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Sikkim High Court upholds MACT orders; Denied insurance policy as the vehicle in accident had an “Act Policy” and not a “Comprehensive Package Policy”

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CASE TITLE – Jai Bahadur Subba and Others versus SBI General Insurance Company Ltd.

CASE NUMBER – MAC App. No.08 of 2023

DATED ON – 05. 06.2024

QUORUM – Justice Meenakshi Madan Rai

FACTS OF THE CASE

The facts in brief are that, the deceased an Assistant Sub-Inspector of Police (ASI) (Sikkim Armed Police), aged about fifty-two years, earning a monthly salary of ₹91,611/- (Rupees ninety one thousand, six hundred and eleven) only, was travelling from Hee Pechrek, West Sikkim to Pangthang, Gangtok, in the aforementioned vehicle, on 18-10-2021. At around 08.30 a.m., the vehicle met with an accident near “Akkar Bridge”, Naya Bazar, Soreng District, resulting in the death of the deceased, the owner/driver and injuries to other occupants. The Claimants/Appellants were denied the compensation amounting to ₹ 99,21,020/- , claimed by them on account of the death of the son of Claimant No.1, the husband of the Claimant No.2 and the father of the Claimants No.3, 4 and 5. The Learned Motor Accidents Claims Tribunal, Gangtok, Sikkim, (hereinafter, the “MACT”) vide its assailed Judgment, dated 17-07 2023, in MACT Case No.14 of 2022, Jai Bahadur Subba and Others vs. SBI General Insurance Company Limited, inter alia observed that the insurance policy of the vehicle in accident was an “Act Policy” and not a “Comprehensive Package Policy”. That, the Claimants/Appellants would be entitled to the extent of compensation in terms of the insurance coverage i.e., “personal accident cover for unnamed passenger” as stipulated in the policy, MAC App. No.08 of 2023 2 Jai Bahadur Subba and Others vs. SBI General Insurance Company Ltd. Exhibit 16 and accordingly granted compensation of ₹50,000/ only, augmenting the amount with litigation costs of ₹1, 00,000/- only.

 

ISSUES

Whether the claimants are entitled to the compensation claimed? If so, who is liable to pay the same?

 

STATUTES

Section 173 of the Motor Vehicles Act, 1988, prescribes the procedures to be followed when applying for appeals against decisions made by Claims Tribunals. It allows anyone unhappy with the award from a Claims Tribunal to file an appeal with the High Court within 90 days.

CONTENTION OF APPELLANTS

Learned Counsel for the Appellants contended that, the deceased was travelling in the Alto vehicle, bearing registration No.SK-02-P-2766, of the deceased driver, late Jai Man Limboo. That, the vehicle was duly insured with the Respondent-Insurance Company. He was a third party as the occupant of the vehicle in accident and therefore fully covered by the insurance policy and not a gratuitous passenger as stated by the Respondent. The Respondent was liable to pay the entire compensation claimed which was erroneously denied by the Learned MACT. Referring to Section 147 of the Motor Vehicles Act, 1988 (hereinafter, the “MV Act‟), it was contended that the said section does not distinguish between an “Act Policy” and a “Comprehensive Policy” and the liability to pay compensation is based on the statutory provision. It was urged by Learned Counsel that it has been observed therein that even in respect of an “Act only‟ policy the insurance company would be liable for the statutory amount as payable under Section 95 of the Motor Vehicles Act, 1939. That, accordingly the compensation ought to be computed in terms of the law laid down by the Supreme Court, towards this reliance was placed on National Insurance Company Limited vs. Pranay Sethi and other case laws. The appellants also contended that, in the same Sikkim High Court in Passi Lamu Sherpa and Another vs. Branch Manager, New India Assurance Co. Ltd, they had observed that the facts and circumstances of every motor accident cases is different and an umbrella view cannot be applied to all the matters, hence the Award of the Learned MACT be set aside and compensation be enhanced as prayed.

