Judgment:
(Prayer: This petition is filed under Articles 226 and 227 of the Constitution of India, praying to direct the 1st respondent to call for an independent report from any other approved surveyor in terms of the representation of the petitioner dated 15.10.2011 vide Annexure-H to assess the loss caused by the fire accident and furnish the copy of the report to the petitioner within a reasonable period of time of 30 days in terms of S.64 UM(3) of the Insurance Act, 1938, etc.)
1. The Insurance Regulatory and Development Authority Act, 1999 (hereinafter referred to as 'the Act') was enacted to provide for establishment of "an Authority" to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto and further to amend the Insurance Act, 1938, the Life Insurance Corporation Act, 1956 and the General Insurance Business (Nationalisation) Act, 1972. S.3 of the Act empowers the Central Government, to establish an authority called "the Insurance Regulatory and Development Authority" (for short 'the Authority'), for the purposes of the Act.
2. In this case I am mainly concerned with the duties, powers and functions of the Authority, under S.14 of the Act. Relevant provisions of the Act involved in the present case read as under:
"2. Definitions.- (1) In this Act, unless the context otherwise requires.-
(a) "appointed day" xxxxxx;
(b) "Authority" means the Insurance Regulatory and Development Authority established under sub-section (1) of Section 3."
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3. Establishment and incorporation of Authority.-
(1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Act, an Authority to be called "the Insurance Regulatory and Development Authority".
(2) The Authority shall be a body corporate by the name aforesaid having perpetual succession and a common seal with power, subject to the provisions of this Act, to acquire, hold and dispose of property, both movable and immovable, and to contract and shall, by the said name, sue or be sued.
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4. Composition of Authority.- The Authority shall consist of the following members, namely:-
(a) a Chairperson;
(b) not more than five whole-time members; (c) not more than four part-time members; to be appointed by the Central Government from amongst persons of ability, integrity and standing who have knowledge or experience in life insurance, general insurance, actuarial science, finance, economics, law, accountancy, administration or any other discipline which would, in the opinion of the Central Government, be useful to the Authority:
Provided that the Central Government shall, while appointing the Chairperson and whole-time members, ensure that at least one person each is a person having knowledge or experience in life insurance, general insurance or actuarial science, respectively." **** **** ****
10. Meetings of Authority.-
(1) The Authority shall meet at such time and places and shall observe such rules and procedures in regard to transaction of business at its meetings (including quorum at such meetings) as may be determined by the regulations.
(2) The Chairperson, or if for any reason he is unable to attend a meeting of the Authority, any other member chosen by the members present from amongst themselves at the meeting shall preside at the meeting.
(3) All questions which come up before any meeting of the Authority shall be decided by a majority of votes by the members present and voting, and in the event of an equality of votes, the Chairperson, or in his absence, the person presiding shall have a second or casting vote.
(4) The Authority may make regulations for the transaction of business at its meetings."
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14. Duties, powers and functions of Authority.-
(1) Subject to the provisions of this Act and any other law for the time being in force, the Authority shall have the duty to regulate, promote and ensure orderly growth of the insurance business and re-insurance business."
(2) Without prejudice to the generality of the provisions contained in sub-section (1), the powers and functions of the Authority shall include,-
(a) ******
(b) protection of the interests of the policyholders in matters concerning assigning of policy, nomination by policyholders, insurable interest, settlement of insurance claim, surrender value of policy and other terms and conditions of contracts of insurance; *****
(h) calling for information from, undertaking inspection of, conducting enquiries and investigations including audit of the insurers, intermediaries, insurance intermediaries and other organisations connected with the insurance business;
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(q) exercising such other powers as may be prescribed. **** **** ****
23. Delegation of powers.-
(1) The Authority may, by general or special order in writing, delegate to the Chairperson or any other member or officer of the Authority subject to such conditions, if any, as may be specified in the order, such of its powers and functions under this Act as it may deem necessary.
(2) The Authority may, by a general or special order in writing, also form committees of the members and delegate to them the powers and functions of the Authority as may be specified by the regulations." **** ***** ****
26. Power to make regulations.-
(1) The Authority may, in consultation with the Insurance Advisory Committee, by notification, make regulations consistent with this Act and the rules made thereunder to carry out the purposes of this Act.
