CHET RAM BATHATA vs Oriental Insurance Co.

BY this complaint, the complainant has prayed that the respondents (hereinafter to be referred to as the Insurance Company) be directed to pay a sum of Rs. 2,50,000/- which includes the amount of insurance and other ancillary relief(s) referred to in para 10 of the complaint.

THE brief relevant facts necessary to be mentioned for determining the point in controversy are that the complainant who was the owner of a building in Village Nerwa, Tehsil Chopal, District Shimla, consisting of 16 rooms, got his building insured with the Insurance Company vide Policy No. 23518/306/12190/11/92/ 00520 for a period with effect from 9.12.1991 to 8.12.1992 and a premium of Rs. 270/- was also paid. THE said policy covered the risk of fire as well. This policy of insurance was to expire on 8.12.1992 and the complainant wrote a letter to the Insurance Company enclosing therewith a Cheque No. 275874 dated 5.12.1992 for a sum of Rs. 270/- as premium for the period starting from 9.12.1992. In other words, he sent this premium by way of cheque for renewal of policy for a further period of one year from 9.12.1992 to 8.12.1993. THE complainant, after the payment of the aforementioned premium requested by letters to the Insurance Company to acknowledge the premium and also issue a new policy. In the meantime, however, unfortunately a big fire took place at Nerwa on 31.12.1992 and the entire building of the complainant was gutted in fire. THE household goods were also totally destroyed and reduced to ashes. THE complainant immediately thereafter informed the Insurance Company about the said loss through a telegram on 2.1.1993 and the FIR was also lodged. THE complainant was assured by the Insurance Company that they will send their surveyor to assess the loss and after assessing the loss, the payment shall be made to the complainant. Unfortunately, no amount has been paid, but it appears that the claim of the complainant has been repudiated by the Insurance Company for the reasons to be discussed hereinafter. According to the complainant, since the claim has been arbitrarily withheld by the Insurance Company, he is not only entitled to the insured amount of Rs. 1,90,000/- but also for Rs. 50,000/- on account of harassment and for Rs. 10,000/- spent by him for visiting Shimla time and again. There is no dispute that the house was gutted in fire on the relevant date and that the complainant has entered into the contract of Insurance Policy for the period with effect from 9.12.1991 to 8.12.1992 and that the risk of fire was covered under the insurance policy.

However, serious dispute has been raised by the Insurance Company that the policy was not revived after 8.12.1992 as the premium, according to them, was received from the complainant only on 8.1.1993 and the policy could be renewed only from 8.1.1993 and not earlier point of time. On 8.12.1992, the policy had, as stated above, already expired. Since no policy was in existence on the date of accident of fire which, admittedly, occurred on 31.12.1992, the risk is not covered and the Insurance Company is within its right to repudiate the claim. According to the Insurance Company, the policy shall be deemed to be in force from the date when the premium was received by the Insurance Company. Further according to the Insurance Company, the cheque was sent by the complainant after the accident of fire and also received by the Insurance Company after the incident. However, it is denied by the Insurance Company that the entire building along with household goods was destroyed. In substance, the plea of the Insurance Company is that on the date of incident i.e. 31.12.1992 when the fire took place at Nerwa, there was no policy in existence and no claim of insurance is payable to the complainant.

WE have heard the learned Counsel for the parties. Mr. Gulzar Rathore, learned Counsel for the complainant has submitted that the complainant made the payment on 5.12.1992 for a sum Rs. 270/- as premium in the form of a cheque for renewal of the policy from 9.12.1992 to 8.12.1993 and that the cheque, admittedly, was encashed by the Insurance Company on 8.1.1993 and that he sent this cheque under certificate of posting (U.P.C.) at Post Office, Nerwa. The risk of the policy should be assumed on the date the cheque is posted as provided under Section 64 VB of the Insurance Act, 1938. Explanation under Clauses (1) and (2) of Section 64VB, makes the position very clear.

MR. B.N. Shandil, learned Counsel for the Insurance Company has reinformed his submission that the Insurance Company has made out in their reply that firstly the risk cannot be assumed on the date when the cheque is posted and secondly, no cheque on the aforementioned date in fact was sent or issued to the Insurance Company. We have considered the rival contentions of the parties. The first question that arises for consideration is whether in fact cheque No. 275874 dated 5.12.1992 for Rs. 270/- on amount of renewal of the policy from 9.12.1992 to 8.12.1993 was sent by the complainant on 5.12.1992. The complainant has produced an attested copy of the certificate of posting (U.P.C.) (Annexure P 2), vide which this cheque was sent to the Branch Manager, Oriental Insurance Company Limited, Branch Office No. 2, Opposite Petrol Pump, Kaithu, Shimla-171003, by the complainant on 5.12.1992. The stamp affixed by the postal department on the certificate of posting (U.P.C.) clearly shows the date and year as 5.12.1992. According to Mr. Gulzar Rathore, Counsel for the complainant, original copy of the U.P.C. has been given to the Insurance Company and received by them. Original, therefore, could not be produced. In fact, the Insurance Company in their affidavit dated 6.3.1996 have admitted that the complainant personally went to the office of the Insurance Company to hand over the original U.P.C. Receipt and the copy of the FIR. One Mr. Bhupal Bhikhta, Clerk/E.D.D.A. in his affidavit dated 10.10.1993 (page-57 of the file) has clearly deposed that the complainant on 5.12.1992 asked him to do UPC to the Insurance Company. The complainant was accompanied by Mr. Laiq Ram, Tailor Master, resident of Nerwa, at the relevant time and that he asked Shri Chet Ram Barthata to affix the postal stamp of Rs. 2 / - on the Under Postal Certificate receipt. Accordingly, he affixed the postal stamp of Rs. 2/- on the UPC receipt and thereafter Mr. Bhupal Bhikhta put the postal seal on the certificate of posting and envelope and gave the Receipt (UPC) to the complainant on 5.12.1992. One Shri Laiq Ram, who is running a tailoring shop at Nerwa, who has accompanied the complainant to the Sub Post Office, Nerwa on the relevant date, has also filed an affidavit dated 7.10.1993, which also corroborates the factum of having posted the cheque under UPC on the relevant date. There is further no dispute that a cheque in fact was received and encashed on 8.1.1993 by the Insurance Company.

