ORDER
B.K. Taimni, Member
1. The complainant, Express Resorts and Hotels Limited, has filed this complaint against the opposite party (O.P.), The Oriental Insurance Co. Ltd., alleging deficiency in service.
2. Brief facts leading to filing of the complaint are that the complainant who is engaged in the business of hotels, was constructing A Resort and Hotel at Jam Nagar in the State of Gujarat, for which they applied for insurance cover from O.P., as part of the loan agreement signed with the State Tourism Corporation and Tourism Finance Corporation, New Delhi. They applied for Insurance Cover on 4.6.1998 for which the O.P. issued the premium calculations, subsequent to which part premium was paid, receipt of which was acknowledged by the O.P. and also issued a sort of certificate (to whomsoever it may concern) on 5.6.1998 stating that the complainant has obtained a Fire Policy ‘C’ along with special perils of storm, cyclones etc. for Rs. 6.8 crores. The area of resort was hit by cyclone on 9.6.1999 damaging considerable part of the building, other constructions and other material, for which a claim amounting to Rs. 36,12,600/- was made. The Surveyor was appointed who made his recommendation yet when the claim was not getting settled, this complaint was filed on 13.1.2000, alleging deficiency in service. On being issued notice, the O.P. stated that the complaint is not maintainable. It will call for extensive evidence hence should go before a Civil Court. There is no deficiency in service on their part as the peril of cyclone occurred within ‘close proximity’ of taking up the insurance cover. It was also contended that the intention of the complainant was to take insurance cover with effect from 16.6.1998 as is evident from letter dated 4.6.1998. Vide letter dated 5.6.1998 the O.P. calculated the premium at Rs. 1,23,191/- against which a cheque only for Rs. 50,000/- was given on 5.6.1998. Since this was not a full payment of premium, there is no provision for making provisional payment of premium of amount less than prescribed tariff rate hence there was no policy cover available with the complainant. Since the balance amount of the premium was not paid it cannot be said that the petitioner had an insurance cover. According to them the Surveyor wrongly assessed the loss presuming that the entire premium of Rs. 1,23,191/- has been paid. On all these grounds there is no merit in the complaint and needs to be dismissed. A rejoinder was filed by the complainant and one affidavit each was also filed supporting the contention of the parties.
3. We heard the parties at length and perused the material on record.
4. In order to limit the controversy we like to reproduce the letter of repudiation issued by the O.P. on 3.4.2000, which is as under:
“Re: Fire Claim No. 171106/11/99/00001
Pol No. 171100/11/99/18003
Date of Loss: 9/10–6/98
Loss of building on A/c of Cyclone.
With reference to the above, we hereby advise that the Competent Authority has repudiated the above claim on the following basis:
(1) Insured has sought cover only from 16.6.1998 as evident from their letter No. CHRC ; GM : 98 : 337 dated 4th June, 1998:
(2) Insured has sought fire policy ‘C’ only as per their letter No. ERHL : CM : 98 : 348 dated 5th June, 1998.”
Two very unimaginative grounds have been expounded to repudiate the claim.
5. On the first ground of repudiation, we see that it is true that the complainant has applied on 4th June, 1998 with a suggestion to make the insurance effective from 15.6.1998. But in our view, this particular document/date on which the O.P. relies, is of no consequence once they received the money and issued the receipt on 5.6.1998, clearly stating that they have received the money to cover the Fire Policy ‘C’ + flood, cyclone under course of construction. It is marked as provisional premium receipt. In our view, the letter dated 4.6.1998 of the complainant gets subsumed by the receipt and certificate issued by O.P. dated 5.6.1998. What clinches the issue, is the omnibus certificate issued by the O.P. on 5.6.1998, which is reproduced below:
“TO WHOMSOEVER IT MAY CONCERN
This is to certify that M/s. Express resorts and Hotels Ltd., with the joint name of Gujarat State Financial Corporation and Tourism Finance Corporation of India had paid the provisional premium of Rs. 50,000/-(Rupees fifty thousand only) and it has been collected vide our receipt No. 3325 dated 5.6.1998, towards insurance of building under course of construction under Fire Policy (C) covering fire, lightning, explosion, riot, strike, malicious damages terrorism) along with special perils of storm, cyclone, flood, inundation, tempest, hurricane, tornado for their property at project site at village Motikhavad, Taluka and District Jam Nagar for sum insured of Rs. 6,50,00,000/- (Six crores fifty lakhs only).
