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Tirhut Dugdh Utpadak Sahkari Sangh v/s Oriental Insurance Co.Ltd.

    CWJC 4122 of 2004

    Decided On, 21 January 2008

    At, High Court of Bihar


    For the Appearing Parties: --------

Judgment Text

(1.) HEARD.

(2.) THE petitioner-Co-operative Society approached by the Oriental Insurance Company limited, a subsidiary of General insurance Corporation of India, a Govt. of India undertaking, now wholly owned Govt. of india Company, for subscribing to the Janta personal Accident Insurance Policy of the company for its employees. The petitioner-Co-operative was given to understand that on payment of lump sum premium in relation to its disclosed employees, the employees of the petitioner-Co-operative would be covered risk against certain events for a period of ten years. The premium was a one time premium in respect of all the disclosed employees but the policy was to operate for a period of ten years. Petitioner agreed

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to subscribe to the said policy and paid a lump sum premium for ten years coverage. They were then issued the policy bond and certificate, which contain the conditions of the policy, the relevant part thereof has been annexed by the petitioners as Annexure 9 to their interlocutory application. The petitioners have challenged the decision of the insurance Company to short terminate the policy and refund the pro-rata unutilised premium. The effect of this decision is that from the date and time the decision was taken notwithstanding the ten years coverage period having not expired, the policy was terminated and no further risk was covered for entertaining any claim.

(3.) PETITIONER submits that this short termination of the policy, which was for a period often years is arbitrary and the conferment of such a power on the Insurance Company is bad as opposed to public policy thus is void in terms of Section 23 of the Con tract Act. It is further submitted that the insurance Company cannot act as a monopolistic body and dictate arbitrary terms and conditions. For this purpose petitioner placed reliance on two judgments of the Apex court being Central Inland Water Transport corporation and Anr. v. Brojo Nath Ganguli and ors. since reported in 1986 (3) SCC 196 : air 1986 SC 1571 and D. T. C. v. D. T. C. Mazdoor Congress, (1991) Supp (1) SCC 600 : AIR 1991 SC 101.

(4.) ON the other hand, Mr. Ashok priyadarshi, learned counsel for the Insurance Company submits that insurance is a matter of contract. Insurance Company was under no legal obligation to cover the risk without the contract. Once the petitioner had entered into contract out of their own volition, knowing the terms thereof, they cannot now escape from such a contractual obligation. In other words, he submits that the petitioner cannot be allowed to approbate and reprobate at the same time in relation to terms of the contract. For this reliance has been placed on Nagubai Ammal and others v. B. Shama Rao and others, since reported in AIR 1956 SC 593 and in particular para 26 thereof.

(5.) HAVING heard learned counsel for the parties and with their consent this application is being disposed of at the stage of admission itself.

(6.) IN the present case, it is undisputed that the present policy being Janta Personal accident Policy is an insurance policy taken out by the respondent-insurance company. In law, there is no compulsion on either party to opt for the policy or to grant the same. It is also not a case where by not granting the policy or not extending the policy any right or fundamental right of the petitioner is affected in any manner, whether to take a policy or not is a voluntary decision to be taken by the beneficiary and similarly whether to grant the policy covering the risk or not is a voluntary decision to be taken by the Insurance Company. There is no compulsion either in fact or in law in this regard on either party. That being so, in my view, the cases relied on by the petitioner being Central Inland Water Transport Corporation and Anr. and d. T. S. (supra) have noapplication.

(7.) THE Apex Court in both the cases held the rules and conditions of terminating services without notice to be bad as oppose to public policy in terms of Section 23 of the contract Act, basically on the principle of unequal bargaining position of the party. Employment being a source of livelihood and a source of life and being as a scarce commodity the bargaining power of a workman and that of employer (State) were grossly unequal and thus the Apex Court held that the hire and fire rule, would be void and even though the employees had signed on the dotted lines of contract of employment or work bound by the rules otherwise those conditions of the rules could not be enforced against the employees. In my view, that situation does not arise in the present case.

(8.) HERE in the present case a policy covering certain risk was offered. That policy itself contained a condition with regard to short termination of policy with a liability on the insurance company to refund unutilised pro-rata premium paid.

(9.) THE insurance company took a policy decision to short terminate all such policies. It is not a petitioner's case that the respondent-insurance company chose only the petitioner-Co-operative for such short termination. It is fairly admitted at the bar that the policy decision applied to all such policies issued by the respondent-insurance company. Thus, there is no allegation of discrimination. That being the position, in my view, the condition appended to the policy cannot be ignored or escaped from. Nothing has been shown that could render that condition in oppose to public policy. Insurance business is a business in true sense. It is not a part of pure social service by a welfare state. If the Insurance Company decides that it is an uncovered risk, it is their option to act or not to act but law cannot compel the insurance Company to cover a risk, which they otherwise are not ready to do. The policy decision is not opposed to public policy in any manner.

(10.) LEARNED counsel for the respondent-Insurance Company had rightly relied on the decision of Nagubai Ammal and others v. B. Sharma Rao and others (supra) wherein the principle with regard to its employees impermissibility to approbate and reprobate has been discussed in detail. Their Lordships have quoted from earlier judgments and have said that a plaintiff is not permitted to approbate and reprobate. The phrase is apparently borrowed from the Scotch law, where it is used to express the principle embodied in our doctrine of election, namely, no party can accept and reject the same instrument. A person cannot say at one time that a transaction is valid and thereby obtain some advantage, to which he could only be entitled on the footing that it is valid, and then turn round and say it is void for the purpose of securing some other advantage. Thus, a party must accept the agreement as a whole if he has voluntarily entered into it or reject as a whole. That being the situation, the petitioner is bound by the policy of the insurance, which contained a condition, being condition No. 5, which gave an unilateral right to the insurance Company to short terminate the policy with an obligation to refund the unutilised pro-rata premium. That was done. In my view, the decision of the Insurance Company to short terminate the policy cannot thus be assailed.

(11.) THE writ petition merits no consideration and is dismissed accordingly. Petition dismissed

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