HINDUSTHAN GENERAL INSURANCE SOCIETY LTD Vs. KHUSHIRAM

JUDGEMENT

(1.) AGGRIEVED by the decree for Rs. 20,000 as damages with costs and interest on account of loss due to fire passed by the District Judge, Betul, in Civil Suit No. 3b of 1969, defendant No. 1, insurance company, has preferred this appeal.

(2.) THE facts not in dispute are that the plaintiff is a dealer in oranges and doing business at Santra Mandi in Multai. Defendant No. 1 is an insurance company while the defendants Nos. 2 and 3 were its agent and development officer at Jabalpur at the relevant time. The plaintiff's case is that he purchases oranges in the mandi and despatches them to Delhi and other places after packing them in wooden cases. For his business he has a structure in Santra Mandi of Multai where he has his office, stocks of oranges and packing materials. The value of the stock-in-trade during the orange season is not less than Rs. 20,000. In the month of January, 1969, almost all the dealers doing business at Santra Mandi at Multai got their shops and stock-in-trade insured by several insurance companies. Defendants Nos. 2 and 3 approached the plaintiff and at their instance he agreed to get his shop insured including the stock-in-trade, furniture and packing materials to cover a risk of Rs. 20,000. He, therefore, submitted a proposal form and paid a premium of Rs. 263. Defendant No. 3 issued a provisional receipt, Ex. P-1, on January 27, 1969, and also cover note, Ex. P-2, of the same date provisionally covering the risk for the period January 27, 1969, to January 27, 1970. The proposal of the plaintiff was accepted but no policy of insurance was issued in the usual way and the plaintiff was under the impression (sic) because the premium amount was retained by the defendants. On April 15, 1969, long time after the issuance of the said cover note, a big lire broke out in the Santra Mandi of Multai due to electric short circuit, completely gutting to ashes the entire Santra Mandi. At the time of fire, the plaintiff had stock of oranges worth more than Rs. 12,000 besides the shop structure, furniture and packing material, as it was then the peak season of oranges. The plaintiff lodged a report in the Multai police station on the same day and sent a telegram, Ex. P-24, to defendant No. 3 on April 16, 1969. Then the plaintiff sent through his counsel a registered notice, Ex. P-19, on April 23, 1969, to defendant No. 3. The plaintiff sent another registered notice through his counsel, Ex. P-20 on July 19, 1969, to defendant No. 1 with a copy to defendant No. 3. Defendant No. 3 forwarded the two notices to the branch office of defendant No. 1 at Nagpur on July 28, 1969, and forwarded a copy, Ex. P-21, to the plaintiff requesting him that all future correspondence may be addressed to the branch office at Nagpur. Since nothing was heard so far, the plaintiff served another registered notice, Ex. P-22, through his counsel on September 12, 1969, and this was replied to by the defendant No. 1 intimating that the proposal was never accepted and, consequently, no liability arises as the particulars in the proposal form were found incorrect. The plaintiff, therefore, filed the present suit claiming Rs. 20,000 as damages with interest from the date of the suit and costs.

(3.) DEFENDANT No. 1 in its written statement submitted that one Kolhatkar (DW 1) had contacted the defendant No. 3 on behalf of the plaintiff and furnished false" information in the proposal form which was signed by the plaintiff. The proposal of the plaintiff was not accepted by this defendant arid by its letter dated February 5, 1969, Ex. D-2, defendant No. 3 was informed about the rejection of the proposal and he was further told to collect the cover note from the plaintiff for cancellation and record. Defendant No. 1 did not receive the premium amount. Defendant No. 3 in his turn by letter No. 47 dated February 21, 1969, requested Kolhatkar to inform the plaintiff that his proposal has been rejected and to collect the cover note from the plaintiff. On the same day defendant No. 3 also wrote to the plaintiff, vide letter No. 48 to this effect. Accordingly, Kolhatkar contacted the plaintiff and informed him that his proposal had been rejected but the plaintiff did not return the cover note saying that it had been misplaced. In spite of several visits by Kolhatkar, he could not collect the cover note. Defendant No. 1 is, therefore, not liable to pay any damages because (i) defendant No. 3 was not authorised to work at Multai as per his appointment letter, he being appointed to work only in the districts of Jabalpur, Satna, Damoh, Sagar and Chhatarpur. He was also informed not to accept insurance of goods kept in temporary, kuchcha and tatta sheds which is a third class risk. So even if defendants Nos. 2 and 3 had accepted the premium and issued a cover note, defendant No. 1 is not bound by the same as they acted beyond their jurisdiction and against the rules and regulations of the company, (ii) The plaintiff had suppressed and concealed material facts and gave inaccurate particulars in the proposal form and, as such the cover note was vitiated and there was no valid contract between the plaintiff and the defendants, (iii) The cover note was provisional pending rejection or acceptance of the cover by the controlling branch of defendant No. 1 and, in any case, it lapsed after a period of 30 days. The fire had occurred after the lapse of the cover note, (iv) Defendant No. 1 did not accept the risk and the plaintiff was duly informed by defendant No. 3 as well as through Kolhatkar who was a representative of the plaintiff. The cover note thus stood cancelled before the fire took place; and (v) the plaintiff had not given the schedule of the loss of goods destroyed in the fire. Defendants Nos. 2 and 3 in their written statement admitted that they had taken the proposal form from the plaintiff after receiving a premium of Rs. 263, the provisional premium receipt was passed and the cover note was issued. Since the proposal was not accepted, the premium was refunded to the plaintiff through Kolhatkar, vide cheque No. A-3234 dated April 12, 1969, drawn on Co-operative Central Bank Ltd. , Jabalpur. On one pretext or another, the plaintiff did not hand over the cover note to Kolhatkar. Defendant No. 3 received telegram on April 16, 1969, about the fire and the subsequent notices which he forwarded to the branch office at Nagpur. Defendant No. 3 acted in his official capacity as Development Officer of defendant No. 1 and had accepted the risk, issued a provisional cover note and a provisional receipt and, as such, he cannot be made liable for the risk covered. These two defendants were neither necessary nor proper parties to the suit.