NEW INDIA ASSURANCE CO. LTD vs Ganesh Prassad Singh

NEW India Assurance Co. Ltd. (Appellant herein) has filed this First Appeal, being aggrieved by the order of the State Commission, which had allowed the complaint of Ganesh Prassad Singh (Respondent herein) and original complainant before the State Commission.

IN this complaint before the State Commission, Respondent/complainant has stated that he had insured bus No. BHF-9913 of which he was the owner, with the appellant insurance company under a comprehensive scheme, in the forenoon of 04-10-1990 and had paid premium for the same on 03-10-1990 through an Agent of the appellant insurance company. The said vehicle while returning from Patna was burnt by some anti-social elements near Village Jarua at about 1.00 P.M. after the passengers had been asked to get down. He immediately lodged a complaint with the Police Station and an FIR was registered. An insurance claim was also filed with the insurance company. However, the insurance company took a view that the cover note insuring the vehicle was issued after the vehicle had already been damaged and burnt and therefore, the claim was not valid. Being aggrieved by the deficiency in service in wrongly repudiating the respondent ''s/complainant ''s genuine claim on the incorrect assumption that the insurance policy and cover note was obtained by misrepresenting facts after the vehicle was burnt, Respondent filed a complaint before the State Commission and requested that appellants be directed to pay him Rs. 3 lakhs along with damages. Insurance company, on being served, filed a written rejoinder denying the above allegations. It was reiterated that an enquiry conducted into the matter clearly established that the cover note was fraudulently obtained by the respondent with the connivance of the Agent and some staff of the appellant insurance company after the Bus had been burnt. In this connection, it was contended that the complainant ''s brother took out a copy of the cover note from the briefcase of Shri M. M. Alam, who was an officer of the insurance company without his knowledge and got it signed by the Probationary Development Officer by misrepresenting that the Development Officer was not available. In view of this fact, the claim was rightly repudiated since there was clear breach of trust by the Respondent. Apart from this, respondent has also suppressed the fact that he had earlier got this vehicle insured with the Oriental Insurance Company, which policy had also lapsed in August, 1990.

THE State Commission, after hearing the parties and on the basis of evidence produced before it, partly allowed the complaint, observing as follows:-- "We have considered the facts stated above on behalf of both the parties and also critically analyzed their submissions and the papers on record filed by them. As stated above there is little dispute with respect to fact of the case. The only point arises for decision is whether the policy dated 04-10-90 has been obtained by the complainant by playing fraud and suppressing the material fact. Whether the occurrence of burnt of the vehicle took place earlier and the policy was obtained on the same day later, are to be scrutinized on the materials available on record. There is no dispute that cover note was issued on the same day of accident by the Insurance Company. In several decisions the Hon ''ble Apex Court and the National Commission have held that when a policy is taken on a particular date its effectiveness is from the commencement of the day, therefore it should not be doubted that since any accident to the vehicle took place on the same day, therefore, the policy appears to be void and obtained by suppression of material fact, is not a valid contention to be accepted as raised on behalf of the Insurance Company. The liability to prove fraudulent act of the policy holder or suppression of the material fact lies heavily on the Insurance Company. Only circumstances that accident and insurance of the policy cover is of the same day is not a valid ground to come to the conclusion that the policy has been obtained by suppressing the material fact. We have gone through all the documents carefully and considered the submissions made on behalf of the parties. We are of the view that the cover note on 04-10-1990 cannot be held as obtained by suppression of the material fact and it is void ab-initio as submitted on behalf of the Insurance Company. Admittedly the vehicle was burnt on this day and it was a total loss. The Insurance policy was for Rs. Three lacs as mentioned in the cover note dated 04-10-90 (Annexure-2). Admittedly it was a total loss of the vehicle due to burning by mob. Hence the complainant is entitled to get compensation for the vehicle to the tune of Rs. Three lacs only. " The State Commission, therefore, directed Appellant Insurance Company to pay the respondent an amount of Rs. Three lacs with 10% simple interest from the date of repudiation of the order till the date of actual payment, within a period of three months. Hence, the present appeal.