(2) In particular, and without prejudice to the generality of the foregoing power, such regulations may provide for all or any of the following matters, namely:-
(a) the time and places of meetings of the Authority and the procedure to be followed at such meetings including the quorum necessary for the transaction of business under sub-section (1) of Section 10;
(b) the transaction of business at its meetings under sub-section (4) of Section 10;
(c) the terms and other conditions of service of officers and other employees of the Authority under sub-section (2) of Section 12; (d) the powers and functions which may be delegated to Committees of the members under sub-section (2) of Section 23; and (e) any other matter which is required to be, or may be, specified by regulations or in respect of which provision is to be or may be made by regulations."
3. In exercise of the powers conferred by sub- section (4) of S.10 read with clauses (a) and (b) of Sub- Section (2) of S.26 of the Act, the Authority, in consultation with the Insurance Advisory Committee made "The Insurance Regulatory and Development Authority (Meetings) Regulations, 2000" (for short, the Regulations). Regulation 3 being relevant, the same is extracted herein below: "3. Meetings of the Authority for transaction of business and procedure to be followed.-
(1) The Authority may meet for the transaction of business, adjourn and otherwise regulate its meetings, as provided in these regulations.
(2) ******
(3) ******
(4) The Chairperson and in his absence, the senior most full time member of the authority shall fix the date, time and place of meetings of the Authority and approve the items of agenda for the meetings.
(5) The notice and agenda for the meeting shall be normally circulated seven days in advance by the Designated Officer. The notice and agenda may be delivered to the members personally upon acknowledgement or despatched through registered post or transmitted through any other secure and reliable modern means of communication, as may be recognised under any law for the time being in force.
(6) ******
(7) All questions which come up before any meeting of the Authority shall be decided by a majority in case of voting by the members present and in the event of any equality of votes, the Chairperson, or in his absence, the presiding member shall have a casting vote.
(8) ******
Regulation 4 is with regard to the Quorum for transaction of business at a meeting of the Authority and prescribes the presence of a minimum of one-third of the appointed members as the minimum for transaction of business at a meeting of the Authority. Regulation 6 is with regard to Minutes of the Meetings mandating that the Designated Officer shall record within 48 hours of the conclusion of every meeting, the minutes of all proceedings at the meeting of the Authority or committee meeting of the Authority and after obtaining the approval of the Chairperson or the presiding member, as the case may be, enter the minutes in books kept for that purpose and each page of every such book shall be initialled or signed and the last page of the record of proceedings of each meeting in such books shall be dated and signed by the Chairperson or the presiding member, as the case may be. The minutes of each meeting shall contain a fair and correct summary of the decisions arrived at the meeting along with the names of the members present at the meeting and in case of each decision taken at the meeting, the names of the members, if any, dissenting from, or not concurring with the decision taken. Sub-regulation (1) of Regulation 8 makes it clear that the provisions of these Regulations shall apply mutatis mutandis to meetings of Committees of members.
4. It is in the aforesaid background, this writ petition was filed, to quash an order dated 21.09.2012, vide Annexure-N, said to be of respondent No.1 and for directing respondent No.1, to call for an independent report from any other approved surveyor in terms of the representation of the petitioner dated 15.10.2011, vide Annexure-H i.e., to assess the loss caused by the fire accident and furnish the report in terms of S.64UM(3) of Insurance Act, 1938 and consequently, to direct the respondent No.2, to settle the claim of the petitioner at Rs.7,40,59,855/- and for grant of consequential reliefs.
5. Succinctly stated, the facts are that the petitioner renewed its fire licence contract with M/s. Cholamandalam MS General Insurance Company Ltd., on 30.06.2010, vide a policy No. PSP-000037465-000-03 for a sum of Rs.39,30,20,000/-. There was breakout of fire on 03.10.2010 at the petitioner's premises. Inspection was done on the same day by the Electrical Engineer and also the Sub-Inspector of Police, Hoskote and a mahazar was prepared by the Sub-Inspector of Police, Sulibele Police Station. The Insurance Company-respondent No.2, appointed Forensic Science Expert, on 05.10.2010, to investigate the circumstances of the said fire accident. A certificate was issued by Hoskote Fire Department, on 06.10.2010, stating that the cause of fire accident was short circuit. The petitioner filed Fire Insurance Claim on 10.11.2010 with respondent No.2. The claim was rejected on 07.09.2011. Petitioner sent a letter to respondent No.1, on 15.10.2011, seeking appointment of an independent second surveyor. Respondent No.1 directed the respondent No.2, on 11.11.2011, to send an explanation to the petitioner's complaint along with relevant documents. Respondent No.2 sent a e-mail, on 21.12.2011, repudiating the petitioner's claim.
