Raghavaiah & Co. Vs. National Insurance Co. & ANR.  INSC 1195 (10
SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 4962 OF
2002 KANDIMALLA RAGHAVAIAH & CO. ... APPELLANT VERSUS
Challenge in this Appeal under Section 23 of the Consumer
Protection Act, 1986 ("the Act", for short) is to a common judgment
and order dated 17th April, 2002, passed by the National Consumer Disputes
Redressal Commission, ("the Commission", for short) in Original
Petitions No. 97 of 1996 and 248 of 1997, whereby the Commission has dismissed
appellant's two complaints alleging deficiency in service against two different
insurance companies on account of non-settlement of insurance claims made by
the 2 appellant, on the ground that both the complaints were barred by
limitation under Section 24A of the Act.
The salient facts giving rise to the appeal are as follows:
appellant firm was engaged in the business of tobacco at Chelakaluripet, Guntur
District, Andhra Pradesh. They constructed godowns in the premises of M/s
Kandimalla Venkateswarlu at Padripuram, in the same district for storage of
tobacco. On 4th December, 1987 the appellant took out a Fire Policy `C' with
the National Insurance Company -- Respondent No.1 in this appeal (subject
matter of O.P. No. 248 of 1997), in the account of the Indian Bank - Respondent
No.2 herein, against loss or damage by fire etc.
period of 4 months from 4th December, 1987 to 3rd April, 1988 for a sum of
Rs.1,35,000/- and paid a premium of Rs.17,634/-. On 8th March, 1988 the
appellant obtained loan from Respondent No.2 -- Indian Bank by hypothecating
the tobacco stored in the godowns. In the intervening night between 22nd and
23rd March, 1988 a fire broke out in the godowns, allegedly due to electrical
short circuit and the entire stock of tobacco was gutted. The appellant
reported the matter to the present contesting parties, i.e., both the Insurance
Company and the Bank. On 24th March, 1988 a Surveyor was appointed by 3
Respondent No.1 -- Insurance Company, who submitted his report on 2nd April,
However, it appears that on 23rd March, 1988 i.e., the date of the
incident, Respondent No.2 -- the Bank lodged First Information Report (FIR)
against the appellant firm and its partners resulting in filing of Criminal
Case No.72 of 1988 against them under Sections 380, 420, 423, 436, 457, 484
read with Section 120 (B) of the Indian Penal Code (IPC), inter alia, alleging
that they had intentionally set fire to the tobacco stocks with a view to lay a
false claim for loss of stocks. After the trial, the accused were acquitted by
the Sessions Judge, Narasaraopet on 22nd August, 1991.
filed by the Bank against order of acquittal was dismissed by the High Court on
5th September, 1992.
In the meanwhile, on 14th July, 1988, Respondent No.2 -- the Bank
preferred a claim (subject matter of the present appeal) with Respondent No.1
-- the Insurance Company for an amount of Rs.1,32,85,760/-. It seems that the
Bank did not pursue the claim.
November, 1992, the appellant asked for the claim form from the Insurance
Company -- Respondent No.1. Having failed to get any response, on 26th October,
1995 issued a legal notice to Respondent No.1. On 4th January, 1996, the
appellant again asked 4 for claim forms but still there was no response.
Ultimately, on 21st March 1996 the Insurance Company replied to the legal
notice, denying the factum of fire and refused to issue the `claim form' on the
ground that the claim had become time-barred.
On 21st October, 1997, the appellant filed the complaint before
the Commission. Before the Commission, appellant's case was that they had asked
for the `claim form' from the insurance company on 6th November, 1992, which
was not given although Respondent No. 2 --Bank being a `co-insured' had lodged
a claim with the Insurance Company on 14th July, 1988, and they were pursuing
their claim with the Insurance Company on behalf of the appellant.
denial of the Insurance Company in honouring the claim was received on 21st
March 1996, the period of limitation to file complaint would commence from that
date and therefore, their complaint before the Commission was well within time.
