w w w . L a w y e r S e r v i c e s . i n



Tainwala Personal Care Products Pvt. Ltd., Mumbai v/s Royal Subdaram Alliance Insurance Co. Ltd., Chennai

    Consumer Case No. 216 of 2012

    Decided On, 25 January 2022

    At, National Consumer Disputes Redressal Commission NCDRC

    By, THE HONOURABLE MR. JUSTICE RAM SURAT RAM MAURYA
    By, PRESIDING MEMBER

    For the Complainant: Fareshte Sethna, Munindra Dvivedi, Divya Bhalla, Aathira Pilllai, Advocates. For the Opposite Parties: S.M. Tripathi, Deepa Chacko, Advocates.



Judgment Text

1. Heard Ms. Fareshte Sethna, Advocate, for the complainant and Mr. S.M. Tripathi, Advocate, for the opposite party.

2. The complainant has filed IA/4398/2021, for striking out the affidavit of Ms. Shubhangin Vinayak Sawant, which has been filed to explain the circumstances, under which Risk Confirmation letter was issued. I do not find any reason for striking out this affidavit. IA/4398/2021 is hereby rejected.

3. Tainwala Personal Care Product Private Limited (the complainant) has filed aforementioned complaint, for directing Royal Sundaram Alliance Insurance Company Limited (the opposite party) (hereinafter referred to as the Insurer) to pay (i) Rs.48597041.07, along with pendente lite and future interest @18% as the insurance claim (ii) cost of litigation and (iii) any other relief, which may be deemed fit and proper in the facts and circumstances of the case.

4. The facts as stated in the complaint and emerged from the documents attached with the complaint are as follows:-

(a) Tainwala Personal Care Product Private Limited, a private limited company, duly incorporated under the Companies Act, 1956 (the complainant) had a factory, at Plot No.4, Government Industrial Estate, village Khadoli, Silvassa, Dadra & Nagar Haveli (U.T.). Royal Sundaram Alliance Insurance Company Limited (the opposite party) is Insurance Company and engaged in the business of providing insurance services. The complainant obtained Standard Fire and Special Peril Policy i.e. Policy No.FM00021530000100 from the opposite party, for a period of 10.02.2005 to 09.02.2006, for its Buildings, Furniture, fixtures, fittings & electrical installation, Plant & Machinery, machinery parts, Dies & moulds and stock, for a sum assured of Rs.23/- crores. The complainant renewed this policy vide Policy No.FM00021530000101 for 10.02.2006 to 09.02.2007.

(b) In early February, 2008, the complainant invited offers from Insurance brokers, for renewal of the aforesaid policy. Satyan Insurance Broker Pvt. Ltd., Andheri (East), Mumbai, offered for renewal of the aforesaid policy, on 65% rebate of the premium. The complainant filled up Proposal Form for the policy for coverage of Rs.2.70 crores and along with a cheque of Rs.23891/- handed over to Satyan Insurance Broker on 13.02.2008. Satyan Insurance Broker sent the Proposal Form for the policy and the cheque of Rs.23891/-, to Western Regional Office of the opposite party on 14.02.2008, through fax. It is alleged that Western Regional Office accepted the proposal form and issued Risk Confirmation on 14.02.2008, for Fire & Allied Perils Insurance Policy from 14.02.2008 to 13.02.2009, for Rs.27000000/-. Satyan Insurance Broker sent Risk Confirmation letter to the complainant on 18.02.2008.

(c) A major fire occurred on Sunday, 17.02.2008 at the factory premises of the complainant, causing extensive loss to the buildings, plant & machineries, furniture and stock etc. The complainant, vide letter dated 19.02.2008, informed the Insurer about the fire incident. The Insured appointed Yezad Daruvla, Surveyor and Loss Adjuster, Mumbai on 20.02.2008, for survey and assessment of loss. The Surveyor inspected the factory premises on 21.02.2008, took various photographs and prepared inventory. The Surveyor submitted his Preliminary Loss Report dated 22.02.2008 and vide letter dated 22.02.2008, demanded various papers for assessment of the loss from the complainant. The complainant supplied his claim form and the required papers on 19.05.2008. However, the Surveyor declined to proceed further, in the absence of the insurance policy vide letter dated 14.07.2008.

