Skip to content


isaqmahmad Abibiji Vs. the United India Fire and General Insurance Co. (Ltd.) - Court Judgment

LegalCrystal Citation
SubjectInsurance;Civil
CourtGujarat High Court
Decided On
Case NumberLetters Patent Appeal No. 21 of 1977
Judge
Reported inAIR1978Guj46
ActsInsurance Act, 1938 - Sections 2(9) and 46; Code of Civil Procedure (CPC), 1908 - Sections 20
Appellantisaqmahmad Abibiji
RespondentThe United India Fire and General Insurance Co. (Ltd.)
Appellant Advocate K.S. Nanavati, Adv.
Respondent Advocate P.B.E. Raval, Adv.
Cases ReferredSnehalkurnar Sarabhai v. E. T. Organisation
Excerpt:
.....and 46 of insurance act, 1938 and section 20 of code of civil procedure, 1908 - suit pertaining to insurance policy claim - suit returned for presentation in proper court as terms of policy restricts forum of suit - under section 46 suit pertaining to insurance claim can be filed in any court having competent jurisdiction - such right of policy holder not limited by terms of policy - return of suit for presenting proper forum not roper - trial court directed to dispose of matter on merit. - - of the hokler shall be entertained by any competent forum in india so that such just claim would not be defeated an any technical objection as to the forum in which the suit is to be brought an the ground that the holder had made the choice of the forum in the contract advisor or policy of..........policies issued by any insurer falling within this wide definition in s 2 (9) whether he is indian insurer.. or foreign insurance company. the legislature recognised justice by enacting that the claim. of the hokler shall be entertained by any competent forum in india so that such just claim would not be defeated an any technical objection as to the forum in which the suit is to be brought an the ground that the holder had made the choice of the forum in the contract advisor or policy of insurance. similarly, the holder was entitled to receive payment, in india of the sum secured by the policy of insurance, even if the policy or contract provided, the moneys being paid somewhere outside india. that right may have reference and applicability to foreign companies which provided for.....
Judgment:

Mehta, Ag. C.J.

1. The City Civil Court's order returning the plaint for presenting to the proper Court having been confirmed in appeal by the learned single Judge , the plaintiff has come in this appeal. The plaintiff was carrying on business in a shop in question at Ahmedabad. The plaintiff had taken out two policies at Exs. 34 and 35 for Rs. 50,000 and Rs. 25,000 on November 28, 1968 from this insurer the Co-operative General Insurance Company Limited, Hyderabad, whose head office was at , Hyderabad,. Now on nationalization of this insurance business under the Act, of 1972, this company has been a unit of United India Fire & General Insurance Company, which had its head office at Madras and the Branch Office is at Hyderabad. On Sept. 18, 1969, due to fire the plaintiff's shop having been burnt, the plaintiff lodged a claim of Rs. 65,000 with the original insurer on Sept. 30, 1969. The plaintiff's claim was rejected on Nov 22, 1969 on various grounds. The plaintiff gave a notice on May 9, 1970 and afater the reply of the original insurer on May 28, 1970, this claim in pauperism was instituted by the plaintiff in the Ahmedabad City Civil Court on June 29, 1970. The pauper application was granted on November 5, 1971. In the suit a preliminary objection having been raised as to the jurisdiction because of clause 15 of the policy, the said objection was tried as a preliminary issue, Clause 15 runs as under:

'15. It is hereby -declared =4 agreed that in case of any claim arising In respect of the property hereby insured the same shall be settled and paid in Hyderabad (A. P). And the entire cause of action shall also be deemed to arise km Hyderabad (A. P.) and further that all legal proceedings in respect of any such claim shall be instituted in a competent Court in the city of Hyderabad (A. P.) only.'

2. The trial Court came to the conclusion that even though the cause of action had accrued at Ahmedabad, which was the competent Court because the policy, was issued at Ahmedabad, the subject-matter of the contract was situated at Ahmedabad and the loss had also taken place at Ahmedabad the Civil Court at Hyderabad would also have jurisdiction at the time of the commencenient of the suit because the original insurer had at that time their Principal office at Hyderabad. Therefore, both the Courts at Hyderabad and at Ahmedabad having jurisdiction to try the suit, in view of the choice of forum under CL 15 of the two policies and the settled legal position laid down fin Hakam, Sing v.Gammon (India) -Ltd., AIR 1971 SC 740, the plaintiff's suit could not be entertained at Ahmedabad. Therefore, the aforesaid order of return of the plaint having been made by the trial Court and the same. having been confirmed __Jnappeal, the plaintiff has filed this lAtters, Patent Appeal

3. Unfortunately, both the Court attention was not drawn to the relevant provision in S. 46 of the Insurance A4 1938. Even under the General Insurance Business (Nationalisation) Act, 1972, under S. 35, it is in terms provided as under:-

'35. Subject to such exceptions, restrictions and limitations, if any, as the Central Government may, by notification, specify in this 'behalf, the insurance Act shall apply to or in relation to the Corporation and ' every acquiring company -as if the Corporation or the acquiring company, as the case may be, were an insurer carrying on general business within the meaning of that Act.'