The proposal for this project has been forwarded to our higher authorities for their approval and special rating. On hearing from them we will let you know the actual premium to be charged and the policy will be issued by us.”
6. We need not travel any further because in our view this clinches the issue that the intent of the insurer was made clear by this declaration after having received the provisional premium of Rs. 50,000/-. The certificate clearly statesot”……. the provisional premium …..has been calculated……..towards insurer’s building under course of construction under Fire Policy ‘C’ along with special perils of storm, cyclone, floods, etc.” In our view the second para that the proposal “for this project has been forwarded for their approval and special rating. On hearing from them we will let you know the actual premium to be charged and the policy will be issued by us,” does not absolve the O.P. from its liability. This policy issued subsequently also speaks of this policy valid from 5.6.1998 to 4.6.1999. The question before us is what would be the status of this complaint in view of these documents? The receipt and the certificate have been issued. In our view, the policy starts from the time the money has been received and this letter issued. It was only for purposes for ‘rating’ which incidentally was never repeat, never communicated to the complainant in any manner, in any form. In fact the policy was not issued till after 4 months and that too when it was required by the Surveyor. A plain reading of the policy leaves us in no doubt that even though it is back-dated, i.e., 5.6.1998 that it covered the peril of cyclone effective 5.6.1998. It was argued before us by the learned Counsel for the O.P. that peril of cyclone was not covered as the complainant had not paid the full premium. We have the letter dated 4.6.1998 in the form of quotation from the O.P. for which the total premium payable was Rs. 1,23,191/-but since the complainant did not require cover for ‘earthquake’ hence the balance worked out to Rs. 84,289/- of which a provisional payment was made and rest has not been demanded till date. Even though policy was issued to help the Surveyor to assess the loss, the conduct of the O.P. to say the least abysmal. The learned Counsel for the O.P. also drew our attention to the headnote under condition Fire Policy ‘C’ which reads as under:
“In consideration of the insured named in the schedule hereto having paid to the Oriental Insurance Co. Ltd. (hereinafter called the company), the premium mentioned in the said schedule, the company agrees (subject to the conditions and exclusions contained herein or endorsed or otherwise expressed hereon) that if after payment of the premium the property insured described in the said schedule of any part of such property, be destroyed or damaged by……”
7. He also drew our attention to the condition 8(3) of the exclusion clause. According to him the cyclone fell in the exclusion clause hence it is not covered. In our view without passing any stricture against the O.P. we like to observe that how can they rely upon a document which had not been Issued to the complainant till much after the event? If this is the conduct and work ethics of public sector body, we shudder to think of the consequence upon the general public insured. We do not wish to attach any relevance to the provisions relied upon by the O.P. as the policy was never issued in time, for the complainant to take a view–one way or the other. In any case, this policy issued, covers the risk of flood/cyclone, even though out of the total premium payable was Rs. 84,289 /- of which premium O.P. received only Rs. 50,000/-. No separate break-up at any time has been shown to us and no such stand has been taken before us to state as to how Rs. 50,000/- got allocated between the various perils covered under fire policy ‘C’, and the premium for flood and cyclone. This has not even been pleaded and in any case, this is beyond and is over and above the ground taken to repudiate the claim of the complainant. In our view, till the time the policy is issued it is the exchange of correspondence which is sacrosanct and would form part of the contract of the parties. We are left in no doubt that based on material brought oh record by the parties that the O.P. covered the risk of ‘fire policy ‘C’ including that of cyclone. Since the regional office and divisional office were under correspondence, the complainant cannot be faulted and left high and dry for any correspondence between these two offices. Learned Counsel appearing for the O.P. relied upon the judgment passed by the Hon’ble Supreme Court in Oriental Insurance Co. Ltd. v. Sony Cheriyan, VI (1999) SLT 565=II (1999) CPJ 13 (SC)=JT 1999 (6) SC 149, para 14 of which is reproduced below:
“The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein.”
