Supreme Court Reverses Insurance Claim for Late Notification in Constable's Death.

Supreme Court Observed in the recent Judgement (NATIONAL INSURANCE CO. VS CHIEF ELECTORAL OFFICER & OTH. D.D 08 FEB. 2023) that Respondent No. 2 did not raise a claim until seven and a half years after the occurrence, which is beyond any reasonable time period. If the wife of the constable had not claimed, it was the responsibility of Respondent No. 1 to have lodged the claim with the Appellant insurance company. The MoU required the claim to be made immediately after the occurrence and if it was not admissible, there was no reason to forward the claim.

Facts -The case involves a dispute between an insurance company (the Appellant) and a prospective beneficiary (Respondent No. 2) regarding the application of the general strict liability principle in an insurance policy. The Patna High Court, in its order dated 03.10.2017, granted the insurance claim to the beneficiary and placed the liability on the insurance company, which is now being questioned by the Appellant. The original claim was made by a writ petition filed by the beneficiary, but the Division Bench reversed the original decision and placed the liability on the insurance company.

The husband of Respondent No.2, a constable, died due to a sunstroke while performing election duty during the extended period of the insurance policy. Respondent No.2, the wife of the deceased constable, sought payment of compensation amount of Rs. 10 lakhs as per the insurance policy in 2008. The Assistant Election Officer noted that the death did not occur due to any external violent activity and thus, compensation was not admissible. Respondent No.2 filed a writ petition for the payment of compensation and the Single Judge assigned the liability to pay the amount to the Chief Electoral Officer and the District Magistrate, Vaishali. But the Division Bench reversed the original decision and placed the liability on the insurance company. Aggrieved Appellant moved to Supreme court.

The Assistant Election Officer had rejected the claim initially but later admitted liability in the writ petition and paid the claim to Respondent No.2. They believe that the liability was later fastened on the Appellant through the writ petition.

The Appellant also states that the insurance policy had expired and that the cause of death, a sun stroke/heat stroke, was not covered under the policy's "Scope of Cover" which required the death to be caused by "external violent and any other visible means."

On the issue of the time period within which the claim had to be made, the Appellant argues that the terms of the MoU required the claim to be made immediately and notified to the insurance company. However, the claim was notified after 11 years and after Respondent No.2 had filed the writ petition in the High Court of Patna. The terms of insurance policies are to be strictly construed and undisputedly accepted.

The court states that Respondent No. 2 did not raise a claim until seven and a half years after the occurrence, which is beyond any reasonable time period. The court also mentions that if the wife of the constable had not claimed, it was the responsibility of Respondent No. 1 to have lodged the claim with the Appellant insurance company. The MoU required the claim to be made immediately after the occurrence and if it was not admissible, there was no reason to forward the claim.

The court then delves into the principles on which a claim under an insurance policy is examined. The terms of the insurance policy are to be strictly construed and the insurance contracts are in the nature of special class of contracts with distinctive features such as utmost good faith, insurable interest, etc. The court cites several judicial pronouncements which state that the words used in an insurance contract must be given paramount importance and the terms of the contract have to be read strictly without altering the nature of the contract.

Finally, the court turns to the specific clause in the MoU that governs the insurance policy, which provides for payment of compensation in the event of death resulting "solely and directly" from the accident caused by external violent and visible means. The court concludes that on a plain reading, it is quite apparent that the admissibility of the claim is in the event of death only.

The judgment of the Division Bench of the Patna High Court is set aside as it is not sustainable. The original order was based on the admission of Respondent No.1, but now they are trying to change their stance. Respondent No.1 has already paid Respondent No.2's wife and it would not be appropriate to let them recover the amount from Respondent No.2. The appeal is allowed.

NATIONAL INSURANCE COMPANY LTD. Vs THE CHIEF ELECTORAL OFFICER & ORS.