THE ORIENTAL INSURANCE CO. LTD.versusMALANA POWER COMPANY LTD.

                       [2021] 11 S.C.R. 937                            937


            THE ORIENTAL INSURANCE CO. LTD.                            A
                                 v.
              MALANA POWER COMPANY LTD.
                  (Civil Appeal No.5132 of 2019)
                      NOVEMBER 15, 2021                                B
    [R. SUBHASH REDDY AND HRISHIKESH ROY, JJ.]
      Insurance: Insurance claim – Repudiation of – Non-disclosure
or fraud – On facts, claim raised by complainant as per the Special
Contingency Policy – Insurance Company’s case that there was
                                                                       C
suppression or non-disclosure of hydrology data of previous year
by the complainant company – National Commission allowed the
complainant – Interference with – Held: Not called for – It is not a
case of suppression or non-disclosure of data – Whatever data was
available, the complainant has made known to the Insurance
Company – Insurance Company was aware of the earlier insurance         D
policy obtained from the previous insurance company by the
complainant, there was no reason for not asking for such hydrology
data of the previous year – Furthermore, cancellation of the subject
policy was also not on account of suppression or fraud played by
the complainant, but since the complainant has not acceded to the
                                                                       E
request of the Insurance Company to modify the sum insured; and
insurance company were not able to re-insure the claim in the re-
insurance market for protection of their interest – Thus, there was
no non-disclosure or fraud, to repudiate the claim.
      Dismissing the appeal, the Court
                                                                       F
      HELD: 1.1 There was no suppression or non-disclosure
by the respondent in suppressing any hydrology data of the
previous year, as pleaded by the appellant. The data of the years
1993 to 2002 could not be provided as the same was not available
with the respondent and it was also made known to the appellant.
[Para 10][943-D-E]                                                     G

      1.2 The Special Contingency Policy for the year 2001-02
was obtained from IFFCO - TOKIO and sum insured was only
Rs.5.00 Crores. When the respondent has requested to increase
the coverage to Rs.10.00 Crores, the same was agreed by the
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                                937
938           SUPREME COURT REPORTS                    [2021] 11 S.C.R.


A     appellant and entered into an MoU with the similar terms and
      conditions of the previous year policy which was with IFFCO-
      TOKIO. Except the amount of coverage was increased from
      Rs.5.00 Crores to Rs.10.00 Crores in the policy issued by the
      appellant, all other terms and conditions were the same. The
      appellant was aware of the earlier insurance policy entered into
B
      by the respondent with the IFFCO-TOKIO prior to issuance of
      the subject policy in favour of the respondent for the period
      covering from 07.07.2002 to 06.07.2003. If they were to examine
      the hydrology data of the previous year, it was well within the
      knowledge of the appellant to ask for such data even before
C     entering into contract. It is not a case of suppression or non-
      disclosure of data as pleaded, and whatever data was available,
      the respondent has made known to the appellant. When the
      appellant was aware of the earlier insurance policy obtained from
      IFFCO-TOKIO by the respondent, there was no reason for not
      asking for such hydrology data of the previous year. As such, it
D
      cannot be said that there was non-disclosure of hydrology data or
      any fraud from the side of the respondent, as is projected by the
      appellant so as to repudiate the claim. [Para 11][943-E-H;
      944-A-B
            1.3 It is to be noticed that the cancellation of the subject
E     policy vide proceedings dated 25.11.2002 was also not on account
      of suppression or fraud played by the respondent, but it was only
      for the reason that the respondent has not acceded to the request
      of the appellant to modify the sum insured from Rs.10.00 Crores
      to Rs.5.00 Crores. Further, the cancellation of policy is on the
F     ground that they were not able to re-insure the claim in the re-
      insurance market for protection of their interest. If there was
      any suppression or non-disclosure, as pleaded, the appellant would
      have cancelled only on such ground. No such ground was raised
      at any point of time either at the stage of issuing notice dated
      20.11.2002, or while issuing the proceedings dated 25.11.2002
G     cancelling the policy for the remaining period by refunding
      premium on pro-rata basis. [Para 12][944-B-D]
           1.4 The submission that the respondent has encashed the
      cheque which was issued towards refund of pro-rata premium,

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 THE ORIENTAL INSURANCE CO. LTD. v. MALANA POWER                               939
                  COMPANY LTD.

will not make any difference as the claim was only for the period              A
for which the insurance policy was in force. [Para 13][944-E-F]
       1.5 There was no non-disclosure or fraud, as pleaded by
the appellant to repudiate the claim. Whether there was any
material suppression or not, is a matter of fact, which is to be
verified from the facts and circumstances of each case and material            B
on record. [Para 14][944-F]
     1.6 The previous policy with IFFCO-TOKIO for the
preceding year, for the period from 07.07.2001 to 06.07.2002 was
made known to the appellant, as such, it cannot be said that there
was any suppression or non-disclosure. [Para 15][945-A-B]                      C
      Oriental Insurance Company v. Mahendra Construction
      (2019) 18 SCC 209 – referred to.
                         Case Law Reference
(2019) 18 SCC 209                  referred to               Para 8            D
      CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5132
of 2019.
       From the Judgment and Order dated 28.02.2019 of the National
Consumer Disputes Redressal Commission, New Delhi in Original
Petition No.53 of 2005.                                                        E
      Mahavir Singh, Sr. Adv., Mohan Babu Aggarwal, Celeste
Aggarwal, Akansha Aggarwal, Mukesh Kumar Sharma, Advs. for the
Appellant.
      Neeraj Malhotra, Sr. Adv., Sameer Nandwani, M/s Shakil Ahmad
Syed, Advs. for the Respondent.                                                F

