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Insurance – Insurance company agreed to insure timber – Timber washed away due to flood – Insurance company repudiated claim in 1988 -Complaint filed in 1994 – Dismissed by National Consumer Commission as time barred – On facts, held: On date of flood, there was no insurance policy in existence nor any commitment on behalf of insurance company to make payment – Even accepting the case at its very best that the period of limitation was 3 years under s.44 of the Limitation Act, the complaint was, even then, beyond time – No case made out for interference by Supreme Court – Limitation Act, 1963 – s.44. Contract Act, 1872 – s.28 – Contract of insurance – Clause providing for forfeiture or waiver of the right itself if no action was commenced within period stipulated – Held: Not violative of s.28 – Though curtailment of period of limitation is not permissible in view of s.28 but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. Respondent insurance company agreed to insure timber lying in forest areas of the State and issued cover note followed by an insurance policy to be purportedly valid for one year from 6th November, 1987 onwards. The timber was washed away some time in September, 1988 on account of heavy rains and consequent large scale flooding in the State. When appellant laid claim before the respondent, the latter vide its communication dated 13th October 1988 refuted its liability and repudiated the claim contending that the insurance policy was issued for 8 months only starting from 6th November, 1987 and ending on 5th July, 1988 and the period of one year mentioned in the policy was on account of a typographical mistake. It is alleged that Respondent even accepted additional premium after the policy was repudiated and still declined to make good the loss. Appellant filed complaint before National Consumer Commission. The Complaint was dismissed as time barred having been filed after expiry of the 12 months period stipulated by Clause 6(ii) of the insurance policy. The order passed by the National Consumer Commission was challenged in the present appeal on grounds that Clause 6(ii) of the insurance policy could not be sustained being violative of s.28 of the Contract Act, 1872 and in any event s.44 of the Limitation Act, 1963 provided a limitation period of 3 years from the date of disclaimer. =Dismissing the appeal, the Court HELD:1. It is clear from the record that the timber had been washed away some time in September, 1988 and after prolonged correspondence, the respondent ultimately vide its communication dated 13th October, 1988 repudiated the appellant’s claim. It is also clear from the counter affidavit filed by the respondent that the appellant had, vide its letter dated 7th November 1987, asked for insurance cover for a period of 8 months and that the period of one year fixed in the insurance policy was evidently a typographical mistake which had, in any case, been rectified in the records of the company on 17th December 1987, that is long before the flood. The claim of the appellant that the respondent company had, even after the 13th October 1988, impliedly admitted its liability under the policy also appears to be incorrect as the surveyors had been appointed on the persistent demand of the claimant/appellant and the premium taken thereafter was only to make good the deficiency in the premium that had been paid for the policy for the period of eight months. It is, therefore, apparent that as on the date of the flood, there was no insurance policy in existence or any commitment on behalf of the respondent to make the payment under the policy. Therefore, even accepting the case of the appellant at its very best that the period of limitation would be 3 years under Section 44 of the Limitation Act, the complaint would, even then, be beyond time, having been filed in April 1994. [Para 5] [1018-G-H; 1019-A-D] 2. As regards the issue of clause 6 (ii) of the insurance policy vis-a-vis s.28 of the Contract Act, 1872, the National Commission had relied upon the Sujir Nayak’s case to hold that the complaint could not be entertained as being time barred. In Sujir Nayak’s case, while dealing with an identical situation where a contract contained a provision prescribing a period of limitation shorter than that prescribed by the Limitation Act, it was held that the contractual provision was not hit by s.28 as the right itself had been extinguished. The plea of the appellant that in view of the Food Corporation of India’s case, the Sujir Nayak’s case was liable for reconsideration has no merit since in Sujir Nayak’s case, Food Corporation of India’s case was specifically considered. [Paras 6, 8 and 9] [1019-D; 1021-B-D] National Insurance Co. Ltd. vs. Sujir Ganesh Nayak & Co. & Anr. (1997) 4 SCC 366; Food Corporation of India vs. New India Assurance Co. Ltd. & Ors. (1994) 3 SCC 324; Vulcan Insurance Co. Ltd. vs. Maharaj Singh & Anr. (1976) 1 SCC 943 and Muni Lal vs. Oriental Fire & General Insurance Co. Ltd. & Anr. (1966) 1 SCC 90, referred to. Case Law Reference: (1997) 4 SCC 366 referred to Para 3 (1994) 3 SCC 324 referred to Para 3 (1976) 1 SCC 943 referred to Para 3 (1966) 1 SCC 90 referred to Para 3 CIVIL APPELLATE JURISDICTION : Civil Appeal No. 6347 of 2000. From the final Judgment and Order dated 16.8.2000 of the National Consumer Disputes Redressal Commission, New Delhi in Original Petition No. 95 of 1994. Naresh K. Sharma for the Appellant. K.L. Nandwani and Debasis Misra for the Respondent. =, , , 2009(1 )SCALE216 , 2008(13 )JT66

