Supreme Court June 2022 Roundup
Legal RoundUpSupreme Court Roundups

Top Stories of the Month

Clean Chit to PM Modi in 2002 Gujarat riots case

“SIT Officials have come out with flying colours unscathed despite all odds”; SC upholds SIT’s clean chit to PM Modi in 2002 Gujarat riots

“The protagonists of quest for justice sitting in a comfortable environment in their air-conditioned office may succeed in connecting failures of the State administration at different levels during such horrendous situation, little knowing or even referring to the ground realities and the continual effort put in by the duty holders in controlling the spontaneous evolving situation unfolding aftermath mass violence across the State.”

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Maharashtra Political Crisis

Supreme Court refuses to stay Trust Vote; Uddhav Thakrey resigns as CM

No stay on floor test, disqualification proceedings to be kept in abeyance till July 11; Read SC’s directions on Eknath Shinde’s plea

Psychiatric & Psychological Evaluation of death row convicts

Supreme Court mandates call for mental health report before pronouncing death sentence

“Implicit in this shift is the understanding that the criminal is not a product of only their own decisions, but also a product of the state and society’s failing, which is what entitles the accused to a chance of reformation.”

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Also Read: Supreme Court allows Project 39A of NLU Delhi to conduct psychological evaluation of a death row convict to bring out mitigating factors

Insolvency and Bankruptcy

Liability in respect of a claim arising out of a Recovery Certificate is a “financial debt” under Section 5(8) of the IBC

The words “means a debt along with interest, if any, which is disbursed against the consideration for the time value of money” are followed by the words “and includes”. By employing the words “and includes”, the Legislature has only given instances, which could be included in the term “financial debt”. However, the list is not exhaustive but inclusive.

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NEET-PG 2021

“Process of admission and that too in the medical education cannot be endless”; SC says no to Stray Round of counselling for unfilled NEET-PG 2021 seats

“There cannot be any compromise with the merits and/or quality of Medical Education, which may ultimately affect the Public Health.”

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Fact Check of this Supreme Court story from a Leading Newspaper

On June 14th 2022, a leading newspaper had published an article with the headline “Illegitimate child of cohabiting couple to get assets share: Supreme Court”. While on the face of it, it appeared to be a landmark judgement, on our correct analysis of the judgment, we found out that neither the couple was held to be cohabitating “without marriage” nor was the son considered to be “illegitimate”.

Read the Fact Check: We fact-check a leading newspaper’s misleading headline “Illegitimate child of cohabiting couple to get assets share: Supreme Court”

Read the accurate analysis by the SCC Online Blog: Long co-habiting couple’s child cannot be disentitled from family property in absence of proof against presumption of marriage

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Most Read Story of the Month

Beyond Reasonable Doubt versus Preponderance of Probabilities: Supreme Court explains why circumstances guide the Courts in deciding Right to Private Defence cases

“The underlying factor should be that such an act of private defence should have been done in good faith and without malice.”

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More Stories

Dishonour of cheque| Partner cannot be held to be vicariously liable when partnership firm is not tried as primary offender

The Partnership Act, 1932 creates civil liability. Further, the guarantor’s liability under the Contract Act, 1872 is a civil liability. The Partner may have civil liability and may also be liable under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. However, vicarious liability in the criminal law in terms of Section 141 of the NI Act cannot be fastened because of the civil liability.

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No conviction based on ‘last seen together’ theory when possibility of suicidal death not ruled out; SC sets man free in a 28-year-old honour killing case

“The suspicion howsoever strong cannot take place of proof.”

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Old Age Home inmates can’t get away with causing disruption of peace of other inmates; Administration can ask them to vacate the room

“One can understand the mental trauma which the parents face in the evening of their life but the agony suffered by a parent cannot be a cause of disturbance to the other inmates or to the organizers who have resolved to take care and run the old age home.”

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Railway doubling project on Karnataka-Goa route antithesis to biodiversity and ecology; Supreme Court revokes approval for railway doubling in Western Ghats

“While economic development should not be allowed to take place at the cost of ecology or by causing widespread environment destruction and violation; at the same time, the necessity topreserve ecology and environment should not hamper economic and other developments.”

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Income, age not enough to tilt the balance in favour of maternal aunt; Grandparents win custody battle of 5-year-old who lost parents to COVID-19

“One should not doubt the capacity and/or ability of the paternal grandparents to take care of their grandson.”

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Date of dispatch/shipment: Is it when the loading commences or when the loading completes?

“The term ‘despatch’ contained in the policy implied ‘completion’ of handing over of possession of the goods to the first carrier (the ship), and not the date on which the loading ‘commenced’ such an interpretation would give rise to an absurdity.”

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Allahabad HC grants bail to a history sheeter only on the basis of parity; prompts SC to lay down illustrative circumstances for cancellation of bail

Holding that the Supreme Court has the inherent powers and discretion to cancel the bail of an accused even in the absence of supervening circumstances, the Court laid down the illustrative circumstances where the bail can be cancelled.

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More than one chargesheet is necessary for invoking provisions of Gujarat Control of Terrorism and Organised Crime Act, 2015

The Court enumerated the conditions will have to be fulfilled for invoking the provisions of the GCTOC Act.

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Pay on a par with last drawn pay on reemployment in Government Service? Not a matter of right, holds Supreme Court

In a case where the bench of MR Shah and BV Nagarathna, JJ was posed with the question as to whether on re­employment in the government service, an employee who was serving in the Indian Army/in the Armed Forces shall be entitled to his pay scales at par with his last drawn pay, it has been held that a claim for the last drawn pay in the armed forces is not a matter of right.

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Consider relocating and rehabilitating 268 Jhuggi Dwellers without insisting on Ration Card proofs; Supreme Court directs Delhi Government

By the impugned order, the Delhi High Court had held that since the original cut-off date was 31-12-1998, the jhuggi dwellers were not eligible for the rehabilitation scheme at that date as they did not have ration card on the relevant date.

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Madras High Court’s decision to keep enquiry report in a sealed cover in SP Velumani graft case doesn’t sit well with Supreme Court

When the State has not pleaded any specific privilege which bars disclosure of material utilized in the earlier preliminary investigation, there is no good reason for the High Court to have permitted the report to have remained shrouded in a sealed cover.

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Unless there’s a written instrument declaring land was voluntarily relinquished for no consideration, State cannot deny payment of compensation

Under the mandate of Article 300A, the State can only deprive a person of the right to property if it is for a public purpose and the right to compensation is fulfilled, thereby reiterating that the right to compensation is an inbuilt part of Article 300A.

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Can insurer rely on statutory interpretation of “acts of terrorism” to repudiate insurance claim where the policy itself defines the term?

The Court reversed National Consumer Disputes Redressal Commission’s (NCDRC) judgment by which it had held that the insurance company was justified in repudiating the claim.

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Can State deny benefits of New Pension Scheme citing delayed appointments when the delay was not attributable to employees?

In the given circumstances, when all other candidates who had participated along with the appellants were appointed on 24-09-2002 including those who were lower in the order of merit, there was no reason for withholding the names of the appellants.

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SC steps in after Orissa HC sits on a blind man’s bail plea in a Ponzi scheme case for 2 years after reserving order in 2020; Issues notice to CBI, ED

The petitioner, who suffers from a permanent disability of blindness by birth, has submitted before the Court that the prolonged detention is against the fundamental rights of the Petitioner under Article 21 of the Constitution of India.

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Supreme Court reinstates All India Chess Federation secretary Bharat Singh Chauhan till August 15 to ensure smooth holding of the prestigious Chess Olympiad-2022

The Court took the decision in the light of the fact that a prestigious Chess Olympiad is to be held in the country and the same should not be affected because of any structural anomaly in the National Sports Federation (NSF). 

