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Wednesday, July 28, 2010

Madras High Court raps National Insurance for unnecessary litigation

Today’s Times of India carried an article titled “ HC raps insurance company for thoughtless action ”.    It is a fact of life that cases are pending at various Courts and some unfortunate victims end up spending major part of their life and money in litigation.   The news article read : Quote:

“ Making a mockery of the national litigation policy, which aims to bring down new cases and appeals by the government, a public sector insurance company has filed an appeal against an accident compensation of Rs 6,000. Worse, it has been fighting the case for the past eight years, and has incurred Rs.6,100/- as case expenditure alone.

Rapping the National Insurance Company Limited for the thoughtless action, Justice K Chandru of the Madras high court has dismissed its revision petition, describing it as abuse of the process of law.

The matter relates to a road accident on June 24, 2001, when a van met with an accident injuring three persons near Sevattipatti in Dharmapuri district. After taking treatment, the injured made claims and they were examined by the claims tribunal. In March 2002, the tribunal ordered Rs.6,000/- each to the claimants. The insurance company challenged the award in the high court, that too after a delay of 1,331 days.

Dismissing the company's petition on Thursday last, the judge quoted extensively from Union law minister M Veerappa Moily's statements decrying compulsive appeals and litigation for the sake of litigating.

"Today, in the field of insurance, where there are private operators are also, a public sector insurer must think twice before venturing into a litigation and must consciously make a cost-benefit analysis. They should not end up being penny-wise pound-foolish," Justice Chandru observed.

Ruling that no convincing reason had been given by the insurer for the delay in filing an appeal, the judge said the court was not inclined to condone such an enormous delay as no due diligence had been shown by the company. He also pointed out that the claimants had not been served notice till date -- that is, after more than 1,200 days. He also said provisions of the Motor Vehicles Act 1988 had clearly forbidden any appeals if the claim amount did not exceed Rs.10,0000/-

Pointing out that the insurance company would end up spending at least Rs 6,100 towards court fee, filing expenses and counsel fee to recover Rs 6,000, Justice Chandru said: "The fiscal part of such an attempt to make a recovery makes one wonder about the real motive of such insurers. It has been done not out of any bonafide attempt to make recoveries, but to litigate at the cost of public exchequer."


It would be unfair to make any comment without knowing full facts of the case; yet the amount involved does not make it a fit case for appeal, even if any substantial point of law had been involved.  From the little information available, this appears to be a petition filed by persons travelling in a goods carrier after tipping off the driver of the van.  Obviously, the Goods carrier is not intended for passenger traffic and the Insurers should not be fastened with liability where none exists.  These persons (irrespective of whether the accident was genuine and the extent of injuries sustained) were at best only gratuitous passengers, contributing to the accident in a way.  The MV Act specifies the persons who are required to be covered and there are many Apex Court judgments on this.   Here is something on Motor Vehicles Act for the not so well informed.

Not a day passes out without news of a road accident in the Highway or in some major road. Vehicles are getting damaged, goods are getting damaged and most importantly there is loss of life and injury to persons. The road traffic, the registration of vehicles that ply on the road, the regulation and rules of those entitled to drive, compensation to road accident victims all are regulated by a legislation called Motor Vehicles Act. This was originally enacted in the year 1939, underwent sea changes and amended comprehensively in the year 1988 and some sectional amendments thereafter.

In some ways, it is a welfare legislation; the present Act has done away with the provisions of limitation period which was six months earlier for the victim to file petition seeking compensation. Also the jurisdiction was vastly changed. The Act provides for tortuous liability on those responsible for the accident and vicarious liability on Insurers, following those of the owner of the motor vehicle.

Sec 165 of the MV Act 1988 provides for constitution of Motor Accidents Claims Tribunal by notification by the State Government for adjudicating upon claims for compensation in respect of accidents involving death of, or bodily injury to, persons arising out of motor vehicles, or damages to any property of a third party so arising, or both.

Under Sec 166 application for compensation may be made by the person who sustained injury; the owner of the property; or by any of the legal representative of the deceased (in case of death). This being a Tribunal, the stamp duty is not much and the expenses in the nature of Court fees is nominal.

The Claims Tribunal makes an award determining the amount of compensation and specifies as to who shall make the payment (mostly the Insurers). When an award is so made, the award needs to be satisfied in its entirety within 30 days from the date of announcement. The Tribunal has all the powers of a Civil Court for the purposes of taking evidence on oath and enforcing the attendance of witnesses and of compelling the discovery and production of documents and material objects.

Sec 173 categorically specifies that any person aggrieved by an award of the Tribunal may within 90 days from the date of award prefer an appeal to the High Court but imposes depositing Rs.25000/- or 50% of the amount so awarded, whichever is less. The High Court may entertain appeal after the period of 90 days, if it is satisfied that the appellant was prevented by sufficient cause from preferring the appeal in time.

Sub sec (2) specified that “No appeal shall lie against any award of a Claims Tribunal if the amount in dispute in the appeal is less than ten thousand rupees.”

In the circumstances, how Tribunals fasten liability when it is disputable and  why the Insurer chose to litigate that too after such a long delay -  the episode  does not sound to be  logical.

Regards – Sampathkumar.


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