MANTORA OIL PRODUCTS (P) LTD., KANPUR vs ORIENTAL INSURANCE COMPANY LTD., KANPUR

THIS is an appeal filed by the complainant in Case No. 29 of 1990 on the file of the State Commission. Uttar Pradesh, against the Order dated March 7, 1990 passed by the State Commission dismissing the complaint on the ground that it was not entertainable under the Consumer Protection Act, 1986. Two reasons have been stated by the State Commission in support of its aforesaid conclusion. Firstly, it was held that since the dispute raised in the complaint pertained to the return of premium paid on an insurance policy it did not fall within the ambit of the Consumer Protection Act. The second ground mentioned by the State Commission is that the expression "unfair trade practice" relates only to purchase of goods and not to ''deficiency'' in a transaction of hiring of service and consequently the grievance put forward by the complainant could not be regarded as one relating to ''unfair trade practice''. After having heard both sides, we have come to the conclusion that both aforesaid grounds set out by the State Commission are incorrect and untenable in law.

THE complainant (appellant) is a company dealing in oil products and in connection with the said business carried on by it, it purchases vegetable oil and refined oil from different parts of the country and transports it in oil tankers. In order to safeguard itself against the possibility of incurring losses due to accidents, theft, pilferage, non-delivery etc. occurring in the course of the transit, the appellant company took out in January, 1988 policies of insurance with the respondent herein - the Oriental Insurance Company Ltd. - through its branch at Kanpur. THE first policy was for a coverage of Rs. 10,10,00,000/-. Subsequently, the appellant increased the coverage by another Rs. 7 crores thereby bringing the total insurance coverage to Rs. 17.10 crores for which an aggregate premium of Rs. 4,26,826/- was paid by the appellant company. One of the conditions of the contract of insurance was that in respect of the unutilised portion of the coverage, the respondent - insurance company should refund to the appellant the proportionate amount of premium on such unutilised portion. In other words, if the value of the total quantity of goods transported fell short of Rs. 17.10 crores during the period covered by the policies, the insurance company was to refund to the appellant the proportionate premium on the amount of shortfall in the quantity transported. That such a condition was a part of the arrangement of the insurance contract is not in dispute before us. It is further admitted that the appellant had transported only goods worth Rs. 9,71,59,990/- during the period covered by the policies. After the termination of the period of the policies, the complainant wrote to the Insurance Company requesting for refund of the proportionate premium of Rs. 2,05,797/- on Rs. 5,38,40,000/- which was the unutilised part of the coverage. In response thereto the respondent company issued a cheque to the appellant for Rs. 40,889/- only. On being further addressed by the appellant for payment of the balance amount of refund due to it the respondent informed the appellant that while working out and collecting the amounts of premium payable under two policies a mistake had been committed by the Branch Office of the respondent in that they had levied premium only at the rate of 30 per cent whereas the correct rate should have been 50 per cent and that on adjustment being made for the short levy of the premium, the refund due to the appellant worked out only to Rs. 40,889/-, for which the cheque had been already sent. Further representations by the appellant to the Insurance Company not having yielded any result, the appellant instituted the complaint before the State Commission seeking to recover from the respondent the balance amount due to it by way of refund of excess premium together with interest.

A photostat copy of the policy of insurance issued to the appellant forms part of the record before us. It is seen therefrom that the premium that was stipulated under the contract was only 30 per cent of the amount covered by the policies. The stand taken by the respondent is that a Circular had been issued as early as on March 7, 1986 by the Head Office of the respondent company to all its Regional and Divisional Offices intimating them about the decision taken by the ''I. C. C. C. '' that a minimum rate of 50 per cent should be charged as premium on insurance of vegetable oil in transit packed in tins or carried by tankers and that at the time when the policies were issued and the contracts of insurance coverage were entered into with the appellant, the Divisional Office of the respondent was not aware of the said latest rate fixed by ''I. C. C. C.''.

IT is significant that at no time during the currency of the contract of Insurance coverage the insured namely, the appellant was informed about the alleged mistake in calculation of the premium, and the terms of the contract remained unaltered during the whole period from which it was in operation. IT was expressly stated in the policy that the rate at which premium was to be paid was only 30 per cent of the amount of coverage. This was an integral term of the contract and the respondent having undertaken to provide insurance coverage under the contracts on this stipulation regarding the consideration to be paid by way of premium, it is not legally open to the respondent now to contend that there was an unilateral mistake on its part in calculating the premium and that hence it is entitled to set off the alleged deficit in the premium collected from the appellant against the amount of refund due to the appellant under the terms of the contract of insurance. The refusal of the respondent to refund the full amount of the proportionate premium paid by the appellant on the unutilised portion of the total coverage mentioned in the policies was clearly illegal. The conduct of the respondent in refusing to honour its obligation for making the refund fully in accordance with the policies of insurance undoubtedly constituted a ''deficiency'' in the service and we do not find it possible to uphold the view expressed by the State Commission in its Order that since the case relates to the return of premium paid on the insurance policies "it does not come under the jurisdiction of the Consumer Protection Act."

THE further observations made by the State Commission that the expression "unfair trade practice" used in the Consumer Protection Act relates to only to purchase of goods and does not apply to deficiency in services hired is also clearly incorrect and untenable. From the very terms of the definition of the expression ''unfair trade practice'' contained in Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (which has been made applicable to our Act by Section 2(1)(r), it is absolutely clear that it applies not merely to the sale or supply of any goods but also to the provision of any service. Hence the second ground mentioned by the State Commission for holding that the complaint was not maintainable under the Act is also erroneous and unsound. Before parting with this case, we feel constrained to observe that the improved Order of the State Commission is absolutely perfunctory. It does not even set out the facts of the case nor is there any discussion therein of the contentions raised by both sides. In an Order disposing of a contested complaint petition filed under the Act more detailed consideration and discussion of all relevant aspects is expected from a quasi-judicial body like the State Commission. This appeal is accordingly allowed. The Order of the State Commission dismissing the complaint petition is set aside and the respondent herein-the Oriental Insurance Company Ltd. is hereby directed to refund to the appellant within six weeks from today the balance amount of Rs. 1,64,908/- with interest at 12 per cent from 31.12.1988 till date of actual payment. We do not make any direction regarding costs. Appeal allowed.