The Bombay high court has directed an insurance company to pay insurance of over Rs9 lakh with interest at the rate of 6% per annum from 1988, after observing that there was no fraud committed by the insured.
Justice MT Joshi of the Aurangabad bench of the HC dismissed an appeal filed by United India Insurance Company Limited and asked the insurance company to pay Rs9.23 lakh to M/s Manisha Enterprises, Beed, towards the claim of a fire insurance policy. The court has also directed the company to give an interest at the rate of 6% per annum since the date on which their showroom was gutted in a fire – April 21, 1988.
The insurance company had challenged the order of the sessions court saying that the company had committed fraud and bought additional insurance on the day of the fire.
In November, 1987, the proprietor of Manisha Enterprises obtained a fire policy 'B' for a period between November 18, 1987 and November 17, 1988. The risk was covered for Rs 2 lakh.
Thereafter, the proprietor's relative obtained another insurance policy 'A' covering a risk of Rs10 lakh for a period between April 21, 1988 and April 20, 1989.
On the night of obtaining the second of the policy, a fire broke out at the shop of Manisha Enterprises, who made a claim of Rs14-15 lakh. The risk firm sent a surveyor which assessed the loss worth Rs11,14,415.
However, the insurance company paid Rs1.91 lakh with respect to policy 'B' and refuted the claim in respect of subsequent policy on the ground that Manisha Enterprises had failed to prove that the cover note of the said policy was validly obtained.
Hence, Manish Enterprises filed a suit before the civil court which was ruled in its favour.
The insurance company challenged it before HC.
The risk firm's counsel AB Ghatne argued that on the date of incident, April 21, 1988, no amount towards the premium was deposited. Even the proposal for issuing a cover note was not received at the firm's office. Also, there was no authorization to any official or agent to take a new and different insurance policy of a different amount.
The insurance company further claimed that the proprietor's relative, Radhesham Sarda, and the development officer of the insurance company, Brijlal Malu, fraudulently drew a new policy of Rs10 lakh. Even the cheque was not deposited on April 21, 1988, Ghante added.
Advocate for Manisha Enterprises, AB Kadethankar argued that a surveyor on the panel of the insurance company said that property worth Rs14 lakh was gutted. Even revenue authorities had independently taken a survey and corroborated this fact.
As per Ravindra Kulkarni, the then branch manager of the firm, the risk starts from the issuance of the cover note and even before encashment of the cheque of premium.
Also, in due course of time, after the incident, the policy of insurance was issued covering the risk of Rs10 lakh for the particular period.
The judge thus observed that the theory of fraud appeared to be a 'concocted story'.
"The plea of fraud is easy to make but very difficult to prove. Besides this, it is akin to a charge of the criminal offence though it may have been made in a civil proceedings. It is therefore the established principle of law that the said plea has to be proved beyond reasonable doubt," observed the judge.
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