As noted earlier, the stand of the appellant has not found favour
with the Commission. The Commission has observed that the cause of action
occurred on the intervening night between 22nd/23rd March, 1988 when the fire
broke out but the complaint was filed only in the year 1997. The first action
by the appellant was in November 1992 i.e., after a gap of 4= years, when the 5
appellant asked for the claim form. The Commission finally held that both the
complaints were barred by limitation and therefore, could not be entertained.
According to the Commission, cause of action could not be assumed to continue
till the date of denial of the claim. The delay in filing the complaint was
obvious in both the cases and there was not even a prayer or an application for
condonation of delay. Hence the present appeal.
Mr. P. Narasimha, learned senior counsel, appearing for the
appellant, argued that the Commission has erred in holding that the complaint
was barred by limitation inasmuch as it failed to appreciate that the policy in
question was a "joint policy" and Respondent No.2 -- Bank was equally
responsible to make a claim for the loss covered under the policy on account of
the fire and as a matter of fact, it did lodge a claim with the Insurance
Company as far back as on 14th July, 1988, but failed to pursue the same, a
clear case of dereliction and deficiency in service towards the appellant was
made out for which they cannot be made to suffer. It was urged that at any rate
non-responsiveness of the Respondent -- Insurance Company towards the legal
notices served upon them by both the appellant and the Bank and their repeated
denial to issue the claim forms also amounted to deficiency in service towards
the appellant. It was, thus, pleaded 6 that the Commission has erroneously held
the claim to be time- barred when the Bank as a joint beneficiary, had
preferred the claim with Respondent No.1 --Insurance Company within time on
14th July, 1988, particularly when because of false complaint by the Bank, the
appellant could not file the complaint. It was asserted that due to deficiency
in service of the Insurance Company as also the Bank, the appellant has
suffered a loss to the tune of Rs.1.35 crores besides facing a civil suit by
the Bank for recovery of the loan, amounting to Rs.3 crores.
Mr. M.K. Dua, learned counsel appearing for Respondent No.1 -- the
Insurance Company, on the other hand, supported the decision of the Commission
and submitted that the appellant's complaint was hopelessly time barred
inasmuch as the incident took place on 23rd March, 1988 and complaint was filed
by the appellant in the year 1997 i.e., after a lapse of 9 years. It was
pointed out that except for intimating the Insurance Company about the fire
incident, the appellant did not lodge any formal claim, supported by documents
as was required under the terms and conditions of the Policy. It was thus,
pleaded that since no claim was made by the appellant in terms of the policy of
insurance, the question of deficiency in service did not arise.
The stand of Respondent No.2 -- the Bank, in the counter affidavit
is that suit for recovery of Rs. 3.76 crores has already been filed against the
appellant which is now pending before Debt Recovery Tribunal, Vishakhapatnam
and complaint before the Commission was by way of a counter-blast to the said
proceedings. A reference is also made to the correspondence exchanged between
the appellant and the Bank from 1988 to 1999 to show that there was no
deficiency in service on their part.
Thus, the short question for consideration is whether on facts at
hand, the Commission was correct in law in dismissing the Complaint preferred
by the appellant as barred by limitation?
Section 24A of the Act bars any fora set up under the Act, from
admitting a complaint, unless the complaint is filed within two years from the
date of which the cause of action has arisen. The provision expressly casts a
duty on the Commission, admitting a complaint, to dismiss a complaint unless
the complainant satisfies the District Forum, the State Commission or National
Commission, as the case may be, that the complainant had sufficient cause for
not filing the complaint within the period of two years from the date on which
the cause of action had arisen.
