KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION VAZHUTHACAUD, THIRUVANANTHAPURAM. APPEAL No. 308/2007 JUDGMENT DATED: 30-01-2010 PRESENT: JUSTICE SHRI. K.R. UDAYABHANU : PRESIDENT APPELLANT The Divisional Manager, National Insurance Company Ltd., Divisional Office, Bank Road, Kannur –1. (Rep. by Adv. Sri. Rajan P Kaliyath) Vs RESPONDENTS 1. Risheendran Nambiar, S/o Narayanan, A 35 Ward, No. CE 29, Near Sadhoo Bar, Near Kannur Bus Stand, Kannur-1. 2. V. Uthaman,Accredited Agent of National Insurance Co. Ltd., Divisional Office, Bank Road, Kannur-1. (R1 rep. by Adv. Sri. T. Raveendran & others) (R2 rep. by Adv. Sri. Salin S. Rajan & Sri. C.S. Rajmohan) JUDGMENT JUSTICE SHRI. K.R. UDAYABHANU: PRESIDENT The appellant is the first opposite party/Insurance Company in OP No. 239/03 in the file of CDRF, Kannur. The appellant is under orders to pay a sum of Rs. 1,90,115/- and compensation of Rs. 10,000/- and costs of Rs. 1,000/-. 2. The case of the complainant is that he had a shop in handloom goods run in a bunk No. A. 35, Ward No. C.E.29, Kannur and the same was insured with the opposite party. He had entrusted the proposal form to the second opposite party, the accredited agent for the first opposite party on 10-04-2003 with the premium amount of Rs. 2,059/- in cash. On the same day, the second opposite party had collected premium from 4 other bunk owners near to the shop of the complainant. On 11-05-2003 at 2 a.m the bunk caught fire and all the goods were destroyed. The complainant immediately reported the fire incident to both the opposite parties and filed a petition to the Police and a crime was registered. On the same day at 11 a.m the Surveyor and the Manager of the first opposite party reached the spot and conducted survey and investigation. On 12-05-2003 he received intimation from the first opposite party rejecting the proposal on the ground that the cheque issued is a third party cheque and that the same is in violation of Section 64 (V)(B) of the Insurance Act. The complainant had not received any previous intimation although the proposal and the premium amount were entrusted with the second opposite party on 10-04-2003. The bunk was earlier insured by the first opposite party through the second opposite party. As the amount was collected by the second opposite party in cash there was no occasion for him to issue the cheque. The first opposite party is bound by the actions of the second opposite party who is the accredited agent of the first opposite party. The bunk was insured for a sum of Rs. 4,00,000/-. He is claimed a sum of Rs. 4,25,000/- as compensation. 3. The first opposite party has filed version contending that the second opposite party is not empowered to collect premium in cash. The illegal action of the agent is not binding on the insurer. It is denied that the second opposite party received the entire premium amount in cash. It is also alleged that the complainant himself caused fire to the bunk for getting the amount of compensation. Survey and investigation was conducted whenever a claim is reported. It is not an admission of liability. It is admitted that a cheque was received but the cheque was issued by a third party and third party cheques are not accepted as it is in violation of Section 64(V)(B). The opposite party is unaware of the transactions between the complainant and the second opposite party. As the policy was not issued there is no privity of contract between the complainant and the opposite party. 4. The second opposite party the Agent has filed version contending that the complainant paid only Rs. 500/- each in two instalments towards the premium amount as he was short of funds. The second opposite party purchased clothes worth Rs. 500/- from the complainant and the second opposite party did not pay anything for the purchase and the same was adjusted towards the premium amount. Hence altogether the complainant has paid only Rs. 1,500/- whereas the premium is Rs. 2,059/-. The second opposite party added Rs. 559/- from his own pocket and issued the cheque to the first opposite party. The complainant is yet to pay the amount incurred by the second opposite party. It is also pointed out that the insurer had accepted the cheque and acted upon, as the proposal was not rejected. Moreover, in several earlier occasions the agent’s cheques were accepted by the first opposite party in similar situations. OP.No. 2 had himself canvassed the policy of one Ismail and 3rd party cheque was issued towards premium and the same was duly accepted. The first opposite party is in the habit of accepting 3rd party cheques towards premium. If the insurer was not inclined to accept the second opposite party’s cheque they should have pointed it out at the time of handing over of such cheques which was made in person by the second opposite party. If the above was pointed out the alleged defect could have been rectified. Infact, the proposal was accepted and steps taken. It is on coming to know that the bunk caught fire that they changed their stand. The second opposite party as the complainant has not paid the entire amount of premium to him. It is also contended that he is not a necessary party. 5. The evidence adduced consisted of the testimony of PW1 the complainant, DW1 the second opposite party and Exts. A1 to A14, B1 to B5. 6. We find that the alleged cheque had not been produced. As per Section 64(V)(B) Clause IV of the Insurance Act which is provided that where any insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post to, the insurer, the premium so collected in full without deduction of his commission within 24 hours of the collection excluding bank and postal holidays. Hence the contention of the Counsel for the appellant that the insurance agents are not empowered to collect the premium is not supported by the above provision. No provision in support of the contention that 3rd party cheques are not accepted was pointed out. PW1 the complainant has testified as to the fact that he paid the premium amount in cash to the agent/second opposite party along with the proposal. The version of DW1 that the complainant did not pay the full amount and that he himself paid a sum of Rs. 559/- towards the premium cannot be believed as he was not expected to receive the premium in instalments. He himself has admitted that he purchased clothes worth Rs. 500/- and did not pay the cash. The complainant has denied any such adjustments. It is more likely that the second opposite party agent might have misappropriated the amount paid by the complainant and subsequently issued his own cheque to the Insurance Company. DW1 has stated that he is the authorized agent of the first opposite party for a period of 7 years. It is the evidence of the complainant that on the same day the second opposite party had collected premium amount in cash from 4 other bunk owners also. The second opposite party has also produced Ext.B1 and B2 which is with respect to the policy of one Ismail (not properly marked vide the appendix). As contended by the second opposite party the 3rd party cheque ought to have been returned to the second opposite party at the time of receipt itself. The first opposite party has not adduced any evidence to controvert the version of DW1 in this regard. No evidence has been adduced by the first opposite party to substantiate the allegation that the bunk was set on fire by the complainant himself. Ofcourse, it was brought out that the cheque was handed over on 09-05-2003 and the incident was on 11-05-2003. The date of handing over of the cheque is not mentioned in the version nor was any evidence adduced in this regard. As mentioned earlier the alleged 3rd party cheque was not produced. The appellant cannot disown liability for the action of the second opposite party in receiving the cash and misappropriating the same and issuing the cheque belatedly. In the circumstances, we find that the action of the appellant amounts to placing reliance of technicalities. In the circumstances, we find that no interference is called for in this regard, in the order of the Forum. All the same, the direction to pay a compensation of Rs. 10,000/- is set aside. The same has been awarded in addition to the policy claim. The appellant is directed to pay a sum of Rs. 1,90,115/- as assessed by the Surveyor and costs of Rs. 1,000/-. In the result, the appeal is allowed in part as above. JUSTICE K.R. UDAYABHANU: PRESIDENT | 
