ARJANDAS BRIJLAL AND COMPANY vs ORIENTAL INSURANCE CO. LTD.

THIS case illustrates how fraud can be committed with the active participation of the officers of the Insurance Company. On 9th June, 1998 it was known all over the country through media reports that Kandla Port was affected by cyclonic storm and rains. Goods kept for shipment were also adversely affected. Still, a rice mill having its head office at Delhi contacted one Mr. R.P.S. Dua, Assistant Administrative Officer at Karnal for giving insurance coverage for the rice bags which were lying at the Kandla Port for export and obtained alleged cover note at 4.30 p.m. or 5.30 p.m. with endorsement that "Subject to inspection of stock by authorized surveyor conducted by the insurer". Mr. Dua, without abiding by the instructions by the higher officers not to issue cover note, had issued the same.

THEREAFTER , as the claim for loss was made by the Complainant, fraud came to light, Dua was suspended, removed from the service and prosecuted, and the claim of the Complainant was repudiated on the following grounds. "i) The Cover Note No.544795 was obtained by you at 4.30 p.m. with malafide intentions, after the loss had already occurred at Kandla, due to cyclone. ii) The said act on your part was in connivance with Shri R.P.S. Dua, A.A.O. (D) as he could not issue the said Cover Note. iii) The Premium cheque No.372511 dated 9.6.98, was also returned immediately and not accepted by the Company as not allowed to be deposited in the Accounts books of Company. iv)The Cover Note referred to above issued by A.A.O. (D) was not accepted and was treated as cancelled, immediately when being brought to the notice of Divisional Office Karnal and intimation to this effect, was sent immediately to you as well as your Bankers, namely M/s. Canara Bank."

Hence, the complaint is filed. In our view, there is no doubt that the Complainant has committed fraud with the Insurance Company, and, therefore, not only the complaint is required to be dismissed, but at the same time, he is required to pay adequate costs and compensation to the Insurance Company. It is difficult to believe that a big businessman having export business from Delhi would not come to know about the cyclonic storm at Kandla Port, where he must have appointed his agents for export of rice. In any case, the survey report which was carried out at the behest of the Complainant (not by the Insurance Company) would reveal that the damage due to the cyclonic storm was extensive. We would quote some portion of the said report submitted by M/s. Mehta & Padamsey Pvt. Ltd. Surveyors, which is as under : "Past 9.30 A.M., the cyclonic storm made its presence felt with high winds and light drizzle. It did not rain hard. Around 12 noon, the wind suddenly reversed direction. The Kutch salt workers located on South-East direction of Kandla noticed the change and what none saw was the steadily moving wall of high tide coming in from the sea. In the next few minutes the storm became intense and tidal waves started hitting the dry areas. There was panic all round as ACC/CGI roofing sheets started flying; and sheet of water moving towards dwellings and storage areas. The tidal waves smashed barriers; filled in ditches; washed away entire labour and salt workers hutments; trucks carrying goods and containers toppled and carried away by moving water wall. The next 2 hours was hell with cranes collapsing, Asbestos sheets roofing blowing and shattering to pieces, godowns collapsing, light towers buckling, tanks uprooting from foundation etc. The storm lasted till 3 PM. Thereafter the tides receded by 5 PM, but not before inundating vast areas with 2 to 3 mtrs of water damaging properties and killing hundreds of people."

THE aforesaid report as well as the media report leave no doubt that from morning 9.30 a.m. there was cyclonic storm at the Kandla Port which was caused extensive damage. This would undoubtedly reveal that the stock must have been damaged extensively prior to 3.00 p.m. Therefore, the alleged cover note obtained by fraud would be of no consequences and void. With these remarks we would refer to a few facts.

