Case: United India Insurance Co. Ltd Vs. M/S. Payarelal Niranjan Lal

The respondent (hereinafter referred to as the `insured) gave a cheque for Rs.1451/- dated 8.10.86 to one Development Officer of the appellant-Company for obtaining Marine (Inland Transit Policy) for Rs.5,00,000/- for incoming goods from various States.On 9.10.1986 an oil tanker of the respondent-insured bearing No.RND-9259 coming from District Mehsana, Gujarat, met with an accident near Pali, Rajasthan.On 11.10.1986 the insured informed the appellant about the accident of its oil tanker. The cheque in question was received in the Divisional Office of the appellant on 13.10.1986 without any cover note.On 19.1.1987 respondent submitted claim bill to the appellant claiming certain amount in respect of the accident of its oil tanker.On 23.3.1993 the claim was rejected by the appellant informing the respondent asYour cheque dated 8.10.96 Rs.1451/- against the premium of the policy of insurance proposed to be issued reached our office on 13.10.86 without a cover note in absence where of any risk arising out of an accident was neither covered nor could that be said to have been covered as also for want of a concluded contract.2. Besides that right from 8.10.86 till 13.10.86 the balance in your account in the concerned bank was only a sum of Rs.1259.21 only, wholly insufficient for clearance of your above cheque without which, mere issuance of the said cheque did not result into a contract worth of being honoured.3. Your alleged accident took place at about 2 p.m. on 9.10.86, i.e. much prior to our even accepting the contract to cover the said risk for reasons given in para No.1 & 2 of this letter and hence we are not liable for thecorrespondence made between us on your initiation is also refuted as entirely irrelevant and off the subject and truth no further correspondence on this subject from you will be taken cognizance of by us as the chapter for vacuum is closed hereby once forrespondent filed a complaint before the State Consumer Disputes Redressal Commission, Rajasthan (hereinafter referred to as the `State Commission) claiming compensation of Rs.4,30,350/-. The complaint was dismissed by the State Commission by order dated 23.9.1996 holding that no concluded contract of insurance came into existence on 8.10.1993 as there was no acceptance of the proposal by the insurer since no cover note or any other customary note of contract had beenappeal was filed by the respondent before the National Commission which was numbered as First Appeal No.666/96. The matter was decided on 30.11.2005 ex parte partially allowing the claim of the respondent and directing the appellant to pay Rs.1,41,794.45 along with interest @ 12% p.a. from 1.1.1987 till date of payment and cost of Rs.10,000/- wasfiled an application before the National Commission with the prayer to set aside the ex parte order by explaining the reason as to why there was no appearance on behalf of the appellant when the matter was called. It was specifically pointed out that Mr. S.C. Sharda who was the earlier counsel had returned all the briefs. The notice was handed over to Mr. Sharda who had not appeared. As no information was given by Mr. Sharda, there was no appearance on behalf of the present respondent before the National Commission when the matter was taken up. By the impugned judgment the application was rejected. It was observed that if there was any change in counsel, the appellant should have been more vigilant.

Court's reasoning:
5. In view of the undisputed factual position that earlier Mr. Sharda was appearing and notice had been served on him, obviously Mr. Sharda was to appear when the matter was taken up by National Commission. But the briefs had been returned by Mr. Sharda to the appellant-company. Therefore, the appellant had no knowledge about the listing of the case. It is not in dispute that Mr. Sharda had not informed the appellant-company about the date of hearing because he had returned the briefs.