CONTENTIONS OF RESPONDENTS

The arguments raised by Learned Counsel for the Respondent was that in the first instance the policy was an “Act Policy” and the premium towards personal accident cover of unnamed passenger was paid amounting to ₹25/-(Rupees twenty five) only. The insurance cover thereby was limited to ₹50,000/ (Rupees fifty thousand) only, as reflected in Exhibit 16. As the deceased passenger was a gratuitous passenger in a private vehicle, he would be covered under the personal accident cover and no other claims made by the Appellants were maintainable. It was contended that there is a difference between a “Comprehensive Policy” and an “Act Policy” and the insurer will not be liable to pay compensation when a private vehicle meets with an accident and a gratuitous passenger dies as a consequence of the accident. That, the limits of liability is the maximum amount that the insurance company would be liable to pay for each individual claim made during the policy period and the Respondent cannot be made liable to pay any compensation exceeding the coverage under the limits of the liability as reflected in the insurance policy for which an additional premium is required to be deposited, hence the Appeal be dismissed.

COURT ANALYSIS AND JUDGEMENT

Upon considering the evidence in its entirety and the submissions canvassed, the Learned MACT, declined to grant compensation to the Claimants save as covered by the policy. The same question as settled for determination by the Learned MACT arises for determination by this Court. In this case after going through other judgements, it was seen by the Hon’ble High Court of Sikkim that the vehicle in which the deceased was travelling was a private vehicle. The insurance policy is a “Motor Act Only—Private Car” Policy and not a MAC App. No.08 of 2023 8 Jai Bahadur Subba and Others vs. SBI General Insurance Company Ltd. Comprehensive Policy. A meticulous perusal of Exhibit 16 revealed that “PA Cover (Personal Accident Cover)—Unnamed Passengers”, a sum insured was of ₹50,000/- only, for which a premium of ₹25/- only, had been deposited. No premium was paid to cover a gratuitous passenger which the deceased ASI indubitably was.  In light of the above findings, the Hon’ble High Court found no reason whatsoever to interfere with the findings of the Learned MACT which was accordingly upheld. It was admitted before this Court by the parties that a sum of ₹ 1,50,000/- only, along with interest calculated at ₹ 18,123/- only, amounting to ₹ 1,68,123 only, was deposited by the Respondent Insurance Company and has been made over to and received by the Appellant/Claimants. The Appeal was then dismissed and disposed of.

 

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Judgement Reviewed by – Gnaneswarran Beemarao

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Sikkim High court upholds family court decision: The maintenance appeal rejected due to lack of merit

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Case Title: Mrs. Mohmuda Khatoon & Anr. v. Mr. Md. Asif

Case No.: Mat. App. No. 01/2024

Dated on: 28 May 2024

Coram: Hon’ble MR. JUSTICE BISWANATH SOMADDER, CHIEF JUSTICE Hon’ble MRS. JUSTICE MEENAKSHI MADAN RAI

FACTS OF THE CASE

The appellants filed an application in the Family Court, Sikkim, seeking maintenance from the respondent under Section 125 of the Code of Criminal Procedure, 1973. On 27th February 2024, the Family Court issued an order directing the respondent to pay a monthly maintenance of ₹4,000 to the appellants, starting from March 2024.This order of the family court was thereby challenged by the appellants Through an appeal under Section 19(1) of the Family Courts Act, 1984.

LEGAL PROVISIONS

Section 125 of Code of Criminal Procedure,1973

Provision for maintenance to be given to wives, children, and parents who are unable to maintain themselves. It ensures that individuals who are unable to support themselves receive financial assistance from those who have a legal obligation to provide such support, thereby preventing destitution and ensuring social justice.

Section 19(1) of Family Courts Ac,1984

Section 19(1) provides the right to appeal against the judgments or orders passed by a Family Court.

