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M/s. Proficient Commodities Pvt. Ltd. v/s M/s. Oriental Insurance Co. Ltd. & Others

    Complaint Case No. 19 of 2012
    Decided On, 28 October 2014
    At, West Bengal State Consumer Disputes Redressal Commission Kolkata
    By, THE HONOURABLE MR. DEBASIS BHATTACHARYA
    By, PRESIDING MEMBER & THE HONOURABLE MR. JAGANNATH BAG
    By, MEMBER
    For the Complainant: -------------- For the Opposite Party: --------------


Judgment Text
J. Bag, Ld. Member:

The present complaint has been filed under Section 12 read with Section 13 of the Consumer Protection Act for non-payment of the claimed sum of Rs.11,04,215/- against the Commodity Broker Members’ Indemnity Insurance Policy No. 122300/48/2011/3316.

The Complainant is a member broker of the insured and is duly authorized under the policy to lodge any claim for monetary loss caused by error in punching in course of placing order. While the policy was valid during 12.06.2010 to 28.03.2011, one approved user with an intent to buy future commodity Copper for the month of August 2010 and to sell the same future commodity for the month of September 2010 at a positive SSP Spread Price Difference (+ SPD) of Rs.3/- i.e., difference between the price of September minus the price of August of Copper duly filled the Spread IOC (Immediate or Cancel) Order Window in the Traders Workstation of Multi Commodity Exchange, being OP No.3 (Proforma) under TWS ID No. 41783 and started hitting the spread IOC Order of 21 Lots quantity per order. The authorized user/Arbitrager put the price difference for intended commodity, but due to error, Crude was put as commodity against genuine commodity Copper. The mistake was immediately sorted and the Arbitrager stopped hitting. The Complainant came to know that they had suffered a huge financial loss of Rs.11,3,476/- and immediately the claim was lodged i.e., on 17thAugust 2010. A Surveyor was appointed by the Insurance Company. The Surveyor observed that the loss was genuine and compensation was recommended. The Complainant made several correspondences with the Insurance Company. Ultimately on 23rdNovember 2011, the insurer sent the repudiation letter saying that wrong trade made by the Arbitrager (Commission Agent) is not covered under the policy. Allegedly, the insurer has wrongly filled up Add-on Cover -1 and Add-on Cover 2. Such Add-on Cover 1 and Cover 2 speak about inclusion of the claim in question. The Complainant can not be deprived of having his claim settled. Accordingly, the present complaint has been preferred with prayer for direction upon OP Insurance Company to release the claimed amount of Rs.11,3,476/- along with interest @ 12 % p.a. from the date of lodging the claim i.e, 17.08.2010 till the date of realization, apart from payment of compensation of Rs.20 lakh for the loss suffered and Rs.1 lakh for mental agony and harassment.

The complaint is contested by OP Nos. 1 and 2 who filed Written Version contending therein that the Complainant is not a consumer, that the Add-on Cover-1 which covers proprietary trade is not opted by the insured for coverage under the policy and that premium for such Add-on Cover-1 has not been paid. It has also been stated that the wrong trade was done by the intermediary only for the proprietor, that is, M/s Proficient Commodities Ltd, and not for the service of clients of the broker insured. There has been no legal liability to the insured on account of any 3rdparty against the Complainant.

We have carefully gone through the petition of complaint, written version filed by the OPs, evidence/questionnaires/replies filed by both the Complainant and OPs Nos. 1 and 2. Brief notes of argument have been filed by the Proforma OP and also by OP Nos. 1 and 2.

Ld. Advocate appearing for the Complainant submitted that the Complainant is covered under the Endorsement –II of the Policy in question and the sum assured is Rs.25 Lakh. The loss occurred when an approved user conducted the transaction and such loss is covered by the Policy. The repudiation of the claim by the insurance company is arbitrary. There was no communication whatsoever from the OP Insurance Company about settlement or repudiation of the claim which by itself is a deficiency in service on the part of the OPs.The Surveyor’s report was not considered for releasing the benefit of the policy on purely a hypertechnical ground that the Complainant did not take the Add-on Cover -1 for which due payment of premium was to be made. The insurer never communicated in any manner that premium for Add-on Cover -2 only was paid and no premium for Add-on Cover -1 was paid. The mistake during transaction in course of placing order was done by an employee of the Complainant. Referring to the decision of the Hon’ble National Consumer Disputes Redressasl Commission as reported in 2012 (2) CPR 290 (NC). It was stated that repudiation of insurance claim on a very flimsy and hyper-technical ground amounts to deficiency in service. The judgment of the Hon’ble Supreme Court as reported in 2000(1) CPR 93 (SC) was also referred to emphasizing that when exclusion clause was not included in the policy nor communicated to the insured, Insurance Company can not claim the benefit of the exclusion clause so as to avoid its liability under the Insurance Policy. Further, no new plea based on new facts can be entertained by the Appellate authority. The claim preferred by the Complainant is very much within the scope of the policy and deserves to be granted.

