The main legal point established in the judgment is that the Insurance Regulatory and Development Authority (IRDA) Regulations do not create a statutory liability of the insurance company to pay brokerage to the broker, and the relationship between the insurance company and the broker must be contractual for the payment of commission.

1. The plaintiff has sued the defendant for recovery of Rs.1,26,99,578/- with interest and costs.

2. It is the case of the plaintiff in the plaint:

(i) that the plaintiff is an insurance broker duly licensed by the Insurance Regulatory & Development Authority (IRDA) and the defendant is a company carrying on business of insurance;

(ii) that in anticipation of Uttar Pradesh State Road Transport Corporation (UPSRTC) requiring insurance for its buses, the plaintiff introduced itself as an insurance broker for handling UPSRTC’s business and UPSRTC vide its letter dated 3rd January, 2004 authorized the plaintiff to negotiate premium rate with terms and conditions for Third Party plus Passenger Liability cover for their business;

(iii) that however subsequently UPSRTC floated tenders inviting bids for insurance premium rates for about 4000 buses;

(iv) that the plaintiff had detailed meetings with Mr. Yogesh Lohiya, General Manager (Technical) and Mr. I.S. Phukela, Assistant General Manger (RO-1) at the Head Office of the defendant wherein inter alia the loading of tariff premium was discussed;

(v) that Mr. Yogesh Lohiya, General Manager (Technical) of the defendant confirmed to the plaintiff and agreed that if the defendant gets the said business from UPSRTC, the defendant shall pay 10% of the premium amount received by the defendant from UPSRTC as brokerage to the plaintiff;

(vi) that brokerage at 10% was consistent with the customary brokerage and IRDA Rules which also permit payment of 10% as brokerage to brokers;

(vii) that on assurance of the defendant that plaintiff would be paid 10% brokerage, the plaintiff made efforts for securing the business of UPSRTC;

(viii) that the defendant vide its letters dated 27th February, 2004 and 19th March, 2004 confirmed that the rates quoted by the plaintiff to UPSRTC had their approval;

(ix) that the plaintiff submitted its bid dated 19th March, 2004 to the tender of UPSRTC;

(x) that the bid of the plaintiff was accepted by UPSRTC vide letter dated 8th April, 2004 and the plaintiff immediately informed the defendant of the same;

(xi) that pursuant to the spade work done by the plaintiff, UPSRTC issued cheque for Rs.56,99,683/- in favour of the defendant towards premium of the first batch of 500 buses with effect from 10th May, 2004 and which cheque was forwarded by the plaintiff to the defendant, accepted by the defendant and in pursuance whereto the defendant issued the Cover Note dated 10th May, 2004 for the period till 9th May, 2005;

(xii) that the said Cover Note also indicated that it was through the plaintiff;

(xiii) that the plaintiff vide its letter dated 3rd June, 2004 called upon the defendant to pay 10% brokerage;

(xiv) that the defendant vide its letter dated 6th July, 2004 advised the plaintiff that the defendant had authorized Mr. K.L. Gupta, Senior Divisional Manager to coordinate with the plaintiff;

(xv) that due to efforts of the plaintiff, the defendant got insurance premium to the total tune of Rs.4,00,30,781/- from UPSRTC and the defendant became liable to pay 10% thereof i.e. Rs.40,03,078.10 paise to the plaintiff;

(xvi) that the policies were renewed and the defendant received further premium of Rs.5,95,60,267/- on which the plaintiff became entitled to brokerage of Rs.59,56,026.70 paise;

(xvii) that thus the plaintiff is entitled to Rs.99,59,104.80 paise;

(xviii) that the plaintiff is entitled to interest @ 15% per annum for the delay in payment.

Hence the suit for recovery of Rs.1,26,99,578/- with future interest and costs.

3. The suit was entertained. The defendant contested the same, pleading:

(a) that the plaintiff had earlier filed petition for winding up of the defendant being CP No.321/2005 and which was dismissed as withdrawn as the plaintiff had failed to prove any agreement or admission of liability on behalf of the defendant;

(b) that the plaintiff in its letter d