LEARNED Counsel for both parties made oral submissions. Learned Counsel for the Appellant/Insurance Company reiterated that the insurance claim was rightly repudiated since as per investigations conducted into the matter backed by affidavits of its senior officers, it was evident that the cover note/insurance policy was fraudulently obtained by Respondent/Complainant in connivance with the insurance agent and some other officials of Appellant/Insurance Company by suppressing the fact that the insured vehicle had already been burnt by miscreants prior to the issue of cover note/insurance policy and, therefore, at the time when insurance policy was issued the vehicle had no insurable risk. In this connection, affidavits filed by the Appellant/Insurance Company of Shri M.M. Alam, Development Officer and Shri S.K. Ojha, Probationary Development Officer as also report of the Surveyor ''s report clearly established two important fact; (i) that the accident had taken place at around 1.00 p.m.; and (ii) the cover note was issued after 3.15 p.m. on the same day. In view of this clear evidence, the State Commission erred in allowing the Respondent ''s complaint.

LEARNED Counsel for the Respondent on the other hand stated that apart from the evidence of the Appellant/Insurance Company ''s own officials, who cannot be termed as independent witnesses, no other evidence e.g. copy of the insurance policy or cover note was filed in evidence to prove Appellant/Insurance Company ''s contention that the cover note was issued after the vehicle had been burnt. It was stated that the cover note was in fact issued in the forenoon of 04.10.1990 i.e. before the vehicle was burnt by miscreants and the premium for the same had been paid a day earlier i.e. on 03.10.1990.

WE have considered the submissions made by learned counsel for the parties and have also gone through the evidence on record. At the outset it may be stated that when the case first came up for hearing before this Commission, vide order dated 31st July, 2006 it was remanded back to the State Commission on the grounds that the parties had not been afforded an opportunity to be heard and adduce evidence/affidavits in support of their respective contentions as is required in the interest of natural justice and as per procedure laid down under Section 13(2) of the Consumer Protection Act, 1986. Thereafter, the State Commission passed the impugned order on the basis of which the present appeal has been filed.

IT is an admitted fact that the vehicle was burnt at around 1.00 p.m. by certain miscreants and this fact has also been confirmed by the Appellant/Insurance Company ''s own Surveyor. The disputed issue is as to whether the cover note/insurance policy was taken prior to this incident or thereafter as contended by the Appellant/Insurance Company. Appellant/Insurance Company, on whom there was onus to prove the above facts, have filed in evidence the statements of their own officials to support their contention. Respondent/Complainant has relied on the money receipt of the premium dated 04.10.1990 (Annexure-I) and an affidavit stating that he had handed over the premium of Rs.9324/- to Appellant ''s agent on 03.10.1990 and accordingly the cover note of insurance in lieu of policy was issued at about 7.00 a.m. on 04.10.1990, bearing cover note no. 06727 dated 04.10.1990 being valid from that date to 03.10.1991. The State Commission, we note after analyzing the various statements and papers on record, had allowed the complaint by concluding that the alleged fraudulent act of the policy holder or suppression of material facts could not be established. We find force in this contention since apart from the affidavit of two of its own employees, Appellant/Insurance Company has not been able to produce any other credible evidence to support its contention that the cover note was fraudulently obtained after the vehicle had been burnt. As observed by the State Commission in its order, there are judgments of this Commission as also of the Hon ''ble Supreme Court of India (including in New India Assurance Co. Ltd. Vs. Ram Dayal And Ors. [1990 (2) T.A.C. 141], wherein the Hon ''ble Apex Court had ruled that when a policy is taken on a particular date, its effectiveness is from the commencement of the day on which the policy has been obtained. In the instant case, in view of the fact that Appellant/Insurance Company has not been able to establish beyond doubt through credible evidence that the policy was obtained fraudulently after the vehicle had been burnt and respectfully following the judgment of the Hon ''ble Supreme Court in Ram Dayal And Ors. (supra), we agree with the order of the State Commission that the Respondent/Complainant was entitled to his insurance claim for Rs.3,00,000/- in respect of the insured vehicle and the Appellant/Insurance Company was not justified in repudiating this claim.

WE , therefore, uphold the order of the State Commission and dismiss the present First Appeal. Appellant/Insurance Company is directed to pay the Respondent/Complainant a sum of Rs.3,00,000/- with interest @ 10% per annum from the date of repudiation till the date of realization. No costs.