Delhi Transport Corporation vs National Insurance Co. Ltd.
2006 Latest Caselaw 556 Del

JUDGMENT

Vikramajit Sen, J.

Page 1467

1. Despite final opportunity having been granted, Counter Affidavit has not been filed. Hence opportunity in this regard was closed on 17.3.2006. As the factual matrix of the case stands uncontroverter, I proceed to decide the Writ Petition as per the asseverations made in the Petition.

2. The contention of the learned Counsel for the Petitioner is that the Respondent had responded to a tender floated by the Delhi Transport Corporation (D.T.C.) for providing Third Party Insurance Cover in respect of the entire fleet of buses owned by D.T.C. The tender was confirmed in favor of the Respondents circa 2000. From the year 2000 to January, 2005, no difficulties were encountered by the Petitioner and the Insurance Cover was renewed from year to year. However, in July/August, 2005 the Respondents prevaricated and circumvented their statutory responsibility by raising flimsy grounds for their refusal. The Petitioners had tendered a sum of Rs. 37,73,899/- (Rupees thirty seven lakhs seventy three thousand eight hundred and ninety nine) in respect of the renewal of the Insurance Policy of 304 D.T.C. buses. It has been explained that the D.T.C. had passed the extracted Resolution at the time when the Respondent's tender was accepted:

The Board noted the details contained in the agenda note and approved 3rd Party Insurance of all DTC buses. The Board also approved financial expenditure of Rs. 8727/- per bus per annum of 60 passengers capacity and Rs. 7769/- per bus per annum of 52 passengers capacity for Third Party Insurance to be paid to M/s. National Insurance Company Ltd. as they were the only tenderer. The Board also approved that on an average 250 bus be insured every month so as to stagger the expenditure over a period of time. It was also decided that Inter-State buses be given first preference.

3. Reliance has been placed on behalf of the Petitioner on the decision in K.S.R.T.C. v. General Insurance Corporation 1998 (1) KLT 318 and finally on Biman Krishna Bose v. United India Insurance Co. Ltd. and Anr. (2004) 6 Supreme Court Cases 477.

4. On behalf of the Respondents, learned Counsel contends that the application for renewal of insurance was sent to the wrong address. This application is dated 3.8.2005 and has been addressed to the Branch Manager, National Insurance Co. Ltd., Division No.10, Flat No.101-106, Plot No. N-1, 1st Floor, B.M.C. House, Connaught Place, New Delhi-110001. Counsel for the Respondent states that there are two branches of the Respondent-Page 1468 Company on the same floor but the letter had gone to the wrong department. I find it absurd and mala fide to raise this ground. It is indeed a sad day when officials of a Nationalised Insurance Company dare to raise this as a ground for escaping from their statutory duties and obligations. Assuming that the tender of Rs. 37,73,899/- (Rupees thirty seven lakhs seventy three thousand eight hundred and ninety nine) had reached the wrong office, albeit on the same floor, it is no excuse for the officials of the Respondent-Company not to forward the communication to the correct desk. The premium in question was not a small sum of money. In a case where 304 buses are plying on Delhi roads, it is not in the public interest that Third Party Insurance Cover should be procrastinated upon.

5. Learned counsel for the Petitioner states that the Branch Manager had been met personally by officers of the D.T.C. while tendering the second premium of Rs. 47,55,738/- (Rupees forty seven lakhs fifty five thousand seven hundred and thirty eight) in September, 2005 under cover of the letter dated 1.9.2005. This Meeting took place at the very same address as the letter dated 3.8.2005.

