SNEH LATA AGGARWAL vs Life Insurance Corporation of India

THE true import of Article 44 of the Indian limitation Act pertaining to insurance claims is the crucial threshold issue in the present case.

FOR the limited purpose of this order, it is unnecessary to recount the facts in detail. It suffices to mention that the complainant Smt. Sneh Lata Aggarwal is the widow and nominee of the Late Sh. Ram Kishan Aggarwal (hereinafter called the deceased). He had taken out a life insurance policy of Rs. 1 lac with the opposite party vide policy No, 76093188 dated the 5th of January, 1985. It is the case that all formalities including medical examination etc. were complied with. The deceased was taken seriously ill at Darjeeling and was admitted to Sadar Hospital there at on the 12th of August, 1985 and died on the 16th of August, 1985 due to Liver-Hepatia failure. At that time his age was about 32 years and it is the case that prior to his death he was hale and hearty. After the death aforesaid, the complainant intimated the Life Insurance Company (hereinafter called the L.I.C) and submitted the required papers alongwith the documents etc. for the payment of the insurance amount of Rs. 1 lac. The opposite party demanded many documents like death certificate, admission and death record of her husband in hospital, birth certificate, original policy and some other documents which were duly supplied by her after collecting them with great difficulty from different places. Despite this the opposite party procrastinated in finalising the claim and raised a number of objections which were all met by the complainant and she was assured that the payment would be made by post. Being a Parda Nishin lady, the complainant could not keep on visiting the office of the opposite party frequently, but during her last visit in the month of June she was informed that her case had been sent to the Regional Office and had not been received back. It is her case that no intimation however, has been given about her case till date by the opposite party and abandoning all hopes of getting redress, she was compelled to knock at the door of the District Forum, Hisar. However, the said Forum returned the petition for want of pecuniary jurisdiction because the amount claimed with interest and costs exceeded Rs. one lac. Thereafter the present complaint has been received by registered post in this Commission on the 3rd of April, 1992.

In the reply of the opposite party, the first preliminary plea is that the claim of the complainant is very much belated and clearly barred by limitation. The allegations on merits have been partly admitted and controverted as the case may be and at this stage, it is unnecessary to advert to them. In the replication filed by the complainant, it has been averred on the point of delay that the opposite party has not specified as to how the claim is barred by limitation and no date has been given from which the limitation starts running. In reply to Para 2 it has been stated that the complainant''s claim has not been repudiated so far by the opposite party and hence, the relief cannot be denied on this score. It is reiterated that the delay has been occasioned entirely due to the fault of the opposite party and because of their non-cooperative and harassing attitude of their officials.

AGAINST the aforesaid background Mr. Brij Jit Singh, the learned Advocate for the L.I.C. has forcibly pressed the bar of limitation. It was submitted that by now it is well-settled that the Limitation Act is applicable to proceedings in the consumer jurisdiction. The Counsel contended that in the present case the provision attracted to the situation is Article 44(a) of the Limitation Act. It was his case that therein the limitation provided is only three years after the proof of the death of the insured. It was submitted that in the present case, deceased had died day back on the 16th August, 1983 and the present complaint has been preferred beyond the prescribed period. Counsel further pointed out that till the filing of the complaint, there was no denial of the claim under the policy and therefore, the alternative terminus of denial cannot come into play. In sum the argument was that the cause of action herein has become barred with effect from the 16th August, 1988. It was not seriously denied on behalf of the complainant that the provision attracted is Article 44 aforementioned. Since the whole controversy must necessarily turn on the language of the same, it is apt to notice the same in extenso:- "44(a) On a policy of insurance when the sum insured is payable proof of the death has been given to or received by the insurers. Three years The date of the death of the deceased, or where the claim on the policy is after denied, either partly or wholly, the date of such denial. "(b) On a policy of insurance when the sum insured is payable after proof of the loss has been given to or received by insurers. Three years The date of occurrence causing the loss or where the claim on policy is denied, either partly or wholly, the date of such denial."

TO arrive at a true construction of Article 44(a) above, it is instructive and indeed necessary to view it in the context of its legislative history. Article 44 of the 1963 Act corresponds to Article 86 of the earlier Limitation Act, 1908. In the earlier Act and the corresponding article the words "or where the claim on the policy is denied either partly or wholly, the date of such denial - in the third column of both the clauses of the Articles were not there. However, when the bill for the Act of 1963 was drafted, the Select Committee designedly introduced an amendment by of the insertion of the afore-quoted words. The relevant part of the Committee''s view on these clauses is in the following terms (Gaz. of India dated 20.11.1962):- "Article 44. The Committee feel that in cases where a claim is denied, whether wholly or in part, by an insurer the plaintiff should be entitled to have the period of limitation computed from the date of such denial. Column 3 against item (a) has been amended accordingly."