REPORTABLE
Municipal Corporation (Town Hall), Shimla

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 IN THE SUPREME COURT OF INDIA
 CIVIL APPELLATE JURISDICTION

 CIVIL APPEAL NO. 6347 OF 2000

H.P. State Forest Company Ltd. ........Appellant

 Vs.

M/s. United India Insurance Co. Ltd. .......Respondent

 JUDGMENT

HARJIT SINGH BEDI,J.

1. The facts leading to this appeal are as under:

2. In October 1987, a meeting was convened by the

 Managing Director of the appellant with representatives

 of various Insurance Companies in Shimla with a

 proposal to insure the timber lying in several forest areas

 of the State. A proposal was also made to the National

 Insurance Company on 26th October 1987 to act as a
 2

lead company while the other Insurance Companies were

to be co-sharers. After negotiations, the respondent

agreed (on the 30th October 1987) to insure the timber

lying in the South Zone in the value of Rs.3.42 Crores

and also issued a cover note dated 7th November 1987

followed subsequently by a policy dated 16th November

1987 to be valid from 6th November 1987 to 5th November

1988. The appellant also deposited a sum of

Rs.2,43,504 as the tentative premium subject to the

approval by the Tariff Advisory Commission. It appears

that on account of heavy rains in the Shimla region in

September 1988 and consequent large scale flooding in

the South Zone, the insured timber was washed away.

This fact was conveyed to the respondent by several

letters between 3rd October 1988 and 31st September

1989. The case of the appellant is that instead of

meeting its contractual obligations, the respondent

refuted its liability to pay on the 13th October 1988 on

the pretext that the policy had, in fact, been issued for a

period of 8 months only starting from 6th November 1987
 3

and ending on 5th July 1988 and the period of one year

mentioned in the policy was on account of a

typographical mistake. It also appears that after

prolonged negotiations, some additional premium was

paid with respect to the aforesaid policy. It is the

grievance of the appellant that despite having accepted

the additional premium even after the policy had been

repudiated on 13th October 1988, the respondent-

company still refused to make good the loss. The

appellant accordingly issued a legal notice dated 7th May

1992 followed by another dated 7th December 1992 but

to no avail, and on the contrary, the respondent vide its

communication dated 24th December 1992 yet again

repudiated the appellant' claim. Faced with this

situation, the appellant through its Advocate, issued a

notice dated 18th April 1993 to the respondent under

clause 13 of the Insurance Policy calling for the

appointment of an arbitrator. In its reply dated 19th May

1993, the Insurance Company refused to accept this

proposal as well. Frustrated thereby, the appellant filed
 4

a complaint before the National Consumer Redressal

Forum (hereinafter called the "Commission") on 18th April

1994 on which notice was issued to the respondent.

Several objections such as the complaint being belated

as the claim had been repudiated by letter dated 13th

October 1988, and that the insurance covered only a

period of 8 months, were taken by the respondent. A

rejoinder affidavit was thereafter filed by the appellant

controverting the pleas raised by the respondent. The

Commission, however, after prolonged hearing by its

order dated 15th February 1996 relegated the appellants

to the remedy of a civil court. This order was challenged

and was set aside by this Court on 13th March 1997 and

a direction was issued to the Commission to examine the

complaint on merits. The Commission accordingly went

in to the matter and dismissed the complaint on 16th

August 2000 holding that the issues were covered

against the appellant by the judgment of this Court in

National Insurance Co.Ltd. vs. Sujir Ganesh Nayak &

Co. & Anr. (1997) 4 SCC 366 in which it had been held
 5

 that the complaint could not be entertained as it was

 time barred having been brought before the Commission

 after the expiry of the period fixed by Clause 6(ii) of the

 Insurance Policy. It is against this order that the present

 appeal has been filed.

