The New India Assurance Company ... vs Narendra Oil Refineries
2017 Latest Caselaw 3751 Bom

              sa376.03.odt                                                                                1/9

                           IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                     NAGPUR BENCH : NAGPUR.


                                              SECOND APPEAL NO.376 OF 2003


               APPELLANT:                             The New India Assurance Company Ltd.,
                                                      Jhansirani   Square,   Sitabuldi,   Nagpur,
                                                      Through its Manager.
                                                           
                                                                  
                                                            -VERSUS-


               RESPONDENT:                            Narendra   Oil   Refineries,   A   Registered
                                                      Partnership   Firm   by   its   partner
                                                      Mancharlal   Deokaranji   Bhoot,   Resident
                                                      of   Deorankar   Nagar,   Amravati,
                                                      Amravati.
                                                                                                                       

              Shri N. B. Joshi, Advocate for the appellant.
              Shri D. V. Chauhan for the respondent.


                                                  CORAM: A.S. CHANDURKAR, J.

DATED: 29 th JUNE, 2017.

ORAL JUDGMENT :

1. This appeal filed under Section 100 of the Code of

Civil Procedure, 1908 has been admitted on the following

substantial question of law :

Whether the findings recorded by the first appellate Court are in conformity with the statutory provisions of Section 64-U, 64-UC and 64-UG of the

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Insurance Act?

2. For considering the aforesaid substantial question of

law, certain relevant facts are required to be noticed. The

respondent is the original plaintiff. It is the case of the plaintiff

that on 23-11-1983, Marine policy for an amount of Rs.2,10,000/-

was entered into with the appellants - defendants. This policy was

effective for a period of one year. Premium amount of Rs.61,425/-

was initially paid. The insurance cover was thereafter doubled to

Rs.4,20,000/-. Additional premium of Rs.61,425/- was paid thus

making net premium of Rs.1,22,850/- with discount of

Rs.25,220/-. The amount of discount was to the extent of 20% of

the premium amount. On 22-6-1984 the Tanker which was duly

insured met with an accident. The claim was raised with the

defendants which was settled at Rs.1,48,020/-. According to the

plaintiff, the defendants however did not pay the amount of

compensation on the ground that 20% amount of discount of

Rs.25,200/- was not returned. This amount was paid by the

plaintiff to the defendant on 29-8-1985 after which the insurance

claim was released. On that basis suit came to be filed for refund

of Rs.25,200/-. This amount was claimed along with interest on

the delayed payment and the total claim made was Rs.56,289/-.

3. The defendants filed their written statement and took

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the stand that the amount of discount was subject to the approval

of the Bombay Regional Committee which was constituted as per

the Tariff Advisory Board. The 20% discount was, therefore,

provisional and subject to final approval. The amount of discount

came to be disallowed and therefore the plaintiff was not entitled

for the same. As the plaintiff was aware about this position, the

plaintiff received communication dated 20-8-1985 and accepted

the insurance claim after deducting 20% discount. It was,

therefore, pleaded that the plaintiff was not entitled for refund of

the aforesaid amount.

4. After the parties led evidence before the trial Court,

it was found that the plaintiff had failed to prove that it was

entitled for discount of Rs.25,200/-. On the basis of document at

Exhibit-43 by which the Bombay Regional Committee refused to

allow the discount, the trial Court held that the plaintiff was not

entitled for any relief. It, therefore, dismissed the suit.

5. The appellate Court in the appeal preferred by the

original plaintiff held that as per document at Exhibit-43, the

defendants were not entitled to withhold the amount of discount.

It further held that as the claim was covered by the Insurance

Policy at Exhibit-20, the defendants were bound by the terms

thereof. On that basis, the appellate Court held in favour of the

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plaintiff and decreed the suit for an amount of Rs.22,500/-.

6. Shri M. B. Joshi, learned Counsel for the appellant

submitted that as per the terms of the policy at Exhibit-20, grant of

discount of Rs.25,200/- on the amount of insurance premium was

provisional in nature and subject to the approval of the Tariff

Advisory Committee. Referring to the provisions of Section 64-UA

and Section 64-UJ of the Insurance Act, 1938 (for short the said

Act), it was submitted that the Bombay Regional Committee by the

communication at Exhibit-43 had not accorded sanction to the

grant of discount and, therefore, the demand of said amount from

the plaintiff was justified. He submitted that the plaintiff without

any protest had made the aforesaid payment of Rs.25,200/- on

29-8-1985 after which the claim amount was released and

therefore, it was not now open for the plaintiff to demand said

amount. He further referred to the provisions of Section 63,

Illustration (c) of the Contract Act, 1872 and urged that the

subsequent payment made by the plaintiff amounted to

subrogation of the claim. It was, therefore, submitted that as per

the provisions of said Act, the plaintiff was not entitled for any

relief.

