Supreme Court Directs Petitioner to High Court in Insurance Claim Dispute: Universal Sompo vs. Suresh Chand Jain (2023)

Date of the Judgment: 26 July 2023
Citation: 2023 INSC 649
Judges: J. B. Pardiwala, J. and Manoj Misra, J.

Can the Supreme Court directly entertain an appeal against an order passed by the National Consumer Disputes Redressal Commission (NCDRC) in its appellate jurisdiction? This was the core question before the Supreme Court in a case involving an insurance claim dispute. The Supreme Court, in this judgment, clarified the appropriate legal procedure for such matters, emphasizing the role of High Courts in the judicial hierarchy.

The bench, composed of Justice J.B. Pardiwala and Justice Manoj Misra, delivered the judgment, directing the petitioner to approach the jurisdictional High Court first.

Case Background

The case revolves around an insurance claim dispute. The complainant, Suresh Chand Jain, had obtained two insurance policies, a Standard Fire and Special Perils Policy and a Burglary Insurance Policy, both issued on 05.12.2011 and 08.12.2011 respectively, through Allahabad Bank (respondent No. 2), with M/s Universal Sompo General Insurance Co. Ltd. (the petitioner) as the insurer. Both policies covered a sum of ₹50 lakh for the risk of fire and burglary, for the period between 25.11.2011 and 24.11.2012.

On 28.03.2012, the complainant informed the respondent Bank about the completion of his new premises at Bawana, Delhi, and the transfer of his stock there from his previous locations. He instructed the Bank to inform the petitioner about this change. The Bank acknowledged this intimation and claims to have forwarded the complainant’s letter to the petitioner on 31.03.2012.

Subsequently, on 29.06.2012, a theft occurred at the Bawana premises, leading to the lodging of FIR No. 213/2012 on 30.06.2012. Both the petitioner and the Bank were informed about the theft. A surveyor was appointed by the petitioner to inspect the premises, and a formal complaint was lodged by the complainant with the petitioner on 01.07.2012.

Following the theft, a fire broke out at the same premises on 18.10.2012. The complainant filed claims for both the theft and the fire, amounting to ₹49 lakh. The petitioner repudiated the theft claim on 22.08.2013, and the fire claim was closed due to non-submission of documents by the complainant.

Aggrieved by the petitioner’s inaction, the complainant approached the State Consumer Disputes Redressal Commission (SCDRC), Delhi, on 03.06.2013, seeking processing of his claim, compensation, interest, and costs.

Timeline:

Course of Proceedings

The State Consumer Disputes Redressal Commission (SCDRC) partly allowed the complaint on 18.03.2016, holding the petitioner and the respondent bank jointly and severally liable for deficiencies in service. The SCDRC directed them to compensate the complainant for the theft of goods worth ₹41,31,180 with 12% interest per annum from the date of the claim. Additionally, they were directed to pay ₹2 lakh for mental agony, harassment, and deficiency in service, and to finalize the fire claim of ₹4 lakh.

The petitioner, aggrieved by the SCDRC’s order, appealed to the National Consumer Disputes Redressal Commission (NCDRC). The NCDRC dismissed the appeal on 16.01.2023, affirming the SCDRC’s order.

Legal Framework

The case is governed by the Consumer Protection Act, 1986 (the Act 1986) and the Consumer Protection Act, 2019 (the Act 2019). The complaint was initially filed under the Act 1986, which was later repealed by the Act 2019 on 20.07.2020. However, the relevant provisions of both Acts are similar.

Section 21(a) of the Act 1986 outlines the jurisdiction of the National Commission:
“21. Jurisdiction of the National Commission. – Subject to the other provisions of this Act, the National Commission shall have jurisdiction — (a) to entertain — (i) complaints where the value of the goods or services and compensation, if any, claimed exceeds rupees one crore; and (ii) appeals against the orders of any State Commission;….”

Section 23 of the Act 1986 provides for appeals to the Supreme Court:
“23. Appeal.- Any person, aggrieved by an order made by the National Commission in exercise of its powers conferred by sub-clause (i) of clause (a) of section 21, may prefer an appeal against such order to the Supreme Court within a period of thirty days from the date of the order: Provided that the Supreme Court may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period: Provided further that no appeal by a person who is required to pay any amount in terms of an order of the National Commission shall be entertained by the Supreme Court unless that person has deposited in the prescribed manner fifty per cent. of that amount or rupees fifty thousand, whichever is less.”

Section 58 of the Act 2019 outlines the jurisdiction of the National Commission:
“58. Jurisdiction of National Commission. – (1) Subject to the other provisions of this Act, the National Commission shall have jurisdiction—(a) to entertain—(i) complaints where the value of the goods or services paid as consideration exceeds rupees ten crore: Provided that where the Central Government deems it necessary so to do, it may prescribe such other value, as it deems fit; (ii) complaints against unfair contracts, where the value of goods or services paid as consideration exceeds ten crore rupees; (iii) appeals against the orders of any State Commission; (iv) appeals against the orders of the Central Authority ;…….”

Section 67 of the Act 2019 provides for appeals to the Supreme Court:
“67. Appeal against order of National Commission. – Any person, aggrieved by an order made by the National Commission in exercise of its powers conferred by sub-clause (i) or (ii) of clause (a) of sub-section (1) of section 58, may prefer an appeal against such order to the Supreme Court within a period of thirty days from the date of the order: Provided that the Supreme Court may entertain an appeal after the expiry of the said period of thirty days if it is satisfied that there was sufficient cause for not filing it within that period: Provided further that no appeal by a person who is required to pay any amount in terms of an order of the National Commission shall be entertained by the Supreme Court unless that person has deposited fifty per cent. of that amount in the manner as may be prescribed.”

