Letters Patent Appeal No. 207 of 2013 · Patna High Court
Case Details
Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 1 IN THE HIGH COURT OF JUDICATURE AT PATNA Letters Patent Appeal No.207 of 2013 In Civil Writ Jurisdiction Case No. 5604 of 2005 ====================================================== 1. The New India Assurance Company Ltd . Through Its Branch Manager, D.A.B. Red Cross Building, Patna -1 Null Represented Through Shri Mahatma Tudu, Manager, And Dully Constituted Attorney Of The New India Assurance Company Ltd. Having Its Regional Office At 6th And 7th Floor, B.S.F.C. Building, Frazer Road, P.S. - Kotwali, District - Patna 2. Divisional Manager, The New India Assurance Company Ltd. D.A.B., D.O.I., Patna -1 Represented Through Shri Mahatma Tudu, Manager, And Dully Constituted Attorney Of The New India Assurance Company Ltd. Having Its Regional Office At 6th And 7th Floor, B.S.F.C. Building, Frazer Road, P.S. - Kotwali, District - Patna Versus .... .... Appellant/s 1. The State Of Bihar 2. Bihar State Bar Council, Through Its Secretary, Bar Council Bhawan, Patna -1 3. Advocate Welfare Fund Of The Bar Council Of India, For The State Of Bihar, Through Its Chairman, Bar Council Bhawan, Patna .... .... Respondent/s ====================================================== Appearance : For the Appellant/s : Mr. Shailendra Kumar For the Respondent/s : Mr. ====================================================== CORAM: HONOURABLE MR. JUSTICE NAVIN SINHA and HONOURABLE MR. JUSTICE SHIVAJI PANDEY ORAL ORDER (Per: HONOURABLE MR. JUSTICE NAVIN SINHA) 3 01-03-2013
Legal Reasoning
We have heard counsel for the appellants. The present Appeal arises from an order dated 06.12.2012 allowing C.W.J.C. No. 5604 of 2005. It was held that if the appellants proposed to terminate the “Janata Personal Accident Policy” prematurely, under Clause 5(i) of the policy, they were obliged to also make a pro rata refund to the Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 2 respondents under the latter part of the same Clause within three months. The Bihar State Bar Council for promoting welfare of lawyers floated a Group Insurance Scheme under an agreement with the appellants. A lump sum amount was to be paid as premium for the policy “Janata Personal Accident Policy” valid for 10 years. A consolidated sum of Rs. 20,70,510/- was given as premium. The duration of the policy was from 26.12.1997 to 25.12.2007. Certain claims had also been made and honoured. On 30.07.2002, the appellant citing adverse claim experience on long term “Janata Personal Accident Policy”, relying on a corporate decision unilaterally cancelled the policy invoking Clause 5(i). The controversy revolves around Clause 5(i) read with Clause 10(i) of the same. We, therefore, consider it appropriate to quote both the clauses which read as follows: `` 5(i) The company may at any time, by notice in writing terminate this policy, provided that the company shall in that case return to the insured the then last paid premium less a prorata part thereof for the portion of the current insurance period which shall have expired, such notice shall be deemed sufficiently be given through registered post, if posted and addressed to the insured at the address “last registered in the company’s book” and shall Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 3 be deemed to have been received by the insured in accordance with law. ``10(i) This policy is valid for ten years from the date of assumption of risk. However, no refund, whatsoever, shall accrue to the insured if claim is admitted in first or second or on account of unexpired risk period.” Learned counsel for the appellants submitted that due registered notice under Clause 5(i) is not disputed. Relying upon Clause 10(i) it is submitted that since first and second insurance claims had been made and honored no refund was permissible for the unexpired risk period. The second part of Clause 5(i) stood excluded in the circumstances. The appellants are a Government Company, falling within the term state under Article 12 of the Constitution of India. We do not consider it necessary to go into the larger questions as in our opinion the Appeal can be disposed on a limited issue. The contract of insurance is but a deed document for the manner in which the parties agreed that their relationship would be governed. The primary duty of the Court is to first give full effect to the document and the language used as an expression of the intention of the parties to the contract. It is only when there is any ambiguity in the language of the document, the question of Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 4 interpretation by the Court may arise. Simultaneously, the document and its clauses have to be read in a manner so as not to render any part of it nugatory and meaningless. In our opinion Clause 5(i) and Clause 10(i) operate in completely different circumstances. The former specifically deals with an option exercised by the appellant in the manner prescribed with a corresponding obligation before terminating the agreement. It is a clause specific with regard to the issue of termination. It is preceded by the words “termination of agreement”. Clause 10(i) is not a termination clause at the option of the appellant. The heading of the clause is “special features of the policy”. It states that the policy is valid for 10 years from the date of assumption of risk. No refund was admissible to the insured for the unexpired risk period if a first or second claim had been raised by the insured. To our mind, it does not contemplate or take into consideration a unilateral termination of the contract by the appellant for reasons attributable to it alone exclusively. To read the clause in the manner suggested would be giving an advantage to the appellant for its own actions. What would be its relevance if the option had been exercised by the insured under Clause 5(ii) is left open for consideration. We put a question to the appellant that if the Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 5 interpretation suggested on its behalf to Clause 10(i) be accepted, under what circumstances will the obligation of the appellant under the second part of Clause 5(i) come into play ?. We have received no answer. In an insurance policy, the Companies normally incorporate several clauses as per their requirement. But these clauses have to be interpreted reasonably and prudently so as not to defeat other clauses of the same agreement which operate to the benefit of the insured who has paid the premiums. The appellant has relied upon a Division Bench order of the Bombay High Court in Writ Petition No. 3715 of 2002 considering a similar clause as 5(i) holding that the relationship being contractual in nature, the Insurance Company is fully justified in invocation of the clause which cannot be the subject matter of scrutiny under Article 226. There can be no quarrel with that proposition. But if the clause contained a right coupled with an obligation, the appellant cannot exercise its right without fulfilling the corresponding obligation. In the judgment relied upon the conflict between a clause like Clause 5(i) and 10(i) was not the subject matter of consideration. We find no merit in the Appeal calling for interference with the order under Appeal. Patna High Court LPA No.207 of 2013 (3) dt.01-03-2013 6 The delay of 23 days in filing of the Appeal is condoned.
Decision
The Appeal is dismissed. (Navin Sinha, J.) (Shivaji Pandey, J.) Md. Ibrarul/-