(d) The complainant received a letter (bearing the date 18.02.2008) on 28.02.2008 from the Insurer, stating therein that the consideration received for covering the risk was less than the offer given by them. Hence they were not in position to cover the risk as requested. The complainant, vide letter dated 03.03.2008, protested the letter and stated that Risk Confirmation letter has already been issued on 14.02.2008 and on the basis of Risk Confirmation, the a surveyor was appointed on 20.02.2008, for survey and assessment of loss of fire incident dated 17.02.2008. A concluded contract between the parties cannot be avoided by an ante-dated letter (bearing the date 18.02.2008) as on checking the courier track, through which the letter was dispatched, it revealed that the letter was handed over to the courier service on 27.02.2008, which proved that it was a ante-dated letter.

(e) The Insurer, vide dated 13.03.2008, denied issuance of Risk Confirmation on 14.02.2008. It has been stated that Satyan Insurance Broker faxed Proposal Form for the policy and cheque of Rs.23891/- on 14.02.2008, which was received on 15.02.2008. Satyan Insurance Broker negotiated for issue of policy on 65% rebate of the premium. The Insurer informed him for 50% rebate on the premium, for issue of the policy. Satyan Insurance Broker handed over another cheque of the deficient amount of Rs.6825/- on 18.02.2008. Risk Confirmation was issued on 18.02.2008, but on the insistence of Satyan Insurance Broker, the dated 14.02.2008 was mentioned on Risk Coverage letter and policy period was mentioned as 14.02.2008 to 13.02.2009. This endorsement was secured by concealing the fact that the fire had already taken place on 17.02.2008. Risk Coverage letter was secured on concealment of material fact as such it is not possible to issue the insurance policy w.e.f. 14.02.2008 as the full amount of the premium was received on 18.02.2008. The complainant again, vide letter dated 18.03.2008, requested for issue of policy document but the Insurer again by letter dated 31.03.2008 denied for issue of the policy.

(f) The complainant then gave a legal notice dated 14.08.2008, to the Insurer for either making payment of Rs.2.70 crores within seven days or to refer the dispute to an Arbitrator. The Insurer, vide reply dated 09.09.2008, declined to refer the dispute to an Arbitrator or to pay. The complainant again gave a legal notice dated 25.09.2008, to the Insurer to refer the dispute to Arbitrator but nothing was done. The Complainant, then filed Arbitration Application No. 232 of 2008, in the High Court of Judicature at Bombay, under Section 11(6) of Arbitration and Conciliation Act, 1996, which was ultimately rejected by order dated 07.05.2012, on the ground that in the absence of any arbitration agreement between the parties, the application was not maintainable. Then this complaint has been filed on 13.08.2012.

5. The Insurer filed its written reply on 05.04.2013 and contested the complaint. The Insurer stated that they never offered Satyan Insurance Broker Pvt. Ltd. to insure the factory premises of the complainant for a sum assured of Rs2.70/- crores on 65% rebate of the premium. Satyan Insurance Broker, on his own, faxed Proposal Form for the policy of the complainant and cheque of Rs.23891/- on 14.02.2008, (received on 15.02.2008). Satyan Insurance Broker negotiated for the rebate in premium and Insurer agreed for 50% rebate i.e. for total premium of Rs.30716/- and also issued an email in this respect on 14.02.2008. Proposal Form was lying in the office of the Insurer as the premium amount was deficient. In the meantime, fire took place at the factory premises of the complainant on 17.02.2008. Then in consultation and connivance of the complainant, Satyan Insurance Broker approached the office of the Insurer on 18.02.2008 along with a cheque (bearing date 13.02.2008) of Rs.6825/-, issued by Yashwant B Sanghavi and Bhawna Yashwant Sanghavi, as a payment of deficient amount of the premium. While tendering this second cheque, he fraudulently insisted the officials of the Insurer, to issue Risk Coverage letter in the date 14.02.2008, suppressing the fact of fire incident dated 17.02.2008 and consequent loss. He also sent a draft of Risk Coverage through fax. The official innocently issued Risk Coverage letter in the date 14.02.2008, on 18.02.2008, due to insistence, misguiding and on concealment of material fact relating to fire. On receiving, Risk Coverage letter, the complainant informed the fire incident to the Insurer vide letter dated 19.02.2008, which was received on 20.02.2008, on which, the Surveyor was appointed inadvertently on 20.02.2008. As fire incident and consequent loss had occurred on 17.02.2008, before tendering the full premium as such neither the policy was issued nor the cheques were en-cashed. Risk Covering letter was secured by committing fraud as such it had no value.

