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2010 (5) TMI 402 - HC - Companies LawPowers and jurisdiction of the Insurance Regulatory Development Authority (IRDA) herein under section 64UM of the Insurance Act, 1938 and the powers of the Central Government, Respondent No. 1 herein, as the Appellate Authority under section 110H of the Insurance Act questioned Held that - Although there is no procedure prescribed as such, given the scope of the powers and the functions of the IRDA as set out in section 14(2)(b) of the IRDA Act, in the present case the IRDA was wholly within its jurisdiction in entertaining the Petitioner s appeal. Therefore, by appointing the independent surveyors and calling for a report the IRDA did not commit any illegality. In deciding to act upon the report of one of them, again, the IRDA did not commit any illegality. Counsel for Respondent No. 3 is right in his contention that by filing an appeal before the Appellate Authority under section 110H, the Petitioner has waived its right to question the jurisdiction of such Appellate Authority at a later stage. Be that as it may, the question that next arises is about the scope of powers of the Appellate Authority under section 110H. This Court is of the opinion that the Appellate Authority was justified in directing the IRDA by its order dated 5th March, 2004 to appoint two fresh surveyors to again assess the loss because one of the assessors who had been appointed earlier turned out to be an interested party. Given the scope and functions of the Appellate Authority, which is co-terminus with that of the IRDA, these directions could not be said to be illegal or ultra vires the powers of the Appellate Authority under the Insurance Act. The challenge to the impugned orders and the report of the Joint Surveyors by the Petitioner must fail.
Issues Involved:
1. Powers and jurisdiction of the Insurance Regulatory Development Authority (IRDA) under section 64UM of the Insurance Act, 1938. 2. Powers of the Central Government as the Appellate Authority under section 110H of the Insurance Act. 3. Validity of the repudiation of the insurance claim by the Petitioner. 4. Validity of the directions issued by the IRDA and the Appellate Authority. 5. Jurisdiction of the High Court to entertain the writ petition. Detailed Analysis: Powers and Jurisdiction of the IRDA: The court analyzed the powers of the IRDA under section 64UM of the Insurance Act, 1938, in conjunction with section 14(2)(b) of the IRDA Act. It was determined that the IRDA has the authority to protect the interests of policyholders, including the settlement of insurance claims. The IRDA can call for independent reports from surveyors even in cases where the insurer has repudiated the claim. The court found that the IRDA acted within its jurisdiction when it appointed independent surveyors and directed the settlement of the claim based on their reports. Powers of the Central Government as the Appellate Authority: The court held that the powers of the Appellate Authority under section 110H are co-terminus with those of the IRDA. Therefore, the Appellate Authority was justified in directing the IRDA to appoint fresh surveyors and in issuing subsequent orders based on their reports. The court found no illegality in the Appellate Authority's actions. Validity of the Repudiation of the Insurance Claim: The Petitioner had repudiated the claim based on the surveyors' reports and additional grounds such as non-compliance with policy conditions and alleged illegal activities by Respondent No. 3. However, the court noted that the surveyors had assessed the loss, and the IRDA had the authority to review these assessments. The court emphasized that while surveyors' reports are not binding, the insurer must have good reasons for repudiation, which can be reviewed by the IRDA and the Appellate Authority. Validity of the Directions Issued by the IRDA and the Appellate Authority: The court found that the IRDA and the Appellate Authority acted within their powers in issuing directions for the settlement of the claim. The IRDA's appointment of surveyors and the subsequent order for settlement were deemed legal. The Appellate Authority's orders, including the direction to pay Rs. 7,95,50,300, were based on the surveyors' reports and were found to be justified. Jurisdiction of the High Court to Entertain the Writ Petition: Initially, a Single Judge had dismissed the writ petition on the ground of lack of jurisdiction. However, a Full Bench of the High Court reversed this decision, holding that the court had jurisdiction since the Appellate Authority was located within its territorial jurisdiction. The court reaffirmed its jurisdiction to entertain the writ petition. Conclusion: The writ petition was dismissed with costs of Rs. 30,000 to be paid by the Petitioner to Respondent No. 3. The court upheld the validity of the orders issued by the IRDA and the Appellate Authority, finding no legal infirmity in their actions. The interim orders were vacated, and the stay application was dismissed. The court emphasized that the IRDA and the Appellate Authority had acted within their statutory powers to protect the interests of the policyholders.
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