this Court, while dealing with the same provision, has held:
It would be seen from the aforesaid provision that it is peremptory in nature
and requires consumer forum to see before it admits the complaint that it has
been filed within two years from the date of accrual of cause of action. The
consumer forum, however, for the reasons to be recorded in writing may condone
the delay in filing the complaint if sufficient cause is shown. The expression,
`shall not admit a complaint' occurring in Section 24A is sort of a legislative
command to the consumer forum to examine on its own whether the complaint has
been filed within limitation period prescribed there under. As a matter of law,
the consumer forum must deal with the complaint on merits only if the complaint
has been filed within two years from the date of accrual of cause of action and
if beyond the said period, the sufficient cause has been shown and delay
condoned for the reasons recorded in writing. In other words, it is the duty of
the consumer forum to take notice of Section 24A and give effect to it. If the
complaint is barred by time and yet, the consumer forum decides the complaint
on merits, the forum would be committing an illegality and, therefore, the
aggrieved party would be entitled to have such order set aside." Corporation
Ltd. & Ors.2 and Haryana Urban
The term "cause of action" is neither defined in the Act
nor in the Code of Civil Procedure, 1908 but is of wide import. It has
different meanings in different contexts, that is when used in the context of
territorial jurisdiction or limitation or the accrual of right to sue.
1 JT 2009
(4) SC 191 2 (2003) 9 SCC 50 3 (2006) 1 SCC 164 9 Generally, it is described as
"bundle of facts", which if proved or admitted entitle the plaintiff
to the relief prayed for. Pithily stated, "cause of action" means the
cause of action for which the suit is brought. "Cause of action" is
cause of action which gives occasion Rajashetty & Ors.4). In the context of
limitation with reference to a fire insurance policy, undoubtedly, the date of
accrual of cause of action has to be the date on which the fire breaks out.
In the case before us, as already noted, fire in the tobacco
godown took place on 22nd / 23rd March, 1988 and the Bank, in whose favour the
stocks had been hypothecated, was informed about it by the appellant on 23rd
March, 1988 itself. Insofar as the appellant is concerned, the matter rested
there till 6th November, 1992, when for the first time, the appellant addressed
the following letter to the Insurance Company.
The Branch Manager, National Insurance Company Limited, Chilakaluripet.
did business in tobacco in the name and style of Messrs. Kandimalla Raghavaiah
and Company. Our stock belonging to 1983-84 crop was kept in a key loan to
Indian Bank was insured with your Company.
1 SCC 186 1 0 Subsequently, a fire accident occurred in the month of March,
1988 in the premises of the Company and the entire stock insured was gutted in
said stock was gutted in the fire accident and the same was insured, we would
like to make a claim with regard to the loss insured by us due to the fire
are hereby requested to give the claim forms thereby enabling us to make a
claim for the loss occurred due to the fire accident.
request may kindly be considered forthwith".
supplied by us)
It is manifest from the letter that till that date the appellant
had not made any claim whatsoever with the Insurance Company for the loss
suffered in the fire on 23rd March, 1988. As a matter of fact, only on 6th
November, 1992 they, for the first time, asked for supply of "claim
forms" in order to prefer a claim. By that time period of limitation for
the purpose of Section 24A of the Act had expired.
even thereafter, everything was quiet at both ends till 16th August, 1995 when
the respondent -- Bank, seemingly on the request of the appellant, confirmed to
the appellant that they had preferred claim for the loss on 14th July, 1988
(Annexure P-7). On 26th October, 1995, the appellant got a legal notice issued
to the Insurance Company -- Respondent No.1, narrating sequence of events
leading to their prosecution at the instance of the Bank and 1 1 their ultimate
acquittal and dismissal of Bank's appeal in the year 1992. The relevant portion
of the legal notice reads as follows:
And that thereafter my client addressed several letters to the authorities of
National Insurance Company with a request to send the claim forms to enable my
client to prefer claim under the policy.
that in spite of repeated requests neglecting the customary services failed to
attend and did not send the claim form on request."