6. The complainant filed Rejoinder Reply on 23.05.2013, in which, the facts stated in the complaint have been reiterated. He alleged that letter dated 18.02.2008 (Annexure-H) to the complaint was ante-dated and in fact, it was dispatched on 27.02.2008 through First Flight Courier Ltd. and delivered on 28.02.2008. The complainant filed documentary evidence and Affidavit of Evidence of Rajkumar Tainwala, Managing Director. The Insurer filed Affidavit of Evidence of S. Srinivasan, Vice President and Ms. Shubhangi Vinayak Sawant, an employee of the Insurer. Both the parties filed written synopsis.

7. The counsel for the complainant submitted that Proposal Form for Standard Fire and Special Perils Policy was filled up on 12.02.2008. It was handed over to Satyan Insurance Broker, along with cheque of Rs.23891/- dated 13.02.2008. Satyan Insurance Broker was routinely acting as an agent of the Insurer. He forwarded the Proposal Form and the cheque to the Insurer on 14.02.2008. The Insurer accepted the Proposal Form and issued Risk Confirmation letter dated 14.02.2008, for the period of 14.02.2008 to 13.02.2009, for the sum of Rs.2.70 crores. Fire took place on 17.02.2008, in the factory premises of the complainant. The loss occurred during validity of the Insurance policy and liable to be reimbursed due to which the Insurer appointed a Surveyor on 20.02.2008. The alleged letter dated 18.02.2008, intimating that Proposal Form was not accepted, is ante-dated as is proved from track report of Courier Service as it was delivered to them on 27.02.2008 and served upon the complainant on 28.02.2008. She relied upon the following judgments of Supreme Court, High Courts and this Commission for the proposition and after issue of ‘Cover Note’ the contract of insurance is completed and the policy cannot be cancelled or withheld, after accruing the liability. General Assurance Society Ltd. Vs. Chandumull Jain, AIR 1966 SC 1644, Svensha Handelsbanken Vs. Indian Charge Crome, AIR 1994 SC 626, National Insurance Company Ltd. Vs. Abhaysing Pratapsing Waghela, (2008) 9 SCC 133, Max New York Life Insurance Company Ltd. Vs. Insurance Ombudsman, ILR 2011 (1) Kerala 276, Tipu Vs. New India Assurance Company Ltd., (2005) 1 ACC 526 (Raj) and New India Assurance Company Ltd. Vs. Pratap Rao H Pawar, (2012) 1 CPJ 424 (NC).

8. I have considered the arguments of the counsel for the parties and examined the record. There is serious dispute between the parties in respect of the date of issue of Risk Confirmation letter and the letter of the Insurer, declining to issue policy on the ground that the premium was deficient. If first issue is decided in favour of the Insurer, then even if the letter of the Insurer, declining to issue policy on the ground that the premium was deficient, was actually issued on 27.02.2008, will make no difference on the merit of the case as the Insurer would be justified to withhold the policy.