      The Judgment of the Court was delivered by
      R. SUBHASH REDDY, J.
       1. This Civil Appeal is filed by the appellant/the Oriental Insurance
Company Limited, aggrieved by the order dated 28.02.2019 passed in             G
O.P. No.53 of 2005, by the National Consumer Disputes Redressal
Commission, New Delhi. By the aforesaid order, the National Commission
has allowed the complaint filed by the respondent/complainant Company
and directed the appellant to pay a sum of Rs.4,68,33,840/- towards the
loss suffered by the respondent, in terms of insurance policy along with
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940             SUPREME COURT REPORTS                          [2021] 11 S.C.R.


A     interest @ 6% per annum from the date of filing the complaint till the
      date of payment.
            2. The respondent is a company which runs a Hydro Power Project
      around Malana Nalah. The respondent was interested in securing an
      indemnity in respect of any shortfall that may take place in aggregate
B     annual power generation at its Hydro Power Plant due to failure of
      hydrology which depends upon vagaries of nature.
              3. For the year 2001-02, the respondent has obtained policies from
      M/s. IFFCO-TOKIO General Insurance Company. M/s. IFFCO-TOKIO
      General Insurance Company provided a package deal of the two
C     insurance policies to the respondent. First one was Industrial All Risk
      Insurance Policy which covered material, damages due to fire and special
      perils, machinery breakdown, loss of profit etc., for a period of 12 months.
      The second insurance policy was Special Contingency Policy which
      covered loss of power generation due to loss of hydrology. The insurance
      coverage for the year 2001-02 was for a period of 12 months commencing
D     from 07.07.2001 to 06.07.2002. The respondent has obtained policies
      from the appellant in similar lines for the period commencing from
      07.07.2002 to 06.07.2003. In respect of Special Contingency Policy, which
      covered the loss of power generation due to loss of hydrology, the risk
      cover for the year 2001-02 was Rs.5.00 crores. Since the likely loss of
E     power generation was estimated to be around Rs.8.00 Crores, the
      respondent wanted the risk coverage enhanced from Rs.5.00 Crores to
      Rs.10.00 Crores for the year 2002-03. The terms and conditions were
      accepted by the appellant. The Special Contingency Policy which is
      obtained from the appellant for the year 2002-03 covered Rs.10.00 Crores
      instead of Rs.5.00 Crores, as provided by the earlier insurer i.e. IFFCO-
F     TOKIO for the previous year i.e. 2001-02. The Special Contingency
      Policy issued by the appellant was identical to the one issued by
      M/s. IFFCO-TOKIO except the sum insured was Rs.10.00 Crores in
      case of short-fall in the aggregate annual power generation due to loss
      of hydrology. A premium of Rs.16,95,750/- was paid by the respondent.
G     As per the terms of the contract entered into, the Insurance Company
      was entitled to cancel the policy by issuing 7 (seven) days’ prior notice.
             4. When the appellant was not able to obtain reinsurance in the
      reinsurance market for getting it protected as per the requirements of
      business retention norms by the Insurance Industry, it has addressed a
H     letter dated 11.11.2002 to the respondent for modifying the terms and
 THE ORIENTAL INSURANCE CO. LTD. v. MALANA POWER                             941
        COMPANY LTD. [R. SUBHASH REDDY, J.]

conditions of the policy to reduce the insurance coverage to Rs.5.00         A
Crores from Rs.10.00 Crores. It is specifically mentioned in the letter
dated 11.11.2002 issued by the appellant that the sum insured had to be
kept at Rs.5.00 Crores as no reinsurer was willing to accept the sum
insured beyond Rs.5.00 Crores. When the said proposal for revising the
policy with a sum insured of Rs.5.00 Crores was not accepted by the
                                                                             B
respondent, the appellant vide proceedings dated 25.11.2002 cancelled
the policy by refunding the premium on pro-rata basis for the remaining
period i.e., from 27.11.2002 to 06.07.2003.
       5. The respondent vide letter dated 26.11.2002 informed the
appellant that there has been a shortfall of 28302839 KWH of electricity
generated from 07.02.2002 to 20.11.2002 and the loss suffered was            C
Rs.5,20,37,800/- and after deduction of 10%, the respondent has claimed
an amount of Rs.4,68,33,840/-. By the said letter, the respondent has
made a formal claim with the appellant for reimbursement of the amount
as per the terms of the policy. As the same was not acceded to, the
respondent approached the National Consumer Disputes Redressal               D
Commission, New Delhi, claiming an amount of Rs.8,56,77,608.81 as
per the Special Contingency Policy.
       6. The appellant has filed written statement opposing the claim.
While contesting the claim on various grounds, mainly it was the case of
the appellant that the respondent has fraudulently suppressed the            E
hydrological data of that project of the previous year. The plea of the
appellant was not accepted by the National Commission mainly on the
ground that the appellant, with open eyes, had entered into a
Memorandum of Understanding (MoU) with the respondent and issued
the policy on the same lines as that of preceding year for the year
2001-02, by duly incorporating the available hydrology data. The National    F
Commission has found that there is no non-disclosure of material
information in terms of the insurance policy issued by the appellant when
the available hydrology data was duly supplied by the respondent and
incorporated in the policy itself. Further, with reference to cancellation
of the insurance policy, the National Commission has found that at no        G
point of time, there was any complaint of any material suppression with
regard to hydrology data and further noticed that the notice dated
20.11.2002 for cancellation of the special contingency policy was also
only for the reason that the respondent was not accepting for amendment
of the policy for revision of the sum insured to Rs.5.00 Crores from
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942               SUPREME COURT REPORTS                        [2021] 11 S.C.R.


