PUNJAB STATE ELECTRICITY BOARD vs Oriental Insurance Company Ltd.

PUNJAB State Electricity Board claims Rs. 9,10,551.16, the insured amount alongwith compensation of Rs. 2 lacs and litigation expenses Rs. 40,000/- in this complaint from the opposite party, the Oriental Insurance Company. The Insurance Company was described as four opposite parties through different offices but notice was issued to opposite party No. 2, Branch Manager of the Insurance Company, Ropar from where policy was taken. The complainant obtained Open Transit Policy on August 30, 1985 from the Oriental Insurance Company. A sum of Rs. 10,000/- was deposited as advance deposit of premium (provisional premium). The purpose of taking the policy was to insure all non-fragile material, machinery parts and spare parts transported from anywhere in India to Ropar by Rail/Road covering risk upto Rs. 40 lacs. Annexure C-2 is the copy of the policy. From time to time it was renewed. In the year 1992-93, various orders were placed by the complainant for getting the stocks as per details Annexure C-3. Relevant bills covering 12 such cases were produced (copies Annexures C-4 to C-15). Since the goods despatched in the Annexure C-3 were not delivered at the destination and were lost, claims were lodged with the Insuranec Company (copies Annexures C-16 to C-27). During this period, there were certain modifications in the terms and conditions of the policy vide letter dated April 4, 1989 (Annexure C-28). Ultimately the complainant was informed by the Insurance Company rejecting the claim vide letters Annexures C-29 to C-32. This led the complainant to approach this Commission. It is mentioned in the complaint that with respect to 5 of the claims, the Insurance Company accepted the claim. Details of such claims are given in para 10 of the complaint. With respect to the remaining claims, the Insurance Company repudiated the same which amounted to deficiency in rendering service. The Insurance Company submitted its version on notice of the complaint. Several pleas were taken admitting the issuance of the policy and deposit of Rs. 10,000/- as advance premium. It was further stated that it was incumbent upon the complainant to intimate the Insurance Company about the despatch of goods alongwith the bills. On that the Insurance Company was to issue bills for the premium which was to be payable within one month. Since in several cases, bills were received much thereafter and that too after despatch of the goods, the Insurance Company as not liable as advance premium was not paid. On this ground, repudiation of the claims was stated to be legal. The details of particulars of the dates of the goods sent and the cheques of the premium received were mentioned in Para 2-C of the written version. This was done to indicate that infact premiums were received after a month of sending of the bills. The plea of limitation was also taken. No resolution of the Electricity Board authorising filing of the complaint was produced. The complaint was not filed through duly authorised person. From the pleadings, the following questions require consideration in this complaint : (1) Whether the complaint is barred by time ? (2) Whether complaint has been filed through authorised person ? (3) Whether repudiation of the claim by the Insurance Company was arbitrary and illegal ? (4) To how much compensation the claimant is entitled to ? Question No. 1

THE complaint was filed on October 23, 1998. THE period of limitation for filing complaint is two years from accrual of cause of action as provided under Section 24-A of the Consumer Protection Act. THE details of the Railway Receipts vide which goods were despatched and premiums were received late are given in the written version of the Insurance Company. THE first one relates to Railway Receipt No. 666770 dated April 30, 1993 and date of cheque of premium July 16, 1993. THE last but one in the item is Railway Receipt No. 1171707 dated September 10, 1993 and date of cheque of the premium is December 15, 1993 and the last one is No. 783113 dated May 26, 1990 and the date of the cheque of the premium is September 22, 1990. THE other receipts are for the period March to July, 1993 and the premium cheques were for the period May to November, 1993. If the date of the receipts are taken as accrual of cause of action, prima facie the complaint would be barred by time. However, it is the repudiation of the claim which would give fresh cause of action to the complainant to file the complaint. It was vide letter (Annexure C-31) that the Insurance Company for the first time informed the Electricity Board which was written on October 20, 1997 that the matter was referred to the Head Office as a special case for consideration. Reference was made to the provision of Section 64-VB providing that no risk could be assumed unless the premium in advance was paid. This had reference to all unsettled claims of the Board. To the same effect is the letter (Annexure C-32) dated January 29, 1998 informing that the claims stood repudiated for breach of the above provision. Thus, it is on January 29, 1998 that the cause of action accrued to the complainant to approach the District Forum. THE complaint filed on October 23, 1998 is, therefore, held to be well within time. Question is answered accordingly. Question No. 2 The complaint was filed by Punjab State Electricity Board through their Chief Engineer (O&M), Guru Gobind Singh Super Thermal Plant, Ropar. Annexure C-1 is the authority given in this respect. Under Regulation No. 55261 of Punjab State Electricity Board Regulation of Conduct and Business, 1980, framed under Section 79(K) of the Electricity Supply Act, 1948, sanction was accorded for institution of recovery suit in District Consumer Disputes Redressal Forum. The full particulars of the matter making claim of Rs. 9,10,551.16 against Oriental Insurance Company, Ropar are mentioned in this order. In this view of the matter, the complaint is held to have been filed by duly authorised person and is maintainable. Question No. 3