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Cases Reported in SCC

2022 SCC Vol. 4 Part 2 : In 2022 SCC Volume 4 Part 2, read this very pertinent matter of the Supreme Court wherein it was decided whether culpable homicide tantamounts to murder or not. [State of Uttarakhand v. Sachendra Singh Rawat(2022) 4 SCC 227]

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2022 SCC Volume 4 Part 3: This part consists a very pertinent decision of the Supreme Court wherein it was held that it cannot be said that the Tribunal will have jurisdiction only if the subject property is disputed to be a waqf property and not if it is admitted to be a waqf property as such interpretation will be against the provisions Section 83(1) of Act. [Rashid Wali Beg v. Farid Pindari, (2022) 4 SCC 414]

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2022 SCC Volume 4 Part 4: This part encapsulates, a very interesting decision, wherein while criticizing the practise of granting cryptic bail in a casual manner, the Court expressed, “It would be only a non speaking order which is an instance of violation of principles of natural justice. In such a case the prosecution or the informant has a right to assail the order before a higher forum.” [Brijmani Devi v. Pappu Kumar(2022) 4 SCC 497]

2022 SCC Vol. 5 Part 1: This part encapsulates, a very interesting decision of the Supreme Court wherein the Court while dealing with Appointment of Vice-Chancellor, held, that it cannot be made dehors the applicable UGC Regulations, even if the State Act concerned prescribes diluted eligibility criteria vis-à-vis the criteria prescribed in the applicable UGC Regulations. [Gambhirdan K. Gadhvi v. State of Gujarat, (2022) 5 SCC 179]

2022 SCC Vol. 5 Part 2: This part covers the decision wherein the scope of “deemed authorization” clause under S. 16 provisio of the Petroleum and Natural Gas Regulatory Board Act, 2006 has been dealt with. It has been held that if one reads S. 16 proviso in isolation, the inference undoubtedly would be that every entity which had started laying and building pipelines and networks was the recipient of the deemed authorisation clause i.e. the provision sought to retrospectively regularise activities by all entities, however, such a plain and facial construction is unacceptable. [Adani Gas Ltd. v. Union of India(2022) 5 SCC 210]

2022 SCC Vol. 5 Part 3: This part consists of an important decision on the menace of “dowry”, wherein it has been held that “Dowry” ought to be ascribed an expansive meaning so as to encompass any demand made on a woman, whether in respect of a property or a valuable security of any nature. [State of M.P. v. Jogendra(2022) 5 SCC 401]

2022 SCC Vol. 5 Part 4: This part covers a pertinent decision on Section 29-A(h) of the Insolvency and Bankruptcy Code, 2016, wherein it has been held that existence of personal guarantee invoked by creditor is sufficient to render disqualification against the person executing guarantee, even when the application seeking initiation of insolvency resolution process is filed by some other creditor. [Bank of Baroda v. MBL Infrastructures Ltd.(2022) 5 SCC 661]

SCC Snippet

Why Reason is the Soul of Justice : The bench of GS Singhvi and AK Ganguly, JJ, in Kranti Associates Private Limited v. Masood Ahmed Khan, (2010) 9 SCC 496, stressed upon the importance of reasoned judicial orders and elaborated on why “reason is the soul of justice.”

Madhya Pradesh High Court
Case BriefsHigh Courts

Madhya Pradesh High Court: While dismissing an appeal filed under Section 173(1) of the Motor Vehicles Act, 1988 challenging award passed by Eighteenth Additional Motor Accidents Claims Tribunal, Jabalpur (MP), Vishal Dhagat, J. held that the present case is a case of misrepresentation on the part of legal representatives/driver/owner of vehicle in contracting with the appellant for purchase of policy in name of deceased owner.

An accident had occurred and the vehicle was insured by appellant-Company by issuing policy in favour of owner. One fateful day, vehicle was driven rashly and negligently, and it plunged into a pond which resulted in death of two persons by drowning. Appellant had challenged the award on ground that owner of said vehicle had died on 08-10-2010. Insurance policy was brought on 19-05-2013 in name of a dead person and there cannot be any contract between dead and living person and therefore, insurance policy is null and void and Claims Tribunal had committed an error in fixing liability on appellant/ Insurance Company to indemnify the owner and pay to legal representatives of deceased.

Counsel appearing for respondents supported the award and relied on the reasons given by Claims Tribunal.

The Court opined that in this case as owner has died before purchasing insurance policy, therefore, there was a misrepresentation on the part of legal representatives/driver/owner of vehicle in contracting with the appellant for purchase of policy in name of deceased owner.

Contract entered between the parties is not voidable as consent given by appellant for covering the risk on purchase of policy was given by misrepresentation or silence hiding the fact that owner has died as appellant had means to discover the truth with ordinary diligence.

Court held that Insurance Company made no efforts to find out why Insured did not appear and sign the application. Insurer could have discovered the truth by ordinary diligence following proper procedure for issuing of policy. Insurer received the money and had issued the policy. Insurer did not exercise ordinary care and diligence in the case.

The appeal was dismissed stating that under these circumstances, policy cannot be held to be voidable at option of appellant.

[National Insurance Co. Ltd. v. Guudi Bai, 2022 SCC OnLine MP 1440, decided on 21-06-2022]


Advocates who appeared in this case :

Ms. Amrit Kaur Ruprah, Advocate, for the Appellant;

Mr. Neeraj Ashar, Advocate, for the Respondent.


*Suchita Shukla, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: In an insurance repudiation case the Division Bench of Ajay Rastogi and Abhay S. Oka*, JJ., held that where the insurance policy expressly defines a term the insurance company cannot rely on Statutory interpretation of the same to repudiate the insurance claim.  

The Court reversed National Consumer Disputes Redressal Commission’s (NCDRC) judgment by which it had held that the insurance company was justified in repudiating the claim.   

Factual Backdrop  

The appellant had taken Standard Fire and Special Perils Policy from the insurance company in respect of his Engineering Workshop and Plant. The total sum assured was Rs.26,00,00,000 under the policy covering the loss on account of fire, lightning, explosion, riots, strike etc.  

As per the claim made by the appellant, after midnight of 22-03-2010, about 50­60 antisocial people with arms and ammunition entered the factory premises of the appellant and caused substantial damage to the factory, machinery, and other equipment. The mob demanded money and jobs for local people. The appellant contended that the object of the incident was to terrorise the management of the appellant and workers in the factory by forcing them to pay a ransom to the miscreants. 

The appellant lodged a regular claim with the insurance company. The surveyor assessed the loss at Rs.89,43,422 while the appellant claimed that the insurance company was liable to make an interim payment of Rs.1.5 crores.   However, the insurance company repudiated the appellant’s claim relying on the Exclusion Clause of the policy regarding loss or damage caused by the acts of terrorism.  

Findings of NCDRC  

Therefore, the appellant approached NCDRC complaining about deficiency in the service offered by the insurance company. By the impugned judgment and order, the NCDRC held that because of the “Terrorism   Damage   Exclusion   Warranty”; i.e., the Exclusion Clause, the insurance company was justified in repudiating the claim of the appellant. The NCDRC held that the damage caused to the factory and equipment of the appellant was due to an act of terrorism. 

Analysis and Findings  

The Exclusion Clause of the policy defined the act of terrorism as—“the actions can be termed as acts of terrorism provided the same are committed for political, religious, ideological or similar purposes.   The words ‘similar purposes’ will have to be construed ejusdem generis.” 

Noticeably, the repudiation of the policy was based on the Preliminary Survey Report, Investigation Report, and the Final Survey Report.   However, the Court noted that the Survey Reports could not throw any light on the question whether there was an act of terrorism, the Investigation Report did not conclusively prove that the persons involved in the incident belonged to Maoist or similar groups. Similarly, the FIR and Closure Report did not refer to acts of terrorism as defined under the Exclusion Clause, rather it showed that the police had registered a case against 105 miscreants who could not be traced. 

Therefore, the Court held that the insurance company had not discharged the burden of bringing the case within the four corners of the Exclusion Clause.  

The insurance company had argued that since the police had invoked Section 17 of the Criminal Law (Amendment) Act, 1908 against the miscreants for unlawful association, the very fact that the provisions of the Amendment Act of 1908 had been applied showed that the loss caused to the appellant was due to a terrorist act. The Court, rejecting the contention of the insurance company held, 

“When the policy itself defines the acts of terrorism in the Exclusion Clause, the terms of the policy being a concluded contract will govern the rights and liabilities of the parties.  Therefore, the parties cannot rely upon the definitions of ‘terrorism’ in various penal statutes since the Exclusion Clause contains an exhaustive definition of acts of terrorism.” 

Conclusion 

Thus, the Court concluded that the NCDRC had committed an error by applying the Exclusion Clause. The policy specifically covered the damage caused by riots or violent means. Hence, the Court held that the decision to repudiate the policy could not be sustained.  

Resultantly, the impugned order was set aside. However, noting that adjudication would have to be made on the quantum of the amount payable to the appellant after appreciating the evidence on record, including the valuation reports, the Court remanded the matter to the NCDRC for reconsideration. Further, relying on the expected damage estimated by the insurance company’s valuer, the Court directed the insurance company to deposit a sum of Rs.89,00,000 with the NCDRC with liberty to the appellant to make an application for withdrawal. 

[Narsingh Ispat Ltd. v. Oriental Insurance Co. Ltd., 2022 SCC OnLine SC 535, decided on 02-05-2022] 


*Judgment by: Justice Abhay S. Oka 


Appearance by:  

For the Appellant: Santosh Kumar, Advocate  

For the Insurance company: Santosh Paul, Senior Advocate  


Kamini Sharma, Editorial Assistant has put this report together  

Case BriefsSupreme Court

Supreme Court: The 3-judge Bench comprising Uday Umesh Lalit, S. Ravindra Bhat*, Pamidighantam Sri Narasimha, JJ., reversed NCDRC’s findings where it had relied on third-party DGFT Guidelines to interpret the date of ‘despatch/shipment’ in the Single Buyer Exposure Policy of the respondent, and thereby deny the appellant’s claim.