CONTENTIONS OF APPELLANTS

The appellants argued that the respondent had previously agreed to pay Rs. 5,000 per month as maintenance. However, despite the agreement, the respondents never paid the agreed amount of Rs. 5000 per month and Rs. 4000 per month was inadequate given the earlier agreement of ₹5,000 per month. The appellants contended that Document-B, an agreement between the parties involving a higher maintenance was crucial evidence supporting their claim for higher maintenance. However, it was not admitted as an exhibit in the Family Court.

COURTS ANALYSIS AND JUDGEMENT

The Court noted that the appellants had exhibited Document-B, an agreement in which the respondent allegedly agreed to pay ₹5,000 per month as maintenance. Whatsoever, upon a queiry the hon’ble court was informed that it was not an original document but a photocopy and as such, it was not marked as an “Exhibit”. The Court clarified that it could not fault the Family Court for not considering a document that was not formally admitted as evidence due to its nature as a photocopy. The Court observed that the Family Court had taken various factors into account before deciding on the maintenance amount. These factors likely included the financial status of both parties, the needs of the petitioners, and the respondent’s ability to pay. The High Court found that the decision was supported by cogent and justifiable reasons. The High Court noted that the Family Court’s order was reasonable and well-grounded, taking into consideration the circumstances and evidence presented. Upon careful review of the Family Court’s order dated 27th February 2024, The High Court did not find any plausible reason to interfere with the Family Court’s order. Consequently, the appeal was dismissed. The High Court upheld the Family Court’s direction for the respondent to pay a sum of ₹4,000 per month towards the maintenance of the petitioners, starting from March 2024.

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Judgement Reviewed by – PRATYASA MISHRA

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Sikkim High Court: Commercial Court exceeds it’s Lakshman Rekha by examining and modifying Arbitral Award

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CASE TITLE – Union of India vs. M/s M.G. Contractors Pvt. Ltd. & M/s M.G. Contractors Pvt. Ltd. vs. Union of India

CASE NUMBER – Arb. A. No.1 of 2022 and Arb. A. No.2 of 2022

DATED ON – 03.05.2024

QUORUM – The Hon’ble Justice Biswanath Somadder & The Hon’ble Chief Justice Bhaskar Raj Pradhan

 

FACTS OF THE CASE

Tender was invited by CPWD, Chungthang, for construction of ITBP road sometime in the year 2010. In response, M/s M.G. Contractors Pvt. Ltd. submitted its tender which was found to be lowest, accepted and awarded in its favour. The value of work awarded under the contract was Rs.70,65,65,490/- which was 24.55% above the estimated cost put to tender of Rs.56,72,94,653/- Twenty-four months to be reckoned from 22nd day after the date of issue of acceptance letter dated 10.09.2010 was the time allowed for carrying out the work. The stipulated date of start of work was 02.10.2010 and the date of completion was 01.10.2012. The Agreement was executed in the year 2011. The work was delayed due to various reasons and finally completed on 30.06.2015. Certain disputes arose between the parties and M/s M.G. Contractors Pvt. Ltd. invoked Arbitration Clause 25 of the Agreement. The Sole Arbitrator was appointed who entered reference vide letter dated 14.03.2020. M/s M.G. Contractors Pvt. Ltd. made 15 claims by filing their Statement of Claims. The Union of India did not prefer any counter-claim. The total claim made by M/s M.G. Contractors Pvt. Ltd. was Rs.29,11,26,419/-  along with interest, GST and cost as actual. Claim No.7 was for an amount of Rs.8,16,41,135/- claimed as due and payable for escalation compensation for period October 2012 to June 2015.  Claim No.13 was for interest at the rate of 18% from due date to date of payment. Claim No. 14 was the claim for GST at applicable rate as per actual on the claim amounts. The learned Sole Arbitrator vide his Award dated 23.3.2021, awarded a sum of Rs.12,80,94,368/- along with interest and GST under Claim No.13 and Claim No.14 in favour of M/s M.G. Contractors Pvt. Ltd. The Sole Arbitrator did not grant Claim Nos. 2, 4, 5, 8, 10, 11 and 12. 7. The Union of India filed an application under Section 34 of the Arbitration and Conciliation Act, 1996 before the learned Commercial Court, being Arbitration Case No. 1 of 2021, in the matter of Union of India vs. M/s M.G. Contractors Pvt. Ltd. The Union of India prayed for setting aside Claim No.7 and associate interest under Claim No. 13 and associate GST under Claim No.14 granted in favour of M/s M.G. Contractors Pvt. Ltd on the ground that it was barred by limitation. By the impugned judgment dated 27.12.2021, the learned Commercial Court concluded that the Award delivered by the learned Sole Arbitrator under Claim No.7 and associate interest under Claim No.13 and associate GST under Claim No.14 are not barred by law of limitation. This is herein refereed to this part of the impugned judgment as its first part.