Ld. Advocate appearing for the OP Insurance Company submitted that the Complainant was not covered under Add-on Cover -1 as evident from the mode of payment of premium of Rs.14036/-, whereas the total premium for Add-on Cover-1 and Add-on Cover-2 would have been Rs.15720/-. The wrong trade was done by the Arbitrager only for the proprietor and / or insured broker M/s Proficient Commodities Pvt Ltd. and not for the service of the clients or intermediaries of the broker insured. There is no third party claim against M/s Proficient Commodities Ltd.

It was further submitted that the Complainant in response to the request of the insurer to provide print out of trade cancellation request to Multi Commodities Exchange (MCX), stated that MCX does not have facility to accept trade cancellation request. That is a violation of terms of policy.There was another violation of terms of policy that request for cancellation of the trade was not made within one minute of the discovery on system. The Arbitrager as per policy condition should have been a permanent employee, but it was found that she was a contractual employee. Thus several violations had occurred in respect of the policy in question. The claim has been rightly repudiated and as held by the Hon’ble National Consumer Disputes Redressal Commission in FA-168/2010, M/s Sunder Art Exports-vs- The Regional Manager, United India Insurance Company Ltd. that the law does not prevent the insurer from finally determining the claim for an amount different from that of the loss assured by the surveyor, albeit for sufficient reasons. In the present case the Surveyor’s report was not accepted as several violations of the policy condition were either overlooked or not duly considered in the Survey Report. The repudiation was justified.

Decision with Reasons

From the petition of complaint and pleadings of both parties the following points are taken up for consideration:1. Is the Complainant a consumer?

2. Is there any deficiency in service on the part of the OPs?

3. Is the Complainant entitled to such relief as prayed for?

Regarding question No. 1 it may by stated that the Complainant along with Intellect Commodity Pvt Ltd is covered by the Policy No. 122300/48/2011/3316 which was taken by Multi Commodity Exchange of India Ltd (MCX) upon payment of premium of Rs.16505/-. The insurance service obtained by the Complainant was not for sale or for commercial use of the said service. As such, The Complainant is a ‘consumer’ as defined under Section 2(1)(d)ii of the Consumer Protection Act.The other two points are being taken up together for convenience of discussion and decision.

The Complainant’s averment is that in course of placing order for Cropper, Crude as commodity was put by the approved user who made the error involving a sum of Rs.11,3,476/-. The mistake was immediately sorted out and a claim was lodged as provided under Policy. Repudiation of the claim by the insurer is allegedly irregular.

The insurer’s plea for repudiation of the claim is that as per the request of the MCX, endorsement No.II was passed to include M/s Proficient Commodities Pvt Ltd and M/s Intellect Commodities Pvt Ltd. Along with basic cover of Rs.25 lakh Add-on Cover was allowed as per Premium Table -2 The wrong trade which was done by the Arbitrager for the proprietor himself, was not covered under Add-on Cover -2. Further, the employee who did the wrong transaction does not appear to be a bonafide permanent employee. No recorded instruction from the principal was also available for executing the trade.

Ld. Advocate for the OP Insurance Company relied on the order of the Ho’ble National Consumer Disputes Redressal Commission in First Appeal No. 168 of 2010 emphasizing that the law does not prevent the insurer from finally de

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termining the claim for an amount different from that of the loss assessed by the Surveyor, albeit for sufficient reasons. In the present case, we find that the insurance company has not accepted the recommendation of the Surveyor and the reasons cited for such refusal appear to have force. The Complainant has not come up with such evidence as would establish that premium for Add-on Cover -1 was paid by them. It is under Add-on Cover -1 of the policy in question that the wrong trade done by an Arbitrager for the proprietor might have been admitted. If the policy, as such, does not permit grant of relief on the question of payment of due premium, the Complainant can not claim benefit under such policy. Going by the discussion as herein above we are of the considered view that the Complainant has not been able to prove his case. Hence, Ordered That the complaint be and the same is dismissed on contest. There shall be no order as to costs.
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