Sukhdev vs National Insurance Company Ltd.

The plaintiffappellant was running the business of fire Wood, furniture wood and coal depot at Hamirpur tehsil Hiranagar in Jammu and Kashmir

State in the year 1983. He had taken out an insurance policy with respondent No.l for an amount of Rs. one lakh on 1871983. The policy bore

No.823/ 3105484083. It was issued on 10783 after having received the premium of Rs. 1135/ The policy covered the risk of fire etc. for the

period 1871983 to 18784. It is alleged by the plaintiffappellant that a fire broke out accidently during the night intervening 34 July 1984. Since the

appellant alleged that some loss was caused to him, he filed a suit for claiming compensation and damages etc. The suit was being tried by the

court of District Judge, Jammu. Even though various issues were framed, only issued No.3 was taken up for consideration which reads as under:

Whether on account of the conditions contained in the warranty, this court has got no jurisdiction? OPD1.

After relying upon a judgement of the Single Judge in the case of M/S Timber Pvt. Ltd. Vs. Skandia Insurance Go. Ltd. reported in AIR 1973,

J&K 86, the learned District Judge, Jammu, dismissed the suit of the plaintiff on the ground that the courts at Jammu has no jurisdiction to try the

suit. The ground urged before the learned District Judge, Jammu, was that the policy of insurance was issued at Pathankot, a place in Punjab State

and that, even though the premises covered by the policy were situated in Jammu and Kashmir State and that the fire broke out there, since the

parties had agreed to exclude the jurisdiction of one court and to confer exclusive jurisdiction to the other court, the courts at Pathankot alone had

the jurisdiction to try the suit. In other words, the learned court below, while relying upon the Judgement of the Single Judge of this court in the

case of M/S Timber Pvt. Ltd. Vs. Skandia Insurance Company, Ltd. (supra), held that even though both the courts at Jammu and Pathankot had

jurisdiction, the parties by agreement could confer jurisdiction to one of such courts exclusively by ousting the jurisdiction of the other court, and

since the parties had chosen to confer jurisdiction upon the courts in Pathankot, the jurisdiction of the courts in Jammu had got ousted. It may be

stated that the aforesaid judgement of this court was based upon the ratio of an earlier judgement of the Supreme Court in the case of Hakim Singh

Vs. Gammon (India) Ltd. reported in AIR 1971, 740.

I have heard the learned counsel for the parties and perused the record.

Mr. S.D. Sharma, learned counsel appearing for the appellant, has raised a very short and simple question in support of the appeal. According

to him section 46 of the Insurance Act, 1938 (Central Act No.IV of 1938) clearly provides that all courts of competent jurisdiction in India are

entitled to try and entertain a suit for any relief in respect of any policy issued and that if any such suit is brought any question of law arising in

connection with such policy of insurance shall be determined according to the law in force in India.

Section 46 may be reproduced as under:""46. Application of the law in force in India to policies issued in India: The holder of a policy of insurance

issued by an insurer in respect of insurance business transacted in a (India) after the commencement of this Act shall have the right, notwithstanding

anything to the contrary contained in the policy or in any agreement relating thereto, to receive payment in India of any sum secured thereby and to

sue for any relief in respect of the policy in any court of competent jurisdiction in India; and if the suit is brought in India any question of law arising

in connection with any such policy shall be determined according to the law in force in India; b) (Provided that nothing in this section shall apply to

a policy of marine insurance).

In the case of Isaqmahmad Habibiji Vs. The United India Fire and General Insurance C. (Ltd) reported in AIR 1978 Guj. 46, while dealing with

the question of applicability of Section 46 of Insurance Act, a Division Bench of Gujarat High Court dearly observed that the policy underlying

section 46 is to confer statutory rights of filing a suit in a court of competent jurisdiction in India notwithstanding anything to the contrary contained

in the policy or in any agreement relating thereto. The observations made be reproduced as under:

Therefore, except in case of marine insurance policy, the policy underlying Sec. 46 is to confer these two statutory rights notwithstanding anything

to the contrary contained in the Policy or in any agreement relating thereto, (1) to receive payment in India of any sum secured thereby and (2) to

sue for any relief in respect of the policy in any Court of competent jurisdiction in India. These rights are available to every holder of the policy of

insurance issued by the insurer in respect of insurance business transacted in India after the commencement of 1938 Insurance Act. The term

