BEFORE THE DISTRICT CONSUMER REDERESSAL FORUM AT TURA
Consumer Case No 2 of 2014

PRESENT

N Khan (MHJS)                                President

Shri Barlind M Sangma                Member

1 Md Abdul Hamid s

son of (L) Pashan Ali

resident of Village Jadigittim Bazar

P0 & PS Nongalbibra District South Garo Hills

Meghalaya                              Complainant

Versus

1. The Branch Manager

United India Insurance Co .Ltd Fancy Valley  Tura 794001.

2.Mis United India Insurance Co. Ltd 24 White Road

Chennai 600014

Opposite parties

Consumer Case No 2/2024: Page 2 of 19

JUDGEMENT

1. The Complainant   has approached     this Forum by way

of     Complaint     under   section 12 of the   Consumer

Protection   Act 1986  complaining     of   deficiency  of

service by the Opposite party . The Complainant   was

running   a   business   of grocery    and stationery  shop
along with godown at Jadigittim Bazar in South Garo
hills     . The       complainant    in order to secure his

stock in trade of        the    above mentioned   business

procured       two     Standard   Fire   and Special Peril
Policies from the Opposite party through his agent.
The Complainant paid a premium of Rs.6405 vide

cheque dated 04.2.2013   for both the policies.

2. The  policy   No    130805/11/12/11/0000622 covered   the

risk     for   the shop to the tune  of Rs 800000 (Eight

Lakh) and the Policy No130805/11/12/11/0000623 covered

the risk for the Godown to the tune of     Rs 700000 (

seven lakh)   the premium for the both the policies

was paid by common cheque by the Complainant . The
opposite      party upon receipt of the premium issued

policies on 25.02.2013 to the complainant. The Opposite party issued a receipt dated 25.2.2013 for the premium of both the policies however the operative period of both the policies as indicated on the policies was

Consumer Case No 2/2014: Page 3 of 19

from 00:00 hrs of 26.02.2013 to 25.02.2014. The Premium received           by the    Opposite   Party   on 25.02.2013   was

credited    on 25.2.2013 during   transaction hours on the
same day.

3. That on 25.02.2013  night    at   around 8:30 P.M  fire

broke out at Jadigttim Bazar which engulfed the complainant's shop and godown covered by the policies abovementioned. Since the complainant shop and godown was covered by the policies mentioned above. The Complainant made claim for the loss suffered .

4. That the  Opposite party vide letter dated 6.12.2013 repudiated the claim and disowned liability to compensate the complainant  and treated the claim as no claim on account of there being no concluded contract between the parties. The Complainant being aggrieved     by the repudiation of the claim issued Legal notice through his Counsel                          highlighting that the policies ought to have operated from the date the
   premium received and not on the date shown on the
   policies. The Opposite party responded to the legal notice   by stating that   the accident occurred prior to the operation of contract period as such the Company was left with no other alternative but  repudiate                 the claim. The Complainant being aggrieved

Consumer Case No 2/2014: Page 4 of 19

by repudiation of his claim by the Opposite Party has filed this instant complaint  alleging deficiency of service by the opposite party.

5. The Opposite Party entered appearance and filed reply to the complaint. The Opposite        party in his reply do not
   dispute that the policies covered both the shops and

the godown   of the complainant  however  the Opposite

party disputes the fact that  insured shop and godown

of the complainant suffered loss in a fire during the
contracting   period.   The   opposite   party   insurance

company     in their reply  has taken a stand that the

contracting period commenced from 26.2.2013 to 25.2.2014and the fire broke out at 8:20 PM to 8:30PM of 25.2.2013 i.e before the operation of the period of insurance contract.

6. That  based    on the   pleading   and   denial     of the

parties   this Forum  was   pleased   to framed  following

issues for the purpose of   adjudication.

1. Whether the instant complaint is maintainable in the
   present form.
2. Whether  the   Policies   obtained   by   complainant

became   operative   from the   date   and   time    of

receipt of  the cheque (premium amount)

3. Whether there was any deficiency in service by the 0.P Insurance Company in repudiating              the Claim of the
   Complainant.