6. Petitioner filed W.P.No.4499/2012, to issue a direction to respondent No.1, to appoint any other approved surveyor, in terms of S.64UM(3) of the Insurance Act, 1938. Said writ petition was disposed of on 01.08.2012, by directing the respondent No.1, to consider the petitioner's application dated 15.10.2011 and take a decision in the matter. Petitioner having served a copy of the said order on 18.08.2012, respondent No.1, by a communication dated 21.09.2012, vide Annexure-N, informed the decision taken i.e., the appointment of second surveyor is not necessary. This writ petition has been filed assailing the said communication and for grant of reliefs, noticed supra.
7. Sri Aditya Sondhi, learned advocate, contended that the 1st respondent having been directed by this Court, to consider the application dated 15.10.2011 of the petitioner and take a decision in the matter, the information furnished, vide Annexure-N, being not the decision of the Authority and there being non-compliance with the writ of Mandamus issued, the 1st respondent, which has the legal obligation to discharge, be compelled to act in accordance with law and obey the command. He submitted that the Act and the Regulations having provided the procedure, the 1st respondent having not followed the same, instead acted in contravention thereof, the impugned communication being unauthorised, is unsustainable. Learned counsel contended that the Statute having provided the procedure to do things in a particular way, the things must be done in that way and not otherwise, the other methods or modes of performance being necessarily forbidden. Learned counsel though urged several other contentions, I deem it unnecessary to notice the same, in view of the decision, which I intend to take in the matter.
8. Sri S. Sriranga, learned advocate for the 1st respondent, by referring to the statement of objections filed on 19.03.2013, contended that the matter being purely contractual in nature between the petitioner and the 2nd respondent, this writ petition is not maintainable. He submitted that the application dated 15.10.2011 of the petitioner for appointment of a second surveyor under S.64UM(3) of the Insurance Act, 1938 was examined along with survey report and forensic report and the findings of the survey and forensic reports having led to the conclusion that the cause of fire was due to the Arson committed by the insured, the findings of the survey report having corroborated with the forensic report, it was decided that the appointment of a second surveyor is not necessary and the decision arrived at was communicated to the petitioner on 21.09.2012, vide Annexure-N. He submitted that the copies of survey and forensic report/s were forwarded to the petitioner, for its record. He contended that in the circumstances of the case, no interference is warranted.
9. Sri O. Mahesh, learned advocate for respondent No.2, contended that on account of intervening period from 30.06.2010 and also the decision of the 1st respondent, vide Annexure-N, the claim of the petitioner for appointment of an independent second surveyor being untenable, would not serve any purpose at this length of time and consequently, the writ petition is liable to be dismissed.
10. W.P.No.4499/2012 filed by the petitioner for issue of directions to the 1st respondent, to call for an independent report from any other approved surveyor/s, as per the representation made by it, on 15.10.2011, to assess the loss caused by the fire accident, in terms of S. 64UM(3) of the Insurance Act, 1938, upon consideration of the rival contentions, by taking into consideration the decision of the Apex Court, in the case of SRI VENKATESWARA SYNDICATE Vs. ORIENTAL INSURANCE COMPANY LIMITED, (2009) 8 SCC 507, it was ordered as follows:
"5. .........Since the application filed by the petitioner under sub-section (3) of Section -64 UM of the Act (Insurance Act, 1938) is not looked into by the 1st respondent, in my considered opinion interest of justice will be met if the 1st respondent is directed to consider the application filed by the petitioner vide Annexure-P dated 15.10.2011 and take decision in the matter. The decision shall be taken by the 1st respondent within six weeks."
(emphasis supplied)
11. The file of 1st respondent, which led to the issue of Annexure-N, made available by Sri S. Sriranga, shows that Sri S. Dhakshnamoorthy, AD-Legal, put up a note, in the matter of appointment of second surveyor as per S.64UM(3) of the Insurance Act, 1938 with reference to the order passed in W.P.No.4499/2012 and concluded as follows:
"As per the direction of the Honourable court to dispose of the application submitted by M/s. Microtek vide letter dated 15/10/2011, we may dispose of the application on the following lines: The findings of the surveyor and Investigator leads to the conclusion of cause of fire is due to Arson committed by insured. Since it is well established by the findings of Survey Report corroborated with Forensic Report, the appointment of second surveyor may not be necessary.
