ROLLATAINERS LTD Vs. UNITED INDIA INSURANCE COMPANY LTD

JUDGEMENT

(1.) Whether Sec.64vb of the Insurance Act renders a concluded contract of insurance, void ab- initio on the ground of a marginal shortage in the amount of premium duly paid and accepted? This is the case question of some significance in this complaint. In view of the above, the facts merit notice with relevance to the question aforesaid with relative brevity. M/s. Rollatainers Limited, a Corporation of considerable repute had admittedly taken out a comprehensive machinery break down insurance policy including that for Gen. No KVA-100, Model KTA, GP 1-0343, M- 84, Engine No.25141813 for a period of one year with effect from the April 1991 (Annexure C-2 ). On the night intervening the 9 and 10th of May, 1991 at about 4 a. m. despite all precaution an engine seizure of the said machinery took place and on dismentling the same it was later discovered that the crank shaft turbo charges, piston etc. were seriously damaged requiring a complete over-haul. The complainant's case is that this break down was fully covered under the insurance policy. It is the case that the manufacturers also after investigation identified it as a major damage and break down and accordingly the insurers were notified thereof. M/s. D. K. Taneja and Associates were appointed as Surveyor and loss assessor by the opposite party and they submitted their survey report dated 16th of August, 1991 assessing the claim for Rs.7.68 lakhs against the complainants' claim of Rs.19.68 lakhs. Despite the disparity, it is the case that the complainants are agreeable to accept the loss as assessed by the Surveyor to avoid any further delay in the settlement of the claim. The opposite party sought certain clarifications which were duly made vide Annexures C-3 and C-4, but despite that there was prolonged procrastination compelling the complainants to serve a registered notice on the insurers dated the 15th of October, 1992 (Annexure C-5 ). Getting no meaningful response even to this notice, the present complaint has been filed seeking a direction to the opposite party to pay Rs.7.68 lakhs alongwith interest @ 24% p. a.

(2.) In the written statement filed by the opposite party a number of preliminary objections were taken to which reference is unnecessary because these were never pressed before us. On merits the broad factual position was admitted. But the main plea taken in the defence was that in the renewal of Policy No.041000/44/35/ 062/91, a notice was sent claiming a premium of Rs.1,15,633/-. However, the complainants who maintained a deposit account with the insurers remitted sum of Rs.87,000/- only. Even though a cover note was given and subsequently a formal policy was issued, the stand taken is that by virtue of Sec.64-B of the Insurance Act, the opposite party could not assume a risk unless the total premium stands paid and, therefore, the insurance contract was void ab-initio by virtue of the said provision. It was the categoric averment that the concluded contract of insurance stood automatically cancelled from the date of its inception.

(3.) Somewhat ambivalently, it was further pleaded that the assessment of the Surveyors duly appointed by the insurers was not correct and it is reiterated that the claim of the complainant is not payable because he had not remitted the full premium due and, therefore, all liability stands denied.