The legal notice was followed by yet another legal notice dated
4th January, 1996 which was also on similar lines. Vide reply dated 21st March,
1996 to the legal notice, the Insurance Company refuted the claim made by the
appellant. For the sake of ready reference, the material portion of the reply
by the Insurance Company is extracted below:
the material available and from the information secured, it became evident that
your client, unable to dispose of the old stocks, unable to discharge the
mounting debt to Indian Bank, resorted to mischievous and criminal acts i.e.
shifting the tobacco stocks from their godowns and intentionally set fire to
the tobacco stocks after substitution by inferior quality tobacco either wholly
or in part with a view to lay a false claim for loss of the stocks against my
clients. The various methods and acts indulged in by your clients constitute a
flagrant violation of the terms and conditions of the policy. Probably
realizing that the acts and methods adopted by them, as stated above,
constitute flagrant violation of the terms and conditions, your clients have
given quietus to the matter by keeping quiet all these years. Your client is
totally disentitled for any claim for alleged 1 2 loss against my client under
policy obtained from them. The claim for loss alleged to have been sustained by
your client, after a lapse of seven years is totally barred by limitation and
is futile in any respect. Under these circumstances, sending claim forms to
your clients as requested in your notice does not arise.
clients further state that in case your client sustained any loss in the year
1988 under the scope of the policy, your client should have established such
loss alleged to have been sustained thereon and pursued (sic) the matter well
within time to enable my clients to act appropriately instead of asking for
issuance of claim form at such a belated stage."
Although it is not clear from the record as to when the said reply
was received by the appellant, but the complaint by the appellant seems to have
been filed before the Commission on or after 24 th October, 1997.
It is, therefore, clear from the aforenoted correspondence between
the appellant and the Insurance Company that cause of action in respect of the
special insurance policy arose on 22nd / 23rd March, 1988, when fire in the
godown took place damaging the tobacco stocks hypothecated with the Bank in
whose account the policy had been taken by the appellant. Thus, the limitation
for the purpose of Section 24A of the Act began to run from 23rd March, 1988
and therefore, the complaint before the Commission against 1 3 the Insurance
Company for deficiency in service, whether for non issue of claim forms or for
not processing the claim under the policy, ought to have been filed within two
years thereof. As noticed above, the complaint was in fact filed on or after
24th October, 1997, which was clearly barred by time. It is pertinent to note
that in the complaint before the Commission, though there was an averment that
the Bank had not disclosed to the appellant whether any amount had been
received by them from the Insurance Company against the claim preferred on 14th
July, 1988, but appellant's categorical stand therein was that it was because
of the pendency of the criminal litigation that they could not make a claim in
respect of the policy for the loss suffered and time and again they had been
requesting the Insurance Company to send the claim forms, which request was not
acceded to by the Insurance Company, and it shows that the appellant was not
depending on the claim stated to have been made by the Bank with the Insurance
A bare reading of the impugned order shows that all these factual
aspects have been duly taken into consideration by the Commission and we are in
complete agreement with the finding by the Commission that the filing of claim
by the Bank on 14 th July, 1988, would not have, in any way, helped the
appellant. On their 1 4 own showing, for the first time, only on 6th November,
1992 and then again on 26th October, 1995, the appellant had requested the
Insurance Company to issue claim form to enable them to prefer a claim which
request was declined by the Insurance Company on 21st March, 1996. By no
stretch of imagination, it can be said that Insurance Company's reply dated
21st March, 1996 to the legal notice dated 4th January, 1996, declining to
issue the forms for preferring a claim after a lapse of more than four years of
the date of fire, resulted in extending the period of limitation for the
purpose of Section 24A of the Act. We have no hesitation in holding that the
complaint filed on 24th October, 1997 and that too without an application for
condonation of delay was manifestly barred by limitation and the Commission was
justified in dismissing it on that short ground.
For the foregoing reasons, we do not find any merit in this
dismissed accordingly with costs.
..........................................J. (D.K. JAIN)
............................................J. (R.M. LODHA)
1 5 JULY 10, 2009.