8. In our view this citation does not help the O.P. as the policy had not been issued within a reasonable period on receiving the premium in the present case. In fact, the insurance policy was issued almost 4 months after the peril had taken place.
9. The learned Counsel for the O.P. also relied upon the extract from the General Insurance Text Books issued by the Institute of Insurance of India regarding cover note and certificate of insurance in the para 15 it defines the cover note which is reproduced below:
“Cover notes are issued when the negotiations for insurance are in progress and it is necessary to provide cover on a provisional basis or when the premises are being inspected for determining the actual rate applicable. Pending the preparation of the policy, the cover note is issued as evidence of protection for a temporary period of time and to prove that cover is in force. It gives brief details of cover. The cover note is temporary and will be superseded once the policy is issued. Sometimes, insurers issue a letter confirming the cover instead of cover note.”
10. Mere perusal of this leaves us in no doubt that till the time the policy is issued, the cover note itself covers the peril even though in the present case no cover note was issued, hence as such receipt and the certificates mentioned earlier, makes it very clear that peril, was covered. It was for the Insurance Company to demand additional premium, if any, based on the rating etc. In view of this provision relied upon by the O.P. in our view helps the complainant. The learned Counsel for the O.P. also relied upon the judgment passed by this Commission in Consumer Protection Association v. Chairman, L.I.C. of India and Ors., III (1996) CPJ (NC) 178. This case has got no relevance as in that case since the premium remained unpaid, O.P. issued demand for deposit of premium when this was not done the proposal was deemed to have been accepted. These are not the facts in this case. In the present case, no demand has been made till date after receiving the provisional payment of Rs. 50,000/- hence the citation does not help the O.P. In our view the receipt issued clearly indicating the perils covered and also the omnibus certificate issued by the O.P. shall become the basis of the contract between the parties. Our view is further strengthened by the fact that the same Insurance Company, since has issued further policy on an enhanced amount of Rs. 8.5 crores and further taking it upto Rs. 10.5 crores. We get an impression that there is something fundamental wrong in the thought perception of the O.P. of doing something on the ground and taking pleas, which are quite to the contrary.
11. The second ground for repudiation taken is that the complainant had sought only cover under fire policy ‘C’. There is no dispute about this fact but what was given to him on a receipt dated 5.6.1998 was fire policy ‘C’ + Flood, Cyclone under course of construction. This was repeated by their certificate dated 5.6.1998 and as things stand this was also part of the policy. When we see the policy issued finally by the O.P. much late that it was fire policy ‘C’ except that in the body of the policy it shows coverage under ‘Flood’ and ‘Cyclone’ for which premium has been indicated and forms part of the total amount.
12. In our view the grounds of repudiation do not stand our scrutiny when we see all the material on record. If we go through the preliminary report and the final report of the Surveyor appointed by the O.P. we are left in no doubt that this is a case of rank highhandedness on the part of the O.P. to repudiate this claim without there being any ground to do so.
13. In the light of discussion above, the complaint is allowed and the O.P. is directed to pay to the complainant Rs. 18,84,394/- (Rs. eighteen lakhs eighty four thousand and three hundred and ninety four only) the amount of loss assessed by the Surveyor along with interest @ 9% p.a. from two months after the receipt of the report of the Surveyor along with compensation of Rs. 50,000/- for mental agony and harassment. This amount should be recovered from the officers at the Divisional level who played the part in repudiating the legitimate claim of the complainant as per law laid down by the Hon’ble Supreme Court in the case of Lucknow Development Authority v. M.K. Gupta, III (1993) CPJ 7 (SC)=AIR 1994 SC 787.
The complainant shall also be entitled for the cost which we fix at Rs. 10,000/-.