United India Insurance Co. Ltd. vs MALENDRA SINGH BABRA

THIS appeal, under Section 15 of the Consumer Protection Act, 1986 is directed against the order dated 18.2.2000 in Complaint No. 124 of 1999 by District Consumer Disputes Redressal Forum, Sarguja (hereinafter called the ''District Forum'' for short) accepting the complaint and directing that a sum of Rs. 11,316/- paid towards annual premium regarding Policy No. 10211 of 1999 be refunded by the appellant/Insurance Company to complainant/respondent No. 1.

RELEVANT facts which need mention are that the complainant/respondent No. 1 had purchased Bus No. MP 27 B/2737. It was financed by Tata Finance Ltd. Initially the insurance policy was obtained from appellant United India Insurance Company. The said policy was to remain in force from 31.3.1997 to 30.3.1998. Undisputedly, Financer Tata Finance Ltd. paid annual premium for the renewal of the said policy on 24.2.1998 and the policy as above was renewed by the appellant effective from 31.3.1998 to 30.3.1999. It further appears that the complainant in the meanwhile on 13.2.1998 obtained an insurance policy relating to the said Bus from New India Assurance Co., Raigarh after payment of premium thereof and the said policy was to be in force from 13.2.1998 to 12.2.1999. The complainant moved the appellant Insurance Company-United Insurance Co. by its letter dated 25.3.1998 to cancel the renewal of the policy from 31.3.1998 to 30.3.1999 and refund the premium paid as mentioned above regarding renewal of the policy. Since the appellant Insurance Company declined, the complainant filed complaint before the District Forum for the refund of the said amount of premium.

The complaint was resisted by the insurer appellant United India Insurance Co. It was alleged that the policy was issued by them earlier. It was averred that if a vehicle is insured twice the earlier insurance policy as per rules cannot be cancelled and in fact second insurance policy deserves to be cancelled and that as per rules framed by the Tarrif Advisory Committee, cancellation of the policy to take advantage of revision in the rates would be strictly prohibited. It was, therefore, averred that cancellation of policy issued by appellant, as sought for by the complainant/respondent was not permissible as per rules and, therefore, the appellant was not liable to refund the amount of premium.

LEARNED District Forum held that despite the policy having been obtained by the complainant from 13.2.1998 to 12.2.1999, the financer - Tata Finance Ltd. had obtained renewal of the policy from the appellant by paying the premium amount on 24.2.1998. It was, therefore, held that action of the financer in obtaining insurance policy subsequently on payment of premium on 24.2.1998 was not proper. Appellant Insurance Co. had committed deficiency in service by not cancelling the policy which was subsequently issued by it, for the period from 31.3.1998 to 30.3.1999, as was prayed by the complainant. Accordingly, the appellant was directed to refund the amount of premium, paid to it. Learned Counsel for the appellant Insurance Company submitted that appellant had insured the Bus initially for the period from 31.3.1997 to 30.3.1998 and appellant had issued policy No. 10001/1997. Subsequently, Financier of the Bus after payment of premium amount on 24.2.1998 had got renewed the policy effective from 31.3.1998 to 30.3.1999 and accordingly the appellant had issued policy No. 10211/1999. However, the complainant in order to take advantage of new rates of premium as per Tariff Advisory Committee which were to be effective from 15.2.1999 had obtained insurance of the Bus from New India Assurance Company by paying premium on 13.2.1998 and obtained a policy covering the risk from 13.2.1998 to 12.2.1998. It was submitted that the above action of the complainant did not warrant cancellation of the policy as desired by him. The learned District Forum, therefore, erred in granting relief to the complainant/respondent No. 1.

AS noticed earlier it is clear that the complainant/respondent No. 1 had obtained an insurance policy by paying premium on 13.2.1998 from New India ASsurance Co., Raigarh. The said policy was effective for the period from 13.2.1998 to 12.2.1999. It also appears that Tata Finance Ltd. subsequently paid premium, for renewal of the policy issued earlier, on 24.2.1998 and accordingly the policy issued by it was renewed by the appellant Insurance Company-United India Insurance Co. which was to be effective from 31.3.1998 to 30.3.1999. Clearly, therefore, the premium was paid by the complainant earlier on 13.2.1998 and was paid before payment of premium by Tata Finance Ltd. on 24.2.1998. AS per appellant, policy obtained subsequently could be cancelled. Since the renewal of policy was subsequent to the policy obtained by the complainant/respondent No. 1 on 13.2.1998, the renewed policy effective from 31.3.1998 to 30.3.1999 issued by the appellant was liable to be cancelled. Learned Counsel for the appellant in the above context urged that the policy was initially issued by the appellant on 31.3.1997 and, therefore, after renewal it has to be treated as the earlier policy than the policy obtained by the complainant/respondent No. 1 on 13.2.1998. However, it may be noted in the above context that initial policy No. 10001/97 was issued for the period from 31.3.1997 to 30.3.1998 and was renewed latter for the period from 31.3.1998 to 30.3.1999. Renewal of the policy would amount to fresh agreement for which premium was paid on 24.2.1998 and another policy No. 10211/1999 was issued. In view of the above, it is clear that there was a fresh agreement of insurance which was to remain in force from 31.3.1998 to 30.3.1999. Obviously, therefore, the contentions as above that the policy was issued earlier by the appellant cannot be accepted. It is also clear that the premium was paid by the complainant for obtaining insurance from New India Assurance Co., Raigarh on 13.2.1998 while according to the appellant the new rates of premium were to be effective from 15.2.1999. Thus, it cannot be said that the premium was paid on 13.2.1998 to avoid the premium revised by Tariff Advisory Committee The contention as above of the learned Counsel for the appellant cannot be accepted.

IN view of the above, it is clear that the appellant Company was the subsequent insurer and had obtained premium on 24.2.1998, while the Bus was already insured by the complainant with New INdia Assurance Co. Ltd. on 13.2.1998. The appellant was, therefore, liable to refund the premium on the request made to them by the complainant/respondent No. 1 by his letter dated 25.3.1998 i.e., even before the renewal of insurance became effective. The learned District Forum was justified in directing so.

LEARNED Counsel for the appellant in this connection submitted that the rate of interest as awarded by the District Forum is on the higher side and deserves to be reduced. District Forum appears to have directed that interest @ 18% be given by the appellant to the complainant/respondent No. 1. In our opinion, considering the present rate of interest and the circumstances of the case, the rate of interest as awarded by the District Forum is on higher side and deserves to be reduced to 9% per annum. Accordingly, the appeal is partly allowed and though order of the District Forum for refund of the premium amount as directed by it, is upheld but it is directed that instead of interest @ 18% per annum thereon directed to be paid by the District Forum, interest @ 9% shall be payable. In the circumstances of the case, the cost of this appeal shall be borne by the parties as incurred. Appeal partly allowed.