These provisions indicate that the Supreme Court can hear appeals against orders passed by the NCDRC only when the NCDRC is exercising its original jurisdiction (as a court of first instance) and not when it is exercising its appellate jurisdiction.

Arguments

The petitioner contended that the Supreme Court should entertain the special leave petition directly against the NCDRC’s order.

The petitioner argued that the NCDRC had erred in upholding the SCDRC’s order, and that the petitioner should not be held liable for the theft and fire incidents.

The respondent argued that the Supreme Court should not entertain the special leave petition and that the petitioner should approach the High Court under Article 226 or 227 of the Constitution.

The respondent contended that the NCDRC’s order was correct and that the petitioner was liable for the deficiency in service.

The respondent relied on the provisions of the Consumer Protection Act, 1986 and 2019, to argue that a direct appeal to the Supreme Court against an order passed by the NCDRC in its appellate jurisdiction is not maintainable.

The respondent also relied on the judgments of the Supreme Court in Associated Cement Companies Ltd. v. P. N. Sharma, AIR 1965 SC 1595 and L. Chandra Kumar v. Union of India, (1997) 3 SCC 261, to support their argument that a writ petition under Article 226 or a petition under Article 227 of the Constitution is maintainable before the High Court against an order of the NCDRC passed in its appellate jurisdiction.

Issues Framed by the Supreme Court

The moot question that falls for consideration is:

✓ Whether the Supreme Court should entertain a petition seeking special leave to appeal under Article 136 of the Constitution directly against the order passed by the NCDRC in exercise of its appellate jurisdiction.

✓ Or whether the petitioner should be relegated to avail the remedy of filing a writ petition under Article 226 of the Constitution or a petition invoking supervisory jurisdiction of the jurisdictional High Court under Article 227 of the Constitution.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Authorities

The Supreme Court considered the following authorities:

Judgment

The Supreme Court analyzed the provisions of the Consumer Protection Act, 1986 and 2019, and concluded that an appeal to the Supreme Court against an order passed by the NCDRC in its appellate jurisdiction is not maintainable. The Court held that the appropriate remedy for the petitioner is to approach the jurisdictional High Court under Article 226 or 227 of the Constitution.

The following table shows how the authorities were viewed by the Court:

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the principle that the jurisdiction of the Supreme Court under Article 136 is to be exercised sparingly and in exceptional circumstances. The court emphasized that when an alternative remedy is available, such as approaching the High Court under Article 226 or 227 of the Constitution, the Supreme Court should not entertain a direct appeal. The Court’s reasoning was also guided by the provisions of the Consumer Protection Act, which clearly stipulate that appeals to the Supreme Court are maintainable only against original orders of the NCDRC, and not against orders passed in appellate jurisdiction. The Court also considered the accessibility of justice, noting that approaching the High Court is a more cost-effective and accessible remedy for the aggrieved party.

The Court considered alternative interpretations, such as directly entertaining the appeal under Article 136, but rejected them because the legal framework and the established principles of judicial review favored relegating the petitioner to the High Court. The Court emphasized that its power under Article 136 is discretionary and should be used sparingly, especially when other effective remedies are available.

The Court’s decision is clear: the petitioner must first seek relief from the High Court. This ensures that the legal process is followed and that the High Court, as a constitutional court, has the opportunity to review the matter before it reaches the Supreme Court.

The decision was unanimous, with both judges concurring on the need to direct the petitioner to the High Court.

The Supreme Court quoted the following from the judgment:
“Generally speaking this Court will not grant special leave, unless it is shown that exceptional and special circumstances exist, that substantial and grave injustice has been done and that the case in question presents features of sufficient gravity to warrant a review of the decision appealed against”

The Supreme Court quoted the following from the judgment:
“It is not possible to define with any precision the limitations on the exercise of the discretionary jurisdiction vested in this Court by the constitutional provision made in article 136. The limitations, whatever they be, are implicit in the nature and character of the power itself. It being an exceptional and overriding power, naturally it has to be exercised sparingly and with caution and only in special and extraordinary situations.”

The Supreme Court quoted the following from the judgment:
“The powers of this Court under Article 136 are very wide but as clause (1) of that article itself states the grant of special leave to appeal is in the discretion of the court. Article 136 is, therefore, not designed to permit direct access to this Court where other equally efficacious remedy is available and where the question is not of public importance…”

Key Takeaways

• ✓ The Supreme Court will not directly entertain appeals against orders passed by the NCDRC in its appellate jurisdiction.
• ✓ Aggrieved parties must first approach the jurisdictional High Court under Article 226 or 227 of the Constitution.
• ✓ The Supreme Court’s power under Article 136 is discretionary and is exercised sparingly.
• ✓ This judgment reinforces the importance of following the established judicial hierarchy and exhausting all available remedies before approaching the Supreme Court.
• ✓ This decision clarifies the procedure for challenging orders of the NCDRC and ensures that the High Courts play their role in the judicial review process.

Directions

The Supreme Court directed the Registry to refund the amount deposited by the petitioner, as the Court did not entertain the petition on merits.

Specific Amendments Analysis

(Not applicable in this case as no specific amendments were discussed)

Development of Law

The ratio decidendi of this case is that the Supreme Court will not entertain a special leave petition under Article 136 of the Constitution directly against an order passed by the National Consumer Disputes Redressal Commission (NCDRC) in its appellate jurisdiction. The aggrieved party must first approach the jurisdictional High Court under Article 226 or 227 of the Constitution. This ruling reinforces the established judicial hierarchy and clarifies the appropriate legal procedure for challenging orders of the NCDRC. There is no change in the previous position of the law, but the judgment reiterates the existing legal position.