Cause of Action In Contract Of Insurance Shall Also Accrue On Date Of Repudiation Of Claim- J&K&L HC

A Jammu & Kashmir and Ladakh High Court Bench of Justice Sanjeev Kumar and Justice Moksha Khajuria Kazmi has clarified that "the cause of action in the case of a contract of insurance shall also accrue on the date the claim, if any, lodged by the insured is repudiated."

Counsel NH Khuroo appeared for the Appellant side, while Counsel Syed Sajad Geelani appeared for the Respondent side.

In this case, a petition was filed by United India Insurance Company against an order passed by the J&K State Consumer Disputes Redressal Commission, whereby the Commission had set dismissed the order of the Divisional Consumer Forum. The Divisional Consumer Forum had dismissed a complaint on the basis of limitation under Section 18-A of the J&K Consumer Protection Act, 1987. In the impugned order, the Commission held that delay of few months was inconsequential, and, therefore, the technical plea of limitation should not become the reason for avoiding the decision of the complaint on merits. 

On a plain reading of Section 18-A of the Act, the High Court observed that a discretion has been conferred upon the Divisional Forum or the State Commission as the case may be, to admit a complaint even after expiry of period of limitation i.e two years from the date of accrual of cause of action.

Placing reliance on the judgment passed in the case of Insurance Company Vs. Posnkar Nath Pandita & Sons, the Court held that "Section 18-A read in its entirety would mean that ordinarily a consumer complaint is required to be filed within two years from the date of accrual of cause of action. However, it is always in the discretion of the Divisional Forum/ Consumer Commission to entertain such complaint even beyond the period of two years, though such discretion must be informed by reasons to be recorded while condoning the delay. That apart, the delay in filing the complaint can also be condoned on the complainant demonstrating sufficient cause for not filing the complaint within limitation period. It would, therefore, emerge that in an appropriate case and for  reasons to be recorded, the Divisional Forum/ State Commission are empowered to entertain complaint beyond limitation. The complaint should not be entertained unless it is filed within two years, is a prescription directory in nature."

Regarding the "cause of action" to file a complaint, the High Court placed reliance on the case of Transport Corporation of India Ltd. V.s Veljan Hydrair Ltd., the Court observed that "it is abundantly clear that the cause of action in the case of a contract of insurance shall also accrue on the date the claim, if any, lodged by the insured is repudiated. Viewed from this angel, we find the complaint filed by the respondent no. 1 in time." The Court also reiterated that there is wide discretion vested in the Divisional Forum/ State Commission to condone the delay beyond two years in an appropriate case by passing a speaking order. In that context, the Court opined that "The judgment of the State Commission is though not well reasoned, does not produce results different from the one that we intend to."

Resultantly, the Court found no merit in the petition, and dismissed the same. The High Court directed that the Commission shall proceed in the complaint and decide the same on merits.

Cause Title: United India Insurance Company Limited vs Ghulam Nabi Bhat & Ors.

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