In support of his contention, he cited the case of United India Insurance Co. v. Harchand Rai Chandan Lal, IV (2004) CPJ 15 (SC)=V (2004) SLT 876=2004 (7) Supreme 110, wherein the Hon''ble Supreme Court has held that a definition or expression given in a policy is binding on parties and it is not open to interpret it in terms of common law. In order to counter these submissions, the Counsel appearing for the respondent has drawn our attention to the last lines of the Insurance Policy figuring on internal page 8 and continued on page 9 which are reproduced hereunder : "THE Company will always have the right to take over the conduct of the defence of any proceedings filed against the insured before the Medical Council or before any State Medical Council or any criminal proceedings filed against the Doctor provided that such proceedings are directly or indirectly connected with any act, omission, negligence or error committed by the insured personally in his professional capacity as a medical practitioner or anybody else acting on his behalf and the Company will bear all costs, charges and expenses in connection with the defence of any such proceedings."

The main question before us for determination is whether in terms of the Insurance Policy, the repudiation of the claim of the respondent by the appellant Company is justified or not. We have already reproduced the relevant terms and conditionsof the policy (supra) and on a bare reading thereof we find without any manner of doubt that the present criminal proceedings filed against the respondent were covered by those terms and conditions because the solitary allegation made in the complaint was that the death of the child was the result of surgical operation done on the foot by not taking due care and caution and there was a direct nexus between the act of negligence and resultant death of the child. In order to appreciate this point, we have taken the pains of going through the remaining portion of Insurance Policy and find the following terms on page 9 : "The liability of the Company hereunder shall not exceed for one claim and for all claims during the policy period under this policy the sums stated against each limit mentioned in the Schedule, except that (subject to the provisions hereof) the Company will in addition bear all costs and legal expenses incurred in defending or conducting or settling out of Court case on behalf of the insured persons in the protection of his professional interest as also legal costs, awarded to the other side by a Court of Law."

