IMPORTANT POINT
Where accident causing damage to insured machinery took place within a month of proposal policy had not been issued enough time could not be said to have lapsed to assume or infer implied acceptance of proposal.

S. N. Kapoor, Presiding Member— The appellant/opposite party insurer is aggrieved by the direction issued by the State Consumer Disputes Redressal Commission, Madhya Pradesh to pay Rs.2,51,619 with interest @ 6% p.a. from 2.2.93 in respect of insurance claim.

First, the facts in brief:

2. The complainant obtained insurance policy as per Annexure-1, for a sum of Rs.12,00,000 relating specifically mentioning the insurance of Submerged Arc Furnace with lining shell, inter connecting material, inter connecting cables II KV & LV side circuit bricks. The machinery for a sum of Rs.5,00,000 and Arc Furnace with lining shell for a sum of Rs.7,00,000 were sought to be insured. A sum of Rs. 48,511 was paid as premium. Though the proposal was sent on 13.9.91 but the policy was not sent. Due to explosion on 25.1.92, the insured sub-merged Arc Furnace was completely damaged. Intimation was given telephonically as well as in writing to the Insurance Co. On 27.1.92, the complainant submitted a claim form and claimed the amount of Rs.5,00,199.09 paise. Policy dated 9.12.1991 was delivered to the complainant on 24.2.1992 annexing endorsement excluding from its scope of cover the damages as to Electrodes and Refractory lining in relation with Arc Furnace.

3. The Insurance Co. appointed the surveyor V.N. Sarin & Co. Pvt. Ltd. to assess the loss and damage. Mr. Amit Rupal, Surveyor gave the report on 22.11.1992 and as such, net payable amount was Rs.96,320 after deduction of depreciation. The Insurance Co. offered a sum of Rs. 88,778. It was not acceptable to the complainant. Reminders in this regard were not considered and ultimately, the complaint was filed.

4. During the course of pendency of the matter, in compliance of this Commission’s order dated 3.5.95, the Insurance Co. paid the amount of 96,320 dated 20.6.1995 vide cheque No.617437 to the complainant.

We have heard the parties at length and gone through the record.

Two questions arise for consideration:

(i) Whether the Insurance Co. was bound by the averments made in the proposal or in the policy? and

(ii) Whether the appellant could take and rely on plea other than the plea taken in their repudiation letter?

4. Since the other questions stand settled in view of the history of the litigation in this matter and the fact that the matter was remanded to the State Commission after setting aside the order of the State Commission directing the complainant to approach the Civil Court, the matter was remanded.

5. As regards the first point, one has to take note of certain situation as obtained in this case. In case the proposal relates to a general policy in accordance with the terms of the ordinary policy of the Insurance Co. then the terms and conditions mentioned in the proposal may be deemed to have been accepted by the Insurance Co, if the Insurance Company would not respond in time. But if policy in the case is not in tune with the general policy of the insurance ordinarily issued by the Insurance Co., then it would become very difficult to accept the situation where it could be said that the terms and conditions of the proposal should be deemed to have been accepted.

6. It may be further mentioned that the proposal is just an offer which is to be accepted or rejected by the Insurance Co. and the contract of insurance comes into existence ordinarily only after issuance of the policy. In case of delay extraordinary implied acceptance may be inferred in case of non-rejection of the proposal for the insured would continue to believe that it had been accepted. Here in this case, the proposal was made on 17.12.1991 and not even one month had passed that the explosion had taken place. Accordingly, enough time had not lapsed to assume or infer implied acceptance of the proposal.

7. In the aforementioned circumstances, one has to take into consideration terms of the policy alone, though there is no doubt that the Insurance Co. had failed to reject the proposal form submitted by the complain