Sukhdev vs National Insurance Company Ltd.and Another

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. 1 for an amount of Rs one lakh on 18.7.1983. The policy bore

No. 823/3105484083. It was issued on 10.7.83 after having received the premium of Rs 1135/The policy covered the risk of fire etc. for the

period 18.7:83 to 18784. It is alleged by the plaintiffappellant that a fire broke out accidentally 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 issue 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 judgment of the Single Judge in the case of M/s Timber1 Pvt. Ltd. vs. Skandia Insurance Co. Ltd. reported in AIR 1973, J

and K 86, the learned District Judge, Jammu dismissed the suit of the plaintiff on the ground that the courts at Jammu had 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 judgment 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 outing the jurisdiction of the other courts and

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

stated that the aforesaid judgment of this court was based upon the ratio of an earlier judgment 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 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 Co. (Ltd) reported in AIR 1978 Guj. 4 while dealing with the

question of applicability of Section 46 of Insurance Act, a Division Bench of Gujarat High Court clearly 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 via any agreement relating thereto. The observations made be reproduced as under :

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

the contrary 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 insurance in respect of insurance business transacted in India after the commencement of 1938 Insurance Act. The term 'insurer' as

defined in S.2 (9) is a completed reply to the contention of Mr. Raval that S. 46 applies only to foreign insurance companies. I[ is only section 2

(9) which contemplates any individual or unincorporated body of individuals or body corporate incorporated under the law of any country other

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

corporate incorporate 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 S. 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 S.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 of India. In that view of the matter, such clauses of choice of forum

live the present clause in Cl. 15 could .never operate in the face of this statutory provision which has a non obstante 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 view 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. (AIR 1971 SC 740) Sri Chatterjee also submitted

that if several courts had jurisdiction, by agreement between the parties the jurisdiction can be limited to one of such courts. His contention was

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 S. 46. of the Act lead to irresistible conclusion that the intention was that the benevolent provision of S. 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 judgment observed as under :

I agree with my learned Brother. By virtue of Section 46 of the Insurance Act, 1938, 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 bolder 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 non obstante 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 perusal of

section 46 of the Act, it is clear that even if there is any agreement for filling 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 perusal of the judgment 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 two judgments 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 Hakim Singh's case (supra). I am in complete respectful agreement with the ratio in both the aforesaid

Division Bench judgments 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 judgment of the trial court impugned in the appeal is setaside. Its finding on issue N). 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 judgment and decree impugned in the appeal is setaside, the matter is remanded to

the court of District Judge, Jammu for retrial of the issues 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.