The respondent had treated the date on which loading commenced as the date of despatch/shipment’ to reject the appellant’s insurance claim. Deciding the case in favour of the appellant, the Court held,

“The term ‘despatch’ contained in the policy implied ‘completion’ of handing over of possession of the goods to the first carrier (the ship), and not the date on which the loading ‘commenced’ such an interpretation would give rise to an absurdity.”

Factual Matrix

The appellant was an exporter of fish meat and fish oil, who had obtained an insurance cover of ₹ 2.45 crores for foreign buyers’ failure to pay for goods exported from Export Credit Guarantee Corporation Ltd. (ECGC), a government company (under the control of the Ministry of Commerce and Industry, Union Government). ECGC provides a range of credit risk insurance cover to exporters.

The vessel (Tiger Mango Voyage 62) set sail on 15-12-2012. The Bill of Lading was prepared on 19-12-2012, with a line specifying the date of ‘onboard’ (i.e., date on which vessel commenced loading the goods in question on board) as 13-12-2012. The vessel delivered the goods on 22-01-2013, however, the overseas buyer defaulted on payment which gave rise to the appellant’s claim lodged with ECGC on 14-02-2013.

ECGC rejected the appellant’s claim stating that since the date of ‘despatch/shipment’ was not clearly defined in the policy, reliance was to be placed on the definition contained in the Directorate General of Foreign Trade (DGFT) Guidelines. As per which, for containerized cargo, the date of ‘despatch/shipment’ was to be interpreted as the date of ‘Onboard Bill of Lading’, which was 13-12-2012, i.e., a day prior to the effective date of the Policy, i.e., 14-12-2012. Therefore, ECGC reasoned that the appellant was not entitled to the claim amount.

The appellant, feeling aggrieved, complained of deficiency of service, and approached the NCDRC for compensation. By the impugned order, NCDRC upheld the rationale of the ECGC and rejected the appellant’s claim.

Analysis and Conclusions

Common Business Sense

Rejecting the interpretation of the terms ‘despatch/shipment’ as construed by ECGC, the Court opined that in event of confusion the disputed terms need to be interpreted in a common business sense. The Court stated,

“The date of loading goods onto the vessel, which commenced one day prior to the effective date of the policy, is not as significant as the date on which the foreign buyer failed to pay for the goods exported, which was well within the coverage period of the Policy.”

Reliance was placed by the Court on Peacock Plywood (P) Ltd. v. Oriental Insurance Co. Ltd., (2006) 12 SCC 673, to hold that while interpreting insurance contracts, the risks sought to be covered must also be kept in mind. Further, the Court opined that the date of loading the goods onto the vessel was immaterial to the purpose for which the policy was taken by the appellant. The Court noted,

“A plain reading of the policy in question demonstrates that it was taken to protect against failure of the foreign buyer in paying the Indian exporter for goods exported. It was not a policy taken to cover in-transit insurance, and the cause of action triggering the claim arose much later, i.e., on 14.02.2013, well within the coverage of the policy.”

Interpretation of Despatch/Shipment

The Court opined that on harmoniously construing the documents of the policy, it is, in fact, the date on the Bill of Lading, and not the Mate’s Receipt/date of shipment which ought to be considered as the date of ‘despatch/shipment’, for the Bill of Lading is the legal document conferring title and possession of the goods to the carrier. Therefore, the Court held that reliance on the DGFT Guidelines to disallow the claim of the appellant was not good in law.

Further, the Court observed that even if the third-party DGFT Guidelines were to be applied, it would not favour the ECGC, as a plain reading of provision 9.12 of the guidelines shows that the date on the Bill of Lading has to be considered as the date of despatch/shipment.

Conclusion

In the backdrop of above, the impugned order of the NCDRC was set aside; the appellant’s complaint was consequently allowed. ECGC was directed to pay the claim amount of Rs. 1,96,38,400/- crores to the appellant, with interest at the rate of 9% p.a.

[Haris Marine Products v. Export Credit Guarantee Corpn. Ltd., 2022 SCC OnLine SC 509, decided on 25-04-2022]


*Judgment by: Justice S. Ravindra Bhat


Appearance by:

For the Appellant: Ms Anjana Prakash, Senior Advocate

For the ECGC: Mr Rajnish Kumar Jha, Advocate


Kamini Sharma, Editorial Assistant has put this report together


Legal RoundUpWeekly Rewind


Top Story of the Week


Aadhaar Card for Sex Workers| Supreme Court bats for sex workers’ right to dignity; directs UIDAI to issue Aadhaar Card without insisting on address proof 

The Supreme Court has upheld sex workers right to identity and issued detailed directions for their protection and upliftment. The directions ranged from prohibiting police actions against consenting sex workers, police and medical protections for sex workers being victim of sexual assault, holding media accountable for voyeurism on revealing identity of sex workers to directing UIDAI to issue Adhar Card for them without insisting on address proof. 

It was observed that  

“…basic protection of human decency and dignity extends to sex workers and their children, who, bearing the brunt of social stigma attached to their work, are removed to the fringes of the society, deprived of their right to live with dignity and opportunities to provide the same to their children.” 

Read here: https://www.scconline.com/blog/post/2022/05/26/aadhaar-sex-workers-without-address-proof-supreme-court-india-judgement-legal-news-updates-research-rights/  


Supreme Court


Insurance companies refusing claims on flimsy/technical grounds must stop! Don’t ask for documents that insured can’t produce 

Insurance companies refusing claims on flimsy/technical grounds must stop! This is what the Supreme Court observed while dealing with  a case where an Insurance Company had refused to settle an insurance claim on non-submission of the duplicate certified copy of certificate of registration of the stolen vehicle. The COurt held that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control. 

The Court was dealing with a case where a truck was stolen when and the Court observed the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim. 

Read here: https://www.scconline.com/blog/post/2022/05/23/insurance-claim-rejection-technical-ground-insurance-company-non-production-document-supreme-court-india-judgments-mr-shah-legal-reserach-updates-news/  

Hindu widow’s pre-existing right to maintenance automatically ripens into full ownership when she is in settled legal possession of the property 

Observing that a Hindu woman’s right to maintenance is not an empty formality, the Supreme Court has held that by virtue of Section 14(1) of the Hindu Succession Act, 1956, the Hindu widow’s limited interest gets automatically enlarged into an absolute right, when such property is possessed by her whether acquired before or after the commencement of 1956 Act in lieu of her right to maintenance. 

Where a Hindu widow is found to be in exclusive settled legal possession of the HUF property, that itself would create a presumption that such property was earmarked for realization of her pre-existing right of maintenance, more particularly when the surviving co-parcener did not earmark any alternative property for recognizing her pre-existing right of maintenance. 

Read here: https://www.scconline.com/blog/post/2022/05/25/hindu-woman-right-to-maintenance-settled-possession-absolute-ownership-section-14-hindu-succession-act-supreme-court-judgment-india-legal-research-updates-news/  

IGST on Ocean Freight for imports unconstitutional; Won’t create a level playing field but will drive Indian shipping lines out of business 

In the case where the constitutionality of two Central Government notifications related to IGST was under scanner, the Supreme Court has held that since the Indian importer is liable to pay IGST on the ‘composite supply’, comprising of supply of goods and supply of services of transportation, insurance, etc. in a CIF contract, a separate levy on the Indian importer for the ‘supply of services’ by the shipping line would be in violation of Section 8 of the CGST Act. 

The Court observed that, 

“If Indian shipping lines continue to be taxed and not their competitors, it would drive the Indian shipping lines out of business.” 

Read here: https://www.scconline.com/blog/post/2022/05/21/igst-ocean-freight-imports-unconstituional-indian-importers-shipping-lines-supreme-court-india-legal-research-updates-tax-law-news/  


High Courts


Kerala High Court| Right of Press to report truthfully and faithfully; Press shall NOT indulge in sensationalism

Stating that, though the Press has a duty to inform the public, the Division Bench of Devan Ramachandran and Sophy Thomas, JJ., observed that, it is the well-accepted thumb rule that the Press shall not indulge in sensationalism; or in speculating upon the guilt or otherwise of any accused or other individual; or to create an opinion about the comportment or character of a person involved in the Trial; and not to embellish, by impelling or sponsoring an opinion they seek. 

High Court also observed that,

“Press has a duty to inform the public, the publication of lurid details and other sensitive investigative inputs, which are within the sole jurisdiction of the courts to decide upon, certainly require to be put on a tight leash.” 

Read here: https://www.scconline.com/blog/post/2022/05/25/right-of-press-to-report-truthfully-and-faithfully-legal-news-legal-updates-law-kerala-highcourt/

Chhattisgarh High Court| Would pledge of ornaments kept for marriage of a daughter and use for self without knowledge of husband would amount to cruelty? 

In a matter pertaining to mental cruelty, the Division Bench of Kerala HC, expressed that, if a spouse by her own conduct, without caring about the future of the daughter, parts with ornaments which were meant for the marriage, it will be within the ambit of mental cruelty done by the wife. 

