ORIENTAL INSURANCE COMPANY LTD Vs. B K SETHI

JUDGEMENT

(1.) The present appeal is filed by the Oriental Insurance Co. against the order dated 9.1.1996 of the State Commission, Delhi in Complaint No. C-342/1993 wherein the complaint was allowed. The brief facts of the case are: Shri B.K. Sethi respondent No. 1 (the complainant) is a Chairman and Managing Director of M/s. Indu Video Films Pvt. Ltd. The company obtained the loan from Delhi Finance Corporation (respondent No. 2) and for repayment of the loan, residential house No. B-120, A and B, Malviya Nagar, New Delhi was mortgaged to Delhi Finance Corporation as collateral security. The said house is owned by Smt. Sushila Devi Sethi and Shri Mohan Lal Chopra, mother and uncle of Shri B.K. Sethi, respondent No. 1. Delhi Finance Corporation vide its proposal dated 27.11.1990, approached the Oriental Insurance Company to issue two insurance policies, one covering the risk of plant and machinery of M/s. Indu Video Films Pvt. Ltd. situated at A-9, Okhla Industrial Area Phase-1 to the extent of Rs. 27,10,149/- and the other to the extent of s. 15,00,000/- in respect of residential building at Malviya Nagar.

(2.) It is the case of the respondents that they sought a Fire policy-'C' in respect of the plant and machinery and Fire policy-'A' in respect of residential property. However, Oriental Insurance Company issued one composite policy as Fire policy-C covering the plant and machinery as well as the residential property. During the validity of the insurance, the residential property suffered some damage due to earthquake. The claim of Rs. 3,96,060/- preferred by M/s. Indu Video Films Pvt. Ltd. was repudiated by the Insurance Co. Thereafter Shri B.K. Sethi, CMD, M/s. Indu Video Films Pvt Ltd. filed a complaint before the State Commission claiming Rs. 1,86,000/- which is the amount of damage assessed by Surveyor appointed by the Insurance Co. and refund of excess premium of Rs. 7,500/- illegally charged for the residential property. The State Commission held in favour of the complainant and directed payment of the claim of Rs. 1,86,000/- as well as refund of excess premium of Rs. 7,500/- and costs of Rs. 5,000/-. The present appeal is against the above order.

(3.) The argument of the Insurance Co. is that the policy issued as regards both plant and machinery as well as residential property is Fire policy-C which covers only fire, riot, strike and does not cover the risk of earthquake. Another argument is that the residential property belongs to the relations of Shri B.K. Sethi, CMD of the insured company and that since these relations have no proprietary interests in the company, there is no insurable interests in the said residential property. The State Commission rejected both these arguments. It is further held that the Oriental Insurance Company conceded that if a person approaches the Insurance Company and asks for Fire Policy in respect of a residential house, it is only Fire Policy-A, which covers earthquake, issued. The State Commission held that while in the proposal, the Delhi Finance Corporation asked for issuance of two policies, Fire Policy-C in respect of Plant and Machinery and Fire Policy-A in respect of residential property, the Insurance Company due to apparent mistake issued a combined Fire Policy-C in regard to both. The State Commission also held that the Insurance Premia for the residential property is 65 p. per Rs. 1,000/- and Rs. 5.62 per Rs. 1,000/- in respect of industrial or commercial premises. It held that because of the combined policy wrongly issued by the Insurance Company, they charged higher premium of Rs. 5.53 per Rs. 1,000/- even for the residential portion of the proposal. They have, therefore, ordered refund of the same.