Consumer Case No 2/2014: Page 5 of 19

4. Whether the accidental fire broke out in the shop

of the     complainant

5. Whether the complainant is entitled  to relief as
   prayed

7. The   complaint  in order     to   establish    the   above
   mentioned issues had examined himself has witness The Opposite Party did not bring any witnesses and relies on pleadings for defense.
8. ISSUE NO 1 : DECISION AND THE REASON THEREOF

Whether the instant complaint is maintainable in the present form.

That the complaint is consumer there is no dispute. The complainant had entered into indemnity contract with the Opposite party by hiring the

service    of the Opposite party on a consideration

of Rs 6405 (premium) under    the Standard   Fire   and

Special Peril Policy to compensate      the Complainant

in event  of loss due to accident /fire. The policy

No   130805/11/12/11/0000622 covered   the  risk   for

the shop    to the tune    of Rs 800000 (Eight Lakh)

Exhibit 1 and   the Policy No130805/11/12/11/0000623

covered the risk for the Godown to the tune of  Rs

700000 ( seven lakh)       Exhibit 2 . The      opposite
Party repudiated the claim of the complainant on the

Consumer Case No 2/2014: Page 6 of 19

ground that the accident took place prior to the commencement of the contracting period however the premium for the policies was received prior to the accident. The Complaint is of deficiency of service in indemnifying the complainant as such Complaint under section 12 of the Consumer Protection Act 1986 is maintainable. The issue is decided in affirmative.

9. ISSUE NO 2 : DECISION AND THE REASON THEREOF

Whether   the   Policies   obtained   by   complainant

became operative from the date and time of receipt of the cheque (premium amount) or the date mention on the Policy

The     case of the   complainant   stand   on

upside down Pyramid on issue No 2    the decision    on

the issue no 2 shall have corollary effect  on the
remaining issues.

10. Before the issue is dealt with it would be proper to
    place the facts which are not disputed .Exhibit 1 and 2 policies was for a period of lone )   the date of
    commencement of contract shown on the policies are 26.2.2013 upto 25.2.1014      the premium of Rs 6405 for

both the Policies was received by the opposite party vide cheque dated 4.2.2013 on 25.2.2013 0 5:30 PM and the said cheque was credited on the same day Exhibit 3 the receipt of premium against the policies

Consumer Case No 2/2014; Page 7 of 19

on 25.2.2013. The opposite party do not dispute that Fire Broke out on 25.2.2013 at around 8.30 PM

11. The complainant adduce his evidence in chief
    on affidavit upon going through the deposition of the complainant it is found that     the complainant    has

reiterated the fact stated in the Complain petition
however the lacunas in the evidence of the complainant

has been     filled by the    Opposite   Party    in cross

examination .The    complainant      in cross examination

stated that    he   had   paid   the premium amount of    Rs

6405( Six thousand four hundred  and five only ) through

cheque dated 4.2.2013 on 4.2.2013to the agent of the company with the assurance that Complainant shall receive the Policies on the following day that is on 5.2.2013 The premium amount of Rs 6405( Six thousand four hundred and five only ) was credited only on 25.2.2013 ( Exhibit 3 The contesting parties are at dispute as to whether the Policies came in operation from the date of the receipt of the premium or the date mention on the policies purported to be proposed by the complainant.

12. It would be useful to refer to section 64 VS of

the   Insurance    Act 1938 for    easy   reference   it is
quoted below:

64VB. No risk to be assumed unless premium is received in advance.

Consumer Case No 2/2014: Page 8 of 19

1. No insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed is made in advance in the prescribed manner.
2. For the purposes of this section in the case of risks for which premium can be ascertained in advance the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer.

Explanation.Where the premium is tendered by postal money order or cheque sent by post the risk may be assumed on the date on which the money order is booked or the cheque is posted as the case may be.

3. Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured and such refund shall in no case be credited to the account of the agent.
4. Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer_ he shall deposit with or despatch by post to  the insurer the premium so collected in full  without deduction of his commission within  twenty-four hours of the collection excluding bank and postal holidays.
5. The Central Government may by rules relax the requirements of subsection (1) in respect of particular categories in insurance policies.