The Bench also added to its observation that, during the marriage ceremony in the Indian household, the presentation of the ornament is normally done for which the parents start the effort, from an early date. 

Read here: https://www.scconline.com/blog/post/2022/05/24/would-pledge-of-ornaments-kept-for-marriage-of-a-daughter-and-use-for-self-without-knowledge-of-husband-would-amount-to-cruelty-chhattisgarh-high-court-law-legal-news-legal-updates/ 

P&H High Court| Can an act of dissent be labeled as sedition? 

Expressing that, in a democratic set-up, there always would be voices of dissent and opinions against rules and protest against actions, P&H HC, observed that, some protests may have aggression but still an act of dissent would not be ordinarily labeled as sedition. 

Bench added to its observation that, to attract an offence such as Section 124-A IPC, there must be deliberate resistance and conscious defiance of authority with a conceived plan aimed to unsettle elected government. 

Read here: https://www.scconline.com/blog/post/2022/05/26/can-an-act-of-dissent-be-labelled-as-sedition-punjab-and-haryana-high-court-law-legal-news-legal-updates/ 

Delhi High Court| Once tenant starts paying rent, can he/she turn around and challenge title of landlord? 

In a matter with regard to the grant of leave to defend, Subramonium Prasad, J., expressed that, the tenant cannot merely make allegations that the landlord has other premises without producing some material to substantiate the same. 

High Court added to its observations that, it is a well-settled position that a tenant may take all kinds of pleas in its application for leave to defend but the Rent Controller has to ensure that the purpose of Chapter III of the Rent Control Act is not defeated by granting leave to defend in every frivolous plea raised by the tenant which may result in protracting the case. 

Read here: https://www.scconline.com/blog/post/2022/05/27/once-tenant-starts-paying-rent-can-he-she-turn-around-and-challenge-title-of-landlord-delhi-high-court-law-legalnews-legal-updates/ 


Legislations


Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 

On May 25, 2022, the Ministry of Road Transport and Highways, in consultation with the Insurance Regulatory and Development Authority of India, has published Motor Vehicles (Third Party Insurance Base Premium and Liability) Rules, 2022 in order to revise the base premium for third party insurance for unlimited liability. The rules shall come into force on 1st June, 2022. 

Read here: https://www.scconline.com/blog/post/2022/05/26/base-premium-for-third-party-insurance-for-unlimited-liability-revised-vide-motor-vehicles-third-party-insurance-base-premium-and-liability-rules-2022/  

IFSCA (Fund Management) Regulations, 2022 

The International Financial Services Centers Authority has revised the Application and Registration Fee under IFSCA (Fund Management) Regulations, 2022. 

Read here: https://www.scconline.com/blog/post/2022/05/23/fee-structure-under-ifsca-fund-management-regulations-2022-revised/  


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Case BriefsSupreme Court

Supreme Court: In a case where an Insurance Company had refused to settle an insurance claim on non-submission of the duplicate certified copy of certificate of registration of the stolen vehicle, the bench of MR Shah* and BV Nagarathna, JJ has held that while settling the claims, the insurance company should not be too technical and ask for the documents, which the insured is not in a position to produce due to circumstances beyond his control.

In the case at hand, a Truck was stolen and an FIR was registered on the very day of theft. The Insured also informed the Insurance Company about the theft on the same day and had also produced the photocopy of the certificate of registration and the registration particulars as provided by the RTO. However, the appellant could not produce either the original certificate of registration or the duplicate certified copy of certificate of registration of the Truck. When the appellant applied for the duplicate certified copy of the certificate of registration, the RTO denied to issue the duplicate certified copy on the ground that in view of information/report regarding theft of the vehicle, which has been registered with the RTO, the details regarding registration certificate on the computer has been locked. The Insurance Company, however, refused to settle the claim.

In such circumstances, the Supreme Court observed that when the appellant had produced the photocopy of certificate of registration and the registration particulars as provided by the RTO, solely on the ground that the original certificate of registration (which has been stolen) is not produced, non-settlement of claim can be said to be deficiency in service. Therefore, the appellant has been wrongly denied the insurance claim.

The Court was of the opinion that in many cases, it is found that the insurance companies are refusing the claim on flimsy grounds and/or technical grounds. It observed,

“The insurance company has become too technical while settling the claim and has acted arbitrarily. The appellant has been asked to furnish the documents which were beyond the control of the appellant to procure and furnish. Once, there was a valid insurance on payment of huge sum by way of premium and the Truck was stolen, the insurance company ought not to have become too technical and ought not to have refused to settle the claim on non-submission of the duplicate certified copy of certificate of registration, which the appellant could not produce due to the circumstances beyond his control.”

The Court, hence, directed the Insurance Company to pay Rs.12 lakhs insurance along with interest @7 per cent from the date of submitting the claim. The insurance company was also saddled with the liability to pay the litigation cost of Rs. 25,000/­ to the appellant.

[Gurmel Singh v. National Insurance Co. Ltd., 2022 SCC OnLine SC 666, decided on 20.05.2022]


*Judgment by: Justice MR Shah


Counsels

For Appellant: Advocate Anand Shankar Jha

For Insurance Company: Advocate Hetu Arora Sethi

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): The Coram of Dinesh Singh (Presiding Member) and Karuna Nand Bajpayee (Member) upheld the decision of the District Commission with respect to concealment of pre-existing fatal diseases at the time of taking insurance.

A revision petition was filed challenging the State Commission’s Order.

The dispute was with respect to the repudiation of the claim on the death of the insured. The parties in the present matter are the insurance company i.e., the petitioner and nominee/widow of the deceased insured was the respondent.

Repudiation of the claim was on the ground of concealment of pre-existing fatal diseases at the time of taking the insurance.

Crux

Whether or not the insured knew that he was suffering from fatal diseases, and he deliberately suppressed his medical condition when he took the policy.

The President of District Commission held that the insured had knowledge of his medical condition when he took the policy and he deliberately suppressed material facts when he took the policy. The other two members held that the insured came to know of his fatal diseases only subsequent to the taking of the policy, when the relevant tests and investigations were conducted in the hospital where he was admitted for treatment just before he died. Accordingly, the majority view was that the complaint deserved to be allowed.

State Commission observed that the onus of proving the fact that the insured had prior knowledge that he was suffering from fatal diseases and as such he deliberately suppressed these material facts at the time of filling up the proposal form was on the insurance co.

Further, it was noted that, there was no evidence on record to show that the insured had knowledge that he was suffering from fatal diseases prior to taking the policy and there was inadequate evidence to support that he had deliberately suppressed his medical condition.

Decision of NCDRC

Coram held that the State Commission’s decision was well appraised reasoned order, and no perversity was found for interference.

The Commission agreed with the counsel for the insurance company that suppression of material facts about pre-existing disease/medical condition would undoubtedly be a breach of the insurance contract, which was of utmost good faith.

In the present matter, the onus of establishing the fact that there was a deliberate suppression of material facts was on the insurance company which onus it failed to discharge by adducing the adequate evidence to substantiate such contention.

In view of the above discussion, the petition was dismissed.

Therefore, the award by the District Commission was upheld by the State Commission and has been confirmed. [LIC of India v. Mamta Sipani, 2022 SCC OnLine NCDRC 41, decided on 2-3-2022]


Advocates before the Commission:

For the Petitioner: Mr. Jai Vardhan, Advocate for Ms. Harvinder Kaur, Advocate

For the Respondent: Mr. Yashvir Singh Kadiyan, Advocate

Case BriefsSupreme Court

Supreme Court: The bench of Sanjiv Khanna and Bela M. Trivedi, JJ has held that an Insurance Company cannot repudiate a claim merely on the ground that there was a delay in intimating it about the occurrence of the theft of vehicle.

The Court was deciding a case relating to theft of a Truck that was insured with Oriental Insurance Company Limited. During the pendency of the complaint before the District Forum, the Insurance Company repudiated the claim of the complainant vide its letter dated 19.10.2010, stating that there was a breach of a condition of the policy which mandated immediate notice to the insurer of the accidental loss/damage, and that the complainant had intimated about the loss on 11.04.2008 i.e. after the lapse of more than five months and, therefore, the Insurance Company had disowned their liability on the claim of the complainant. While the District forum allowed the Complaint, the NCDRC reversed the said finding.

When the matter reached before the Supreme Court, it applied the ruling in Gurshinder Singh v. Shriram General Insurance Company Ltd., 2020 (11) SCC 612, wherein it was observed that

“On occurrence of an accidental loss, the insured is required to immediately give a notice in writing to the company. This appears to be so that the company can assign a surveyor so as to assess the damages suffered by the insured/vehicle.

….

In case of theft or criminal act which may be the subject of a claim under the policy, the insured shall give immediate notice to the police and cooperate with the company in securing the conviction of the offender. The object behind giving immediate notice to the police appears to be that if the police is immediately informed about the theft or any criminal act, the police machinery can be set in motion and steps for recovery of the vehicle could be expedited. In a case of theft, the insurance company or a surveyor would have a limited role. It is the police, who acting on the FIR of the insured, will be required to take immediate steps for tracing and recovering the vehicle. Per contra, the surveyor of the insurance company, at the most, could ascertain the factum regarding the theft of the vehicle.

