On 22nd June 2020, the Bench of Justices Ali Mohammad Magrey and Vinod Chatterji Koul heard the following three appeals, via video conferencing –
- Sajad Ahmad Malik vs. Divisional Manager, National Insurance Company Ltd. & Anr.
- Oriental Insurance Company Ltd. vs Sajad Ahmad Malik & Anr.
- Divisional Manager, National Insurance Company Ltd. vs Sajad Ahmad Malik & Anr.
The Court heard the appeals together as they arose out of an order passed by erstwhile J&K State Consumer Commission.
Facts of the case
Sajad Ahmad, the complainant insured his residential building with both National Insurance Company Ltd and the Oriental Insurance Company Ltd. On 23-09-2002, the complainant claimed that some terrorists sneaked into his house. The terrorists and the security personnel had a gun battle lasting for two days. On 24-09-2002, the insured building blasted, killing two terrorists.
The complainant approached both the Insurance Companies to depute Surveyors on the spot. The National Insurance Company deputed a surveyor on the spot. On the other hand, the Oriental Insurance Company did not. Both the insurance companies failed to settle the complainant’s claim. Thus, the complainant approached the then J&K State Consumer Commission. The Commission directed the National Insurance Company Ltd to pay ₹7,00,000 and Oriental Insurance Company Ltd to pay ₹8,00,000. This Payment had to be made within 6 weeks. The complainant filed an appeal as he claimed ₹38,00,000 with 15% interest. Both the insurance companies filed separate appeals that sought to set aside the Commission’s order dated 31-05-2013.
Arguments by the parties
The learned counsels for all the three parties raised the issue of jurisdiction of this Court. Jammu and Kashmir Reorganization Act, 2019 came into effect on 31st October 2019. The Government of India made the Central laws applicable in the UTs of J&K and Ladakh. Hence, J&K Consumer Protection Act, 1987 stood repealed. Thus, this Court does not have the jurisdiction to hear appeals against the Commission’s orders. Thus, the parties questioned the maintainability of these appeals in this Court.
The learned counsel for the complainant contended that he is entitled to a higher amount of compensation. The learned counsel for National Insurance Company argued that the complainant had prior knowledge about the presence of two terrorists in his house. It is for this reason, he insured his house with two companies. The Police Investigation Report confirmed the same. The complainant concealed the material facts like the presence of two terrorists.
Thus, the complainant obtained the insurance policies fraudulently. The presence of terrorists makes it clear that the house will be attacked by forces anytime. The learned counsel for Oriental Insurance Company argued that the insurance contract must be based on ‘utmost good faith’. In this case, the complainant concealed the necessary information. Thus, he intentionally committed fraud upon the Company. Hence, the insurance contract is void ab initio and not enforceable under law. Thus, the Company is not liable to pay compensation.
Court’s Analysis
The complainant had failed to disclose the presence of terrorists in his house. The complainant did not inform about the simultaneous insurance policy for the same house. This makes the insurance contract void. The Court is of the view that the Commission is wrong with its impugned order. This is because the order is contrary to the evidence on record and the law governing the subject.
Court’s Decision
This Court decided to hear all the pending proceedings or appeals arising out of the orders of the then J&K State Consumer Commission. This Court will hear them as if the old Act was still in force. Thus, the question of jurisdiction stands answered. However, the Court made it clear that all new proceedings and appeals shall be dealt with according to the new law- the Consumer Protection Act, 2019. The changed law provided under J&K Reorganization Act, 2019 will be followed.
The Commission’s order dated 31-05-2013 is set aside. The Court allowed the appeals of both the insurance companies. It dismissed the complainant’s appeal along with his consumer complaint.
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