6. Learned counsel for the Respondent seeks to rely on Annexure P/24 which is their letter dated 2.9.2005 addressed to the Petitioner in regard to renewal of Insurance Policy of 410 busus for TPI (Third Party Insurance). This does not in any way further the cause of the Respondents as the payment could easily have been forwarded by the Respondent to the officer concerned. Learned counsel for the Petitioner correctly contends that this is a flimsy excuse since in the previous years the premium was tendered at the same address. If any change had occurred in the functioning of the Respondent, surely a Third Party such as Petitioner would not be aware of it. This is especially so since the so-called shifting of the concerned office was on the same floor, as submitted by learned Counsel for the Respondent on instructions from Mr. Anil Khanna, Senior Divisional Manager and Mr. Ramesh, Senior Branch Manager, National Insurance Company Ltd., Delhi.

7. Learned counsel for the Respondent has submitted, again on instructions from Mr. Anil Khanna, that a policy change had been effected in the Respondent-Company. It had been found that Third Party Insurance Covers were not remunerative to the Company and hence fresh Guidelines had been stipulated. Even if this is so, the proper course would have been for the Respondent to increase the premium in consonance and compliance with established law and practice. It is impermissible for the insurance company to avoid providing insurance succor.

8. Learned counsel for the Petitioner has categorically stated that these Guidelines had not been brought to the notice of the Petitioner. Mr. Ramesh and Mr. Anil Khanna state that although the Policy was not forwarded to the Petitioner but in discussions, the Petitioner had been orally informed about it. This is denied by the Petitioner on instructions from Mr.R.K.Sharma, concerned Manager, D.T.C. Since no Counter Affidavit has been filed, the version put forward by the Respondent cannot be accepted. It is manifestly evident that since the Respondents had found that extending Page 1469 Third Party Insurance Cover was an onerous and non-profitable obligation/duty they were avoiding entering into such an arrangement, on one excuse or the other.

9. The matter stands fully covered by the decision of the Hon'ble Supreme Court in Biman Krishna Bose's cases (supra). It had been observed that:

3. Under Section 9 of the General Insurance Business (Nationalisation) Act, 1972 (hereinafter referred to as the Act), General Insurance Corporation of India (in short GIC) was set up as a government company for the purpose of superintendence, control and carrying out the business of general insurance in the country. Under Section 24 of the Act, the acquiring companies were given the exclusive privilege to carry on general insurance business in India. Under Section 3(a) of the Act, an acquiring company has been defined to mean any Indian insurance company in which any other company has been merged in pursuance of the amalgamation scheme formulated under the Act. The respondent Insurance Company is one of such acquiring companies. A perusal of the provisions of the Act makes it evident that it is only the acquiring companies which have exclusive privilege of carrying on the general insurance business in India, under the supervision and control of General Insurance Corporation of India. Excepting the acquiring companies, no other company in the private sector has a right and privilege to carry on general insurance business in India and to that extent the acquiring companies have a monopoly over such business. In such a situation, acquiring companies have the trappings of the State being other authorities under Article 12 of the Constitution of India. The acquiring companies thus being the State under Article 12 of the Constitution are expected to act fairly and reasonably. In the present case, what we find is that the respondent Insurance Company refused to renew the insurance policy of the appellant on the ground of his past conduct. The past conduct attributed is that the appellant had gone in litigation for payment of his claim lodged by him with the respondent Insurance Company. If an insured lodges a claim with the company and the company does not honour the claim, the insured is left with no alternative but to knock the doors of a court of law. Merely because the appellant had approached the Consumer Forum and this Court for redressal of his grievance, can such an act be attributed as bad record as to disentitle the appellant to get his policy renewed? The answer is no. Where an insurance company under the provisions of the Act has assumed monopoly in the business of general insurance in the country and thus acquired the trappings of the State being other authorities under Article 12 of the Constitution, it requires to satisfy the requirement of reasonableness and fairness while dealing with the customers. Even in an area of contractual relations, the State and its instrumentalities are enjoined with the obligations to act with fairness and in doing so, can take into consideration only the relevant materials. They must not take any irrelevant and extraneous consideration while arriving at a decision. Arbitrariness should not appear in their actions or decisions. In the present case, what we find is that arbitrariness is Page 1470 writ large in the actions of the respondent Company when it refused to renew the mediclaim policy of the insured on the ground of his past conduct i.e. having gone into litigation for payment of his claim against the respondent Company. We are, therefore, in agreement with the view taken by the High Court that the order of the respondent Company refusing to renew the mediclaim policy of the appellant was unfair and arbitrary.