THIS is a complaint filed by M/s. Arjandas Brijlal Company against the opposite party, the Oriental Insurance Company Ltd. alleging deficiency in service for repudiating the claim. Brief facts of the case are: Complainant"s submission: The Complainant is a partnership firm engaged in the business of rice millers and exporters, exporting Indian rice, for the last 30 years. In the course of its business the Complainant has insured stock of Basmati rice lying in the godowns of Kandla Port Trust at Gandhidham for export shipments. On 9th June, 1998, the Complainant approached Mr. R.P.S. Dua, Assistant Administrative Officer (Development) (A.A.O. (D) of the Oriental Insurance Company Ltd. (hereinafter referred to as the Insurance Company) for securing an insurance cover for a sum of Rs.2 crores for the rice bags which were lying at Kandla Port. Mr. Dua initially informed the Complainant that he needs to get the approval of the Regional Office of the Insurance Company at Chandigarh for accepting the insurance proposal. It is stated by the Complainant that on the same day Mr. Dua informed that it had received the approval from Regional Office for accepting the insurance proposal. Accordingly, Mr. Dua issued an Insurance Cover Note No.544795 dated 9.6.1998 and received cheque No.372511 dated 9.6.1998 drawn on Canara Bank, Karnal, for Rs.71,072/- towards premium for the said insurance. The cover note was issued in the name of Canara Bank, Chandni Chowk, Delhi, as export consignments were financed by the above Bank.

On the same day, there was unprecedented cyclone followed by rain, tidal waves and flooding at Kandla port area. The Complainant informed the Divisional Office of the Insurance Company at Karnal by telegram on 12.6.1998 that they had suffered heavy losses caused to their insured stocks of rice lying at Kandla Port godowns as the same had been extensively damaged. As there was no response, the Complainant once again sent another letter dated 16.6.1998 requesting to the Insurance Company to depute its Surveyor at Kandla Port for conducting necessary survey. The Complainant vide letter dated 22.6.1998 called upon the Insurance Company to depute its Surveyor within 24 hours of receipt of the same, failing which the Complainant would have the loss assessed by the local Surveyor - Lloyds at Kandla at the risk and responsibility of the Insurance Company and further conveyed that the cargo would be disposed of as per circular issued by the Kandla Port Trust. Despite repeated requests and reminders by the Complainant, the Insurance Company failed to depute its Surveyor and hence Complainant got the survey conducted by M/s. G.P. Dave & Sons, approved Surveyors at Gandhidham, who conducted the survey on 24.6.1998 at the godowns where their consignment was stocked. After the inspection, the Surveyors submitted their report dated 8th July, 1998 and assessed the loss caused to 6,212 bags of rice comprising of 265.150 MT, out of the total 725 MT which was stored in the godowns awaiting shipments. The Kandla Port Trust had also ordered that the rice which was damaged was found to be unfit for human consumption and ordered that it should be destroyed. Accordingly it was destroyed by the Kandla Port Trust Authorities during the period 30th June to 8th July, 1998 in the presence of the State Public Health Authorities. The Kandla Port Trust Authorities issued a certificate on 10.6.1998 confirming the same.

IN order to mitigate the losses, the Complainant segregated the remaining affected stocks and the bags which were either in sound condition or partly damaged and transported them to its mill at Taraori for salvaging operations for repolishing, sorting, repacking of the partly damaged rice. In this process, 1120 bags were found to be totally damaged and unfit for exports. Adding 6212 bags which were destroyed by the order of the Kandla Port Authorities earlier the total loss came to 7332 bags. It is only on 14.7.1998, the Regional Office of the Insurance Company finally appointed M/s. K.D. Kohli & Company Pvt. Ltd. as Surveyors to survey the reported damage caused to the stocks of rice of the Complainant insured under the aforesaid Cover Note dated 9.6.1998. The Surveyors issued to the Complainant a letter bearing No.July-2/98/8-404/98 dated 20.7.1998 which was received by the Complainant on 28.7.1998 that they would like to inspect the damaged stocks.

ON receipt of this letter the Complainant replied on 29.7.1998 itself explaining the situation, that since the Insurance Company did not appoint a Surveyor earlier in order to minimize the losses and also to remove the affected stocks as per the orders of the Kandla Port Trust and State Public Health Authorities they had already appointed a Surveyor and conducted the salvage operations. The Surveyor of the Insurance Company replied on 31st July, 1998 that they intend to visit the mills of the Complainant at Taraori, for inspection of the stocks transferred from Kandla Port to assess the present status, and called for further information and documents to establish the presence of stocks at Kandla Port prior to the occurrence of the damage and suggested that their visit to the mills at Taraori could be possibly made on 1st August, 1998, when they would discuss the matter regarding the claim of the Complainant. Accordingly, 10th August, 1998 was fixed for inspection and telephonically confirmed by the Surveyors but they failed to turn up on that date. The Complainant on 11.8.1998 sent a fax message to the Surveyors regretting the failure of the Surveyors to turn up for the inspection and failing in giving any intimation in advance of any change of the inspection schedule of the Surveyors and requested the Surveyors to intimate the next appropriate date of their visit. Nothing has been heard from the Surveyors thereafter and finally Complainant received a letter dated 10/11.8.1998 from the Divisional office of the Insurance Company at Karnal repudiating their liability under the said Cover Note for the grounds quoted above.

