Libertatem Magazine

Supreme Court Backs Decision of National Consumer Disputes Redressal Commission in Insurance Case

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In a judgment on March 22nd the Supreme Court upheld the NCDR’s Order. The court stated that it will not interfere with the Judgement of NCDR in the matter, as it stands on sound reasoning. 


The appeal arose out of the death of one Om Prakash, who was employed by the Himachal Pradesh State forest Corporation as a Chowkidar at their Divisional Office at Chopal. The Deceased was found in a hapless condition smelling of alcohol and passed away the following afternoon. The post mortem report stated that no injuries were found on the body of the deceased. The cause of death was concluded to be asphyxiation caused by alcohol ingestion and food regurgitation. This was supported by the expert opinion of Dr. D.J. Das Gupta, M.D. 

Respondent no. 1 HPSFC had had taken the Janta Personal Accident Insurance Policy covering all its employees including the deceased from Respondent no. 2 The New India Assurance Company Limited and had been depositing premium for its employees, including the deceased, under the Insurance Policy. The legal heirs of the deceased filed a claim before the insurance company. This claim was subsequently repudiated by the company. Aggrieved by the repudiation of the claim, the Appellants filed a consumer complaint under Section 12 of the Consumer Protection Act, 1986 before the District Consumer Disputes Redressal Forum, Shimla alleging deficiency by the respondent insurance company, the District Forum favoured the applicants in the matter and stated that the insurance company was liable to indemnify the applicants.

The insurance company appealed the order before the state commission. The State Commission in its order observed that the body of the deceased did not have any external injury or mark of violence. And so opined that the death was not accidental and therefore the insurance company could not be held liable for the indemnification under the policy. The state commission further observed that it would be the HPSFC that would be liable to the legal heirs of the deceased, relying on precedent set in The New India Assurance Co. Ltd. v. Smt. Jamuna Devi & Ors., (2002) 3 CPJ 64 (NC). The Himachal Pradesh State Forest Corporation appealed this decision before the NCDR which held that the state commission was right in its observation about the death being accidental and thereby eliminating the insurance company’s liability but it also observed that the HPSFC could not be held liable as they were only acting as a mediator for depositing the premium of employees with the Insurance Company however the HPSFC could not avoid liability under the Workmen’s Compensation Act, 1923.

Appellant’s Arguments

The counsel for the appellant argued that the insurance company did not communicate the terms and conditions of the Insurance Policy to the insured persons. The deceased was not told that the Insurance Policy was applicable only in accidental deaths arising in course of employment. The Appellants contended that as per the law laid down in an earlier case The New India Assurance Co. Ltd. v. Smt. Jamuna Devi & Ors., (2002) 3 CPJ 64 (NC) even if the Insurance Policy is not applicable, the HPSFC was acting as a mediator between the insured/deceased and the Insurance Company and hence there was a tripartite agreement which entitles the Appellants to claim compensation from them and since compensation under the Insurance Policy is available only to those who pay the premium therefore, a claim before the Commissioner under the 1923 Act cannot prevent a claim under the Insurance Policy.

Respondents’ Arguments

The counsel for respondent no: 1 HPSFC argued that in case of accidental death the insurance company would be liable for the indemnification and not the HPSFC. and in case of non-accidental deaths neither the HPSFC nor the insurance company would be liable, which was rightly observed by the National and the State commissions Further, that the deceased was an employee of HPSFC and not a consumer since the definition of “service” under the Consumer Protection Act excludes from its ambit services rendered under the contract of employment between employer and employee and hence the complaint was not maintainable under the Consumer Protection Act against HPSFC and that that HPSFC could be liable only under the 1923 Act and not under the Insurance Scheme as it was only a mediator for depositing the premium of employees with the Insurance Company.

The counsel for Respondent no. 2: The New India Assurance Company Limited argued that the deceased died a natural death, which is not covered under the Insurance Policy ,since there is no evidence of any bodily injury in the post-mortem report to prove the appellants’ claim that the deceased died because of a fall during the storm on the night in question there is little doubt that it was a non-accidental death. Therefore, the claim is not payable under the said Policy. It was also pointed out that Proviso 4 to the Insurance Policy contains an exclusion clause, whereby it is provided that if the insured dies whilst under the influence of alcohol or drugs, any claims under the Policy will not be payable. And the facts of the present case show that on the night before his death, the deceased was heavily drunk.

Observations of the Court 

The Court observed the evidence placed on record by both the parties and the findings of all three consumer Forums , and have concluded that there is no reason to interfere with the order passed by the NCDR, as there is no evidence of any bodily injury that would indicate an accidental death. The court relied on the expert opinion cited in the proceedings as well as the post-mortem report. the court also concluded that in their view the HPSFC was was only acting as a mediator for depositing the premium of employees with the Insurance Company and had no liability as such under the Insurance Policy. And if at all the HPSFC could only be found liable under the Workmen’s Compensation Act, 1923, as confirmed by the NCDR’s order. Further, the Provisio 4 of the Insurance Policy, clearly states that the injured is not entitled to compensation since on facts it is proved that he was intoxicated at the time of the incident. And therefore there is no reason to interfere with the NCDR’s Order. 

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