National Consumer Disputes Redressal
M/S Naresh Kumar Sandeshkumar & Co. vs United India Insurance Co.Ltd. on 29 March, 2012
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO.4063 of 2007 (From the order dated 08.10.2007 in Appeal No.1781/2002 of the State Commission, Maharashtra) M/s Naresh Kumar Sandeshkumar & Co. Petitioners(s) Versus United India Insurance Co.Ltd. Respondent(s) BEFORE : HONBLE MR.JUSTICE ASHOK BHAN, PRESIDENT HONBLE MRS. VINEETA RAI, MEMBER For the Petitioners(s) : Mr.Anish R.Shah, Advocate For the Respondent(s) : Mr.Kishore Rawat, Advocate Pronounced on 29th March, 2012 ORDER
PER VINEETA RAI, MEMBER M/s Nareshkumar Sandeshkumar & Company (hereinafter referred to as Petitioner) have filed this revision petition against the order of the State Consumer Disputes Redressal Commission, Maharashtra (hereinafter referred to as the State Commission) in Appeal No.1781/2002 decided in favour of United India Insurance Co.Ltd., Respondent herein.
In its complaint before the District Forum, Petitioner/Complainant who is a proprietory Concern dealing in the business of general merchant and commission agent have been taking insurance policies from the Respondent/Insurance Company in respect of stocks and articles in their godown since 1995 and have paid the premium due by cheque in a timely and uninterrupted manner. Due to increase in their business the limit of bank cash-credit to Petitioner was increased to Rs.60 lakhs for 2001-2002 and accordingly as per bank norms, Petitioner also decided to enhance the insurance coverage to Rs.60 lakhs for that year. Since, the current insurance policy was expiring on 01.11.2001, Petitioner sent a cheque for Rs.18,711/- dated 30.10.2001 drawn on Ahmednagar Merchants Co-op. Bank Ltd. under postal certificate (U.P.C.) towards the premium amount for renewal of the said insurance policy along with a letter pointing out the mistake in the address of the shop to the Respondent/Insurance Company. On 10.11.2001 around 4.30 am there was a fire in the godown premises of the Petitioner because of which he suffered a loss to the tune of Rs.1,33,250/-. The information about the fire was given to the Police and since there were two holidays on 10.11.2001 and 11.11.2001 in the Respondents office, Petitioner informed the Respondent about the fire by fax dated 10.11.2001.
On 12.11.2001 Petitioner also informed the Respondent telephonically about the same and requested it to appoint a surveyor to assess the damages/loss. Respondent/Insurance Company appointed a Surveyor who assessed the loss at Rs.1,24,695/-. However, Respondent/Insurance Company repudiated the claim of the Petitioner on the grounds that it had received the cheque for premium amount on 15.11.2001 and the policy was issued immediately thereafter for the period 15.11.2001 to 14.11.2002 but since the earlier policy had expired on 01.11.2001 and fire had taken place on 10.11.2001 i.e. before the renewal of the insurance policy, Respondent/Insurance Company is not liable to pay the insurance amount. Being aggrieved, Petitioner filed a complaint before the District Forum on grounds of deficiency in service and requested that Respondent/Insurance Company be directed to pay Rs.1,33,250/- along with interest 12% per annum.
The above contentions were denied by the Respondent/Insurance Company who stated that the cheque along with letter dated 30.10.2001 was received by the Respondent only on 15.11.2001 and therefore, at the time when the fire took place on 10.11.2001, there was no insurance cover for the premises in question since the earlier policy had lapsed on 01.11.2001 and renewal took place only on 15.11.2001 on receipt of the cheque on that date.
The District Forum allowed the complaint and directed the Respondent/Insurance Company to pay the Petitioner a sum of Rs.1,24,695/- being the loss assessed by Surveyor along with interest @ 12% per annum from the date of filing of the complaint till realization within 45 days from the date of order.
Aggrieved by this, Respondent/Insurance Company filed an appeal before the State Commission which allowed the same by setting aside the order of the District Forum. The State Commission in its detailed order cited several judgments including of the Honble Apex Court in Life Insurance Corporation of India Vs. Raja Vasireddy Komalavalli Kamba & Ors. 1994 ACJ 345(SC) wherein the Apex Court had held that the general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates its acceptance to the person making the offer. In the instant case while according to the Petitioner, he had sent the cheque for Rs.18,711/- towards premium amount to the Respondent/Insurance Company under postal certificate on 30.10.2001, the cheque was received only on 15.11.2001 and accepting this amount the policy was issued and the contract of insurance was concluded on 15.11.2001 for a period upto 14.11.2002. Thus, at the time when the fire had taken place, there was no insurance cover for the premises. The relevant part of the order of the State Commission reads as follows:
It is apparent that, the contract of insurance was not concluded between the appellant and the complainant.
