Case Brief - Kandimalla Raghavaiah and Company v. National Insurance Company and Another

Kandimalla Raghavaiah and Company v. National Insurance Company and Another, (2009) 7 SCC 768

 

 

[Short Facts : This appeal was preferred against the decision of the Commission and the Insurance Company due to denial of claim being the claim action and  complaint barred by limitation. The appellant took first action seeking claim form from insurance company after 4½ years of fire breaking out and another 4 years in filing the complaint in the commission. Commission dismissed appellant’s complaint. Now this appeal]

 

 

Facts :

·    The appellant firm was engaged in the business of tobacco in Guntur District, Andhra Pradesh. The appellant firm took out a Fire Policy with the National Insurance Company (Respondent No. 1) in the account of Indian Bank (Respondent No. 2) against loss or damage by fire, etc. for a period of 4 months.

·      The appellant took a loan also from Respondent No. 2 hypothecating the tobacco stored in godowns. One night a fire broke out in the godowns,  and the entire stock of tobacco was gutted. The appellant reported the matter to the Respondents No. 1 & 2 i.e. both the Insurance Company and the Bank.

·      Respondent No. 2 (Bank) filled an FIR against the appellant firm and its partners alleging that they have intentionally set fire to the tobacco stocks with a view to lay a false claim for loss of stocks. This case took more then 4 years and all the accused were acquitted.

·      In the meantime, around 4 months after fire broke out Respondent No. 2 (Bank) preferred a claim with Respondent No. 1 (Insurance Company) but the bank did not pursue the claim.

·      After acquittal (more then 4 years after the fire broke out) the appellant asked the claim form from the Insurance Company (Respondent No. 1) but got a reply from insurance company after 4 years denying the factum of fire and refused to issue the “claim form” on the ground that the claim had become time-barred.

·      Then, the appellant filed the complaint before the commission. And, the Commission held that complaint was barred by limitation and therefore, could not be entertained. Hence, this appeal.

 

 

Table of Facts :

 

Specifications	Details
Parties	1.    Kandimalla Raghavaiah & Company (Appellant) 2.    National Insurance Company (Respondent No. 1) 3.    Indian Bank (Respondent No. 2)
04-12-1987	Appellant took out a Fire Policy with the Respondent No. 1 in the account of Respondent No. 2 against loss or damage by fire, for a period of 4 months from 04-12-1987 to 03-04-1988.
08-03-1988	Appellant obtained loan from Respondent No. 2
In the intervening night between 22-03-1988 and 23-03-1988	A fire broke out. Appellant informed the R-1 & R-2 about the accident.
23-03-1988	R-2 lodged FIR against the Appellant firm & its partners
24-03-1988	A surveyor was appointed.
14-07-1988	R-2 preferred a claim (subject matter of the present appeal) with R-1 but the Bank (R-2) did not pursue the claim.
22-08-1991	The accused were acquitted.
05-09-1992	High Court dismissed the appeal filed by the Bank against the order of acquittal.
06-11-1992	Appellant asked for the claim form from R-1
26-10-1995	Having failed to get any response, the appellant issued a legal notice to R-1.
04-01-1996	Appellant again asked for claim forms.
21-03-1996	The R-1 (Insurance Company) replied to the legal notice, denying the factum of fire and refused to issue the “claim form” on the ground that the claim had become time barred.
21-10-1997	Appellant filed the complaint before the Commission.

 

 

Issue :

Whether Commission was correct in law in dismissing the complaint preferred by the appellant as barred by limitation?

 

 

Contentions : 

 

Appellant	Respondent No. 1
That the Commission has erred in holding that the complaint was barred by limitation inasmuch as it failed to appreciate that the policy in question was a “joint policy” and Respondent 2 Bank was equally responsible to make a claim for the loss covered under the policy on account of the fire and as a matter of fact, it did lodge a claim with the Insurance Company as far back as on 14-07-1998, but failed to pursue the same, a clear case of dereliction and deficiency in service towards the appellant was made out for which they cannot be made to suffer.	That the appellant’s complaint was hopelessly time-barred inasmuch as the incident took place on 23-3-1988 and complaint was filed by the appellant in the year 1997 i.e. after a lapse of 9 years.
That at any rate non-responsiveness of the respondent Insurance Company towards the legal notices served upon them by both the appellant and the Bank and their repeated denial to issue the claim forms also amounted to deficiency in service towards the appellant.	That except for intimating the Insurance Company about the fire incident, the appellant did not lodge any formal claim, supported by documents as was required under the terms and conditions of the policy.
Pleaded that the Commission has erroneously held the claim to be time-barred when the Bank as a joint beneficiary, had preferred the claim the Respondent 1 Insurance Company within time on 14-7-1988, particularly when because of false complaint by the Bank, the appellant could not file the complaint.	Pleaded that since no claim was made by the appellant in terms of the policy of insurance, the question of deficiency in service did not arise.

 

 

Ratio :

·      It is clear from the correspondence between the appellant and the Insurance Company that cause of action arose when fire in the godowns took place. The limitation for the purpose of Section 24-A began to run from 23-3-1988 and therefore, the complaint before the commission against the Insurance Company for deficiency in service, whether for non-issue of claim forms or for not processing the claim under the policy, ought to have been filed within two years thereof. However, the complaint was in fact filed on or after 24-10-1997, which was clearly barred by time. The complaint filed on 24-10-1997 was also without an application for condonation of delay. Therefore, it was manifestly barred by limitation and the commission was justified in dismissing it on that short ground.

 

Observations :

·      Section 24-A bars any for a set up under the Act, from admitting a complaint, unless the complaint is filed within two years from the date on which the cause of action has arisen. The provision expressly castes a duty on the Commission, admitting a complaint, to dismiss a complaint unless the complainant satisfies the District Forum, the State Commission or the National Commission, as the case may be, that the complainant had sufficient cause for not filing the complaint within the period of two years from the date on which the cause of action had arisen.

·      The term “cause of action” is neither defined in the Act nor in CPC, but is of wide import. It has different meanings in different contexts. That is when used in the context of territorial jurisdiction or limitation or the accrual of right to sue. Generally, it is described as “bundle of facts”, which if proved or admitted entitle the plaintiff to the relief prayed for. “Cause of action” is cause of action which gives occasion for and forms the foundation of the suit, for which the suit is brought.

 

 

Decision :

·      The Court did not find any merit in this appeal and dismissed.