Between

The Divisional Manager

The New India Assurance Company Ltd.,
Divisional office, Sri Complex
Kakinada

                                                                Appellant/opposite party

                A N D

Shri Satyanarayana Poultries
rep. by its Partner Sri Ch.Ramanna
Vemulappali, Dwarapudi, E.G.Dist.

                                                                Respondent/complainant

Counsel for the Appellants            Sri Naresh Byrapaneni

Counsel for the Respondent          Sri P.Ramesh Babu

 QUORUM:                  SRI SYED ABDULLAH, HON’BLE MEMBER

      &

                            SRI R.LAKSHMINARSIMHA RAO, HON’BLE MEMBER

WEDNESDAY, THIS THE TWENTIETH DAY OF OCTOBER TWO THOUSAND TEN

Oral Order ( As per R.Lakshminarsimha Rao, Member)
           ***

1.             The parties are referred to as they have been arrayed in the complaint.  The factual matrix of the case is that the complainant farm is a partnership firm doing poultry business insured 8754 poultry birds with the opposite party insurance company by paying premium amount of Rs.32,723/- under comprehensive poultry insurance policy bearing No.476130000297 dated 8.3.1999 for the period from 8.3.1999 to 16.6.2000.  The policy covers the risk of death of birds due to diseases of various kinds and other perils.  The opposite party issued letter dated 10.6.1999 intimating the complainant about the cancellation of insurance policy w.e.f., 2.6.1999.  The complainant requested for refund of the amount paid towards the premium and got issued notice through its advocate claiming the amount.  The complaint, as such was filed seeking for refund of the premium. 

2.             The opposite party insurance company resisted the claim.  It was contended that the opposite party insurance company issued the insurance policy covering 8888 birds when they were aged about six weeks.  Dr.Somaraju, Retd. Assistant Director, Animal Husbandry Kakinada issued inspection report prior to the date of issuing the insurance policy.  The complainant reported mortality on 30.4.1999 due to sunstroke and foul cholera.  The Assistant Administrative Officer of the insurance company along with Dr.Somaraju inspected the birds on 14.4.1999 and recorded the mortality that occurred on 13.4.1999 and 14.4.1999.  The complainant went on reporting mortality and the surveyor, each time inspected the insured farm till 18.4.1999 and recorded the details of the dead birds till 18.4.1999.  On 15.4.1999 the complainant reported mortality as above 500.  The AAO and the surveyor counted the live birds  and found them as 16,049 out of which 11482 were insured by the branch office, Kakinada and 4567 were insured by its branch office Vijayawada.

3.             The complainant submitted letter of confirmation to the surveyor that it i.e., the complainant farm was covered under 15 different policies issued by three branches of the opposite party i.e., Vijayawada, Kakinada and Dowleswaram and two branches of the National Insurance Company Limited i.e., Yanam and Eluru.  During the visit by the officials of the opposite party insurance company and the surveyor, the complainant farm had not shown the birds separately which were covered under different insurance policies and different insurance companies.  The loss was not established by the complainant.  The opposite party decided to cancel the insurance policy and sent letter dated 26.5.1999 to the complainant intimating that the policy in question and another insurance policy bearing no.4761130000297 were cancelled w.e.f., 7 days from the date of receipt of the letter by the complainant.  The opposite party insurance company had sent another letter dated 10.6.1999 reiterating the contents of the letter dated 26.5.1999, for the complainant had went on giving claim intimation though it had acknowledged receipt of the letter dated 26.5.1999.

4.             The Partner of the complainant farm Ch.Ramanna has filed his affidavit and got marked  Exs.A1 to A6.     On the side of the oppostie party insurance company  no affidavit has been filed except the copies of 1.  note submitted by the Senior Divisional Manager of the opposite party insurance company, copy of the letter addressed by the opposite party insurance company to the complainant and copy of receipt evidencing the dispatch of the letter dated 26.5.1999.  The original documents of these documents are stated to have been filed in C.C.Nos.360 of 2005.