The learned Commercial Court, however, was of the opinion that the decision given under Claim No.13, awarding interest at the rate of 8% per annum to the claimant under Claim No.1, 3, 6, 7 and 9 with effect from 17.02.2020 till the date of Award, i.e., 23.03.2021, is contrary to the provisions of Section 31(7) (b) of the Arbitration and Conciliation Act, 1996. Accordingly, the learned Commercial Court modified the Award to the extent that M/s M.G. Contractors Pvt. Ltd. is entitled for interest under Claim No. 1,3,6,7 and 9 at the rate of 8% per annum with effect from 23.03.2021 till payment of Award as per Section 31(7) (b) of the Arbitration and Conciliation Act, 1996 barring the time period consumed during proceedings of the case before the learned Commercial Court. The learned Commercial Court, however, did not find any illegality in awarding Claim No.14. Thus, the Application under Section 34 of the Arbitration and Conciliation Act, 1996 was partly allowed. We shall refer to this part of the impugned judgment as the second part.

 

ISSUE

  1. Whether the arbitrator erred in determining the start date for the limitation period for Claim No. 7?
  2. Whether the interest awarded by the Sole Arbitrator from February 17, 2020, is not consistent with the provisions of Section 31(7)(b).

 

LEGAL PROVISIONS

Section 31(7)(b) of the Arbitration and Conciliation Act, 1996, specifies that if the arbitral award is for the payment of money, the arbitral tribunal may include in the sum for which the award is made interest, at a rate it deems reasonable, for the whole or any part of the period between the date on which the cause of action arose and the date on which the award is made.

COURT ANALYSIS AND JUDGEMENT

The Hon’ble High Court of Sikkim stated that in Arbitration Case No. 1 of 2021, The Union of India cannot effectively seek to modify parts of the Award that they had previously accepted and that the learned Commercial Court does not have the power to modify the Award in such a manner. After referring to judgment of the Hon’ble Supreme Court in Project Director, National Highways No.45E and 220, National Highways Authorities of India vs. M. Hakeem and another and S.V. Samudram vs. State of Karnataka and Another, modifying the Award would be outside the purview of the powers granted under Section 34, which allows for setting aside an arbitral award on specific grounds but does not extend to modifications of an accepted Award. The Commercial Court can review and set aside an arbitral award if it falls within the grounds specified under Section 34. However, since the Union of India had accepted most of the claims, including the interest and GST components, their request to set aside or modify specific parts of the Award, such as Claim No. 7 and the related interest and GST, was beyond the court’s power. This means that the Union of India is bound by the terms of the Award as accepted and cannot seek further modification or setting aside of specific parts. The Hon’ble High Court in Arbitration Case No. 1 of 2021, was of the opinion that in a proceeding under Section 37 of the Arbitration and Conciliation Act, 1996, they are not authorised to disturb concurrent findings of facts and law by the learned Sole Arbitrator and the learned Commercial Court. The learned Sole Arbitrator concluded that the work was completed on 30.06.2015, bill was finalised on 9.03.2017 and arbitration was sought before the Chief Engineer of the Union of India on 17.02.2020 and thus, the arbitration was invoked within limitation period of three years from the date of finalisation of the bill. The learned Commercial Court once again examined the issue raised by the Union of India, the relevant clauses and concluded that M/s M.G. Contractors Pvt. Ltd. completed its work on 30.06.2015 and finalised the bill on 09.03.2017. Accordingly, the learned Commercial Court was also of the opinion that the Award under Claim No.7 and its associate interest under Claim No.13 and associate GST under Claim No.14 was not barred by the law of limitation. In the circumstances, the court noticed that the Union of India has failed to make out a case for interference either under Section 34 or under Section 37 of the Arbitration and Conciliation Act, 1996. The Hon’ble High Court concluded that the first part of the impugned judgment of the learned Commercial Court, vis-à-vis, the challenge of the Union of India in its application under Section 34 of the Arbitration and Conciliation Act, 1996 need not be interfered with and accordingly, dismissed Arb. A. No. 1 of 2022. Whereas for the second part of the impugned judgment, the court learned that the Commercial Court on its own examined the Award minutely and modified the Award, vis-à-vis, Claim No.13 and while doing so the learned Commercial Court exceeded its jurisdiction. Hence allowing, Arb. A. No. 2 of 2022.