In the relevant notification which has been issued under S. 35 of this General Insurance Business (Nationalisation) Act, 1972, by the Central Government specifying the exceptions, restrictions -and limitations on Mc. 29, 1972, while laying down various sections of the Insurance~ Act, 1938, which are not applicable, this relevant provision in S. 46 is not excluded. Therefore, even after the nationalisation of this insurance business6 it is clear that S. 46 would govern the present question.

Section 46 runs as under:-

'46. The holder of a -policy of insurance issued by an insurer in respect of insurance business transacted in India after the commencement of this Act shall have the right, notwithstanding anything to the contrary contained in -the policy or in any agreement relating thereto, to receive payment in India of any sum secured thereby and to sue for any relief In respect of the policy in any Court of competent jurisdiction in India; and if the suit is brought in India any question of law arising in connection with any such policy shall be determined according to the law in force in India 3 Provided that nothing in this section shall apply to a policy of marine insurance.'

Therefore, except in case of marine insurance policy, the, policy underlying S, 46, is to confer then two statutory rights notwithstanding anything to the contrary contained m the policy, or in any agreement relating thereto, (1) is receive payment in India of any man secured thereby and (2) ' sue or any relied in respect of the policy in a' Court of competent Jurisdiction in India. These rights are available to every holder of the policy of insurance issued by the insurer in respect of insurance business transacted in India after the commencement of ISM Insurance Act The term Insurer as defined m S. 2(9) in a complete reply to the contention of Mr. Raval that: S, 46 applies only to foreign insurance companies, It is Only & 1 (9) which contemplates any hadividual or un incorporated body of individuals or boft corporate incorporated under the law 49 any country other than india. while so far as S 2 (9) (b) is concerned it specifically covers,any body corporate carrying an business of insurance, which is a body corporate incorporated 100der 'any law for the tow being in Some india. The whole provision in S 46 which covers such valuable rights to the holder of the policy of insurance which is issued by any insurer hilling within the definition of S 2 (9) will hom to be iviefpreted in a manner which advances the object of this benevolent pnwidoa and not in, a manner so as to defeat the : object underlying this provoom. ?be 900tion creates tbese AWM*WY rights which am to operate notwithatosid1ing anything to the contrary contained to the policy or in any agreement relating therelo. SO these statutory rights prevail and overt ride anything. to the contrary Laid do in the contract ad inawance or tb~ FOJiCT of insurance, Therefore, fall -effect must. be given to this statutory Provision when it conferred these valuable right, to all holders of insurance policies issued by any insurer falling within this wide definition in S 2 (9) whether he is Indian insurer.. or foreign insurance company. The Legislature recognised justice by enacting that the claim. of the hokler shall be entertained by any competent forum in India so that such just claim would not be defeated an any technical objection as to the forum in which the suit is to be brought an the ground that the holder had made the choice of the forum in the contract advisor or policy of insurance. Similarly, the holder was entitled to receive payment, in India of the sum secured by the policy of insurance, even if the policy or contract Provided, the moneys being paid somewhere outside India. That right may have reference and applicability to foreign companies which provided for payments being made outside India. But that would be no reason to whittle down-the width of the other right created by the Legislature in its wisdom. The right conferred on the holder is a right to bring a suit for any relief in respect of the policy in any Court of competent jurisdiction in India and, therefore, even though there may be arbitration clause, or even choice of forum to the contrary in the policy or the contract of insurance, the suit could not be refused to be entertained by the competent Court on the ground of any such contractual stipulation. The width and amplitude of this provision makes it abun6ntly clear that it is not only applicable to foreign companies but also to insurance companies in India. In that view of the matter, such clauses of choice of forum like the present clause in C1. 15 could never operate in the face of this statutory provision which has a non obstianate clause to the effect that notwithstanding anything to the contrary contained in the policy, the holder of the policy will have -a right to sue for any relief in respect of the policy in any court of competent jurisdiction in India. Once a finding is reached -by both the Courts that Ahmedabad Court was the competent Court, a suit could never be refused to be entertained on the ground of contractual stipulation which is completely overridden by this benevolent provision in S. 46. In that view of the matter, there is no substance in the preliminary objection. It does not lie in the mouth of the insurance company to raise such pleas in the face of this categorical provision in S. 46. It was unfortunate that the policies having been issued in 1968, the policies had not to conform to the standard form as per the amendments which have been made from June 1, 1969, where on pain of the licence being withheld such -provisions would never appear in the insurance policies. However, even in old insurance policies the legislature had met with this evil by remedying the mischief which would arise from such defence which would totally non-suit and make it impossible for the policy-holder to Me such a suit for such claims under the policy.

