Insurance – Insurance Ombudsman – Jurisdiction – Redressal of Public Grievances Rules, 1998 – Rules 4(i) (“insured person”), 4(k) (“personal lines”), 13 (“Manner in which complaint is to be made”) – Marine cargo specific voyage policy – Commercial lines – Proprietorship concern.
The petitioner, New India Assurance Co. Ltd., challenged an award passed by the Insurance Ombudsman. The award directed the petitioner to pay Rs. 20,00,000/- to the first respondent, G & M Industrial Products, for a repudiated claim under a marine cargo specific voyage policy. The petitioner contended that the complaint, filed by the first respondent (a proprietorship concern) for a commercial policy, was outside the Ombudsman’s jurisdiction under the Redressal of Public Grievances Rules, 1998.
Under the Redressal of Public Grievances Rules, 1998:
- Rule 4(i) defines “insured person” as “an individual by whom or on whose behalf an insurance policy has been taken on personal lines”.
- Rule 4(k) defines “personal lines” as “an insurance policy taken or given in an individual capacity”.
- Rule 13(1) states, “Any person who has a grievance against an insurer, may himself or through his legal heirs make a complaint”.
The Ombudsman had overruled the jurisdictional objection, observing that the first respondent was a “proprietary concern” and that such a business cannot be separated from the owner. The Ombudsman also noted the petitioner’s prior agreement to mediation (Ext.P2).
The High Court, in its analysis, referred to the Division Bench decision in National Insurance Co. Ltd v. Indus Motor Company Pvt. Ltd. and others [2005 (4) KLT 391], which held that the emphasis of Rule 13 read with Rule 4(k) is on the words “individual”, “personal lines”, “himself or through his legal heirs”, and that an incorporated company would not fall under these expressions. Similarly, a Single Judge in Bajaj Allianz General Insurance Company Ltd. Ernakulam v. Puthen Modern Rice Mill, Kalady and others [2021(2) KLT 640] held that a partnership firm also does not fall within “any person” in Rule 13.
The High Court held that a conjoint reading of the Redressal of Public Grievances Rules, 1998, indicates that they were intended for the redressal of grievances of individuals concerning policies issued on “personal lines”. The rules do not envisage adjudication of disputes arising from policies issued on “commercial lines” to entities like companies, partnerships, or proprietorship concerns.
The Court distinguished Supreme Court judgments (Ashok Transport Agency v. Awadhesh Kumar and Another [(1998) 5 SCC 567] and Raghu Lakshminarayanan v. Fine Tubes [(2007) 5 SCC 103]) that define a proprietorship concern as merely the business name of an individual. It clarified that these observations were made in the context of the Code of Civil Procedure and cannot be applied as such to understand the scope of the Redressal of Public Grievances Rules, which has a unique object and purpose.
Furthermore, the Court found that the Ombudsman erred in several ways:
- Incorrectly observing that “personal lines” was not defined in the Rules, as it is defined in Rule 4(k).
- Failing to address the relevant issue of whether a complaint pertaining to a policy obtained on commercial lines was maintainable as per the Rules.
- Erroneously assuming that the petitioner’s willingness for the Ombudsman to act as a mediator (a distinct function under Rule 12(2)) precluded them from raising objections regarding the maintainability of the complaint for adjudication (under Rule 12(1)).
The High Court concluded that the Redressal of Public Grievances Rules, 1998, conferred authority on the Insurance Ombudsman only to consider complaints of individuals who, or on whose behalf, insurance policies were taken on “personal lines.” Policies obtained by proprietorship concerns were not within the purview of these Rules.
Consequently, the impugned award dated 14.10.2015 of the Insurance Ombudsman was set aside, as the Ombudsman ought not to have entertained the complaint due to lack of jurisdiction.
For Petitioner : Advs. George Cherian (Sr. Advocate), Latha Susan Cherian & K.S.Santhi
For Respondent : Advs. Achu Subha Abraham, Chithra Chandrasekharan K.R. Monisha, Philip T. Varghese & Thomas T. Varghese