When an insured has lodged the FIR immediately after the theft of a vehicle occurred and when the police after investigation have lodged a final report after the vehicle was not traced and when the surveyors/investigators appointed by the insurance company have found the claim of the theft to be genuine, then mere delay in intimating the insurance company about the occurrence of the theft cannot be a ground to deny the claim of the insured.”

In the case at hand, the FIR was lodged immediately on the next day of the occurrence of theft of the vehicle by the complainant. The accused were also arrested and chargesheeted, however, the vehicle could not be traced out.

“Of course, it is true that there was a delay of about five months on the part of the complainant in informing and lodging its claim before the Insurance Company, nonetheless, it is pertinent to note that the Insurance Company has not repudiated the claim on the ground that it was not genuine. It has repudiated only on the ground of delay.”

The Court, hence, concluded that when the complainant had lodged the FIR immediately after the theft of the vehicle, and when the police after the investigation had arrested the accused and also filed challan before the concerned Court, and when the claim of the insured was not found to be not genuine, the Insurance Company could not have repudiated the claim merely on the ground that there was a delay in intimating the Insurance Company about the occurrence of the theft.

The Court, hence, set aside the order of NCDRC.

[Jaina Construction Committee v. Oriental Insurance Company Ltd., 2022 SCC OnLine SC 175, decided on 11.02.2022]


*Judgment by: Justice Bela M. Trivedi


Counsels

For appellant: Advocate Avinash Lakhanpal

Case BriefsSupreme Court

Supreme Court: The Division Bench of Dhananjaya Y Chandrachud and B.V. Nagarathna*, JJ., held that if on the consideration of the medical report, the insurance company gets satisfied about the medical condition of the proposer and that there was no risk of pre-existing illness, and on such satisfaction it issues the policy, it cannot thereafter, contend that there was a possible pre-existing illness or sickness which has led to the claim made by the insured and for that reason repudiate the claim.

The facts in a nutshell were that the appellant had sought an overseas mediclaim policy B as he intended to travel to USA. On reaching at San Francisco airport he got a heart attack and was admitted in the hospital where angioplasty was performed on the appellant and three stents were inserted to remove the blockage from the heart vessels. Later on, the appellant claimed treatment expenses from the respondent-insurer which was repudiated by the insurer stating that as the appellant had a history of hyperlipidaemia and diabetes, which fact was not disclosed while obtaining insurance, the policy did not cover pre-existing conditions and complications arising from that.

Findings of NCDRC

The National Consumer Dispute Redressal Commission concluded that since the complainant had been under statin medication which was not disclosed while obtaining mediclaim, the complainant failed to comply with his duty to make complete discloser of his health conditions in a manner contrary to the principle of ‘uberima fides’ between the insurer and the insured. Hence, the Commission held that the insured was not entitled to claim benefit under the policy and the repudiation of the insurance claim was valid.

Uberrimae Fidei

Insurance contracts are special contracts based on the general principles of full disclosure inasmuch as a person seeking insurance is bound to disclose all material facts relating to the risk involved. The contractual duty so imposed is that any suppression or falsity in the statements in the proposal form would result in a breach of duty of good faith and would render the policy voidable and consequently repudiate it at the instance of the insurer. Opining that in relation to the duty of disclosure on the insured, any fact which would influence the judgment of a prudent insurer and not a particular insurer is a material fact, the Bench stated that the fact must be one affecting the risk. If it has no bearing on the risk it need not be disclosed and if it would do no more than cause insurers to make inquiries delaying issue of the insurance, it is not material if the result of the inquiries would have no effect on a prudent insurer. The Bench added,

“The duty to make full disclosure continues to apply throughout negotiations for the contract but it comes to an end when the contract is concluded; therefore, material facts which come to the proposer’s knowledge subsequently need not be disclosed.”

However, clarifying the position, the Bench stated that the assured is not under a duty to disclose facts which he did not know and which he could not reasonably be expected to know at the material time. Further, in order to seek specific information from the insured, the proposal form must have specific questions so as obtain clarity as to the underlying risks in the policy, which are greater than the normal risks.

Contra Proferentem

“A prudent insurer has to gauge the possible risk that the policy would have to cover and accordingly decide to either accept the proposal form and issue a policy or decline to do so.”

As per the doctrine, when words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction applies. The Bench opined that if, on the consideration of the medical report, the insurance company was satisfied about the medical condition of the proposer and that there was no risk of pre-existing illness, and on such satisfaction it had issued the policy, it could not thereafter, contend that there was a possible pre-existing illness or sickness which had led to the claim being made by the insured and for that reason repudiate the claim.

Factual Analysis

The respondent-insurer claimed that there was suppression of the fact that the appellant was suffering from a heart disease for which he was prescribed statins owing to a cholesterol problem and the said fact which was a riskfactor for cardiac disease was material fact was not disclosed in the proposal form. Rejecting the claim of the insurer, the Bench observed that statins was prescribed in order to reduce the risk of a cardiac ailment in future. The Bench expressed,

“Diabetes mellitusII is a risk factor for a cardiac ailment in a person, it is not a hard and fast rule that every person having diabetes mellitusII would necessarily suffer from a cardiac disease.”

Noticeably, statins is also prescribed for controlling hyperlipidaemia but the appellant did not suffer from any heart ailment or hyperlipidaemia. Therefore, the Bench was of the view that prescription of statins to the appellant could not be deduced to say that the appellant had a cardiac ailment or hyperlipidaemia.

Noticeably, the appellant was issued overseas mediclaim policy after undergoing the requisite medical tests namely: 1) Blood sugar test, 2) Urine examination 3) Electrocardiogram test and after being examined by the doctor who stated that the appellant had diabetes mellitusII (DM2) which was controlled on drugs. The doctor further noted that there was no current illness or disease which would possibly require medical treatment during the proposer’s (appellant’s) forthcoming trip.

Therefore, the Bench held that the insurer being appraised about the said medical condition, i.e. diabetes mellitusII of the appellant, issued policy to the appellant; which lead to the inference that the insurer did not consider the said medical condition as a risk factor for any possible cardiac ailment during the term of the policy so as to decline acceptance of the proposal form and issuance of the mediclaim policy.

Conclusion and Decision

“Treatment availed by the appellant for acute myocardial infraction in USA could not have been termed as a direct offshoot of hyperlipidaemia and diabetes mellitus so as to be labelled as a pre-existing disease or illness which the appellant suffered from and had not disclosed the same.”

In the light of the above, the Bench concluded that there was no suppression of any material fact by the appellant to the insurer. The Bench opined the act of insurer of issuing mediclaim policy to the appellant despite the aforesaid facts regarding his medical record had to be read against the insurer by applying the contra proferentem rule against it; otherwise, the very contract of insurance would become meaningless in the instant case.

Consequently, the Bench held that the insurance company was not right in repudiating the policy in question. The appellant was held entitled to be indemnified under the policy. The decision of the Commission was set aside with the following orders:

  1. The insurer was directed to indemnify the appellant regarding the expenses incurred by him towards his medical treatment with interest at the rate of 6% per annum from the date of filing the claim petition before the Commission till realisation.
  2. Since the expenses incurred by the appellant was in terms of US Dollars and the claim would be paid in terms of Indian 57 Rupees, the exchange rate as it existed on the date the claim petition was filed by the appellant herein before the Commission or at Rs.45 INR, whichever is lesser, shall be reckoned for the purpose of determining the conversion rate of US Dollars into Indian Rupees.
  3. The appellant was also entitled to Rs. 1,00,000 towards the cost of litigation.

[Manmohan Nanda v. United India Assurance Co. Ltd., 2021 SCC OnLine SC 1181, decided on 06-12-2021]


Kamini Sharma, Editorial Assistant has put this report together


Appearance by:

For the Appellant: Gopal Sankarnarayanan, Senior Counsel along with Zehra khan, Counsel

For the Respondents: Sunaina Phul, Counsel


*Judgment by: Justice B.V. Nagarathna

Kerala High Court
Case BriefsHigh Courts

Kerala High Court: A. Badharudeen, J., exonerated the insurance company, Bajaj Allianz from liability to pay compensation in a motor accident case. The Bench observed,

“In a three wheeler goods carriage, the driver could not have allowed anybody else to share his seat. No other person whether as a passenger or as a owner of the vehicle is supposed to share the seat of the driver.”

The instant appeal was filed by the insurer-Bajaj Allianz General Insurance Co. Ltd with regard to a motor accident claim. The Insurance Company disputed liability and sought exoneration from liability raising contention that the injured was a gratuitous passenger in a goods vehicle viz., Goods Autorickshaw. Though the appellant sought exoneration, the Tribunal did not allow the same.