7. Shri D. V. Chauvan, learned Counsel for the

respondent on the other hand submitted that the defendants were

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not justified in relying upon the document at Exhibit-43 inasmuch

as it was merely a communication by the Bombay Regional

Committee and not by the Tariff Advisory Committee. He

submitted that as per provisions of Section 64 UC (3) of the said

Act, there was no ratification by the Controller and, therefore, the

defendants were not justified in refusing to grant the discount of

20%. He submitted that the payment made on 29-8-1985 was

under coercion as the amount of claim had been blocked by the

defendants. This payment cannot have effect of depriving the

plaintiff of the amount of discount. He also referred to the conduct

of the defendants to urge that the appellate Court had rightly held

that the actions of the defendants were not justifiable.

8. I have heard the learned Counsel for the parties at

length and I have gone through the impugned judgments. It is not

in dispute that as per the policy at Exhibit-20 the coverage was

granted for the period from 23-11-1983 to 22-11-1984. The

accident of the vehicle took place when the said policy was in

force. The only question to be considered is with regard to the

entitlement of the plaintiff to the amount of discount on premium

to the extent of 20%. While it is the case of the plaintiff that the

grant of discount to the extent of 20% was not subject to any

approval or decision of any other body, it is case of the defendant

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that the same was subject to approval by the Bombay Regional

Committee. Exhibit-43 is the communication that has been issued

by the Bombay Regional Committee in which it has been stated

that the amount of discount was disallowed and unless this

amount of Rs.25,200/- was refunded, the defendants could not

make payment of the insurance claim. The record further indicates

that thereafter on 29-8-1985 the plaintiff gave consent to

reduction of the aforesaid amount after which the claim amount

was paid to the plaintiff.

9. As per provisions of Section 64-U of the said Act, a

Committee known as the Tariff Advisory Committee has been

established. As per Section 64-UC, this Committee has power to

regulate rates, advantages, conditions etc. that may be offered by

insurers in respect of any risk that are binding on all insurers.

Under Section 64-UJ, the Advisory Committee can constitute a

Regional Committee for the prescribed regions. The Regional

Committees are required to advise the Advisory Committee with

regard to any question connected with fixation of rates,

advantages, terms and conditions. The aforesaid statutory

provisions indicate that on the constitution of the Tariff Advisory

Committee and thereafter the Regional Committees, the matters

pertaining to fixation of rates, advantages and terms and

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conditions for risk coverage that can be offered by an insurer are

within the purview of said Committee. It is in that background that

the defendants sought consent of the Bombay Regional Committee

in the matter of grant of discount to the extent of 20% to the

plaintiff. By the communication at Exhibit-43, this grant of

discount was disallowed by the Bombay Regional Committee.

Pursuant thereto, on 29-8-1985 the plaintiff permitted deduction

of the amount of discount after which the claim amount was paid

to the plaintiff. Considering the aforesaid statutory provisions

which are binding on the defendants, it cannot be said that the

defendants by acting on the basis of the communication Exhibit-43

issued by the Regional Committee acted in an illegal manner while

disallowing the amount of discount. Though it was sought to be

urged on behalf of the plaintiff that it accepted to forgo the

amount of discount on account of coercion by the defendants,

except the pleadings in the plaint, there is no evidence led by the

plaintiff to bring on record any such coercion at the hands of the

defendants in that regard. Similarly, the aspect of delay in settling

the claim also cannot be a ground to hold that the effect of the

communication at Exhibit-43 had been wiped off.

10. The trial Court on the basis of the aforesaid material

on record found that pursuant to the letter at Exhibit-43, the

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plaintiff had voluntarily agreed for the deduction of the amount of

discount and therefore, its claim was not justified. The appellate

Court, however, without considering the purport of this

communication along with the provisions of Section 64 of the said

Act held in favour of the plaintiff. In my view, it cannot be said

that the plaintiff was entitled to claim amount of discount of

Rs.25,200/- after the same was disallowed by the Regional

Committee. This act of the Regional Committee is not under

challenge. The defendants have acted in accordance with the

aforesaid statutory provisions.

11. In that view of the matter, the substantial question of

law as framed is answered in favour of the appellant. It is held

that the findings recorded by the appellate Court are not in

conformity with provisions of Section 64-U, 64-UC and 64-UG of

the said Act.

12. Consequently, the judgment of the appellate Court

dated 7-3-2003 in Regular Civil Appeal No.227/2000 is quashed

and set aside. The judgment of the trial Court dated 8-9-1987 in

Special Civil Suit No.34/1986 is restored.

13. The second appeal is allowed in aforesaid terms. No

costs.

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The respondent is granted time of eight weeks to

refund the amount withdrawn by it.

JUDGE

/MULEY/