1(6) The Authority may from time to time specify by the regulations made by it the manner of receipt of premium by the insurer.

1. Ins. by Act 42 of 2002 sec. 13 (w.e.f. 13.9.2002).

Consumer Case No 2/2014: Page 9 of 19

13. That the agent of the Opposite party is under
    statutory obligation to deposit the premium collected on a policy of insurance on behalf of the insurer
    within 24 hrs of the collection and if he office of insurer is far off  agent shall dispatch              the premium
    by post
14. Section    64 VB  Clause (2)        provides    that   the

risk may not be assume earlier than the    date on

which the premium is paid and the Explanation provides that where premium is paid by postal money order or cheque send by post  the risk may be assumed from the date on which money order was booked or the cheque is posted

15. The agent   of the Opposite Party ought to have
    send the premium amount within 24 hrs to the insured  in as much as   the         risk   is     assumed       from the   time

premium     is receipt by the   insurer      unless contrary

intention   is expressed by the insurer . The Cheque
amount was paid by the complainant to the agent of
the Opposite party on 4.2.2013 and same was never

deposited with within the statutory period   of 24 hrs

no reason has been assigned    for not depositing the

cheque dated    4.2.2013 by the   agent   of the   Opposite

Party .Exhibit 3     the   receipt    explicitly indicates
that the cheque was credited on 25.2.2013 after the
lapse of 21 days from the date of its issuance by

Consumer Case No 2/2014: Page 10 of 19

the Complainant.The complainant in his cross examination has stated that:

"I gave a cheque dated 4.2.2013 for an amount of Rs. 6,405 only towards two insurance policies. The agent told me that the policy papers would be given to him on the following day. The transactions took place at JadigIttim Bazar. The agent told me that he would submit the papers in the office of the 0.P Insurance on 5.2.2013 and the policy would be sent to me on the same day"

16.    The   complainant had   paid   the   premium   for the

both the policies vide cheque dated 4.2.2013 with an intention to purchase the policy on the following day. There was no occasion for the Complainant to issue pre- dated cheque of 4.2.2013 for purchasing policies proposing date of insurance contract to commence from,00.00hrs 26.2.2013. The Proposal date mention in the policies Exhibit 1 and 2 is unilateral proposal by

the   Opposite Party without any consent    or approval
of the Complainant the same cannot be construed as
the proposal date of the complainant nothing has

been brought on record by the Opposite party   to show

that      Complainant     had proposed     that   date   for

commencement     of the      contract  from 26.2.2013.The

complainant     in his   evidence     stated     that  "the
proposal form did not reflect the exact date of the

Consumer Case No 2/2014: Page 11 of 19

validity of the policy . I dont know             what is proposal

form . I cannot read English . I can just write my name."           That agent of the Company  if allowed to

withhold   the   premium   beyond   24 hrs      it   would

provide and opportunity    to play mischief by fixing

any date of commencement of the contract . Section

64VB (4) protects the    consumers from any   such mischief

by the Company    or his agent.

17.      The   complainant   in order     to butter his    case

relied on decision of Apex Court : New India Assurance Co.Ltd Vrs Ram Dayal (1990)2 scc 680  where it was held by the Honble Apex Court that policy of any date would cover the liability of the insurer from

Assurance      Company     Vs Chinto Devi       reported      in

(2000) 7SCC 50 it was held that

New India Assurance Co. Ltd. v. Ram Dayal & Ors. reported in [LIT 1990 (2) SC 164 = (1990) 2 SCC 680] where this Court held when the policy is of any date it would cover the liability of the insurer from the previous mid-night preceding the same date hence even where accident in point of time is earlier than the time when insurance policy was issued the insurance Company would be liable. A change in this principle is brought