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Sikkim HC: Essential for the petitioner to follow the exact procedure outlined by the Budgetary Support Scheme when seeking grants

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CASE TITLE – Glenmark Pharmaceuticals Limited v. Union of India

CASE NUMBER – W.P. ( C ) No. 2 of 2023

DATED ON – 06.05.2024

QUORUM – Hon’ble Justice Bhaskar Raj Pradhan

 

FACTS OF THE CASE

The writ petition does neither challenge the Budgetary Support Scheme and specifically the mandate of paragraph 5.4 thereof nor the two circulars i.e. circular dated 27.11.2017 and Circular dated 10.01.2019 issued by the Central Board of Excise and Customs. it is contended that Respondent No.3 has rejected the claim for budgetary support in contravention of the Budgetary Support Scheme and the two circulars. Paragraph 5.4 of the Budgetary Support Scheme provided that the budgetary support shall be worked out on quarterly basis for which claims shall be filed on a quarterly basis namely for January to March, April to June, July to September and October to December. When the petitioner made the claims for the four quarters as above, four Orders dated 05.12.2019 were passed rejecting all the claims of the petitioner on the ground that claims made for the period prior to the issuance of unique ID (UID) is not maintainable. This was challenged by the petitioner in Writ Petition (C) No. 48 of 2020 Glenmark Pharmaceuticals Ltd. vs. Union of India & Ors. The Division Bench of the High Court of Sikkim vide Judgment dated 24.11.2021 set aside those Orders with the direction to the authorities to process the four claims made by the petitioner for budgetary support and sanction reimbursements as found eligible within three months from the date of the judgment. Pursuant thereto the respondent no.3 vide three orders, all dated 01.03.2022 sanctioned various amounts as budgetary support for three quarters i.e. October, 2017 to December, 2017, January 2018 to March, 2018, April 2018 to June, 2018. The respondent no.3 vide Order No.307/BS/GST/GTK-DIV/2021-22 dated 01.03.2022 (impugned order) informed the petitioner that he had sanctioned Rs.0/-(Rupees zero) only to the petitioner as budgetary support for goods cleared by the petitioner during the quarter – July 2017 to September, 2017

 

ISSUE

Whether the budgetary support claimed by the petitioner for the month of July 2017 and August 2017 separately in their initial applications ought to have been favourably considered by the Assistant Commissioner, Central Goods & Service Tax.