The facts of the case were that while the injured was travelling in a Bajaj Goods Autorickshaw along with construction goods to the work site by sitting near the driver of the vehicle and transporting the construction goods, he met with an accident when the said Autorickshaw suddenly turned by its driver. The injured had claimed Rs 1,50,000 as compensation.

The appellant contended that the injured was a gratuitous passenger of the goods vehicle and was travelling in the goods autorickshaw, sharing the seat of the driver where driver alone was permitted to travel.

Hence, the stand of the Tribunal giving the injured the status of a person accompanying the goods carried therein was unsustainable.

In National Insurance Co. Ltd. v. Baljit Kaur, 2004 (1) KLT 938 (SC) = 2004 (2) SCC 1it was held that the term “any person” envisaged under S. 147(1)(b)(i) shall not include any gratuitous passenger, it was held that if the claimant had not been travelling in the vehicle as owner of the goods, he shall not be covered by the policy of insurance.

“No gratuitous passenger can be allowed to travel in a goods vehicle and not even the owner of the vehicle can share the seat of the driver in a goods autorickshaw.”

Hence, the Bench held that, if the claimant had not been travelling in the vehicle as owner of the goods, he shall not be covered by the policy of insurance. In other words, no other person whether a passenger or as a owner of the vehicle was supposed to share the seat of the driver and any such action would be violation of the policy conditions as the policy suggested that the seating capacity of the vehicle involved in the accident was one person and nobody was permitted to travel in the said Goods Autorickshaw, other than the driver.

Observing that the injured was accompanying the Goods Autorickshaw along with construction goods to the work site after sharing the seat of the driver and met with an accident during this course, the Bench allowed the contention raised by the appellant urging full exoneration is to be allowed and contra decision entered into by the Tribunal was stand set aside.

Resultantly, Insurance Company was held not liable to pay the amount and the liability was casted upon the owner of the vehicle. [Bajaj Allianz General Insurance Co. Ltd v. Bheema, 2021 SCC OnLine Ker 4068, decided on 08-11-2021]


Kamini Sharma, Editorial Assistant has reported this brief.


Appearance by:

For the Appellant: Adv Sri. Lal George

For the Claimant: Adv Sri. T.B.Shajimon

Case BriefsHigh Courts

Meghalaya High Court: The Division Bench of Ranjit More, CJ. and H.S.Thangkhiew, J., took up a petition which prayed for the following:

  • a writ in the nature of mandamus directing the Respondent’s authorities to utilize the amount of Rs. 19.84 crore received by the State Respondents and to constitute inquiry as to the in-ordinate delay in completion of the Cancer Treatment Centre at Civil Hospital, Shillong till date for the non-proper utilization of funds amounting to Rs. 26.16 crore sanctioned by the Department of Atomic Energy (DAE), Government of India.
  • a writ in the nature of mandamus directing the State Respondents to establish an Oncology Department in the various District Hospitals of the state so as to ensure the easy access of treatment to the cancer patients of the state.
  • a writ in the nature of mandamus directing the Respondents to improve the quality of cancer care treatment in their respective hospitals and also to strengthen the Community Health Centres (CHCs) and Primary Health Centres (PHCs) in early diagnosis and screening according to the Operational Guidelines of the National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Disease & Stroke (NPCDCS), to establish Tertiary Cancer Care in the various districts and also to appoint specialist in the different oncology department of the respondents hospitals providing cancer treatment to the patients.
  • a writ in the nature of mandamus directing the Respondents to make cancer as a notifiable disease and to conduct mass awareness programmes or outreach programmes in sensitizing people about the various causes of cancer and the importance of early diagnosis.
  • a writ in the nature of mandamus directing the Respondents to include the remaining seven District of the states i.e. West Garo Hills (Tura), East Jaintia Hills (Khliehriat), East Garo Hills (Williamnagar), South Garo Hills (Baghmara), South West Garo Hills (Ampati), South West Khasi Hills (Mawkyrwat) and North Garo Hills (Resubelpara) in the State Population Based Cancer Registry (PCRB) programme so as to acquire the accurate data of patients suffering from the disease.
  • a writ in the nature of mandamus directing the state respondents to create a component under MHIS or a separate cancer patients fund for providing speedy, effective and better financial aid to the cancer patients of the state.
  • a writ in the nature of prohibition and mandamus directing the State Respondents not to allow the advertising agencies to publicly display any advertisements which will affect the health and safety of the people of the state especially the minors.

The petitioner contended that there was arbitrary and inordinate delay on the part of the respondents in establishing a comprehensive and modern cancer care facilities in the State of Meghalaya even after attaining forty-nine years of Statehood and that non-availability of a comprehensive Cancer Hospital and failure of the respondents to strengthen and establish screening centres for early detection and treatment of cancer in the Community Health Centres and Primary Health Centres have caused serious inconveniences and financial problems to the citizens of the State.

It was further grievance of the petitioner that though the Department of Atomic Energy, Government of India had sanctioned Rs.26.16 crore for establishment of a Cancer Treatment Centre at Civil Hospital, Shillong, however, due to lapses and negligence on the part of the concerned authorities, out of the amount of Rs.19.84 crore received by the State respondents, only Rs.9.77 crore of Utilization Certificates were furnished to the Government of India. The petitioner had also made grievance about the implementation of the Megha Health Insurance Scheme in the State of Meghalaya. In this regard, he contends that though the said scheme provides for financial aid amounting to Rs.5,00,000/- (Rupees Five lakhs) to all the citizens of the State, however, due to non-availability of the Cancer Hospital and medicines in the State, the said scheme has remained on paper only.

The Court was of the opinion that the issues in the PIL were of serious concern and the respondents needed to respond to the same, issuing a notice to the respondents.[Lurshaphrang Shongwan v. Union of India, 2021 SCC OnLine Megh 205, order dated: 28-10-2021]


Advocates before the Court:

For the Petitioner/Appellant(s): In-person with Mr AG.Momin, Adv.

For the Respondent(s): Dr N.Mozika, Sr. Adv. With Ms T.Sutnga, Adv.


Suchita Shukla, Editorial Assistant has reported this brief.

Cases ReportedSupreme Court Cases

In Vikram Greentech (I) Ltd. v. New India Assurance Co. Ltd., (2009) 5 SCC 599, the bench of DK Jain and RM Lodha, JJ explained how a contract of insurance needs to be interpreted. The Court said,

“16. An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberrima fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract.

17. The four essentials of a contract of insurance are: (I) the definition of the risk, (ii) the duration of the risk, (iii) the premium, and (iv) the amount of insurance. Since upon issuance of the insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of the risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer.”

Read more… 

Case BriefsSupreme Court

Supreme Court: Reminding the Courts that the Motor Vehicles Act is in the nature of social welfare legislation and its provisions make it clear that the compensation should be justly determined, the bench of R. Subhash Reddy and Hrishikesh Roy*, JJ has held that a realistic recompense having regard to the realities of life, both in terms of assessment of the extent of disabilities and its impact including the income generating capacity of the claimant.

Brief Facts

On 13.4.2001, appellant suffered serious injuries when the motorcycle, where the appellant was riding pillion, was hit by a car. Both riders were impacted, resulting in severe head injuries to the appellant. He was bedridden, totally immobilized and initially, remained admitted in the hospital for 191 days. The appellant has also suffered severe impairment of cognitive power with hemiparesis and total aphasia and the prognosis for him is 69% permanent disability.

The claimant was 21 years old and was earning around Rs.4,500/- per month from jewellery work when he suffered the accident.

Compensation awarded by Tribunal: Rs.5,74,320/-

Compensation Awarded by Kerala High Court: 14,31,752/

Analysis

On facts

“The 21 year old’s youthful dreams and future hopes were snuffedout by the serious accident. The young man’s impaired condition has certainly impacted his family members. Their resources and strength are bound to be stressed by the need to provide full time care to the claimant. For the appellant to constantly rely on them for stimulation and support is destined to cause emotional, physical and financial fatigue for all stakeholders.”

The Court noticed that while the permanent disability as certified by the doctors stands at 69%,the same by no means, adequately reflects the travails the impaired claimant will have to face all his life. A person therefore is not only to be compensated for the injury suffered due to the accident but also for the loss suffered on account of the injury and his inability to lead the life he led, prior to the life altering event.

The Court held that in cases wherein the claimant is suffering severe cognitive dysfunction and restricted mobility, the Courts should be mindful of the fact that even though the physical disability is assessed at 69%, the functional disability is 100% in so far as claimant’s loss of earning capacity is concerned.

It hence held,

“… the impact on the earning capacity for the claimant by virtue of his 69% disability must not be measured as a proportionate loss of his earning capacity. The earning life for the appellant is over and as such his income loss has to be quantified as 100%. There is no other way to assess the earning loss since the appellant is incapacitated for life and is confined to home.”

The Court, hence, enhanced the compensation to Rs. 27,67,800 to be paid within six weeks. Any amount paid earlier under these heads, may be adjusted during payment to the appellant.