AGGRIEVED by the alleged repudiation of the claim, the allegations made by the Insurance Company in their letter of repudiation, the Complainant replied vide letter dated 12.8.1998 which is reproduced as under: "Without prejudice to the above, we totally deny all the allegations made in your letter and state as under, in reply :- i) We were not aware of any loss to our cargo at Kandla at the time of obtaining the Cover Note. ii) Shri R.P.S. Dua has been signing the Cover Notes issued to us for the last many years. iii) We deny having received premium cheque No.372511 dated 9.6.98 alleged to have been returned to us. iv) While totally denying your contention of having cancelled the Cover Note as unaccepted, we wish to invite your kind attention to our telegram/fax message of 22.06.98 asserting/reiterating our contentions."

ACCORDINGLY , on 3.9.1998 a claim was lodged for Rs.1,40,90,725/- with the Insurance Company alongwith all the relevant documents. It is also contended that the repudiation by the Insurance Company is illegal, malafide and untenable and that the Complainant had observed utmost good faith in their transaction and that there has been no concealment or any misrepresentation, whatsoever. It is averred that a substantial business of insurance has been placed with the Insurance Company without any claims arising out of such insurance except for the instant claim and that eventually the claim has arisen due to damages to the goods. The Insurance Company is evading its liability for payment of legally payable claims and made unwarranted and false allegations against the Complainant. In this complaint the Complainant claimed total value of the claim of Rs.1,14,90,725/- with 18% p.a. from 5.10.1998 upto the date of filing this complaint till the date of payment alongwith pendente lite and future interest @18% p.a. and further compensation of Rs.one lakh for mental torture. The Complainant gave the sequence of events on the crucial day of 9.6.1998, which are as follows : (i) At about 10 a.m. on 9.6.1998 Shri Sunil Khuranna, partner of the Complainant firm talked from Delhi to Mr. Dua and gave him proposal for insurance cover of Rs.2 crores on the stocks of 18161 bags (approximately 750 MT) of rice lying in the godowns at Kandla Port for export. The Manager of the firm at Taraori (Karnal) at about 1.00 P.M. submitted a proposal in writing to Dua and about 3.00 P.M. Dua came to the office of Complainant"s firm at Taraori and delivered Cover Note for Rs.2 crores. The Cover Note contained the stipulation: "Subject to inspection of the stock by authorized Surveyor, conducted by the insurer". Mr. Khurana immediately faxed report of stock position received from Captain S. Kochhar and Co., Surveyors at Kandla, to Dua which showed the stocks held in Kandla godowns as 18161 bags. On receipt of this fax, Dua deleted the stipulation in the Cover Note under his signatures. This statement of the Complainant was rebutted by the opposite party. It is contended that the Complainant never forced Mr. Dua for deleting the stipulation that stocks should be verified and that Mr. Dua did it on his accord as a matter of routine as done earlier on the statement of Mr. Khuranna. Thus there was no malafide intention of misleading the opposite party. (ii) It is contended by the Complainant that this Cover Note was unconditional and unqualified and hence was a binding contract. It is argued by the Complainant that Insurance Company is estopped from challenging that no valid Cover Note was issued to the Complainant as they appointed M/s. K.D. Kohli and Company on 15.6.1998 to survey the loss at Kandla. (iii) The contention of the Insurance Company that Dua had no authority to issue the Cover Note is untenable and misconceived as Complainant"s firm was getting insurance cover regularly since 1991 and that during last two years received opposite party"s cover notes for over Rs.10 Crores all signed by Mr. Dua. This fact has been admitted by Mr. Dua in his affidavit. The plea of the Insurance Company that Mr. Dua had issued the cover notes without approval of his seniors or that he had not acted in accordance with their directions are all false and concocted story. Mr. Dua had never been prohibited from issuing the cover notes but had only been asked to keep the proposal in abeyance and keep it under consideration. If media reports and warnings of the Metrological Department were known to Mr. Dua regarding impending Cyclone he could have not issued the Cover Note. Although Kandla is a cyclone prone port and it is well known that all warnings of Metrological Department do not always come true and that the cyclones which are expected to hit a port sometimes do not touch or pass by the port. Hence, trucks of goods were accepted by the Kandla Port Trust even upto evening of 8th June, 1998 and a number of loaded trucks were waiting on 9.6.1998 and this fact has not been rebutted by the opposite party. Joint Survey report of Mehta and Padmasey Surveyors Pvt. Ltd. itself states that : (Page 108 - Vol.II):