It was on the basis of the aforesaid recommendation of the Committee that the draft bill for the Act of 1963 amended Article 44(a) in the terms now existing. It is against the aforesaid legal background that the language of Column 3 has now to be interpreted. It is somewhat plain that present language with an alternative start of limitation has been provided under these Clauses. There are consequently two distinct and alternative terminal, namely the date of the death of the deceased or the date of the denial by the insurer. Obviously the intention of the Legislature is to give the benefit to the insured to avail of the a lternative date of denial when the claim on the policy is repudiated.

MR. Brij Jit Singh had contended that because in the present case the insurer had not made any formal denial of the claim till filing of the present complaint, the only terminus which is now applicable is the first one and there is no alternative starting point. According to him the limitation in the present case would start only from the date of the death of the deceased. This stand has to be only noticed and rejected. If such a construction were accepted the whole purpose of the change and amendment in Article 44 would be rendered totally nugatory. It is a well-settled cannon of construction that no portion of a statute is to be rendered otiose, and meaning has to be given to every word designedly employed by the Legislature. Therefore, the submission of MR. Brij Jit Singh that even after the amendment, Article 44(a) still visualises only one starting point, namely the date of the death of the deceased has to be rejected.

THE somewhat specious argument that was then raised by Mr. Singh was that in the present case, the matter had merely remained pending with the L.I.C. and at no stage, till the filing of the present complaint was any communication sent to the insured that her claim stood rejected. In these circumstances, it was his stand that the alternative starting point cannot come into play. We are unable to subscribe to such a submission. It is obvious that if a construction of this kind is placed on Article 44(a) it can lead to mischievous results. As in the present case, if the insurer inordinately delays in finalising the claim of the insured and keeps dangling before him, the hope of the favourable settlement for a period beyond three years after the date of death, the claim would become barred according to the stand taken by the opposite party. A construction which leads to such inequitus consequence has obviously to be avoided. It is well-settled that even where two constructions are possible, it is necessary to avoid an interpretation which is likely to lead to a patent abuse. Coming specifically to the Limitation statutes, it is a well-settled principle that a construction should be adopted in favour of the right to sue rather than the one barring such a right. Though the matter seems to be clear on the history of the provision and its language the view we are inclined to take is also supported by analogous precedent. It would be clear from the above that the language of Clauses (a) and (b) of Article 44 are closely similar if not mpari-materia. Under Article 44(b), a Division Bench of the Karnataka High Court in Secretary T.A.P. Co-op. Marketing Society Ltd. v. Custodian N.I A. Co. Lt d. AIR 1988 Karaataka 185 held as under : - " xx xx xx xx xx We must state the correct position in law. Perhaps, the insurance forms were all printed long prior to the coming into force of the present Limitation Act on 1.4.1964. Under Art. 44(b) of the Schedule to the Limitation Act, three years'' period is provided for filing a suit to recover damages sustained on ac count of any loss under an Insurance Policy. The time starts running against the plaintiff only on the date of the occurrence causing the loss or the date on which the claim is denied by the Insurance Company."

Yet again to the same tenor are the observations of Sabyasaehi Mukharji, J.(as his Lordship then was) in I.T.C. Ltd. v. M.M.P. Lines Pvt. Ltd., AIR 1978 Calcutta 298.

In the light of the aforesaid discussion, it is somewhat plain that the true import of Article 44(a) is that it expressly provides two alternative starting points for limitation. These are either the date of the death of the deceased or the date of denial of the claim by the Insurance Company. The insured is entitled to take advantage of the alternative date, and his right to sue is not barred by mere delay and dithering of the insurer to finalise the claim.

IN the present case, it is manifest that herein the insurers have in express terms repudiated the complainant''s right to relief on merits as well. IN para 4 of the reply on merits it has been categorically stated that the claim of the complainant is denied and that no amount is payable under the Policy. This express denial has been made in the reply dated 16.3.1992. Obviously enough, under the alternative point of limitation, the time of three years would start running from the said date and therefore, the present complaint is plainly within time. In view of the above, the preliminary objection of the bar of limitation raised by the opposite party is hereby rejected. The complaint now proceeds for disposal on its merits. Complaint dismissed.