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'Cause Of Action In Case Of Contract Of Insurance Accrues On Date Of Repudiation Of Claim': J&K&L High Court
Basit Amin Makhdoomi
31 Dec 2022 11:45 AM IST
The Jammu and Kashmir and Ladakh High Court on Friday clarified that 'cause of action' in an insurance case can also accrue on the date the claim lodged by the insured is repudiated by the insurance company.The court said the Supreme Court in Kendimalla Raghavaiah & Co. V.s Nationa Insurance Co. and ors has held that with reference to a fire insurance policy, the date of accrual of cause...
The Jammu and Kashmir and Ladakh High Court on Friday clarified that 'cause of action' in an insurance case can also accrue on the date the claim lodged by the insured is repudiated by the insurance company.
The court said the Supreme Court in Kendimalla Raghavaiah & Co. V.s Nationa Insurance Co. and ors has held that with reference to a fire insurance policy, the date of accrual of cause of action has to be the date on which the fire breaks out. However, it added that the apex court has not adverted to the fact that the cause of action may in some cases accrue on more than one occasion and on different date.
"... in view of the clear exposition of law by the Hon’ble Supreme court in the case of [M/s Transport Corporation of India Ltd.] V.s Veljan Hydrair Ltd., it is abundantly clear that the cause of action in the case of a contract of insurance shall also accrue on the date the claim, if any, lodged by the insured is repudiated," said the court.
The observations were made by the division bench of Justices Sanjeev Kumar and Moksha Khajuria Kazmi while answering a question as to when does a cause of action to file a complaint as mandated under J&K Consumer Protection Act, 1987 accrue in case of loss caused to the insured vehicle in an accident.
The court was hearing an insurance company's plea challenging the order of the J&K State Consumer Disputes Redressal Commission, Srinagar which while sitting in appeal had set aside the order of the Divisional Consumer Forum whereby a complaint had been earlier dismissed for being hit by limitation under sec 18-A of the said Act.
In terms of the impugned order, the Commission had condoned the delay in filing the appeal subject to payment of costs of Rs. 1000/- to be paid by complainant stating that the the technical plea of limitation should not become the reason for avoiding the decision of the complaint on merits.
The division bench, while relying on a Judgement of the high court in Insurance Company Vs. Posnkar Nath Pandita & Sons, observed that a perusal of Section 18-A in its entirety would mean that ordinarily a consumer complaint is required to be filed within two years from the date of accrual of cause of action.
However, it is always in the discretion of the Divisional Forum or Consumer Commission to entertain such complaint even beyond the period of two years, though such discretion must be informed by reasons to be recorded while condoning the delay, the bench added.
Deliberating on the term 'cause of action' in context of Sec 18-A of the Consumer Protection Act 1987, the bench explained that the cause of action in the context of limitation with reference to a contract of insurance may accrue to the aggrieved party on the date the contract of insurance is entered into, on the date the accident involving the insured vehicle takes place or even the date on which the claim of the insured for indemnification is repudiated.
Applying the said position of law, the bench recorded that the repudiation of the claim cannot be but a cause of action to file the complaint. It added that the cause of action may accrue at different stages and at different points of time, however, for the purposes of reckoning the period of limitation, what is relevant is the date when the cause of action last accrued.
In view of the aforesaid discussion, the bench dismissed the appeal with a liberty to the Commission to proceed in the complaint and decide the same on merits.
Case Title: United India Insurance Company Vs Ghulam Nabi Bhat & Ors.
Citation: 2022 LiveLaw (273)
Coram: Justice Sanjeev Kumar & Justice Moksha Kazmi Khajuria.
Counsel For Petitioner : Mr NH Khuroo
Counsel For Respondent: Mr Syed Sajad Geelani