On ‘just compensation’

The Court emphasized that, in cases like the one at hand, the Tribunal and the Courts must be conscious of the fact that the permanent disability suffered by the individual not only impairs his cognitive abilities and his physical facilities but there are multiple other non-quantifiable implications for the victim.

“The very fact that a healthy person turns into an invalid, being deprived of normal companionship, and incapable of leading a productive life, makes one suffer the loss of self-dignity. Such a Claimant must not be viewed as a modern day Oliver Twist, having to make entreaties as the boy in the orphanage in Charles Dickens’s classic, “Please Sir, I want some more”. The efforts must be to substantially ameliorate the misery of the claimant and recognize his actual needs by accounting for the ground realities. The measures should however be in correct proportion.”

It further noted that the plea of the victim suffering from a cruel twist of fate, when asking for some more, is not extravagant but is for seeking appropriate recompense to negotiate with the unforeseeable and the fortuitous twists is his impaired life.

“Therefore, while the money awarded by Courts can hardly redress the actual sufferings of the injured victim (who is deprived of the normal amenities of life and suffers the unease of being a burden on others), the courts can make a genuine attempt to help restore the self-dignity of such claimant, by awarding ‘just compensation’.”

[Jithendran v. The New India Assurance Co., 2021 SCC OnLine SC 983, decided on 27.10.2021]


Counsels:

For Claimant: Advocate A. Karthik,

For Insurance Company: Advocate JPN Shahi


*Judgment by: Justice Hrishikesh Roy

Know Thy Judge | Justice Hrishikesh Roy

Legislation UpdatesNotifications

The Insurance Regulatory and Development Authority of India has published revised guidelines on Trade Credit insurance on 8th September 2021. The guidelines shall come into force from November 1, 2021.

 

Key highlights of the revised guidelines are:

  • The guidelines set out the regulatory framework to:
    1. promote sustainable and healthy development of trade credit insurance business
    2. facilitate general insurance companies to offer trade credit insurance covers to suppliers as well as licensed banks and other financial institutions to help businesses manage country risk, open up access to new markets
    3. to manage non-payment risk associated with trade financing portfolio.
  • These guidelines shall be applicable to all insurers transacting general insurance business, registered under the Insurance Act, 1938. The ECGC Ltd (formerly Export Credit Guarantee Corporation of India Ltd) is exempted from the application of these guidelines.
  • A trade credit insurance for Banks / Financial Institutions and Factoring Companies shall cover the loss on account of non-receipt of payment from a buyer, due to commercial or political risks, against the bills / invoices purchased or discounted and it shall be issued for covering trade related transactions other than loan default of seller.
  • A trade credit insurance policy shall not cover a) Reverse Factoring; b) Government Buyers except for political risks in overseas under export transaction. c) Financial Guarantee in any form d) Any other risk cover that may be specified by the Authority from time to time.
  • A trade credit insurance policy shall cover only receivables arising from transactions made under trade credit transaction.
  • Every Insurer shall have an Underwriting and Risk Management Policy approved by Board, in addition to the underwriting policy prescribed under Guidelines on Product Filing Procedures for General Insurance Products which shall be filed with the Authority.
  • The insurer shall have a “Claims Manual” which will illustrate how the claims shall be processed, documentation, delegation of authority, policy holders servicing, grievance redressal etc.
  • Contravention of the any of these Guidelines shall invite penal action under the provisions of the Insurance Act, 1938 which includes prohibiting insurer against entering into any new or particular trade credit insurance business transaction after giving the insurer an opportunity of being heard.


*Tanvi Singh, Editorial Assistant has reported this brief.

Case BriefsSupreme Court

Supreme Court: The bench of Sanjay Kishan Kaul and R. Subhash Reddy, JJ has issued directions with respect to motor vehicle accident claims and has said that the said “directions will apply across the country so that a uniform practice is followed.”

Here are the detailed directions:

  1. Accident Information Report- The jurisdictional police station shall report the accident under Section 158(6) of the Motor Vehicles Act, 1988(Section 159 post 2019 amendment) to the tribunal and insurer within first 48 hours either over email or a dedicated website.
  2. B. Detailed Accident Report- Police shall collect the documents relevant to the accident and for computation of compensation and shall verify the information and documents. These documents shall form part of the Report. It shall email the Report to the tribunal and the insurer within three months. Similarly the claimants may also be permitted to email the application for compensation with supporting documents, under Section 166 to the tribunal and the insurer within the same time.
  3. The tribunal shall issue summons along with the Report or the application for compensation, as the case may be, to the insurer by email.
  4. The insurer shall email their offer for settlement/response to the Report or the application for claim to the tribunal along with proof of service on the claimants.
  5. After passing the award, the tribunal shall email an authenticated copy of the award to the insurer.
  6. The insurer shall satisfy the award by depositing the awarded amount into a bank account maintained by the tribunal by RTGS or NEFT. For this purpose the tribunal shall maintain a bank account and record the relevant account details along with the directions for payment to the insurer in the award itself.
  7. Each tribunal shall create an email ID peculiar to its jurisdiction for receiving the emails from the police and the insurer as mentioned above. Similarly, all insurer throughout India shall also create an email ID peculiar to the jurisdiction of each claim tribunal. These email IDs would be prominently displayed at tribunal, the police stations and the office of the insurers for the benefit of the claimants. Similarly, these email IDS shall also be prominently displayed on the website maintained by the tribunal and the insurer.
  8. Insurers shall appoint nodal officers for each tribunal and provide their contact details, phone and mobile phone numbers, and email address to Director Generals of State Police and the tribunals.

The Court was also of the opinion that the Central Government shall develop an online platform accessible to the tribunals, police authorities and insurers throughout India, as each State having an independent online platform for submission of accident reports, claims and responses to claims, will hamper efficient adjudication of claims, especially where the victim of the accident is not a resident of State where accident has occurred. It, however, refrained from passing any directions on the same for the time being after the ASG submitted that some more time may be required to work out the time period within which they can be implemented and the necessary infrastructure for the same created for which some more discussions are required.

The Court is due to take up the matter again after the summer break.

[Bajaj Allianz General Insurance Company Private Ltd. v. Union of India, 2021 SCC OnLine SC 418, order dated 16.03.2021]


Amicus Curiae: Mr. Narasimhan Vijayaraghavan, AC, Mr. Vipin Nair, AOR

For Petitioner(s): Ms. Meenakshi Arora,Sr. Adv.

Mr. Siddharth, AOR

Mr. Amit Kumar Agrawal, Adv.

Ms. Mamta Meghwal, Adv.

For Respondent(s):  Mr. J.K. Sud, Ld. ASG

Ms. Garima Prashad, Adv.

Mr. Bhuvan Mishra, Adv.

Mr. Navanjay Mahapatra, Adv.

Ms. Sanya Sud, Adv.

Mr. Randeep Sachdeva, Adv.

Mr. Harish Nadda, Adv.

Mr. Raj Bahadur Yadav, Adv.

Mr. G.S. Makker, Adv.

Mr. B.V. Balram Das, Adv.

Gauhati High Court
Case BriefsHigh Courts

Gauhati High Court: The Division Bench of Sudhanshu Dhulia, CJ. and Manash Ranjan Pathak, J., took up a PIL wherein the counsel of the petitioner, Mr A. Chamuah had filed an interlocutory application stating that in Assam persons who were suffering from COVID, although they had an insurance cover were still not being admitted in private hospitals inspite of directions issued in this regard for taking care a COVID patients (who have insurance cover), vide order of the Regulatory Authority dated 04-03-2020.

Mr D. Saikia, Advocate General, Assam placed on record before the Court that on enquiry being done at their end, nine private hospitals were contacted in Guwahati, Dibrugarh and Bongaigaon and the replies which they had received from these private hospitals is that inspite of the late payment in many cases, have not denied admission to a patient suffering from covid, except in some cases where the employees of the hospital were also suffering from COVID. Enquiries have also been made regarding the old lady, who was allegedly denied treatment from cancer as she was suffering from COVID.

The Court granted one week time to Assistant Solicitor General of India, Mr R.K.D. Choudhury to get instructions from the Insurance Regulatory Authority and to file a detailed reply regarding the same so that there is a better position to examine the matter. Court to hear the matter on 31-05-2021.

[Lawyers Association, Guwahati v. State of Assam, 2021 SCC OnLine Gau 1100, decided on 24-05-2021]


Suchita Shukla, Editorial Assistant has put this report together 

Case BriefsSupreme Court

Supreme Court: In an interesting case, the 3-judge bench of UU Lalit, Indira Banerjee and KM Joseph*, JJ has held that while in case where there is a blood test or breath test, which indicates that there is no consumption at all, undoubtedly, it would not be open to the insurer to set up the case of exclusion, however, the absence of test may not disable the insurer from establishing a case for exclusion from liability on ground of drunk driving.

How to decide if the driver was “under the influence of intoxicating liquor”?