Insured has requested for the Copy of survey report and Forensic Report. This may be provided to the insured. Submitted for advices.
S. Dhakshnamoorthy
AD- Legal"
12. The file having been sent to HOD-Non Life, he made the following note:
"1. As brought out in the note, it is felt that no useful purpose will be served in appointing the second surveyor as nearly two years have elapsed since the dated of accident. At this late stage no meaningful conclusions would be drawn.
2. The insurer has repudiated the claim under general condition (8) of the insurance policy which states that the claim is fraudulent.
3. In absence of any other reason to believe that the claim has been denied under condition (8) of the policy, we may share the survey and the investigation report with the insured. Sd/-
28-08-2012"
13. The file having been sent to the Member (Non Life), he made the following note:
"Member (NL)
From the Copy of Survey Report and Forensic Expert's Report on the loss, it is observed that the Surveyor (Licensed by IRDA) has opined the cause of Fire as "Arson". The Forensic Report analysis supports the conclusion. Based on this finding, insurer M/s. Cholamandalam M/s General Insurance Company have repudiated the claim, as per policy terms.
Earlier, IRDA had filed a written Statement before the HC, Karnataka that the Authority may not appoint a second surveyor and the insured may take legal recourse against the decision of insurer. Now the HC of Karnataka, Bangalore has addressed IRDA to dispose off the Petitioner's application to the authority, under Section 64 UM(3) of the Act, requesting appointment of a second surveyor, on merits.
Noting that the decision of insurer is based on surveyor's finding of "Arson" as the cause of fire and the onus of proving that the loss is not admissible under the insurance policy, now lies with the insurer, recommend that IRDA may reiterate their earlier stand not to appoint a second surveyor. Put up for approval.
We may, however, provide, copy of survey report to the Petitioner /insured.
Sd/-
17-09-2012 "
14. The Central Government, by Notification, has established the Authority, consisting of a Chairman and 10 members. While disposing of W.P.No.4499/2012, on 01.08.2012, the 1st respondent was directed to consider the application dated 15.10.2011 filed by the petitioner and take decision in the matter. The notiings / minutes of the Ad-Legal, HOD- Non Life and the Member (Non-Life), extracted at paras 11, 12 and 13 supra, are only their individual opinions. Undeniably, the Authority has not taken the decision in a meeting, as provided in S.10 of the Act i.e., in terms of the procedure as per the Regulation 3. The minutes of meeting and the decision taken at the meeting has not been entered by the designated officer in the minute's book kept for that purpose.
15. The 1st respondent being a statutory Authority is required to do the things in the manner provided by the statute and not otherwise, since the position of law is well settled by the Apex Court, in catena of decisions, that if the statute prescribes a particular procedure to do an act in a particular way, that act must be done in that manner only, otherwise that act cannot be considered to have been done (See BABU VERGHESE Vs. BAR COUNCIL OF KERALA, (1999) 3 SCC 422).
16. The provisions of the Act has vested the power in the "Authority", to be exercised by it in the manner provided under the Regulations. The statutory provisions, extracted supra, require the 1st respondent to act in accordance with the Regulations. Perusal of the record shows that the writ issued on 01.08.2012 in W.P.No.4499/2012 has not been given effect to by the Authority. The 1st respondent has not met and taken the decision on the application dated 15.10.2011 of the petitioner. The decision taken, extracted supra, being not that of the Authority, but being the opinion/s of the individual member/s, noticed supra, recorded in the noting sheets of the file and not in the meeting of the Authority as per the agenda, the individual view/s / opinion/s cannot be held to be that of the Authority - 1st respondent. Consequently, the petition deserves to be allowed.
In the result, the writ petition is allowed and the impugned communication dated 21.09.2012, as at Annexure-N is quashed. The 1st respondent-Authority is directed to give effect to the writ issued on 01.08.2012 in W.P.No.4499/2012, by keeping in view the observations made supra. Time for compliance is six weeks from the date a copy of this order becomes available to the 1st respondent.
No costs.