5.             The District forum has allowed the complaint directing the opposite party to refund the premium ` 32,723/- with interest @ 12%per annum from 8.3.1999 till payment. 

6.             Both parties have filed their respective  written arguments.

7.             The point for consideration is whether the impugned order suffers from misappreciation of fact or law?

8.             The opposite party issued insurance policy on 8.3.1999 covering the life of the birds for the period from 8.3.1999 to 15.6.2000.  The policy was issued subject to the valuation table and poultry clause attached thereto.  The opposite party insurance company has cancelled the insuance policy by invoking condition no.15 of the policy and intimated the cancellation of the policy by letters dated 26.5.1999 and 10.6.1999.  The letter dated 26.5.1999 reads as under:

“This is to inform you that it is hereby decided to cancel the above poultry insurance policy issued to you on 8.3.1999 by invoking the condition no.15 of the policy.  The (7) days period will come into effect from the date of receipt of this letter by you.  The premium will be refunded as per rules and procedure”.

9.             The complainant firm had accepted the decision of the opposite party insurance company as to the cancellation of the insurance policy which is evident by its request for refund the premium of `32,723/- and the request for refund of the premium has been reiterated in the letter dated 26.12.1999 which was subsequently followed by the notice dated 23.3.2000. 

10.            The Administrative Officer has put up a note to the Senior Divisional Manager of the opposite party insurance company that their AAO and the surveyor submitted report that the complainant firm was not maintaining the records in violation of the terms and conditions of the insurance policy apart from submitting that the complainant company’s case is a case of bad moral hazard.  It was stated that the complainant firm has agreed for cancellation of the insurance policy.  Supporting the version of the opposite party insurance company as made out in the notes, the complainant firm has not raised any objection for cancellation of the insurance policy.  It has not been denied by the complainant firm that the complainant firm had obtained 15 insurance policies from three branches of the opposite party insurance policy and two branches of the National Insurance Company Limited whereunder the birds of the complainant firm were insured.  The complainant firm had obtained the insurance policies from two different insurance companies by suppressing the fact of coverage of insurance risk by one insurance company from the other.  The opposite party company came to the conclusion that the complainant farm had played fraud on it.  The opposite party insurance company referred to the terms and conditions of the insurance policy stating that it was authorized to retain the premium amount in the case of the insured playing fraud on it in obtaining the insurance policy. 

11.            Fraud in any form vitiates the contract and it goes to the root of the matter on which the very foundation of the contract is laid by the parties to the contract who repose confidence in each other to stipulate the terms and conditions of the agreement which eventually become enforceable and attains in the eye of law, the shape of contract.  The opposite party insurance company has not filed the terms and conditions of the insurance policy.  It is stated in its letter dated 26.5.1999 that the premium would be refunded as per the terms and conditions of the insurance policy. 

12.            A peculiar situation has been created by the conduct of the opposite party insurance company in retaining the terms and conditions of the insurance policy the premium by not choosing to file before the District Forum resulting in the suffering of the order whereby it was fastened with the liability to refund the premium of `32,723/- along with interest @ 12% per annum from the date of receipt of the amount.  The complainant farm has not come-forward with any explanation for its conduct in obtaining the insurance policy in question and another insurance policy from the opposite party insurance company in suppression of the fact of the existence of some of the other insurance policies.  Therefore, both the parties have attributed to the cause by each of the parties exhibiting inaction to deny the statement of the other party attributing fault in the matter relating to the contract of insurance.  Taking into consideration of the circumstances of the case, we are inclined to restrict the amount awarded against the opposite party insurance company to `25,000/- and reduce the interest awarded thereof  from 12% to 9% per annum. 

13.            In the result the appeal is allowed in part.  The order dated   28.11.2007 is modified.  The opposite party directed to refund the amount of `25,000/- along with interest @ 9% per annum from the date of complaint till payment.  No costs.

                                                                MEMBER

                                                                MEMBER

                                                              Dt.20 .10.2010

KMK*