Back
DELHI STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, NEW DELHI
Honble Mr. Justice A.P. Chowdhri, President &
Mr. Desh Bandhu. Member
ORIENTAL INSURANCE CO. LTD.—Appellant
versus
MRS. SANGEETA BABBAR—Respondent
Case No. A-61 of 1996—Decided on 26.8.1997
Counsel for the Parties :
For the Appellant :Mr. S.D. Wadhwa, Advocate.
For the Respondent: Mr. Sunil Taneja, Authorised Representative.
The Insurance Company's negligence in presenting the cheque for renewal premium and failure to inform the complainant about the dishonored cheque constituted deficiency in service, making it liable to pay the claim amount despite the non-payment of premium.
Headnote:
INSURANCE - INSURANCE ACT, 1938 - SECTION 64-VB - RENEWAL PREMIUM - DISHONOUR OF CHEQUE - NEGLIGENCE OF INSURANCE COMPANY - DEFICIENCY IN SERVICE - LIABILITY OF INSURANCE COMPANY.
Fact of the Case:
The complainant purchased a Maruti Van with the financial participation of City Bank and obtained comprehensive insurance from Oriental Insurance Company. The Bank handed over a blank cheque for renewal premium to the Insurance Company, which was filled up and deposited in the Bank after the expiry of the original policy. The cheque was returned uncashed due to unclear effects, but the Insurance Company failed to inform the complainant or present the cheque again. Nine months later, the insured vehicle was stolen. The Insurance Company repudiated the claim on the ground that the contract of insurance was void due to non-payment of premium.
Finding of the Court:
The District Forum held that the Insurance Company was deficient in rendering services to the complainant and directed it to pay the claim amount along with interest. The State Commission upheld the District Forum's order and dismissed the Insurance Company's appeal.
Issues: 1. Whether the Insurance Company was negligent in presenting the cheque for renewal premium, resulting in the lapse of insurance coverage? 2. Whether the Insurance Company's failure to inform the complainant about the dishonored cheque and present it again constituted deficiency in service?
Ratio Decidendi: 1. The Insurance Company was negligent in presenting the cheque for renewal premium after the expiry of the original policy, leading to a gap in insurance coverage. 2. The Insurance Company's failure to inform the complainant about the dishonored cheque and present it again amounted to deficiency in service under Section 2(1)(g) of the Consumer Protection Act, 1986.
Final Decision: The State Commission dismissed the Insurance Company's appeal and upheld the District Forum's order directing the Insurance Company to pay the claim amount along with interest.
Mr. Justice A.P Chowdhri, President— Brief facts leading to this appeal are that Mrs. Sangeeta Taneja complainant for short, purchased Maruti Van with the financial participation of City Bank. The complainant had given blank cheques for repayment of the loan amount to the bank including some cheques for payment of premium to the Insurance Company. Accordingly comprehensive insurance was obtained in favour of the complainant from Oriental Insurance Company for the period 7.3.1991 to 6.3.1992. With regard to the renewal, the aforesaid Bank handed over a blank cheque on which date namely 28.2.1992 as well as the amount of premium were filled-up by the Insurance Company. The cheque was deposited in the Bank on 31.3.1992 even though the original policy expired on 6.3.1992 and complainant's cheque had been provided to the Insurance Company long before the expiry of the said period. The cheque was received back uncncashed on 20.4.1992 with the remarks that the effects were not clear and the cheque may be presented again. The cheque was not presented again nor was the insured informed that the cheque had not been encashed. On the night between 13/14 January, 1993 that is nearly nine months after the dishonour of the cheque, the insured vehicle was stolen. FIR was lodged on 14.1.1993. The City Bank was unformed on 15.1.1993 and so was Insurance Company informed. On 20th April, 1993, the Insurance Company asked the complainant to transfer ownership of the stolen vehicle in favour of the Insurance Company. On 27.4.1993, the complainant was asked to submit un traced report of the police regarding the FIR. On 27.4.1993, the Divisional Manager of the Insurance Company requested RTO to transfer ownership of the lost vehicle in favour of the Insurance Company as the claim was to be settled on total loss basis. The Insurance Company approved claim for Rs. 1,19,000/- as proposed by Dinesh Goel and Co., Surveyor. The complainant was accordingly asked to submita discharge voucher. By 18.5.1993, the complainant handed over key of the lost vehicle to the Insurance Company. A report was than received from the department concerned of the Insurance Company that the premium cheque had not been encashed and accordingly the Insurance Company withheld the payment of the amount. The complainant served legal notice on3.9.1993. The Insurance Company repudiated its liability by letter dated 28.10.1993. The complainant accordingly filed a complaint. The main contention on behalf of the O.P.-Insurance Company was that in the absence of payment of premium, the contract of insurance was rendered void and accordingly the Company was justified in repudiating the claim. By a detailed and well-reasoned order, the District Forum rejected the contention and, in the peculiar facts and circumstances of the case directed the Insurance Company to pay to the complainant Rs. 1,19,000/- alongwith interest @ 18% per annum w.e.f. 27.4.1993 till date of payment. Aggrieved by the order, the O.P. has preferred this appeal.
2. We have heard Mr. S.D. Wadhwa, Advocate for the appellant and Mr. Sunil Taneja, Authorised Representative of the respondent.
3. Basing himself on five decisions, to be shortly noted, Mr. Wadhwa contended that in the absence of payment of premium the Insurance Company could not assume risk under the policy in view of the provisions of the Section 64-VB of the Insurance Act, 1938. The decisions relied on by Mr. Wadhwa are as under :
(1) Chandan and Another v. Kanwarlal & Another, 1987 ACJ 816 (Delhi High Court).
(2) United India Insurance Company Limited v. Ayeb Mohammed and Ors., 1991 ACJ 650 SC.
(3) Hotel Southern (P) Limited v. National Insurance Company Limited and Others, 1986-96 CONSUMER Part-II 2803 NS (NC).
(4) United India Insurance Company v. N. Mohan Reddi and Another, 1986- 96 CONSUMER 2788 NC.
(5) Vijay Kumar Krishan Gopal Bankers & Commission Agent Kurukshetra v. United India Insurance Company, 1986-96 CONSUMER 2595 NC.
4. These cases related
