NATIONAL INSURANCE CO LTD Vs. SUMAN OIL INDUSTRIES

JUDGEMENT

(1.) IN this case, the respondent company had taken out an insurance in respect of its stocks comprising oil seeds, oil cakes, oil etc. for a sum of Rs. 5 lakhs against fire. The cover note was issued but policy was not issued immediately in respect thereof. And, strangely, policy was issued only after filing of the complaint and all along the insured remained in possession of only the cover note covering the risk of fire. Mr. J.R. Midha, learned Counsel for appellant, could not explain as to why the policy was not issued within a reasonable time of the issuance of cover note. The cover note was for a period commencing 21st March, 1990 upto 20th September, 1990. On 24th April, 1990, fire broke out in the mill. The Surveyor assessed the loss at Rs. 1,56,353.20, but opined that loss resulted from spontaneous combustion which was one of the excluded risks and was not covered by the policy. This resulted in repudiation of the claim. IN this case, the insurance cover in respect of the stocks, breaking out of fire and destruction of goods covered by the insurance by fire are not in dispute. The value of the goods destroyed is also duly assessed by the Surveyor. It is in evidence that throughout the period of the insurance cover, the policy was not handed over to the insured and he was given only a cover note which normally speaking, is only an interim cover note or it may be described as protection note for the interregnum during which the policy is prepared and issued. Such a period has to be reasonable and not unduly prolonged. IN the present case, throughout the period covered by the insurance, policy did not reach the insured. IN fact, the policy was produced for the first time before the District Forum. The insured was never made aware of the exclusion clauses. The Surveyor has also not given any particular reason and evicence to show that the fire was the consequence of spontaneous combustion. The affidavits sworn by Shri P.K. Jain has not been believed and rightly so. IN quite a few cases we have come across this reprehensible practice of the INsurance Company issuing only cover note and the delaying the issuance of policy. Such a practice gives rise to scope for the mal-practice of the insurer tailoring the policy to escape liability and it is nothing short of a fraud being played by the INsurance Company on the insureds. When the INsurance Company alleges that it is not liable to compensate for any risk, it is for the INsurance Company firstly to prove the exclusion clause and secondly that the event was covered by the exclusion clause. When the insurance policy was not issued and only a cover note had been issued, the exclusion clauses remained uncommunicated to the insured and the insured, in the circumstances, would be entitled to be paid the amount of loss by the Surveyor who had assessed it at Rs. 1,56,353.20. The State Commission has committed no error in awarding this amount. IN the light of the above discussion, this appeal fails and is dismissed with costs assessed at Rs. 2,000/-. Appeal dismissed with costs.