3. Mr. Sharma, the learned counsel for the appellant has

 submitted that Section 44 of the Limitation Act provided

 a period of limitation of 3 years from the date of

 disclaimer and as such the period of 12 months fixed by

 clause 6(ii) could not be sustained by virtue of the

 provisions of section 28 of the Contract Act, 1872. In

 this connection, he has pointed out that this matter was

 concluded against the respondent by the judgment in

 Food Corporation of India vs. New India Assurance

 Co.Ltd. & Ors. (1994) 3 SCC 324 which had been

 reaffirmed in Muni Lal vs. Oriental Fire & General

 Insurance Co.Ltd. & Anr. (1996) 1 SCC 90 and that

 Sujir Ganesh Nayak case (supra) which was based on

 the pre amended Section 28 ibid was, therefore,

 inapplicable. Mr. Nandwani, the learned counsel for the
 6

 respondent has, however, submitted that the claim had,

 in fact, been repudiated on 13th October 1988 and as the

 3 years period was deemed to have commenced from that

 day, the complaint was barred even on the appellant's

 best case as the complaint had been filed in April 1994.

 He has, further, argued that as far back as in the

 judgment in Vulcan Insurance Co.Ltd. vs. Maharaj

 Singh & Anr. (1976) 1 SCC 943 and followed

 subsequently in several judgments (and even in those

 referred to above), it had been held that a clause in an

 Insurance Policy fixing a period of limitation

 extinguishing the right to file a suit or complaint within a

 certain stipulated period which could be less than that

 prescribed by the Limitation Act, was not violative of

 Section 28 of the Contract Act and as such the findings

 of the Commission were perfectly in accordance with the

 law for this additional reason as well.

4. We have considered the arguments advanced by the

 learned counsel for the parties.
 7

5. It is clear from the record that the timber had been

 washed away some time in September 1988 and after

 prolonged correspondence, the respondent ultimately

 vide its communication dated 13th October 1988

 repudiated the appellant's claim. It is also clear from the

 counter affidavit filed by the respondent that the

 appellant had, vide its letter dated 7th November 1987,

 asked for insurance cover for a period of 8 months and

 that the period of one year fixed in the insurance policy

 was evidently a typographical mistake which had, in any

 case, been rectified in the records of the company on 17th

 December 1987, that is long before the flood. The claim

 of the appellant that the respondent company had, even

 after the 13th October 1988, impliedly admitted its

 liability under the policy also appears to be incorrect as

 the surveyors had been appointed on the persistent

 demand of the claimant/appellant and the premium

 taken thereafter was only to make good the deficiency in

 the premium that had been paid for the policy for the

 period of eight months. It is, therefore, apparent that as
 8

 on the date of the flood, there was no insurance policy in

 existence or any commitment on behalf of the respondent

 to make the payment under the policy. We, therefore,

 endorse the argument raised by the respondent that even

 accepting the case of the appellant at its very best that

 the period of limitation would be 3 years under Section

 44 of the Limitation Act, the complaint would, even then,

 be beyond time, having been filed in April 1994.

6. In view of the above observations, we find that the

 second issue with regard to the implications of clause 6

 (ii) of the policy vis-`-vis Section 28 is really academic,

 but as the learned counsel for the parties have addressed

 us on this score, we have chosen to deal with it as well.