9. Although in the complaint, it has been alleged that Satyan Insurance Broker was routinely acting as an agent of the Insurer but in the Affidavit of Evidence filed before Bombay High Court, it has been clearly stated that in early February, 2008, the complainant invited offers from Insurance brokers, for renewal of the aforesaid policy. Satyan Insurance Broker Pvt. Ltd., Andheri (East), Mumbai, offered for renewal of the aforesaid policy, on 65% rebate of the premium. The complainant filled up Proposal Form for the policy for coverage of Rs.2.70 crores and along with a cheque of Rs.23891/- handed over to Satyan Insurance Broker on 13.02.2008. Satyan Insurance Broker sent the Proposal Form for the policy and the cheque of Rs.23891/-, to Western Regional Office of the opposite party on 14.02.2008, through fax. According to the Insurer, this fax material was received on 15.02.2008. But Satyan Insurance Broker started negotiation for the rebate in premium on 14.02.2008 and Insurer agreed for 50% rebate i.e. for total premium of Rs.30716/- and also issued an email in this respect on 14.02.2008 at 5.10 PM (Document-R-2, filed along with Affidavit of Evidence of S. Srinivasan). From this fax message, it is proved that the Insurer was demanding premium of Rs.30176/- and this amount was not tendered on that day. Even Proposal Form for the policy and the cheque of the complainant was not received on 15.02.2008, as such, Risk Confirmation letter could not have been issued on 14.02.2008.

10. The Insurer alleged that after fire on 17.02.2008, Satyan Insurance Broker, in consultation and connivance of the complainant, approached the office of the Insurer on 18.02.2008 along with a cheque (bearing date 13.02.2008) of Rs.6825/-, issued by Yashwant B Sanghavi and Bhawna Yashwant Sanghavi, as a payment of deficient amount of the premium. While tendering this second cheque, he fraudulently insisted the officials of the Insurer, to issue Risk Confirmation letter in the date 14.02.2008, suppressing the fact of fire incident dated 17.02.2008 and consequent loss. He also sent a draft of Risk Confirmation through fax. The official innocently issued Risk Confirmation letter in the date 14.02.2008, on 18.02.2008, due to insistence, misguiding and on concealment of material fact relating to fire.

11. Two circumstances clearly proved the fraudulent act of Satyan Insurance Broker, firstly cheque of Rs.6825/- was bearing date 13.02.2008. The complainant issued his cheque of Rs.23891 on 13.02.2008. Had Satyan Insurance Broker informed the complainant that insurance premium of Rs.30176/- was payable then the complainant instead of issuing cheque of Rs.23891/- would have issued the cheque of the full amount. Secondly it was not a normal conduct that any insurance agent would give premium of a client from his account. The Insurer filed Affidavit of Evidence of Ms. Shubhangi Vinayak Sawant, an employee of the Insurer to prove that while tendering this second cheque, Mr. Vinod Kukreti, from Satyan Insurance Broker fraudulently insisted Ms. Monalisa Bandhopadhyay, an employee of the Insurer, to issue Risk Confirmation letter in the date 14.02.2008, suppressing the fact of fire incident dated 17.02.2008 and consequent loss. He also sent a draft of Risk Confirmation through fax. Ms. Monalisa Bandhopadhyay innocently issue

Please Login To View The Full Judgment!

d Risk Confirmation letter in the date 14.02.2008, on 18.02.2008, due to insistence, misguiding and on concealment of material fact relating to fire and loss. It appears more probable that Satyan Insurance Broker presented this cheque of Rs.6825/-(filed along with Affidavit of Evidence of S. Srinivasan) on 18.02.2008 and obtained Risk Confirmation letter on 18.02.2008. This Risk Confirmation letter was sent to the complainant on 18.02.2008 as is proved from the endorsement of receiving made on it by the complainant’s staff. 12. Section-19 of Contract Act, 1872, provides that when the consent of an agreement is caused by coercion, fraud, or misrepresentation, the agreement is voidable at the option of the party whose consent is so caused. Supreme Court in Reliance Life Insurance Company Vs. Rekhaben Nareshbhai Rathod, (2019) 6 SCC 455 and New India Assurance Company Ltd. Vs. Satpal Singh Muchal, (2019) 12 SCC 673, held that a contract of insurance is a contract of uberrima fide and non-disclosure of material fact, vitiates the insurance policy. In the fact of the case, I do not find any illegality in not issuing the insurance policy by the Insurer as the Risk Confirmation letter was obtained on concealment of material fact relating to fire incident dated 17.02.2009. If Risk Confirmation letter had been issued on 14.02.2008, the complainant would not have committed two days delay in informing the Insurer in respect of fire incident. Appointment of the surveyor on 20.02.2008 was an innocent mistake, the complainant cannot get any benefit of it. O R D E R In the result, the complaint has no merit and is dismissed.
O R