The claims related to the period September to July, 1993. The repudiation of the claim was made on January 29, 1998 vide letter Annexure C-32. There is apparent delay of four years in taking up a decision to repudiate the claim which per se amounts to deficiency in rendering service.

EVEN on merits, the repudiation is arbitrary and canot be legally upheld. The entire approach of the Insurance Company while interpreting Section 64-VB of the Insurance Act and the terms and conditions of the insurance policy is erroneous in law. Section 64-VB of the Insurance Act reads as under : "64-VB. No risk to be assumed unless premium is received in advance-(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. (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or despatch by post to, the insurer, the premium so collected in full without deduction of his commission within twenty-four hours of the collection excluding Bank and postal holidays. (5) The Central Government may, by rules, relax the requirements of Sub-section (1) in respect of particular categories of insurance policies."

A bare perusal of the provision would indicate that on receipt of advance premium, the risk under the policy would stand covered. In view of the admitted fact that the insured had paid premium of Rs. 10,000/- in advance and as per terms and conditions of the policy on receipt of the bills from the senders of the goods indicating value of the articles despatched, from time to time bills were to be issued by the Insurance Company and such premium was payable within one month. In pith and substance on payment of such bills received, subsequently it is the advance amount of the premium paid which was to be kept intact otherwise upto the advance premium of Rs. 10,000/- as and when goods were despatched, they stood automatically insured. This aspect of the matter was not taken into consideration while repudiating the claim otherwise there is no provision for keeping an amount of Rs. 10,000/- advance premium provisionally intact with the Insurance Company if the goods despatched upto that limit premium were not automatically stood insured at the time of despatch. No doubt, as per details given in the written statement, on issuance of the bills, the additional premium was despatched late, i.e. not within a period of one month but that per se will not take the case out of the purview of the insurance policy as the advance premium paid cover such risk.

ALONGWITH the written submissions filed on behalf of the opposite party, Annexure R-1 has been filed indicating the date of despatch, date of bill No., date of cheque, and date of loss to demonstrate that the amount of respective bills was paid after the date of loss in respect of 12 items which are in dispute. As already stated above, this approach is not correct as the advance amount of Rs. 10,000/- already paid at the time of issuance of the policy was not taken into consideration. The amount of the premium of these different bills is not mentioned in this Annexure to give a finding as to whether on the dates of despatch any of the items exceeded the coverage of risk upto the premium of Rs. 10,000/-. The repudiation of the claim is, therefore, held to be arbitrary and illegal entitling the complainant to the insured amount of the 12 bills as claimed in the complaint. The question is answered accordingly. Question No. 4. 9. Since there was deficiency in rendering service in arbitrarily rejecting the claim, the complainant is held entitled to value of the goods which were not delivered and were covered under the risk under the insurance policy. The total amount of loss as claimed is Rs. 9,10,551.16 to which the complainant is entitled to since there was deficiency in rendering service. In view of the decision of the Supreme Court in United India Insurance Co. Ltd. v. M.K.J. Corporation Ltd., III (1996) CPJ 8 (SC), the complainant is entitled to compensation by way of interest on the aforesaid amount @ 12%. 10. For the reasons recorded above, this complaint is allowed with the direction to the Insurance Company to pay Rs. 9,10,551.16 alongwith 12% p.a. interest w.e.f. 1.1.1994, i.e. after four months of the date of despatch of the last consignment till payment with cost of Rs. 5,000/-. It may be observed that if the Insurance Company raises a dispute regarding any of the items which were in dispute that on the date of the despatch the limit of Rs. 10,000/- advance paid had exceeded, to that extent the Insurance Company will not be liable and the matter could be agitated in the execution proceedings, if necessary. Complaint allowed with costs.