'Insurer' as defined in Sec. 2(9) is a complete reply to the contention of Mr. Raval that Sec.46 applies only to foreign insurance companies. It is

only Section 2(9) which contemplates any individual or body of individuals or body corporate in incorporated under the law of any country other

than India. While, so far as Sec. 2(9) (b) is concerned, it specifically covers any body corporate carrying on business of insurance, which is a body

corporate incorporated under any law for the time being in force in India. The whole provision in section 46 which confers such valuable rights to

the holder of the policy of insurance which is issued by any insurer falling within the definition of Sec. 2(9) will have to be interpreted in a manner

which advances the object of this benevolent provision and not in a manner so as to defeat the object underlying this provision. The section creates

these statutory rights which are to operate notwithstanding anything to the contrary contained in the policy or in any agreement relating thereto. So

these statutory rights prevail and override anything to the contrary laid down in the contract of insurance or the policy of insurance. Therefore, full

effect must be given to this statutory provision when it conferred these valuable rights to all holders of insurance policies issued by any insurer falling

within this wide definition in Sec. 2(9) whether he is Indian insurer or foreign insurance company."".......""The right conferred on the holder is a right

to bring a suit for any relief in respect of the policy in any Court of competent jurisdiction in India and, therefore, even though there may be

arbitration clause, or even choice of forum to the contrary in the policy or the contract of insurance, the suit could not be refused to be entertained

by the competent Court on the ground of any such contractual stipulation. The width and . amplitude of this provision makes it abundantly clear

that it is not only applicable to foreign companies but also to insurance companies in India. In that view of the matter, such clauses of choice of

forum like the present clause in Cl. 15 could never operate in the face of this statutory provision which has a nonobstante clause to the effect that

notwithstanding anything to the contrary contained in the policy, the holder of the policy will have a right to sue for any relief in respect of the policy

in any court of competent jurisdiction in India......

Similar views were expressed by a Division Bench of Patna High Court in the case of M/S Barbigha Cold Storage Co. Ltd. Vs. National

Insurance Co. Ltd. reported in AIR 1981 Pat. 21.

Referring to the decision of the Supreme Court in Hakam Singh Vs. Gammon (India) Ltd. submitted that if serval courts had jurisdiction, by

agreement between the parties the jurisdiction can be limited to one of [SIC] such courts. His contention \(vas that this being the general law, it

cannot be the intention behind Section 46 to undo the above general law. In support of his contention, Mr. Chatterjee referred to certain decisions

but as the facts of all these cases are different from the facts of the instant case, I consider it unnecessary to discuss the details of these cases.

Mr. Verma, learned counsel for the petitioner, contended that while the decision of the Supreme Court in AIR 1971 SC 740 (supra) laid down

the general law, Section 46 laid down the special provision to regulate the relationship between the insured and the insurer under the Act and this

being the position, even if Section 46, meant for applicability to a particular kind of contract, transgressed on the general law, its provisions shall

stand good and valid if the make of the law so intended. The terms ""notwithstanding anything to the contrary contained in the policy or in any

agreement relating thereto"" occurring in Sec.46 of the Act lead to irresistible conclusion that the intention was that the benevolent provision of

Sec.46 of the Act was to prevail over the terms of the contract terms of the policy and the agreement, if any, to the contrary. This being the

position, the second contention raised by Mr. Chatterjee too has no substance and it must fail.

B.P. Jha, J, as he then was, while giving his separate concurring judgement, observed as under:

I agree with my learned Brother. By virtue of Sec. 46 of the Insurance Act, 1983, the holder of a policy of a marine insurance, shall have two

rights, namely, (i) to receive payment in India and (ii) to sue for any relief in respect of the policy before any Court of competent jurisdiction in

India. These two rights have been conferred on the holder of the policy of an insurance issued by an Insurer in respect of the Insurance business

transacted in India. Section 46 is a non obstante clause. According to nonobstante clause the holder of a policy insurance is entitled to receive

payment in India and to sue for relief in respect of the policy in any Court of competent jurisdiction in India in spite of any agreement or any

statement contained in the policy to the contrary. The holder of a policy of insurance is entitled to avail these two rights. In the present case, the

petitioner could have brought a suit before the Calcutta Civil Courts on the basis of the conditions laid down in the policy. It is on the basis of the

agreement, made in the policy, that the trial Judge held that the Calcutta Civil Court has jurisdiction in this matter. Unfortunately, Section 46 of the

Insurance Act was not placed before the trial Judge. It is for this reason that this mistake has been committed by the trial Court. 12. On a persual

of Section 46 of the Act, it is clear that even if there is any agreement for filing a suit at a certain place, a policy holder is entitled to file a suit before

any Court of India having competent jurisdiction. It is conceded by Mr. K.D. Chatterjee, learned counsel for the opposite party, that both the

Calcutta and Patna Civil Courts have jurisdiction to entertain such suit. In this view of the matter, the Patna Civil Court is entitled to try the suit in

question. This section will apply to any insurer who transacts its business. In my opinion, it does not only apply to foreign insurer companies.