Consumer Case No 2/2014: Page 12 of 19

through decision of this Court which holds if there is any special contract mentioned in the policy it would be operative in terms of that contract hence where time is mentioned when was issued then the liability would cover only from the time it was issued. Reference is made in National Insurance Co. Ltd. v. Jikubhai Nathuji Dabhi (Smt) and Ors. reported in (1997 (1) SCC 66). This was a case where the policy was taken at 4.00 p.m. while accident took place at 11.00 a.m. This Court held in view of the special contract mentioned in the policy viz the time of its issue it would be operative from that time and not from the previous mid night. This decision has taken note of the aforesaid Ram Dayals case. The similar principle is also decided in New India Insurance Co. v. Bhagwati Devi & Ors. reported in (1998) 6 SCC 534). It was further held that Held in view of the subsequent decision adjudication of time is  essential and such adjudication being a fact  finding exercise case remanded to Tribunal for determination of time and the  liability of  insurer or owner

18.  From the above discussion it is understood that

in absence    of time mention in the cover note or the

Consumer Case No 2/2014: Page 13 of 19

policy   the date of      operation shall be midnight   of

the date policy issued . however if the date and time

is mention     in the policy it shall operate from the

date      and time mention in the policy  but in cases

where there is dispute with regard to date and time mention in the policy the same need to be determined by way of evidence  as it is a matter of facts

19. In the case in hand  premium was paid on 4.2.

2013  thereafter     the   complainant   did not have any

control   or say  over      it      as   discussed   above

Section  64/713(4) mandated   that     premium     shall   be

deposited within 24 hrs from   the date      of receipt

by the agent     The premium was deposited after 21

days that on 25.2.2013      the Opposite party or his

agent has failed    to advance any cause or causes   for

depositing    the   premium in     breach of    statutory

provision that    is section 64/713(4). The Opposite Party

•

knew very well  that the cheque towards the payment of

premium was dated   4.2.2013 no bonafide was shown by

the Opposite party    to apply its mind while receiving

premium.

20. No prudent man would issue pre date cheque  
    there is nothing on record to show that so call proposal was made by the complainant                for effecting the date
    of operation of the policy from 26.2.2013. In a contract

Consumer Case No 2/2014: Page 14 of 19

of insurance when an insured gives a cheque towards payment of premium or part of the premium, such a contract consists of reciprocal promise. The drawer of the cheque promises the insurer that the cheque on presentation would yield the amount in cash. It cannot be forgotten that a cheque is a Bill of Exchange drawn on a specified banker. A Bill of Exchange is an instrument in writing containing an unconditional order directing a certain person to pay a certain sum of money to a certain person. It involves a promise that such money would be paid

IN DIVISIONAL MANAGER, UNITED INDIA INSURANCE CO LTD. VS.  LABANGA SAHU REPORTED IN AIR 1999 ORI 193                 it was held that

That upon scrutiny of the Section 64VB of the Insurance Act 1936:

8. From a perusal of the above provisions, it is clear that the insurer may assume the risk from the date on which it receives the premium either in cash or by cheque. And the insurance agent who collects a premium on behalf of the insurer is obliged to either deposit or despatch by post the full premium collected to the insurer within twenty four hours of the collection Therefore as per the provision the payment and acceptance of premium by the agent brings into existence an insurance cover.

Consumer Case No 2/2014: Page 15 of 19

IN INDRA CHAND SAMSUKHA (M/s) Vs.        M/s NEW INDIA

ASSURANCE LIMITED : 2001 (3) GLT 370    it    was    held in
Para 9:

9. The Apex Court further observed that even in case of bouncing of cheques if the premium is made good before the date of accident the Insurance Company shall be liable. Thus the law is well settled that liability of the Insurance Company arises from the moment premium is received by the insurer. In these days of instant insurance for air journey transit insurance etc. no body can be expected to wait for receipt of the policy documents to cover his risk. The insurance is taken at the counter of the airports and by the time the head office issues the policy the journey will be completed or the period of risk will be over. In National Insurance Co. Ltd. (supra) the Apex Court considered this aspect of the matter also. In this case the insurer has not come up with the plea that the insurance policy was taken or purchased after the incident of fire. The premium was also not shown to be paid on a back date. Receipt of the amount on 26.12.86 and occurrence of fire taking place on 28.12.96 is nowhere disputed. It is also not the case of the insurer that the amount was returned back to the insured before the date of accident. As a matter of fact the insurer is using the said premium for the last 15 years and still refusing to settle the claim or pay the compensation for the damages.