A bare reading of the terms and conditions of the Insurance Policy after according to them their primary and natural meaning makes it abundantly clear that the purpose of the policy was to indemnify the respondent for any criminal proceedings which included claim made against him for compensation or damages etc. and the only qualification for obtaining this benefit was that such proceedings should have been directly or indirectly connected with any act or omission, negligence or error committed by the respondent in his professional capacity as a medical practitioner. The Insurer Company had to bear all the costs, charges and expenses in connection with the defence of the proceedings. The liability had been even extended for defending the insured to bear all costs and legal expenses incurred for taking or settling out of Court the case, as well as, the legal cost awarded to the other side by a Court of Law. It is a settled proposition of law laid down by the Apex Court in the Constitution Bench case of General Assurance Society Limited v. Chandmull Jain and Another, AIR 1996 Supreme Court 1644, that " in a Contract of Insurance there is a requirement of urberima fides, i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the Company in case of ambiguity or doubt". Further it has been held in the said case "that in interpreting documents relating to a Contract of Insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however reasonable if the parties have not made it themselves," In the back drop of the abovestated legal principles having a bearing with the Insurance Policy it is held with no manner of doubt that the criminal proceedings which were initiated against the respondent before the Judicial Magistrate, 1st Class and ultimately terminated before Hon''ble Apex Court in a continuous legal process and they were as such covered under the terms and conditions of Insurance Policy in question. It has been held in the case of United India Assurance Co. v. Harchand Rai Chandan Lal (supra), which judgment has been cited by the Counsel of the appellant that," The terms of the policy have to be construed as they exist and we cannot add or substract something". The arguments which is being advanced on behalf of the appellant runs contrary to the terms and conditions of the contract of Insurance Policy in question, as well as, in contradistinction to the law laid-down in the case United India Assurance Company v. Harchand Rai Chandan Lal (supra). To straighten the controversy it is stated that where the parties agree upon certain terms which are to regulate their relationship, it is not for the Court to make a new contract, however reasonable, if the parties have not made it for themselves. Any argument which travels outside the terms and conditions of the Insurance Policy in question does only violence to the object for which the policy had been offered by the appellant and accepted by the respondent. The argument, therefore does not carry any legal weight and is rejected. Further more, another plea of the learned Counsel of the appellant is that when claim of the respondent was repudiated on 2.2.1993 then in compliance to the terms and conditions of the Insurance Policy he should have filed suit or complaint within 12 months from such rejection. Since this has not been done so the complaint had become time barred and the Forum committed an error in granting reliefs. This special argument cannot advance the case of the appellant because the rejection of the claim at this stage was only a unilateral act done in hot haste purely on the information laid by the respondent through letter dated 8.8.1992 (Annexure-C) and received by the appellant on 10.8.1992 regarding launching of criminal proceedings against him and a request was specifically made to take over the proceedings and cover the case on his behalf". It was incorporated in the Insurance Policy that such information should have been given at the earliest. In response to the receipt of this information, the appellant should at this stage in view of the above noted conditions of the Insurance Policy "taken over the conduct of the proceedings" and not to repudiate his claim. By this illegal act the insurer itself committed a breach of the condition of Insurance Policy. When the Hon''ble Supreme Court on 17.4.1998 vide (Annexure-A) allowed the settlement of the criminal case between the parties, the respondent on 20.5.1998 put up a claim to indemnify him for an amount of Rs. 1,70,000/- and other expenses. The insurer vide (Annexure-D) informed him that compromise in a criminal case is not a decree passed in a civil suit and any claim arisen under criminal proceedings is not covered under the Insurance Policy and that they were not associated in the proceedings so policy stood repudiated from 2.2.1993. This letter (Annexure-D) is dated 10.6.1998 and under law the repudiation of the claim is deemed from its date i.e. 10.6.1998. An offence falling under Section 304A, RPC is non-compoundable but the Hon''ble Supreme Court in its plenary constitutional jurisdiction vested under Article142 of the Indian Constitution had moulded the relief in the form of settlement by imposing a liability of Rupees two lacs on the respondent (accused therein and co-accused). The monetary liability fixed in this way has its genesis in the launching of criminal proceedings and it cannot be stretched as a civil liability in any manner. In para No. 07 of this order, the relevant terms and conditions of the policy have already been reproduced and after its perusal it becomes crystal clear that criminal proceedings were also covered under the Insurance Policy. The last lines of page 9 of the policy are : "the Company will in addition bear all costs and legal expenses incurred in defending or conducting or settling out of Court case on behalf of the insured persons in the protection of his professional interest as also legal costs awarded to the other side by a Court of Law". The law cited by the learned Counsel of the appellant laid down in the case of United India Insurance Co. v. Harchand Rai Chandan Lal (supra), does not advance his case but it supports the cause of the respondent. It has been held in this case that "terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is not open to interpret the expression appearing in policy in terms of common law, but it has to give meaning to the expression as defined in the policy". Adverting to the facts of the present case in hand; it can be said with no manner of doubt that criminal proceedings to be launched for a negligent professional conduct of the respondent were covered in the colour and contents of the Insurance Policy. The important ingredient to constitute an offence falling under Section 304A, RPC is negligence act and its becoming the only cause of death. In the criminal proceedings the insurer could not be impleaded as a party. The repudiation of the Insurance Policy is already stated to be done on 10.6.1998 (Annexure-D) and the complaint was filed on 18.8.1998 before the Forum. In no way it was a belated cause but cause filed within three months from the accrual of cause of action. The law cited at the Bar by the learned Counsel laid down in the case of National Insurance Co. Ltd. v. Suraj Ganesh Naik Co. & Another, AIR 1997 SC 2049, is of no help to him as in the present case, the respondent did not allow any grass to grow under his feet and filed the claim on 18.8.1998 within three months. There could arise no occasion for seeking the consent of the insurer before the Hon''ble Supreme Court as insurer was not a party and could not under law be impleaded as such. After making a critical analysis of the case we thus are of the view that the arguments advanced by the learned Counsel for the appellant are the arguments of despair and they are not germane to over-set the findings of the Forum.

IN view of the discussion made above, we are of the view that there is no merit in this appeal which is dismissed with costs of Rupees two thousand. The appellant shall pay interest at the rate of 6% per annum on the sum of Rs. 1,70,000/- till date and also shall pay litigation charges to the tune of Rs. 79,100/- and Rs. 5,000/- as transportation charges as well as Rs. 10,000/- as compensation for mental agony as has been ordered by the Forum. IN addition we direct that in case the payment of the whole awarded amount i.e. of Rs. 2,64,100/- along with costs of Rupees two thousand is not made within two months from today then interest at the rate of 6% per annum shall become payable on the said amount from today. This mode we are adopting to ensure early settlement of the claim which is the main object of the Consumer Protection Act. Had the administrative hierarchy of the insurer at the administrative level applied subjective and pragmatic approach coupled with diligence in going through the terms and contents of the INsurance Policy on its plain meanings of the words used therein and obtained honest legal opinion thereon this cause would have been settled long ago in the year 2003 when the impugned order was passed but by filing such a merit-less appeal, the insurer has contributed in inflating its liability towards the insured and in this manner put the money of its credulous investors down the drain which practice is reprehensible. With this epilogue we part with the record of the appeal and it should be consigned to the records. The office shall return the record of the Forum. Appeal dismissed.