"It was learnt from the authorities and eyewitnesses that, every thing was normal in Kandla in the morning of June 9, 1998. The workers reported to their work as usual and there was no indication of any impending storm and weather looked normal." It is averred that this noting by Surveyors of Insurance Company has not been taken into consideration which has adversely affected their claim. The Complainant submitted that they were not aware that the cyclone would hit the Kandla Port. (iv) The rice stocks held at Kandla were intact and there was no damage to the stocks, nor any part of it was destroyed prior to the making of the proposal as alleged by the opposite party. The daily stock reports seen by Capt. S. Kochhar and Company confirmed the latest stock position at 18161 bags of rice in their reports dated 9.6.1998 and 10.6.1998. It is averred by the Complainant that the proposal for insurance was made honestly and bonafide without any knowledge of any alleged loss/damage by a cyclone. There was neither breach of the principle of uberrima fides nor any misrepresentation by the Complainant. (v) On 12.6.1998 the Complainant informed the Insurance Company and followed up through reminders dated 16.6.1998 and 22.6.1998 and the O.P. did not respond to the same. (vi) The Insurance Company submitted that they have acted as per Surveyor"s alleged interim report dated 5.8.1998 which show that the Surveyor has gone beyond the scope and ambit of their authority to give an opinion as to validity of the cover note and hence the Complainant contended that it cannot be relied upon. It is submitted that the duty of a Surveyor is only to survey the loss/damage caused to the insured goods. In the repudiation letter dated 11.8.1998 there was no mention of any interim survey report by the opposite party. (vii) It is further submitted that Insurance Company made an attempt to resile its liability arising out of the valid insurance cover note and made Mr. Dua a scapegoat for the same. Mr. Dua in his affidavit stated that he was at the office of the Complainant from about 4.00 p.m. to 6.00 p.m. Mr. Dua has been prosecuted for criminal charges of cheating, breach of trust, fraud, falsification of documents etc. by the Insurance Company, was subjected to disciplinary action, and has been dismissed from the service. The Complainant averred that apparently there is a quid pro quo for giving such affidavit dated 13.9.2002 by Mr. Dua on assurance of his reinstatement as a price for such an affidavit. (viii) No affidavit has been filed by Mr. S.P. Singh Pasricha, the Senior Divisional Manager at Karnal and Shri R.N. Kaul, Manager, Regional Office, Chandigarh, if the Insurance Company who were alleged to have been dealing with the case, to substantiate the statements of Mr. Dua. The Complainant submitted that they are entitled to the claim of Rs.1,14,90,725/- alongwith interest at the rate of 18% p.a. from 5.10.1998 and with compensation of Rs. 1 lakh for the alleged deficiency in service of the opposite party.