4. The trial Court also should not have felt helpless even when such choice of forum had been made as per the settled legal position in various judgments of this Court. In Rai & Sons v.Trikamji Kanji, (1975) 16 Guj LR 31, the decision in Hakam Singh's case (AIR 1971 SC 740) was considered in the identical context of an agreement to select one of the two competent Courts under the Civil Procedure Code by an agreement of the parties because such agreement was not contrary to public policy and did not violate S. 28 of the Contract Act. The settled legal position was also pointed out that the prima facie leaning of the Court was that the contract should be enforced and the parties should be kept to their bargain. But subject to the prima - facie leaning the discretion of the Court was to be guided by considerations of justice, the balance of convenience, the nature of the claim and the defence, the history of the case, the pro per law -which governed the contract, the connection of the dispute with the several countries and the facilities for obtaining even handed justice from the foreign tribunal, which were all material and relevant considerations. Even whether agreement sought to submit the dispute to foreign -arbitration, the Court could refuse to grant the stay asked for. Following that decision of the Supreme Court in Michael v. Serajuddin, AIR 1963 SC 1044, it was pointed out that as per the settled legal position, even under contract if the parties selected one of 'the two competent forums, that did not amount to ouster of the jurisdiction of the ordinary Courts. Therefore, such a contractual stipulation, in favour of which the Court would have prima facie a great leaning for upholding the solemnity of the contract so as to bind the parties to their own bargains, could never operate as an absolute bar to the jurisdiction of the competent Court. Therefore, the competent Court would always have a discretion to resolve this question by taking into -consideration this stipulation as only one of the factors, which would be given great weight -as the parties had selected a particular forum, but ultimately the question would have to -be decided not by treating the stipulation as if there was an absolute bar to the existence of jurisdiction but as one of the factors to be considered for exercise of the jurisdiction on sound judicial principles. That is why in the facts of that case it was held that the cause of action having arisen only in the jurisdiction of the Court at Bhuj, where all the material witnesses were available, it would be wholly -unjust and inequitable to force that plaintiff contractor to file that suit in the Delhi Court where there was no cause of action, especially ,the other defendants were also JMnled in that suit and further agree intents were relied, upon by way of a tri Partite arrangement for the plaintiff's dues claimed in the suit. The same view is reiterated in Snehalkurnar Sarabhai v. E. T. Organisation, AIR 1975 Gui 72, by our learned brother M. P. Thakker J.who has in terms held that while parties can lawfully enter into an agreement to Twtrict a dispute to a particular Court having jurisdiction, that stipulation though valid cannot take away the jurisdiction of the Court which admittedly has Jurisdiction. The ouster clause can Trate tasp I against the parties to the contract. It could not not tie the hands of the Court and denude it of the power to do justice. Ordinarily Courts would respeat the agreement between the parties which was born out of the meeting of their mindi -and out of considerations of convenience. .But the Courts were not obliged to do so in every ease. Therefore, when the plaintiff was obliged to go to Calcutta-merely for the pleasure of respecting the stipulation embedded in the contract between the parties it was held that it would be denying justice to him, Court's jurisdiction being not divested FULL BENCH 'by any absolute -bar such stipulation D. P. DESAI, P. D. DESAI AND could be ignored by the excluded Court 13. K. MEHTA, JJ. which otherwise Possessed jurisdiction if it was considered to be oppressive having regard to the surrounding circumstances including the stakes involved and the various factors mentioned therein. In the present case the injustice sought to be penetrated to this unfortunate victim who was insured was so apparent, if he was to lie driven to file his suit in the Hyderabad Court where the Head Office of the original insurer was situated. The entire cause of action had arisen at Ahmedabad. The shop which was burnt was situated at Ahmedabad and the fire had also taken place at Ahmedabad and all witnesses would be from Ahmedabad. The Policy of insurance was also taken at Ahmedabad. Therefore, except for the fact that the defendant-original insurer had its head office at Hyderabad, which position had also now changed after nationalisation,' there wais no part of the 0ause of action as such which had arisen at Hyderabad. It would be grossly unjust to drive the plaintiff merely on the Kore of the, Choice of forum to file a suit at Hyderabad as it would be precipitating injustice to him and the insurance company would be able to succeed on such a dishonest technical ground. Therefore, the discretion as per the settled legal position should have been exercised even if the question had to be examined from the aspect of choice of forum. Fortunately S. 46 is the legislative decision itself which was applicable in the present case where the legislature itself has conferred a right on the policy holder to sue the insurer in any compe-1 tent forum in India. In that view of the matter this appeal must be allowed by setting aside the decision of the learned single Judge as well as the order of the trial Court and the matter shall now go back to the trial Court for expeditious disposal within a period of one month from the receipt of the record as the matter has been sufficiently delayed all this time. The insurer shall pay all the coots of the plaintiff all throughout up to the hearing of this appeal. The appeal is accordingly disposed of.

5. Appeal allowed.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //