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2011 Supreme(Mad) 3083
High Court of Judicature at Madras
VINOD K. SHARMA
The National Insurance Co. Ltd., Rep. by its Chairman & Managing Director & Another
Versus
M/s. Shriram Investments Ltd., Rep. by its Director, S. Venkatakrishnan & Another
O.P.No.199 of 2009
Decided on : 01-07-2011
For the Petitioners:N. Vijaya Raghavan, Advocate.
For the Respondents:R1 - Vijay Narayanan, S.C., Srinath Sridevan, K. Hari Shankar, T.K. Bhaskar, Advocates.
The court established the liability for refund of premium, rejection of adjustments, and entitlement to claimed amounts based on documentary evidence and admissions.
Headnote:
Arbitration and Conciliation Act - MOU - 34 - Summary: The court discussed the dispute arising from a Memorandum of Understanding (MOU) between the parties, the deposit of premium, cancellation of the MOU, and reconciliation of accounts. The court analyzed the claims made by the parties and the defenses raised, and ultimately decided on the entitlement to refund, adjustment of premium, and liability for various amounts.
Fact of the Case:
The parties entered into a MOU for insurance policies. Dispute arose regarding premium deposit, cancellation of policies, and reconciliation of accounts. The respondent filed a claim petition under Section 11 of the Arbitration and Conciliation Act, claiming various amounts.
Finding of the Court:
The court found in favor of the respondent on various claims, rejecting the petitioner's justifications and defenses. The court held the petitioner liable for refund of premium, rejected adjustments claimed, and awarded sums to the respondent with interest.
Issues: Dispute over premium deposit, cancellation of policies, reconciliation of accounts, and entitlement to various amounts claimed by the respondent.
Ratio Decidendi: The court relied on the documentary evidence and admissions to determine liability for refund, rejection of adjustments, and entitlement to claimed amounts.
Final Decision: The court awarded sums to the respondent with interest, rejected the petitioner's justifications and defenses, and held the petitioner liable for refund of premium and other amounts claimed by the respondent.
1. This petition, under Section 34 of the Arbitration and Conciliation Act, 1996, has been filed by the petitioners to challenge the award dated 04.12.2008 passed by the learned arbitrator.
2. The parties to the litigatioin entered into a Memorandum of Understanding (MOU) on 05.03.2002. The object of the MOU was to permit the respondent to issue cover notes and the petitioner company was to issue regular insurance policies for one year operating from the date of issue of cover notes.
3. In order to implement the MOU, the respondent no.1 herein deposited a sum of Rs.8,00,000/- (Rupees Eight Lakhs only) to cover the premium for the policies to be issued by the petitioner. The respondent thereafter deposited further sums from time to time to cover premium payable to the insurance policies in the future. The petitioner deputed staff members at the office of the respondent finance company, to issue policies on the basis of cover notes. In December 2004, the petitioner company informed the respondent that account of respondent did not have sufficient cash to meet the premium with respect to 750 cover notes, issued by the respondent. The respondent was accordingly asked to deposit a sum of Rs.25,00,000/- (Rupees Twenty Five Lakhs only) and also furnish indemnity bond to cover insurance policies, issued by the respondent.
4. The parties agreed to cancel the MOU with effect from 15.03.2005. By cancelling the MOU, it was stipulated therein that the respondent will not utilize the cover note with effect from 15.03.2005 and return the unutilized cover notes with indemnity to the petitioner.
5. The parties also agreed to reconcile the account within one month of the date of cancellation of the MOU.
6. In terms of the deed of cancellation, on 27.06.2005, the petitioner company confirmed the credit balance on 31.03.2005, to be Rs.1,91,02,499/- (Rupees One Crore Ninety One Lakhs Two Thousand and Four Hundred Ninety Nine only). Thereafter on 30.06.2006, the petitioner company confirmed the credit balance of respondent to be Rs.173.41 lakhs. In the process of reconciliation, it was pointed out by the petitioner company that the total cover note books, issued to the respondent was 514, out of which, respondent had accounted only for 500 cover notes. The respondent was accordingly directed to return the remaining 14 cover note books. This was complied with by the respondent.
7. On 15.06.2005, the insurance company asked for return of 149 cover note leaves, which was said to be not available in the cover note books. It is not disputed that this direction was also complied with. The respondent company accordingly asked for return of amount due and outstanding.
8. In view of the dispute having arisen between the parties, the respondent thereafter approached the Hon'ble Chief Justice under Section 11 of the Arbitration and Conciliation Act, for appointment of an Arbitrator. The Hon'ble Mr.Justice R.Balasubramanian (Retd.), was appointed as the Sole Arbitrator. The claimant filed a claim petition claiming under eight heads, which read as under:
i) Under Claim No.1, the claimant / first respondent herein prayed for a decree for a sum of Rs.173.41 lakhs with interest @ 24% p.a. with effect from 15.03.2005 till date of payment, the amount which was said to be lying to the credit of the respondent.
ii) Under Claim No.2, the respondent herein sought refund of Rs.25 lakhs deposited as additional deposit along with interest @ 24% p.a.
iii) Under Claim No.3A, claim for Rs.82,75,405/- (Rupees Eighty Two Lakhs Seventy Five Thousand and Four Hundred Five only) along with interest @ 24% was claimed on account of premium paid for 766 policies, which were cancelled.
iv) Under Claim No.3B, the respondent herein also claimed a sum of Rs.81.86 lakhs along with interest @ 24% p.a. for refund of amount debited with 687 cover notes, issued either for a fresh policy or for renewal, as no policies were issued against cover notes.
v) Under Claim No.3C, the claiman