LEARNED Counsel for the Insurance Company submitted that on 9th June, 1998, the Complainant was in touch with Mr. R.P.S. Dua at 3.00 p.m. for insurance of stocks of rice worth Rs.2 crores lying at Kandla Port, Gandhidham, Gujarat. Mr. Dua sought Sr. DM"s approval and permission for issuance of cover note as the Complainant was insisting for urgent issue of cover note that day itself. The Sr. D.M. directed Mr. Dua not to issue a cover note as desired by the proposer especially in view of the media reports of the climatic conditions prevailing off the coast in Gujarat. At 4.30 p.m., Mr. Dua approached the Sr. D.M. stating that he had received a message from the Taraori office of the Complainant"s Company and requested the Sr. D.M. to reconsider the proposal. Thereafter, at 5.00 p.m. Sr. D.M. in the presence of Mr. Dua contacted Mr. R.N. Kaul, Manager, Regional Office, Chandigarh. Mr. Kaul advised the Sr. D.M. to keep the matter in abeyance and not to issue any cover note and for further consideration of the matter, he called for a formal written proposal from the Complainant"s Company. The Sr. D.M. informed Mr. Dua about Mr. Kaul"s instructions and directed him not to issue any cover note and to only collect the formal proposal from the party. Mr. Dua left the Sr. D.M."s office without disclosing any document or facts or details regarding the said proposal or any cover note.

THEREAFTER , Mr. Kaul tried to contact the Sr. D.M. at his residence at 9.00 p.m. and his call was returned back at 9.30 p.m. and he once again instructed not to issue any cover note to the Complainant. He further informed the Sr. D.M. that in the evening news bulletin on the television there was reports of a cyclone at Kandla. The Sr. D.M. tried to contact Mr. Dua who was not available and hence he left a message on his pager that he should contact Sr. D.M. immediately. Despite having received the pager message Mr. Dua could not contact Sr. D.M. but called on him at his residence on 10.6.1998 at about 6.30 a.m. Mr. Dua then informed that he had already issued a cover note bearing No.544795 to the Complainant and collected the premium amount on the previous evening itself. When the Sr. D.M. asked him why did he give the cover note in spite of his repeated instructions and directions to the contrary, Mr. Dua offered no explanation or answer. The Sr. D.M. asked Mr. Dua to collect the original cover note from the Complainant and thereafter reminded and directed him a number of times, but he did not do so. On 10th June, 1998, Sr. D.M. returned the cheque to the Complainant for Rs.71,072/- issued by them towards premium and intimated them that the cover note has been cancelled and that they were unable to accept the said insurance. Through couriers and registered A.D. letters, he tried to intimate the same to the Complainant which was refused by them on 12.6.1998 and 13.6.1998. An intimation of the same was also sent through the telegram on 11.6.1998. Mr. Dua showed Sr. D.M. a proposal dated 9.6.1998 stating that the goods from the proposer/Complainant were intact. It is argued that this document was created and forged after the issuance of the cover note and that the veracity of this document is suspected. It is submitted by the Learned Counsel, if this document existed earlier and if Mr. Dua had possession of it on 9.6.1998 and he deliberately hid it from the concerned officers, i.e. from the Sr. D.M. and from Mr. Kaul, it is argued that Mr. Dua must have done in collusion criminal conspiracy with the Complainant for some illegal gain. It is averred that concealment of this document and Mr. Dua"s action and inaction as mentioned above constituted criminal breach of trust and betrays the motives to support a false claim against the Insurance Company.

IN the alleged cover note issued by Mr. Dua at 4.30 p.m. on 9th June, 1998 it is written "subject to inspection of the stock by the authorized surveyor, conducted by the insurer". The Complainant had represented to the insurer that the insurable goods were safe and intact at 4.30 p.m. whereas he had the knowledge that the goods had already been lost/damaged at 10.30 a.m. by the cyclonic storm. However, it was vital information which was concealed and the motive was to cheat and defraud the Insurance Company by fraudulent means.

LEARNED Counsel for the Insurance Company contended that all the media reports including the Door Darshan news in English and Hindi and other regional languages had been repeatedly warned about and monitored the cyclonic storm brewing in the Arabian Sea. Report of India Today newsmagazine also stated that "on June 9, at 10.30 a.m. as officials were dithering, the storm struck the port." The storm has caused major devastation to life and property at Kandla Port and its neighbouring areas. The insurable goods which were allegedly stored at Kandla port were destroyed much before the insurance cover was issued. The Insurance Company appointed a Surveyor to survey the remaining stock at Tararoi although it does not create any right or interest in favour of the Complainant. The Surveyor vide report dated 5.8.1998 has opined which is reproduced as under: "From the copy of covernote provided to us by Chandigarh Regional Office and considering chronology of the events, it is evident that it was purchased after occurrence of cyclone and claimants knowing about damage of this to the stocks stored at new godowns, Kandla port. As the claimant knew about the damage to stocks before/at the time of purchase of the cover note (on 9.6.98 at 4.30 p.m.), therefore, in our opinion, such a covernote would be void" As the facts stand, in our opinion, presently no liability is made out for the Insurer under the above-mentioned cover note"."