 We see from the order of the Commission that it has

 relied upon Sujir Ganesh Nayak's case (supra) to hold

 that the complaint could not be entertained as being

 time barred. The counsel for the appellant had, however,

 argued before the Commission as before us, that as

 Section 28 of the Contract Act had undergone significant

 amendments, the aforesaid judgment required a re-
 9

appraisal. This submission had been rejected by the

Commission by observing that it was bound by the

judgment in Sujir Ganesh Nayak's case and that the

appellant could agitate the question as to its correctness

before the Supreme Court. The matter was, accordingly,

adjourned by us to enable the parties to find out if the

amendment had, indeed, been made and, if so, to what

effect. During the resumed hearing, the learned counsel

for the appellant candidly admitted that the amendment

had been made but had thereafter been repealed and the

matter would, thus, have to be examined under Section

28 of the Contract Act, as originally placed. We have,

accordingly, chosen to deal with this matter under that

provision. 7. It would be clear

from the above prefatory note that the discussion would

involve an appreciation of Clause 6(ii) of the Policy and

Section 28 of the Contract Act. Both these clauses are

reproduced below:

 "6(ii) In no case whatsoever shall the
 company be liable for any loss or damage
 10

after the expiration of 12 months from the
happening of the loss or damage unless
the claim is the subject of pending action
or arbitration: it being expressly agreed
and declared that if the company shall
declaim liability for any claim hereunder
and such claim shall not within 12
calendar months from the date of the
disclaimer have been made the subject
matter of a suit in a court of law then the
claim shall for all purposes be deemed to
have been abandoned and shall not
thereafter be recoverable hereunder.

 Section 28

 Agreements in restrain of legal
 proceedings void-

 Every agreement, by which any party
 thereto is restricted absolutely from
 enforcing his rights under or in respect of
 any contract, by the usual legal proceedings
 in the ordinary tribunals, or which limits
 the time within which he may thus enforce
 his rights, is void to that extent.

 Savings of contract to refer to
 arbitration dispute that may arise

 Exception 1 - This section shall not render
 illegal a contract, by which two or more
 persons agree that any dispute which may
 arise between them in respect of any
 subject or class of subjects shall be referred
 to arbitration and that only the amount
 awarded in such arbitration shall be
 recoverable in respect of the dispute so
 referred.
 11

 Savings of contract to refer questions
 that have already arisen.

 Exception 2 - Nor shall this section render
 illegal any contract in writing, by which two
 or more persons agree to refer to arbitration
 any question between them which has
 already arisen, or affect any provision of any
 law in force for the time being as to
 references to arbitration."

8. In Sujir Nayak's case (supra) to which primary reference

 has been made by the learned counsel for the parties while

 dealing with an identical situation where a contract

 contained a provision prescribing a period of limitation

 shorter than that prescribed by the Limitation Act, it was

 held that the contractual provision was not hit by Section

 28 as the right itself had been extinguished.

9. Mr. Sharma has, however, submitted that in view of the

 observations in some paragraphs in Food Corporation of

 India's case, the observations in Sujir Nayak's case were

 liable to reconsideration. We, however, find no merit in this

 plea for the reason that in Sujir Nayak's case, Food
 12

 Corporation of India's case (supra) has been specifically

 considered and Vulcan Insurance Company's case (supra)

 too had been relied upon. In Sujir Nayak's case, this

 Court was called upon to consider condition 19 of the policy

 which was in the following terms:

 "Condition 19. - In no case whatever
 shall the company be liable for any loss
 or damage after the expiration of 12
 months from the happening of loss or the
 damage unless the claim is the subject of
 pending action or arbitration."

10.While construing this provision vis-`-vis Section 28 of the

 Contract Act and the cases cited above and several other

 cases, in addition, this is what the Court ultimately

 concluded:

 "16. From the case-law referred to above the
 legal position that emerges is that an agreement
 which in effect seeks to curtail the period of
 limitation and prescribes a shorter period than that
 prescribed by law would be void as offending
 Section 28 of the Contract Act. That is because
 such an agreement would seek to restrict the party
 from enforcing his right in Court after the period
 prescribed under the agreement expires even
 though the period prescribed by law for the
 enforcement of his right has yet not expired. But
 there could be agreements which do not seek to
 curtail the time for enforcement of the right but
 which provide for the forfeiture or waiver of the
 right itself if no action is commenced within the
 period stipulated by the agreement. Such a clause
 13

in the agreement would not fall within the mischief
of Section 28 of the Contract Act. To put it
differently, curtailment of the period of limitation is
not permissible in view of Section 28 but extinction
of the right itself unless exercised within a specified
time is permissible and can be enforced. If the
policy of insurance provides that if a claim is made
and rejected and no action is commenced within
the time stated in the policy, the benefits flowing
from the policy shall stand extinguished and any
subsequent action would be time-barred. Such a
clause would fall outside the scope of Section 28 of
the Contract Act. This, in brief, seems to be the
settled legal position. We may now apply it to the
facts of this case.

