The Supreme Court, while dismissing a Special Leave Petition filed by the Oriental Insurance company, against the order of the Allahabad High court, rendered invalid the provisions of an insurance policy that prohibits the filing of a claim after a specified time limit, as being contrary to Section 28 of the Indian Contract Act, 1872 (“Act”), and thus Void. 

The Petitioners before the Allahabad High Court had contended that Clause 2 of the Insurance Policy stipulated that, if an insurance claim was filed within one month from the expiry of the Policy, then the delay could be condoned by the Collector. Accordingly, since the Respondent’s claim was filed 3 months after such expiry, the same was time barred. 

Rejecting this contention, the Allahabad High Court observed that since the said Clause itself allowed condonation of insurance claims filed within two months from the expiry of the Insurance Policy, the Respondent’s claim in strict sense was belated by just more than a month. 

The High Court also referred to the case of Gautam Yadav Vs. State of U.P. and others wherein its Division Bench deemed the limitation period under the Policy as unreasonable and arbitrary and ordered substitution of the same by a duration of three years as provided under the limitation act. Noting that the insurance claim had been settled in that case despite the Hon’ble Supreme Court’s stay on the said order. The High Court in the present matter condoned the Respondent’s delay on the basis that the Policy was a welfare policy in nature, and ultimately, in light of the same, the Appellant’s writ petition was dismissed.

When the matter came to be heard by the Hon’ble Supreme Court, the Bench restricted the scope of its decision to Section 28 of the Act, as the sole argument raised by the company was that the claim was time barred. However, the Court held that the condition of lodging a claim within a period of one month, extendable by another month, was contrary to Section 28 of the Act and thus void.