It is argued that the factum of issuance of the cover note constituted a concluded contract, then the same would have no legal effect since its performance was frustrated by the unfolding of events prior to its coming into effect. The said contract could not be enforced against the company because it was frustrated. Frustration of contract means that "where existence of a specific thing is, either by terms of contract or in contemplation of parties, necessary for performance of a promise in the contract, duty to perform promise is discharged if thing is no longer in existence at time of performance." In the present case the contract was frustrated because the insurable interest did not exist before the contract could come into effect. The cover note which was issued at 4.30 p.m. on 9th June, 1998, was ex post facto (the damage to the insurable goods) and hence the contract/cover note was void ab initio.

THE cover note was procured through criminal conspiracy with Mr. Dua. It is in breach of the principle of Uberrima fies and violative of relevant legal provisions. The Complainant acted in breach of uberrima fides, i.e. the breach of utmost good faith, absolute candour and honesty, concealing nothing, with which a contract must be made. If there is vital breach of faith and concealment of material fact, the contract can be unilaterally rescinded and can be deemed to be void ab initio. We have heard both the parties and perused the record carefully.

FIRSTLY , the Complainant had referred to the Joint Survey Report made by Mehta and Padamsey Surveyors Pvt. Ltd. wherein at page 108 quotation has been taken as to what was the condition of the weather in the morning of 9th June, 1998. The relevant portion is quoted above. It is very clear from this statement that cyclone hit by 9.30 a.m. and lasted upto 3.00 p.m. Secondly, the crux of the entire case is based on the meeting between the Complainant and Mr. R.P.S. Dua when the crucial cover note has been issued. It is very important to note as to how and when the file moved. We elaborate on this issue as under: (a) Mr. Dua admitted upon the repeated insistence of the Complainant and in view of his long-standing good relations with them after receiving a telephone call from the Manager, Mr. Shashi at about 1.00 p.m., he visited Complainant"s office at 4.15 p.m. He admitted that he issued the cover note between 5.50 " 6.00 p.m. and the risk coverage was subject to inspection of the stock by the authorized surveyor of the insurance company. On the insistence of the Complainant he mentioned that the cover note was issued at 4.30 p.m. (b) That he struck off noting on stock inspection at the instance of the Complainant. Further, he admitted that : "I obliged them in the sound knowledge that the cover would in any case not be effective till such time that the stocks had actually been inspected. In other words, if at the time of subsequent inspection by authorized surveyor, the stocks did not exist in the condition in which they were represented to me, the risk cover would not be operational." (c) That, he was unaware of the cyclone conditions in the Kandla and that it was only later that evening Mr. Dua discovered from television news that a massive cyclonic storm struck the Kandla Port. Mr. Dua admitted that the cheque was returned by the Senior Officers intimating the Complainant that the coverage of the risk was declined. He further admitted as under : "That I would not have issued the cover note had I known that a cyclonic storm had devastated Kandla Port earlier that morning. I was deliberately misled by the party viz. Arjandas Brijlal and Co. They have misused my good relations with them for the issuance of the said cover note. They have committed breach of faith and a deliberate fraud on the Insurance Company and me."

WE also rely on the affidavit filed by Shri S.P. Singh Pasricha, who was the then Divisional Manager of the Insurance Company to whom Mr. Dua sought approval to issue the alleged cover note. Mr. Pasricha by letter dated 30.9.1998 had written to the Station House Officer, Police Station City, Karnal, Haryana registering the complaint of FIR against Mr. Dua, Mr. Pushpinder Khuranna and Mr. Sunil Khurana (partners of the Complainant) alleging criminal breach of trust in supporting a false claim against the Insurance Company and for the criminal conspiracy between these parties to defraud Insurance Company. In his affidavit he stated that on 9th June, 1998 Mr. Dua approached him at 3.00. P.M. for permission to issue the cover note and said the Proposer Company was insisting immediate release of the same. "He informed me that the said Proposer Company was insisting for urgent immediate issue of cover note as their bankers were to be given a copy of the covernote. He sought my approval and permission for issuance of a cover note."