A persual of the Judgement of this court in the case of M/S Timber Pvt. Ltd. Vs. Skandia Insurance Co. Ltd (supra) clearly reveals that neither

section 46 of the Insurance Act was brought to the notice of the court at that time nor was any argument raised with regard to the applicability of

such a legal provision on a contract of insurance. The aforesaid 1wo Judgements of Gujarat and Patna High Courts leave no one in any doubt that

in contracts of insurance, in the light of section 46 of the Insurance Act, the parties are governed not by the general rules of jurisdiction of courts as

is the law laid down by the apex court in Hakam Singh's case (supra). I am in complete respectful agreement with the ration in both the aforesaid

Division Bench Judgements of Gujarat and Patna High Courts and following the suit observe that the law laid down by this court in the case of M/S

Timber Pvt. Ltd. Vs. Skandia Insurance Co. Ltd. (supra) is not applicable to suits in respect of insurance policies, because of applicability of

section 46 of Insurance Act on the ground that this court in that case, had no occasion to either apply or interpret section 46 of Insurance Act,

since it was not brought to the notice of the court.

In the result, therefore, the appeal succeeds. The Judgement of the trial court impugned in the appeal is setaside. Its finding on issue No.3 is

reversed. It is held that the courts in Jammu had the jurisdiction to try the suit concurrently with the courts at Pathankot and that it was within the

rights of plaintiff to have chosen the court.

For the reasons stated above, and because of the fact that the Judgement and decree impugned in the appeal is setaside, the matter is

remanded to the court of District Judge, Jammu for retrial of the issue on the merits of the case. The parties through their learned counsel are

directed to appear in the court of learned District Judge, Jammu on Aug. 3, 1995.essary of the respondent. It was also averred in the plaint that the

net annual income of defendants petitioners was more than Rs.40,000/ per annum, and therefore, the suit was not governed under the provisions of

Jammu and Kashmir Houses and Shops Rent Control Act, 1966, hereinafter referred to as ""Act"". The suit was resisted by the defendants and is

still pending before the trial court. At the tie of filing of the suit, sub section (iii) of Section 3 of the Act provided, as under:

Any tenancy in respect of any houses or shop where the income of the tenant, whether accuruing within or outside the 'State, exceeds rupees

40,000/ per annum.

By the said provision, the operation of the Act was excluded so far as those tenants were concerned whose net income exceeded Rs.40,000/

per year. A ground was taken by the plaintiff in the suit that the income of the tenants was more than Rs.40,000/ per annum, therefore the suit

could not be tried under the provisions of the Act. The figure of Rs.40,000/ per annum appearing in sub section (iii) of Section 3 of the Act was

substituted by the Act XXXVII of 1988 with the figure of Rs.60,000/ per annum. After this amendment was made in the Act in the year, 1988 the

petitioners herein filed an application on 1611994 before the trial court seeking dismissal of the suit on the ground that since the plaintiff had

pleaded in his plaint that the income of defendants tenants was more than Rs.40,000/ per annum, the suit was no longer maintainable, as the ground

of ejectment was not available to the plaintiff because of amendment made to sub section (iii) of Section3 of the Act. The learned trial court did not

find favour with the prayer of the defendants and dismissed the application on 15091995. This revision has been filed against the said order.