Consumer Case No 2/2014: Page 16 of 19

23.     From the     above discussion it can be     safely

concluded   that   policies in the   instant case   became

operative from the dated of receipt of premium the premium was paid through cheque to the agent of the opposite party on 4.2.2013 the assume risk commences from 4.2.2013  further the cheque was credited prior to the accident on 25.2.2013 at around 5:30 ( Exhibit 3) there is no evidence from where inference can be drawn that the Complainant has proposed the date 26. 2.2013 for commence of the insurance contract. It is

apparent that the policies of the Complainant assume risk from the date of receipt of the premium i.e 4.2.2013 further the premium amount was credited on 25.2.2013 prior to the accidental fire  as such  the repudiation of the claim of the Complainant by the Opposite

Party   was   in breach   of the    contract   of service

entered between    the parties by virtue of the policies

Exhibit 1 and 2 and there has been infraction of section 64VB of the Indian Insurance Act 1938. There has been deficiency in service of the Opposite Party for which the Complainant is entitled to compensation . This Forum deem fit and proper to grant a compensation of Rs

10000 ( Ten Thousand    only )    for deficiency of service
by the Opposite Party.

That the issue is decided    in favour of the

Complainant.

Consumer Case No 2/2014: Page 17 of 19

24.       ISSUE NO 3&4 IS TAKEN UP JOINTLY

3. Whether the accidental fire broke out in the shop of
   the complainant
4. Whether the complainant is entitled  to relief as
   prayed.

The opposite party had repudiated the claim of the Complainant on account of  there being no concluded contract between the parties at the time and date when the accident took place. The fire broke out on 25.2.2013 at around 8:30 PM  this fact has not been categorically disputed by the Opposite Party  the defense of the Opposite Party has been that the fire broke out prior to the date mention in the policies

The issue no 3 is decided in favor of the Complainant without much resistance from the Opposite party.

25.    The   issue No 4  as what  relief the Complainant

is entitle to is of much significance. The complainant had prayed for grant of insured amount of Rs 1500000( Fifteen Lakh) along with interest of @ of 12% per annum from the 12.8.2013 till the date of payment of the claim amount  along with the above mentioned

prayer some other     prayers are also made by     the
Complainant.

Consumer Case No 2/2014: Page 18 of 19

26. There    is nothing before this Forum to reckon the
    quantum of the loss suffered by the Complainant the same can be determined only by examining the surveyors report and other relevant documents. In other words   the Forum
    has neither the expertise nor the material before it to determined the quantum of insured amount as prayed by the Complainant .This Forum while deciding the issue No 2 has awarded              and compensation    of Rs 10000(Ten                   Thousand

only)towards deficiency of services.    The Opposite party
is directed to dispose both the Claims of the Complainant covered by Policies No 130805/11/12/11/0000622 covering the

risk    for   the shop to the tune of Rs 800000 (Eight

Lakh) and the   Policy  No130805/11/12/11/0000623 covering

the risk for the Godown to the tune of   Rs 700000
seven lakh) taking into account the risk commencing from 
the date receipt of premium 4.2.2013 and credited

on 25.2.2013 for the reason discussed above and disposed of the Claim with 3 months from the date of receipt of the certified copy of this order.

27. Considering the fact and circumstance of the case
    cost of Rs 5000 is imposed on the Opposite party. The opposite shall pay   an amount     Rs 10000 toward

compensation   for    deficiency in service     and Rs 5000

towards cost  sum total     of   Rs 15000     ( Fifteen

thousand )   within one month from, the date    of receipt
of this order.

Consumer Case No 2/2014: Page 19 of 19

28.  It is made clear that above mentioned compensation

and cost does   not absolve   the   Opposite   Party  from

paying the insured amount after duly assessing loss suffered by the Complainant as directed by this forum within the stipulated period.

Complainant     petition disposed on contest with cost

as mentioned above.

Signed on this 12^th day of February 2016