4. Coming to the next question whether the appellant's policy was required to be renewed with effect from the date when it fell due for renewal. The view taken by the High Court is that an insurance policy cannot be renewed for the period which has already expired. It is not disputed that original mediclaim policy taken out by the appellant provided for its renewal. It is also not disputed that the appellant applied for renewal of the insurance policy well in time and sent a cheque towards its premium. The respondent Company has not challenged the order of the High Court setting aside the order refusing to renew the mediclaim policy of the insured. Under such facts and circumstances of the case, whether the appellant can be directed to take a fresh mediclaim policy on the premise that no renewal of the policy can be ordered for the expired period.

10. The Respondents are clearly trying to escape from their statutory obligations. They cannot be permitted to do so. The contention on behalf of the Respondents is that retrospective Insurance Covers ought not to be granted by this Court. Reliance has placed on Section 64VB which states that No risk to be assumed unless premium is received in advance . The argument is that if a direction is to issue to the Respondents to renew the Third Party Insurance Cover as heretofore then it should be made effective from the date on which the premium is received. The language of the said Section militates against the arguments since it specifically contemplates the receipt of the payable premium or a guarantee in this regard. The cheques forwarded by the Petitioner have not been dis-honoured. Instead the cheques have been returned to the Petitioner without any presentation by the Respondent to the Bank. It is, therefore, not a case where premium has not been received from the prospective Insurance Customer, instead it is the Respondent Company which has refused to encash it. The Respondent cannot be allowed to take advantage of its own wrong doing. The position is worse confounded since the Respondent has failed altogether to bring any factor to the notice of the Petitioner which would indicate that the Petitioner was not entitled for any reason to Third Party Insurance Cover.

11. Annexure P/18 is a copy of the Circular dated 29.7.2005 of the Chairman, Insurance Regulatory And Development Authority which is very relevant and reads as follows:

We draw your attention to our earlier circulars dated 17th May, 28th June and 29th October 2002 on the captioned subject.

The authority is still receiving complaints regarding non-acceptance of motor third party proposals by certain offices of the insurance companies. As you may be aware, the Third Party Insurance is a compulsory cover Page 1471 as per the motor vehicle Act and cannot be denied by any insurer to any vehicle having a valid fitness certificate.

In this connection, we also draw your attention to TAC circular IMT/04/2003 dated 20th June, 2003 explaining the basis of rating of Third Party Liability risk as per matrix considering the individual risk perception and adverse claims experience, if any.

You are therefore, once again directed to see that no operating office denies Third Party Liability cover to any motor vehicle having a valid fitness certificate. Please acknowledge receipt and confirm that you are informing all your operating offices to comply with this direction from the authority.

12. The Respondent has willfully refused to comply with the Circular. In any event, the fourth paragraph of the Supreme Court Judgment extracted above is a clear, unambiguous and indisputable authority for holding that the Insurance Policy should have been renewed from the date on which the Petitioner had made an application in this regard by forwarding payment of the necessary insurance premium.

13. In these circumstances, the Writ Petition is well founded and is allowed. The Petitioner shall forward, once again, the requisite insurance premium within two days from today. In view of the clarification now made, the cheque shall be tendered to Direct Agent Branch, B.M.C. House, Connaught Place, New Delhi-110001. The Respondents shall renew the Third Party Insurance Policy, as heretofore, with effect from the initial date of the application i.e. 3.8.2005 which was for 304 buses and 1.9.2005 for 407 buses. The Petitioner shall accept the premium in the future as and when tendered to it.

14. The Petitioner shall be entitled to cost quantified at Rs. 25,000/- (Rupees twenty five thousand).

15. dusty.