I have gone through the application moved before the trial Court. It appears, that the petitioner are under misconception. Sub Section (iii) of

Sections of the Act does not at all provide a ground for ejectment. It only excludes the applicability of provisions of the J&K Houses and Shops

Rent Control Act to a suit for ejectment. If it is found that the income of the tenants is exceeding a particular limit prescribed by Sub Section (iii) of

Section 3, the trial Court wall try the suit under the ordinary law; and if the Court finds that it does not exceed the limit prescribed by Sub Section

(iii) of Section 3, the suit has to be tried by the Court in accordance with the provisions of the Act. The ground taken in the suit for ejectment was

that of personal necessity. The income of the defendants was only mentioned in the plaint to show to the trial Court that the suit had to be tried in

accordance with the provisions of general law. Therefore, the application was misconceived. It has also not been shown as to under what

provisions of law the application had been made before the learned trial Court. Even if such a plea had to be taken by the defendants, it could have

been taken by moving an application for amendment of the written statement. The proceedings in civil suits are strictly governed by the provisions

of Code of Civil Procedure, and I do not find any provision in the Code of Civil Procedure, whereby an application could be made before the trial

court asking the Court to dismiss the suit.

Now coming to the merits of the case, I have found that the present controversy revolves around the point whether the amendment made in Sub

Section {iii) of Section 3 of the Act was retrospective in nature. It is well settled law that the amendment of law is retrospective only if the law says

so. However, there can be occasions when it can be held that a particular law has retrospective operation. But it is not the presumption that a

particular law is retrospective in nature. The presumption in fact is that the law is prospective. My attention has been drawn to a judgement of the

Supreme Court reported in AIR 1969 S.C. 1114, in which their Lordships of the Supreme Court have held that sometimes statutes have a

retrospective operation when the declared intention is clearly manifest from the language employed. The Apex Court was interpreting tenancy law

of the State of Uttar Pradesh, and laid down certain tests in order to arrive at a conclusion whether a particular law was retrospective or

prospective in nature. Para ""13"" of the said judgement is quoted below:""Now a law is undoubtedly retrospective if the law says so expressly but it

is not always necessary to say so expressly to make the law retrospective. There are occasions when a law may be held to be retrospective in

operation. Retrospection is not to be presumed for the presumption is the other way but many statutes have been regarded as retrospective

without an declaration. Thus that remedial statutes are always regarded as prospective but declaratory statutes are considered retrospective.

Similarly sometimes statutes have a retrospective effect when the declared intention is clarely and unequivocally manifest from the language

employed in the particular law or in the context of connected provisions. It is always a question whether the legislature has sufficiently expressed

itself to find this one must look at the general scope and purview of the Act and the remedy the Legislature intends to apply in the former state of

the law and then determine what the Legislature intended to do. This line of investigation is, of course, only open if it is necessary. In the words of

Lord Selborne in Main.V.Strak, (1980) 15 AC 384 at P.388 there might be something in the context of an Act or be collected from its language,

which might give to words prima face prospective a larger operation. More retrospectively is not to be given than what can be gathered from

expressed or clarely implied intention of the Legislature.

From the said that tests laid down it is clear that the Apex Court was of the view that normally the law should be taken as it is; if its operation is

said to be retrospective it has to be taken as retrospective, if the law itself says that it is prospective it has to be taken as prospective. The Courts

should only investigate and venture into the field as to whether the law is retrospective or prospective only when it is necessary to do so. However,

in the present case, I find that it is not necessary t do so because of two important reasons: a) That Sub Section (iii) of Section 3 of the Act is clear

that it is prospective; and (b) Secondly, the income as mentioned in Sub Section (iii) of Section 3 has relevance to a particular year, where the

income of a tenant exceeds Rs.60,000/ per annum. Going to the scheme of the Act, the word per annum has to be connected to the year in which

the cause of action for ejectment accures. I am fortified in my view by a Full Bench Judgement of this Court reported in 1971 JKLR Page 185.

The Full Bench of this Court in that case was interpreting the words per annum appearing in the same Sub Section. The words per annum (year) as

interpreted by a Full Bench of this Court means the year in which the tenancy of the tenant commenced. The Court was of the view that every

word has to be interpreted in a particular context. Per annum could be interpreted to mean differently under different Acts. Under the Income Tax

Act, it would definitely have a different meaning. Therefore, I am of the view that the income per annum as mentioned in Sub Section (iii) of Section

3 of the Act has to be interpreted in the context of the year of tenancy and the year in which the cause of action for ejectment arose to a particular

landlord. Therefore, the present income of the petitioners becomes irrelevant, the income which they had when suit was filled is the only relevant

factor.

For the aforesaid reasons, I hold that SubSection (iii) of Section 3 of the Act is not retrospective in operation but is prospective. Therefore, this

revision merit dismissal and is accordingly dismissed. Since the matter is fairly an old one, it is expected that the trial court shall dispose of the case

very expeditiously.