If in a case, without there being any blood test, circumstances, associated with effects of consumption of alcohol, are proved, it may certainly go to show that the person who drove the vehicle, had come under the influence of alcohol. The manner, in which the vehicle was driven, may again, if it unerringly points to the person having been under the influence of alcohol, be reckoned.

“Evidence, if forthcoming, of an unsteady gait, smell of alcohol, the eyes being congested, apart from, of course, actual consumption of alcohol, either before the commencement of the driving or even during the process of driving, along with the manner in which the accident took place, may point to the driver being under the influence of alcohol. It would be a finding based on the effect of the pleadings and the evidence.”

What does Section 185 of the Motor Vehicles Act state?

Section 185 of the Motor Vehicles Act creates a criminal offence dealing with driving by a drunken person or by a person under the influence of drugs. The Section mandates the proving of the objective criteria of presence of alcohol exceeding 30 mg per 100 ml. of blood in a test by a breath analyser.

Being a criminal offence, it is indisputable that the ingredients of the offence must be established as contemplated by law which means that the case must be proved beyond reasonable doubt and evidence must clearly indicate the level of alcohol in excess of 30 mg in 100 ml blood and what is more such presence must be borne out by a test by a breath analyser. With effect from 01.09.2019, the following words have been added to Section 185, that is “or in any other test including laboratory test”.

“The law does not prohibit driving after consuming liquor and all that is prohibited is, that the percentage of liquor should not exceed 30 mg. per 100 ml. of blood. Therefore, the understanding appears to be that only in circumstances, where the act of driving, having consumed liquor, attracts the wrath of Section 185 and an offence is committed thereunder, that the opprobrium of the Exclusion Clause in the Contract of Insurance, for own damage, is attracted.”

Read the full text of the provision here

Why will lack of scientific material not disable the insurer from establishing a case for exclusion?

If prosecution has not filed a case under Section 185, that would not mean that a competent Forum in an action alleging deficiency of service, under the Consumer Protection Act, is disabled from finding that the vehicle was being driven by the person under the influence of the alcohol.

“The presence of alcohol in excess of 30 mg per 100 ml. of blood is not an indispensable requirement to enable an Insurer to successfully invoke the clause. What is required to be proved is driving by a person under the influence of the alcohol. Drunken driving, a criminal offence, under Section 185 along with its objective criteria of the alcohol-blood level, is not the only way to prove that the person was under the influence of alcohol. If the Breath Analyser or any other test is not performed for any reason, the Insurer cannot be barred from proving his case otherwise.”

Further, should the Insurer fail to establish a case in terms of Section 185 BAL (Blood Analyser Test), it would fail, may not be the proper approach to the issue.

“It is not difficult to contemplate that the accident may take place with the driver being under the influence of alcohol and neither the Breath Test nor the laboratory test is done. A driver after the accident, may run away. A test may never be performed. However, there may be evidence available which may indicate that the vehicle in question was being driven at the time of the accident by a person under the influence of alcohol.”

Hence, in such circumstances, it cannot then be said that merely because there is no test performed, the Insurer would be deprived of its right to establish a case which is well within its rights under the contract.

[IFFCO TOKIO GENERAL INSURANCE COMPANY LTD. v. Pearl Beverages, 2021 SCC OnLine SC 309, decided on 12.04.2021]


*Judgment by Justice KM Joseph

For appellant: Advocate Shivam Singh

For respondent: Senior Advocate Gopal Sankarnarayanan

Case BriefsSupreme Court

Supreme Court: Taking note of an important legal question raised by the High Court of Kerala while hearing a Motor Vehicle Accident claim case, the 3-judge bench of NV Ramana, Surya Kant and Aniruddha Bose, JJ has agreed to decide the following question:

“Whether in the matter of awarding costs, the procedure and rules framed under the Constitution, CPC and the Rules made thereunder, for `Courts’, could be resorted to by the Claims Tribunal which is apparently, not a `Court.”

The petitioner in the Special Leave petition, challenged the Kerala High Court’s judgment whereby the High Court upheld the compensation granted by the Motor Accident Claims Tribunal, Kottayam in favour of the injured respondent. It was argued that

“the Tribunal does not possess any authority to award any costs as incidental to its power over the parties or the subject matter of the litigation, and the Tribunal being constituted under a special enactment is to be governed solely by the provisions of the Motor Vehicles Act, 1988.”

The Court, hence, allowed the special leave petition to the limited extent of examining the legal issue raised by the petitioner.

Advocate N.Vijayaraghavan will be assisting the Court as  amicus curiae.

[ICICI Lombard General Insurance Company v. MD Davasia,  2021 SCC OnLine SC 79, order dated 11.02.2021]


Appearance before the Court by

For Petitioner:  Rana Mukherjee, Sr.Adv., Nagesh, Adv., Daisy Hannah, Adv. and Shekhar Kumar, AOR.

National Consumer Disputes Redressal Commission
Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): C. Viswanath (Presiding Member) expressed that:

Section 50 of the Insurance Act imposes a statutory obligation on the part of the Insurance Company to issue notice before the expiry of three months from the date on which premium is payable and has not been paid and to give notice to the Policyholder informing him about the options available to him, unless the said conditions are set forth in the Policy.

The instant revision petition was filed under Section 21(1) (b) of the Consumer Protection Act, 1986 against the Order of Punjab State Consumer Disputes Redressal Commission.

Factual Matrix

Complainant’s son obtained a Personal Life Insurance Policy from petitioner 2 for a sum of Rs 2.70 lakh. On the said policy a quarterly instalment of the premium was fixed which was being paid through an agent. The complainant was the nominee.

Complainant’s son died in a road accident. Later the insurance company appointed a surveyor who demanded a bribe to make a favourable report, which the complainant did not pay.

Petitioner 1informed the complainant that since the premium due was not paid, therefore the claim of the complainant could not be considered.

On being aggrieved with the deficiency in service on the part of the petitioners, respondent filed a complaint before the District Forum.

District Forum concluded that there was no deficiency in service on the part of the petitioners as the Insurance Policy of the deceased had lapsed and the complaint was dismissed.

Though the State Commission while accepting the appeal and setting aside the District Forum’s order observed that:

“Consequently, the Complaint filed by the Appellant/ Complainant is allowed and the Respondents are directed to pay the sum insured of Rs.2.70 lakh under the Policy to the Appellant and Rs.1.00 lakh on account of accidental death of the young and unmarried son of the Appellant. The Respondents are also directed to pay Rs.20,000/- as compensation and Rs.10,000/- as litigation expenses to the Appellant.

The Respondents shall comply the order within 45 days of the receipt of copy of the order.”

Complainant aggrieved with the State Commission’s order filed the present revision petition.

Decision

Commission observed that the entire case revolved around Section 50 of the Insurance Act, which states as follows:

“50. Notice of options available to the assured on the lapsing of a policy:

An insurer shall (before the expiry of three months from the date on which the premiums in respect of a policy of life insurance were payable, but not paid), give notice to the policy-holder informing him of the options available to him (unless these are set forth in the policy)”.

Bench observed that the petitioner’s main issue was that the premium was payable on 06-03-2007 and even during the grace period it was not paid. Policy stood lapsed at the end of 31st day from the date of premium fell due.

Further, since the complainant did not apply for reinstatement, no benefits under the policy could be given to them. Petitioners kept notifying the complainant about the policy being lapsed and were also informed about the reinstatement option.

Later on not receiving any information from the insured, the policy lapsed and the same was notified to the complainant.

Hence, the Commission found that the petitioners had acted in accordance with the terms and conditions of the Policy, therefore the complaint deserved to be dismissed.

District Forum’s Order was upheld.[Tata AIG Life Insurance Company Ltd. v. Kishan Lal Arora, Revision Petition No. 4415 of 2013, decided on 01-02-2021]

Hot Off The PressNews

The Competition Commission of India (CCI) approves the acquisition of stake by Axis Bank Limited, Axis Capital Limited and Axis Securities Limited in Max Life Insurance Company Limited.

Axis Bank Limited provides services in retail banking, which includes retail lending and retail deposits, wholesale banking, payment solutions, wealth management, forex and remittance products, distribution of mutual fund schemes and distribution of insurance policies.

Axis Capital Limited is engaged in the business of providing focused and customized solutions in the areas of investment banking and institutional equities.

Axis Securities Limited is engaged in the business of broking, distribution of financial products and advisory services.

Max Life Insurance Company Limited is Life Insurance company registered with Insurance Regulatory and Development Authority of India (IRDAI). It is engaged in the business of providing life insurance and annuity products and investment plans in India.

The proposed combination approved by CCI relates to increase of shareholding in Max Life Insurance Company Limited (Target) to approximately 9.9% by Axis Bank Limited and acquisition of 2% and 1% shareholding in the Target by Axis Capital Limited and Axis Securities Limited respectively.

Detailed order of the CCI will follow.


Ministry of Corporate Affairs

[Press Release dt. 21-01-2021]

[Source: PIB]