HAVING regard to the evidence produced on record by the complainant and ultimately encashment of the said cheque by the Insurance Company, there is left no manner of doubt that the cheque was sent for renewal of the policy before the expiry of the earlier Insurance Policy on 8.12.1992.

MR. B.N. Shandil, Counsel for the Insurance Company, however, submits that in fact no cheque was sent under certificate of posting and this certificate of posting (UPC) has in fact been manoeuvred by the complainant to cover the risk for insurance purpose. This contention cannot be accepted for the reasons stated above and more particularly even the employee of the postal office Mr. Bhupal Bhikhta has also testified that the cheque was in fact sent under certificate of posting (UPC) on 5.12.1992. The official acts in the discharge of their duties are presumed to have been done by the officials correctly. There is also oral evidence, as discussed above, which clearly demonstrates that the contention of the Insurance Company has been made merely to be rejected.

However, the crucial question that requires consideration is whether the payment of the cheque dated 5.12.1992 sent by the complainant under certificate of posting, which was encashed by the Insurance Company on 8.1.1993, can cover the risk of the complainant in respect of the fire which occurred on 31.12.1992. The decision of this question depends upon whether on the payment of cheque dated 5.12.1992 by the complainant, which was encashed on 8.1.1993, the policy is revived from 9.12.1992 to 8.12.1993. In this context we may refer to the provisions of Section 64VB of the Insurance Act, 1938, the relevant extract of which may be reproduced below: "(1) No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner".

(2) For the purposes of this Section in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation:-Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be"

IT is apparent from the provisions of this Section 64VB of the Insurance Act, 1938 that the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. However, the explanation there under clearly provides that where the premium is tendered by cheque sent by post, the risk may be assumed on the date when the cheque was posted. IT would be seen from the aforementioned provisions that one of the modes of payment of premium has been provided by cheque. Since the cheque was posted on 5.12.1992, the risk can be assumed from the date when the cheque was issued i.e. on 5.12.1992, which is earlier point of time than the expiry of the policy and secondly since the cheque was of earlier point of time of the expiry of the earlier policy and that the cheque was sent for revival of the policy, it can very well be assumed that the cheque has been sent well within time and the policy should be assumed to have been revived with effect from 9.12.1992 to 8.12.1993, as requested by the complainant. We have, therefore, on hesitation to hold that in view of the above provisions, the policy of the complainant stood revived with effect from 9.12.1992 to 8.12.1993 and when the fire broke out, the policy was very much alive and in force and, therefore, the complainant is entitled to the insured amount and the rejection of the claim by the Insurance Company is wholly arbitrary and untenable in the eyes of law. We are fortified in taking this interpretation by a decision in a case. United India Insurance v. Thakor Swarupji Bhiraji & Others, 1992 (2) Cr.LR 1587. The Gujarat High Court has observed that the risk is covered on the payment of premium either in cash or by tendering postal money order or cheque sent in post. Mere tendering of premium either by sending it in post by postal money order or cheque is enough for the purpose of covering the risk and it will start from the day of which the premium is sent by postal money order or by cheque.

EXACTLY similar view has been expressed by the Tamil Nadu State Commission in Pattarai Perumbamdur Primare Agricultural Co-op. Bank v. The Branch Manager, National Insurance Com. Ltd. & Anr., I (1993) CPJ 421. The State Commission has observed that under explanation to Section 64 VB where the premium is sent by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. We may, however, notice the judgment relied upon by Mr. B.N. Shandil, Counsel for the Insurance Company in support of his submission Oriental Fire and General Insurance. Co. Ltd. v. Panvel Industrial Cooperative Estates Ltd., AIR 1992 Bombay 107. In this case, it was held that mere payment of premium amount and its acceptance by agent cannot amount to concluded contract of insurance and assumption of risk on the part of the Insurance Company. This case is distinguishable. In this case, the payment made by the insured was accepted by an agent which cannot amount to concluded contract. These observations have been made in different facts of the case and do not apply to the facts of the present case. Incidentally, we may also notice that the complainant has produced evidence by way of Annexure P5 - the photographs etc. and he has stated that the entire building along with household goods was gutted in fire and no satisfactory evidence has been produced by the Insurance Company to the contrary. The complainant had raised loan from the Bank for construction of his building. Since the risk of fire was covered under the insurance policy, as discussed above, the complainant is entitled to the insured amount of Rs. 1,90,000/- along with interest. However, other relief (s) sought for by the complainant cannot be allowed as they do not arise under the contract of insurance.

IN the light of what is discussed above, the complaint is allowed and the INsurance Company is directed to pay to the complainant the amount of insurance i.e. Rs. 1,90,000/- along with interest @ 12% per annum with effect from 31.12.1992 till actual payment.

IN the facts and circumstances of the case, there is no orders as to costs. Complaint allowed.