Mere sending cheque under certificate of posting does not conclude the contract of Insurance so as to foist liability upon the insurance company. The matter was under negotiation and no binding contract can be said to have been resulted. The earlier policy expired on 01.11.2001. After receipt of the cheque in question, the insurance company had issued policy for 15.11.2001 to 14.11.2002. The Bombay High Court has observed that the phrase risk may be assumed used in the explanation thereof clearly indicate this. Neither sub-section(2) nor the Explanation means that the risk attaches immediately on payment of premium and the insurer undertakes the risk.
In view of the ratio in above cases, the Forum below erred in holding that, the policy was in existence when the fire in question had taken place. No binding contract arises until the person to whom the offer is made says or does something to signify his acceptance. Policy has been issued for the period 15.11.2001 to 14.11.2002. There was no policy on 10.11.2001.
Counsel for both parties made oral submissions.
Counsel for Petitioner essentially reiterated the facts as stated before the Fora below and contended that the State Commission erred in not taking cognizance of the fact that the cheque for renewal of the insurance policy was sent under postal certificate on 30.10.2001 i.e. one day prior to the expiry of the policy and, therefore, the insurance policy would have to be effective from the date when the cheque was dispatched because as per Section 64 (V)(B) of the Insurance Act, if the premium is sent by cheque through post then date of insurance should be considered from the date of posting and not from the date of receipt of postal envelope by the insurance company, especially if there is documentary evidence in the form of UPC certificate issued by the Postal Department which clearly establishes that the cheque was posted on 30.10.2001 itself. Further, the State Commission should have appreciated the fact that in the present case the Petitioner had been very diligent in the past while ensuring timely renewal of the insurance policy. According to the Counsel for Petitioner, the judgments including of the Apex Court cited by the State Commission are not relevant in the instant case since the facts in those judgments are different and not applicable to the present case.
For example, in Raja Vasireddy Komalavalli Kamba(supra) the policy pertained to life insurance and in that case the premium received was not accepted by the Divisional Office of the LIC because of which the contract was not concluded. In the instant case, Respondent/Insurance Company was competent to accept the premium cheque and in fact did so on its receipt. The revision petition therefore deserves to be accepted.
Counsel for Respondent on the other hand stated that since the cheque was received on 15.11.2001 and the insurance policy had expired on 01.11.2001, it is clear that there was no insurance cover on 10.11.2001 when the fire took place. Although, Petitioner contends that he had sent a cheque one day prior to the expiry of the current policy, as per the judgements of the Honble Supreme Court cited by the State Commission in its order as also the judgement of the Honble Supreme Court in Deokar Exports Pvt. Ltd. Vs. New India Assurance Co. Ltd. I(2009) CPJ 6 (SC), it has been clearly ruled that an Insurer cannot accept the request to grant insurance cover with retrospective effect i.e. from the date prior to the receipt of a premium. The present case is squarely covered by this judgment because even if the cheque was sent on 30.10.2001, it was received only on 15.11.2001 and the insurance policy could not have been issued with retrospective effect.
We have heard learned Counsel for both parties and have carefully considered the evidence on record. It is not disputed that the insurance policy taken by Petitioner from the Respondent/Insurance Company expired on 01.11.2001 and that the fire in the premises took place on 10.11.2001 in which the Petitioner suffered a loss which was also confirmed by the Surveyor. It is also not disputed that the fresh policy was issued on 15.11.2001 on receipt of premium cheque for renewal of the policy from the Petitioner by the Respondent/Insurance Company.
Respondent, however, has disputed Petitioners contention that since the cheque was purportedly sent on 30.10.2001, the insurance policy would have been deemed to have become valid from its renewal date i.e. 01.11.2001. In support, Petitioner has produced a certificate of posting from the Post Office indicating that the letter had been dispatched on 30.10.2201. We are, however, not convinced by this contention of the Petitioner. Merely dispatching a letter and that too under postal certificate is not adequate proof of the fact that the letter had been sent on that date. Honble Supreme Court in Gadakh Yashwantrao Kankarrao Vs. E.V. Alias Balasaheb 1994(1) SCC 682 has held that a letter sent under UPC has little evidentiary value.
On the other hand, as pointed out by the State Commission in its detailed order, the Apex Court in Raja Vasireddy Komalavalli Kamba(supra) has held that the general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates its acceptance to the person making the offer. In the instant case, it was only on 15.11.2001 that the Respondent/Insurance Company to whom the offer to insure the goods was made had accepted the Petitioners request and in acknowledgment of the same had concluded the contract of insurance by issuing a policy for the period from 15.11.2001 to 14.11.2002. It is thus clear that on the date when the fire took place i.e. on 10.11.2001, there was no contract of insurance between the parties and under the circumstances, Respondent/Insurance Company was justified in not indemnifying the claim. In view of the above facts, we uphold the order of the State Commission since there was no insurance policy in existence on the date of the fire incident, and dismiss the revision petition. No costs.
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(ASHOK BHAN J.) PRESIDENT Sd/-
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(VINEETA RAI) MEMBER /sks/