Further Mr. Pasricha also stated that he received a call from Mr. Kaul and called Mr. Dua and instructed him not to issue any cover note.: "I directed him to not to issue a cover note as desired by the proposer especially in view of media reports of the climatic conditions prevailing off the coast of Gujarat. However, at 4.30 p.m. the said Mr. Dua again approached me stating that he had received a message from the Tarori office of the said proposer company in connection with the proposal. In his presence, at about 5.00 p.m. I sought the advice of Mr. R.N. Kaul, Manager, Regional Office, Chandigarh. Mr. Kaul advised me to keep the matter in abeyance " not to issue any covernote, and for further consideration of the matter called for a formal/written proposal from the proposer company. I informed Mr. Dua of Mr. Kaul"s instructions and again directed him not to issue any covernote and to only collect a formal proposal from the party. He left my office at about 5.30 p.m. without disclosing any further document or facts or details regarding the said proposal of any covernote."

Mr. Pasricha submitted that he returned the cheque for Rs.71,072/- issued by the Complainant towards the premium and intimated that cover note has been cancelled. Although, this intimation was sent through courier and registered A.D., both letters were returned since Complainant refused to accept them on 12.6.1998 and 13.6.1998. Mr. Dua later stated that the proposal form from the Proposer/Complainant stated that the goods were intact and was submitted by him in the Divisional Office on 10.6.1998. Regarding this document Mr. Pasricha in his affidavit stated as under: "I suspect the veracity of this document. I do not believe it existed on the date mentioned in it. It was created later on. However, if it did exist earlier and if Mr. Dua had possession of it on 09.06.98 then he deliberately concealed it from me and from Mr. Kaul. His reason for concealment of this document and his action and inaction as above-stated is a grave offence under the Company rules and constitutes criminal breach of trust and other criminal offences."

IN this case, it is apparent on the face of the record that the Complainant and Mr. Dua, an officer of the Insurance Company were fully aware of the climatic conditions and the cyclonic storm in Kandla at the time of issuance of cover note. Mr. Pasricha clearly stated on affidavit that Mr. Dua was with him till 5.30 p.m. on 9.6.1998. There is discrepancy in the timing stated by Mr. Dua and the Complainant as to where was Mr. Dua at 5.00 P.M. as the Complainant states that he was in his office and Mr. Pasricha stated that Mr. Dua was with him till 5.00 p.m. whereas Mr. Dua stated that : "Q. In the last para of cover note, you have written "Subject to inspection of the stock by the Authorised Surveyor conducted" After that you have made cutting and initialled. Have you also made cutting of those words in original c/note and initialled it." A. Yes, cuttings in original cover note were made and initialled."

Mr. Dua stated that he issued the cover note between 5.30 to 6.00 p.m. and further admitted that he mentioned the time of issuance of cover note at 4.30 p.m. on the instructions of the Complainant. In view of the discrepancy in time as statement given by all the three concerned parties at that relevant time, and in view of Mr. Dua"s admission that he consciously changed the time of issuance of cover note at the instance of the Complainant, we have every reason to believe the statement made by Mr. Pasricha. If this is the case then it is a common knowledge that Kandla Port struck by the cyclone in the morning of 10.30 itself and the goods were already destroyed during that period of storm by noon. The cover note issued at 5.50 " 6.00 p.m. has been done through criminal conspiracy by the Complainant with the officer concerned, i.e AAO " Mr. Dua. It is not only in breach of the principle of Uberrima fides but it is a case of fraud. The goods were already damaged during the day before the issuance of the cover note and hence alleged contract, if at all, is void. The Complainant has committed fraud and is not entitled for the claim. Hence, there is no question of any deficiency in service by the Insurance Company. Further the Complainant procured alleged cover note through misrepresentation and unfair trade practice. In view of the aforesaid discussion, this complaint has no merit. Hence, it is dismissed. The Complainant shall pay Rs. one lakh as cost to the Insurance Company which is required to litigate and defend at the instance of the Complainant.