 19. The clause before this Court in Food Corpn.
case extracted hereinbefore can instantly be
compared with the clause in the present case. The
contract in that case said that the right shall stand
extinguished after six months from the termination
of the contract. The clause was found valid because
it did not proceed to say that to keep the right alive
the suit was also required to be filed within six
months. Accordingly, it was interpreted to mean that
the right was required to be asserted during that
period by making a claim to the Insurance Company.
It was therefore held that the clause extinguished the
right itself and was therefore not hit by Section 28 of
the Contract Act. Such clauses are generally found in
insurance contracts for the reason that undue delay
in preferring a claim may open up possibilities of
false claims which may be difficult of verification with
reasonable exactitude since memories may have
faded by then and even ground situation may have
changed. Lapse of time in such cases may prove to
be quite costly to the insurer and therefore it would
not be surprising that the insurer would insist that if
the claim is not made within a stipulated period, the
right itself would stand extinguished. Such a clause
would not be hit by Section 28 of the Contract Act.

 21. Clause 19 in terms said that in no case
would the insurer be liable for any loss or damage
after the expiration of twelve months from the
happening of loss or damage unless the claim is
subject of any pending action or arbitration. Here the
claim was not subject to any action or arbitration
proceedings. The clause says that if the claim is not
pressed within twelve months from the happening of
 14

 any loss or damage, the Insurance Company shall
 cease to be liable. There is no dispute that no claim
 was made nor was any arbitration proceeding
 pending during the said period of twelve months. The
 clause therefore has the effect of extinguishing the
 right itself and consequently the liability also. Notice
 the facts of the present case. The Insurance
 Company was informed about the strike by the letter
 of 28-4-1977 and by letter dated 10-5-1977. The
 insured was informed that under the policy it had no
 liability. This was reiterated by letter dated 22-9-
 1977. Even so more than twelve months thereafter
 on 25-10-1978 the notice of demand was issued and
 the suit was filed on 2-6-1980. It is precisely to avoid
 such delays and to discourage such belated claims
 that such insurance policies contain a clause like
 clause 19. That is for the reason that if the claims
 are preferred with promptitude they can be easily
 verified and settled but if it is the other way round,
 we do not think it would be possible for the insurer
 to verify the same since evidence may not be fully
 and completely available and memories may have
 faded. The forfeiture clause 12 also provides that if
 the claim is made but rejected, an action or suit
 must be commenced within three months after such
 rejection; failing which all benefits under the policy
 would stand forfeited. So, looked at from any point of
 view, the suit appears to be filed after the right stood
 extinguished. That is the reason why in Vulcan
 Insurance case while interpreting a clause couched in
 similar terms this Court said: (SCC p. 952, para
 23)
 "It has been repeatedly held that such a clause
 is not hit by Section 28 of the Contract Act."
 Even if the observations made are in the nature
 of obiter dicta we think they proceed on a correct
 reading of the clause."

In the light of the fact that Food Corporation's case has been

considered in Sujir Nayak's case, no further argument

remains in the present matter, as Clause 6(ii) and Condition

19 are, in their essence, pari materia.
 15

11. Mr. Sharma has also placed reliance on Muni Lal's case

 (supra). In this case, the primary issue before the Court

 was as to whether an amendment under Order 6 Rule 17 of

 the CPC ought to be allowed after the relief which had been

 sought to be introduced had become time barred. We,

 therefore, find that no case for interference is made out.

 The appeal is, accordingly, dismissed. There will be no

 order as to costs.

 ..............................
.....J.
 (DALVEER BHANDARI)

 ...................................J.
 (HARJIT SINGH BEDI)New Delhi,
Dated: December 18, 2008

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