This consumer complaint has been filed by the complainant M/s Manjunatha Spinning Mills Limited against the Oriental Insurance Company Limited and 4 Ors. alleging deficiency in service against the opposite parties.
2. The brief facts as given in the complaint are that the complainant filled a proposal form on 17 January 2011 and gave it to respondent No.4 through respondent No.5 along with a cheque th dated 17 January 2011. A fire erupted in the premises of the mill on 21 January 2011 and th st the complainant informed the police and lodged the FIR. The respondent No.4 i.e. the branch manager of the Insurance Company was also informed. The respondent No. 4 sent a letter to the complainant on the next day informing that a surveyor had been appointed by the competent authority but the appointment of surveyor was without prejudice. The complainant pursued with other officers of the Insurance Company like respondent No. 2 however, seeing no result the complainant sent legal notice dated 21 September 2011 to the Insurance Company. The st Insurance Company replied the notice vide later dated 14.02.2012 stating that no policy was issued to the complainant and therefore there was no concluded contract of insurance between the parties and even the premium amount was not paid by the complainant therefore the claim was not payable.
3. Aggrieved by the reply of the Insurance Company, the complainant has filed the present complaint. The opposite parties have filed the written statement stating the same facts as given in the reply to the legal notice. It is also stated that complainant is not a consumer of the Insurance Company because the contract of insurance is not complete. Both the parties have filed their evidence by way of affidavits which have been taken on record.
4. Heard the learned counsel for the parties and perused record. The learned counsel for the complainant stated that the proposal form was given to the officer of the Insurance Company on 17 January 2011 along with a cheque where only the amount was to be filled by that officer. th The proposal was duly processed by respondent No. 4 in its office but the policy was not issued till 21 January 2011. It was argued by the learned counsel that as per section 64VB of the st Insurance Act 1938, the insurance will become effective from the date of issuing the cheque for the premium. The proposal form and the cheque were given on 17 January 2011 and therefore th the insurance had become effective with effect from 17 January 2011. It was further submitted th by the learned counsel for the complainant that the appointment of the surveyor by the Insurance Company only confirms that the Insurance Company had approved the proposal of the complainant for issuing the policy, otherwise, there was no compulsion on the Insurance Company to appoint a surveyor if there was no insurance contract. When the surveyor submitted his report dated 15 March 2012 to the opposite party and a loss of Rs.76,54,038 was assessed by th the surveyor, then the Insurance Company changed their stand and decided to repudiate the claim on the ground that there was no policy issued by the opposite party. It was also stated by the learned counsel for the complainant that respondent No.5 has accepted in his written statement that he had received the proposal form and the cheque from the complainant on 17 January th 2011 and the same was processed and approved, however, the final policy could not be issued as there was some technical problem in the system. The policy was to be issued on 21 January st 2011, however, on the same day, the information was received about the fire incident. The learned counsel stated that when the proposal was approved, the issuance of policy remains only a formality and the complainant is entitled to get the benefit of the insurance policy.
5. On the other hand, the learned counsel for the Insurance Company stated that the complainant had filed a proposal form and a cheque with the respondent No. 5, however, no amount was mentioned in the cheque, thus, the same could not have been encashed. No policy can be issued until the premium is received as per section 64 VB of the Insurance Act 1938. Thus, there was no question of issuing the insurance policy. If the policy has not been issued, the contract of insurance is not complete and therefore, no liability can be attributed to the insurer. The learned counsel mentioned that the appointment of surveyor was for the sake of good order and without prejudice as is clear from the letter dated 22 January 2011 by the respondent No.4 nd which reads as under:-
"We refer to your letter dated 21.01.2011 addressed to the undersigned regarding the fire accident occurred on 21.01.2011 at you factory premises.
The competent authority for the sake of good order deputed Sri M. Poornachandra Rao, Surveyor, Guntur for inspection of the loss. The appointment of the surveyor is without prejudice and the admissibility of the liability is also subject to rules and regulations of our Company."
6. It was argued by the learned counsel for the opposite party Insurance Company that the appointment of surveyor does not give any right to the complainant to make an insurance claim.
7. I have carefully considered the arguments advanced by both the parties and have examined the record. In the present case, it is alleged that the proposal form and a cheque without mentioning any amount on it were given to respondent No. 5 who is the development officer of the Insurance Company working with respondent No. 4, however, the policy could not be issued by 21 January 2011 and there was a fire accident in the factory premises of the complainant. st When a proposal is made to an Insurance Company, it takes some time to process the same. The Insurance Regulatory and Development Authority (protection of policy holders' interests) Regulations 2002 in clause 4(6) provide that the insurer should take the decision on the proposal form within 15 days of its receipt. Thus, it cannot be the case of the complainant that the Insurance Company delayed the decision on the proposal form. Nobody can expect approval of an insurance claim only by filing the proposal form. Moreover, in the present case, even the premium has not been paid to the Insurance Company as only a blank cheque was given to the respondent No. 5. In these circumstances, there is no question of completion of the contract of insurance. The Supreme Court in Life Insurance Corporation of India Vs. Raja Vasireddy Komalavalli Kamba, (1984) 2 SCC 719, has clearly observed that if the policy is not issued then the contract of insurance is not concluded. The judgment reads as under:-
" 13. The mere receipt and retention of premium until after the death of the applicant or the mere preparation of the policy documents is not acceptance. Acceptance must be signified by some act or acts agreed on by the parties or from which the law raises a presumption of acceptance. See in this connection the statement of law in Corpus Juris Secundum, Vol. XLIV page 986 wherein it has been stated as:-
"The mere receipt and retention of premiums until after the death of applicant does not give rise to a contract, although the circumstances may be such that approval could be inferred from retention of the premium. The mere execution of the policy is not an acceptance; an acceptance, to be complete, must be communicated to the offerer, either directly, or by some definite act, such as placing the contract in the mail. The test is not intention alone. When the application so requires, the acceptance must be evidenced by the signature of one of the company's executive officers."
14. Though in certain human relationships silence to a proposal might convey acceptance but in the case of insurance proposal, silence does not denote consent and no binding contract arises until the person to whom an offer is made says or does something to signify his acceptance.
The general rule is that the contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer."
8. From the above authoritative judgment of the Hon'ble
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Supreme Court, there remains no doubt that in the present case, the contract of insurance was not concluded as neither the premium was received by the Insurance Company nor any policy was issued. If the contract of insurance has not been concluded, there is no question of entertaining the insurance claim of the complainant. The appointment of a surveyor was done without prejudice as was made clear by the respondent No.4 while appointing the surveyor wide his letter dated 22 January 2011. nd Moreover, there were other policies of the complainant with the opposite party and the surveyor may have been appointed in that confusion or in that context. Clearly, the appointment of surveyor in the present case does not give any edge to the complainant in pressing for his insurance claim. 9. Based on the above discussion, I do not find any merit in the present complaint and the complaint No. 211 of 2012 is dismissed.