Flora said that it had approached National on May 25, 2001 for insurance cover; and that after physical verification, the proposal form was filled up and the cheque for premium handed over on June 1. "Based on newspaper report which appeared on May 30, 2001 regarding owners of Zap," Flora had filed a complaint for cheating with the crime branch in the jurisdictional police station, it said. "There was no report of unrest or any problem with students at the centre. The insurance policy was belatedly issued on June 4, 2001 instead of on June 1," added Flora. It was also said that Flora's director was out of station for 3-4 days and returned on June 7, when he "got information regarding theft in the centre and immediately went to the centre and filed a complaint with the police station", and informed the insurance company `the same day'.

Flora also pointed out `various inconsistencies' in the surveyor's report made "after a delay of 11 months assessing a loss of Rs 6,49,467". The delay in the report of the surveyor, and unnecessary appointment of the investigator after a delay of four months, and finally the repudiation of claim after an inordinate delay of 16 months meant a clear deficiency in service, argued Flora against National.

Insurance company's arguments

What did National have to say? It cited an FIR filed by 21 students, reading thus: "When we reached the Institute in the morning i.e., today May 30, 2001, we were shocked to see that the computers were not repaired and there was nobody from the management to answer our queries. When we decided to lodge a formal complaint against Zap Infotech Ltd, the institute was closed around 2.00 p.m. and attempts were made by the management to remove computers from the centre".

National cited its surveyor's report that had pointed out many things `to prove that there was concealment of facts':

The investigator's report `quoted extensively from the daily dairy of the Police Station', according to which the computers had been removed from the centre on May 30, 2001; and "there was fight and quarrel at the premises and the Institute was closed for one week".

National submitted before the Commission students' statements "that in the last week of May the centre started removing computers from terminals and kept them aside". It seems, "other computers that were operational were constantly down due to lack of maintenance and virus troubles", and "classes were not conducted properly". More dramatic things happened: "On May 30, 2001, in the afternoon the students observed that the management was trying to remove the server and computers through the rear lane, which was promptly reported to the police." Since Flora knew it would not be able to recover anything from Zap, it had allegedly filed an FIR on June 8, 2001 about `theft/burglary' of computers/air-conditioners and so on, reasoned National.

The Commission's observations

Justice M.B. Shah, President of the Commission, and P.D. Shenoy, Member, heard both the sides, and observed, "A cursory glance at the insurance proposal indicates that this was filled up in great urgency. The proposer has neither indicated his name and designation nor place and date while signing the proposal."

The concept of insurance depends upon utmost good faith and trust between the insured and the insurer but Flora has violated these norms by not disclosing several vital facts to National, said the Commission. Even before Flora approached National, it had filed a suit in the Delhi High Court, in May, 2001, praying as follows: "Appoint a Local Commissioner to visit the suit premises, take photographs, initial account books and make list and make inventory of the computers and other furniture items lying and installed". It indicated the apprehension of Flora about the safety of the computers as they might be stolen, reasoned the NCDRC.

The Commission also cited a newspaper report of May 30, 2001 from Hindustan Times: "Overnight, the Mumbai-based proprietors of the Institute downed the shutters leaving the students, all of whom had paid close to Rs 18,000 each for a short training module in e-commerce, completely in the lurch. Now these institutes are closing without a trace. Even the staff at these centres have not been paid salaries for the last three to four months, the District Police Chief said."

National's decision to repudiate the claim was not unjustifiable, said the Commission. However, the Commission wasn't too happy with the way insurance companies issue policies. "The insurance agent has some responsibilities, but it appears that insurance companies are not having any control on such agents, nor they are taking appropriate steps that in such cases before accepting the premium the officers of the Insurance Company visit the site and verify whether the goods which are sought to be covered by the insurance company are in existence or not".

Despite that, the contract of insurance is based on good faith, reminded the Commission. "In this view of the matter, there is no substance in this complaint, and is, therefore, dismissed," it ruled, directing Flora to pay costs of Rs 10,000 to National.

Picture by Ashoke Chakrabarty

Cases@TheHindu.co.in

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