The division bench of Supreme Court comprising, Hon’ble Justices Hemant Gupta and Hon’ble V Rama Subramanian while dismissing a special leave petition filed by the Oriental Insurance Company assailing Allahabad High Court's order dated September 22, 2021 has observed that a condition in the insurance policy which bars the filing of the claim after the specified time period is contrary to Section 28 of the Indian Contract Act, 1872 ("Act") and thus void.
The Section 28 reads as follows:
Every agreement, —
- by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
- Which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.]"
Brief Of Case Before Allahabad High Court
The Insurance Company had approached the High Court challenging the order dated January 4, 2020 passed by Permanent Lok Adalat, Muzaffarnagar, whereby the claim of Smt. Sanjesh, was allowed and Insurance Company was directed to pay Rs. 5 lacs to Smt Sanjesh under the "Mukhyamanti Kisan Evam Sarvhit Bima Yojna".
Counsel representing the Insurance Company argued that the claim was time barred. To prove his statement, he submitted that the accident took place on August 29, 2017 and the deceased had succumbed to injuries on September 5, 2017 and claim was filed after on December 20, 2017 after a period of about 3 months. Counsel relied on the agreement executed between the Insurance Company and State as per which, in the event of delay of more than one month in filing claim after expiry of Insurance, the Collector has power to condone the delay of only one month.
Relying on the finding made by the Permanent Lok Adalat, counsel for the Respondent submitted that that claim was filed merely with a delay of 15 days.
Reliance was placed by the counsel on judgment passed by the Division Bench of the High Court in Gautam Yadav vs. State of U.P. and others, 2020(11) ADJ 321 wherein the Division Bench considered the period of limitation for the purpose of filing claim, and it was held that, "limitation provided under the said scheme is unreasonable and arbitrary and have substituted the said period by three years”. While dismissing the plea, the bench of Justice Saurabh Shyam Shamshery in the order said,
"Policy itself provides condonation of delay up to two months even after the Policy came to an end. Therefore, in strict sense, the delay is just more than one month. There is no clause in the Policy which specifically bar the consideration of claim by Court concerned even beyond the period of two months. The decision passed in Gautam Yadav (supra) is stayed by the Apex Court in Special Leave Petition (Civil) No. 7647 of 2021 by order dated 12.08.2021, though the payment was made by the Insurance Company. Considering that delay in filing the claim petition is just above one month and Insurance Policy is a welfare policy and that though the question of law is pending before Supreme Court but claim was paid in that case, thus the short delay in filing the claim petition is just above one month and Insurance Policy is a welfare policy and that though the question of law is pending is just above one month and Insurance Policy is a welfare policy and that though the question of law is pending before Supreme Court but claim was paid in that case, thus the short delay in filing the claim petition can be condoned. No other submission is made on behalf of the petitioner; therefore, the writ petition is dismissed”.
Case Before Supreme Court :
The Counsel Appearing for the Insurance Company had submitted that the claim was not filed within a period of one month.
Two judges bench dismissed the appeal preferred by the Insurance Company and relied on Section 28 of the Act said,
"In view of the aforesaid Section the condition of lodging claim within a period of one month, extendable by another one month is contrary to Section 28 of the Act and thus void. In view of the said fact, we do not find any ground to interfere with the order passed by the High Court. SLP thus dismissed”
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