 

CONTENTIONS BY THE PETITIONER

The learned counsel for the petitioner contended that the petitioner had satisfied all the conditions of the Budgetary Support Scheme but was denied on its erroneous interpretation and of the Circular dated 27.11.2017 and Circular dated 10.01.2019 issued by the Central Board of Excise and Customs. Attention was drawn to paragraph 5.1 and 5.6 of the Budgetary Support Scheme. The petitioner claimed budgetary support for the month of July 2017 and August 2017 but did not claim for the month of September 2017 since no IGST was paid in cash for that month. It was the petitioner’s argument that the separate claims for the months of July 2017 and August 2017 was in terms of Circular dated 10.01.2019. The petitioner argued that reliance placed on Circular dated 27.11.2017 is misplaced and incorrect. It was also stated that Circular dated 27.11.2017 allows adjusting the balance of ITC against IGST paid in cash but does not allow aggregation of figures for the entire quarter. It was submitted that reliance placed on format and formula of the Circular dated 27.11.2017 is incorrect and cannot supersede the Budgetary Support Scheme. Relying upon the judgment of the Supreme Court in Commissioner of Central Excise, Bolpur vs. Ratan Melting and Wire Industries it was submitted that any circular which is contrary to the statutory provisions has no existence in law.

 

CONTENTIONS BY THE RESPONDENT

The learned Deputy Solicitor General of India appearing for the respondents drew the attention of the Court to paragraphs 3.2, 5.1, 5.4 of the Budgetary Support Scheme as well as paragraph 9(ii) of the Circular dated 27.11.2017 and submitted that a combined reading of these provisions requires that as per the formula, whatever balance of ITC of CGST/IGST is available at the end of quarter, the same is to be deducted from the cash payment for calculation of budgetary support claim for the quarter. They had also pointed out that the petitioner did not challenge the Circulars dated 27.11.2017 and 10.01.2019. It was their submission that the budgetary support under the Budgetary Support Scheme is in the nature of grant and not refund of duty under taxation law

 

COURT ANALYSIS AND JUDGEMENT

The Hon’ble High Court of Sikkim stated that it was incumbent upon the petitioner to satisfy the requirements of the Budgetary Support Scheme and follow the procedure prescribed. When a procedure is prescribed, the petitioner while seeking the grant of budgetary support, is required to follow that procedure and not work out a different procedure for the authorities to follow, the fact that budgetary support was given to the petitioner for the other three quarters, it was evident that there was no malice on the part of the authorities while rejecting the claim for budgetary support for the quarter July 2017 to September 2017. And they also noted that the petitioner makes no grievance about the applications filed by them for the other quarters for which budgetary support as sought for, were granted. In the writ petition what has been stated is that the applications were filed on the oral direction of the authorities to resubmit the applications. The petitioner has not indicated that the application provided incorrect information or that it was involuntary, but during the arguments, they stated that the application was filed on the persistence of the authorities and not voluntarily. The application was however, filed by the respondents in their counter affidavit. The Hon’ble High Court noticed that, although the petitioner had made an attempt to underplay this application by suggesting that the earlier applications filed by the petitioner were the correct applications it was quite clear that what the petitioner intended to do was to make the authorities to work out the budgetary support on the basis of the monthly claims filed by them earlier and not as per the quarter as required under the Budgetary Support Scheme. The petitioner made separate applications for July 2017 and August 2017 without including the balance of ITC of CGST for the month of September 2017 they could attain positive budgetary support for each of the months separately and claim it. The petitioner did not make any claim for September 2017 in which the balance of ITC of CGST was Rs. 12,59,63,822/- (Rupees Twelve Crores Fifty Nine Lakhs Sixty Three Thousand Eight Hundred Twenty Two) as they would not be entitled to any budgetary support because of the balance of ITC of CGST for the month of September 2017. Therefore, when the petitioner was required by the authorities to modify their initial applications to a quarterly basis as required under the law they had no choice but to reflect the balance of ITC of CGST for the month of September 2017 as well. This led the petitioner to calculate their own budgetary support in the negative correctly as done in the application mentioned by the petitioner in the writ petition but filed by the respondent in the counter affidavit. Due to these facts, The Hon’ble High Court of Sikkim was of the view that the petitioner is not entitled to any relief as sought for in the present writ petition and was accordingly dismissed.

 

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