A     Rs.10.00 Crores only on the ground that they were not able to reinsure
      their interest. The National Commission by clearly recording a finding
      that there was no suppression and fraud on the part of respondent, has
      allowed the claim of the respondent and directed to pay an amount of
      Rs.4,68,33,840/- which is the loss suffered by the respondent in terms of
      the policy along with interest @ 6% per annum.
B
             7. We have heard Sri Mahavir Singh, learned senior counsel
      appearing for the appellant and Sri Neeraj Malhotra, learned Senior
      Counsel appearing for the respondent.
             8. Even in this appeal, by referring to the impugned order and
      other material placed on record, the learned Senior Counsel appearing
C     for the appellant has mainly contended that the respondent had obtained
      policy by playing fraud and suppression, as such, the respondent is not
      entitled to make any claim against the appellant. It is submitted that
      there is non-disclosure of previous hydrology data of the year 2001-02
      before obtaining the policy despite the same was available with the
D     respondent. It is further submitted that after obtaining the subject policy
      from the appellant, few days thereafter, the respondent made a claim
      against the earlier insurer M/s.IFFCO-TOKIO, which itself shows that
      by changing the insurance companies, the respondent was in the habit of
      making wrong claims. It is submitted that in view of the suppression /
      non-disclosure of hydrology data of the previous year though it was
E     available with the respondent, the appellant has rightly repudiated the
      claim of the complainant company. It is contended that the National
      Commission without considering the matter as per the settled legal position,
      by recording erroneous findings, allowed the claim made by the
      respondent. In support of his argument, the learned Senior Counsel has
      placed reliance on the judgment of this Court in the case of Oriental
F
      Insurance Company v. Mahendra Construction1.
             9. On the other hand, Sri Neeraj Malhotra, learned Senior Counsel
      appearing for the respondent, by taking us to the findings recorded by
      the National Commission and other material placed on record, has
      submitted that there was no suppression or fraud played by the
G     respondent, as pleaded and the claim of the respondent was rightly allowed
      by the National Commission. The learned Senior Counsel has also
      submitted that in the absence of any errors in the order impugned, there
      are no grounds to interfere with the same. It is contended that the
      appellant is aware of the conditions of the insurance policy which the
H     1
          (2019) 18 SCC 209
 THE ORIENTAL INSURANCE CO. LTD. v. MALANA POWER                              943
        COMPANY LTD. [R. SUBHASH REDDY, J.]

respondent has obtained for the previous year 2001-02 from M/s.IFFCO-         A
TIKIO and as per the same terms and conditions, the subject policy was
issued by the appellant. At no point of time, the appellant asked for the
hydrology data. It is submitted that without informing the respondent,
the appellant has appointed M/s. A.K. Gupta & Associates for carrying
out a survey and called for report on the loss of power generation. The
                                                                              B
Surveyor appointed by the Insurance Company has submitted a report
which was not even furnished to the respondent and based on such
report, the claim made by the respondent was repudiated. It is submitted
that having regard to the material produced before the National
Commission, it has come to a definite finding that there was no suppression
or non-disclosure from the side of the respondent, as such, there was no      C
reason or justification for repudiating the claim made by the respondent
and allowed the claim of Rs.4,68,33,840/-.
      10. On hearing the learned counsel on both sides and perusal of
the material placed on record, we too are of the opinion that there was
no suppression or non-disclosure by the respondent in suppressing any         D
hydrology data of the previous year, as pleaded by the appellant. The
data of the years 1993 to 2002 could not be provided as the same was
not available with the respondent and it was also made known to the
appellant.
       11. The Surveyor appointed by the Insurance Company instead            E
of assessing the loss of hydrology as per the policy, went into several
aspects which are irrelevant to the claim. The Special Contingency Policy
for the year 2001-02 was obtained from IFFCO-TOKIO and sum insured
was only Rs.5.00 Crores. When the respondent has requested to increase
the coverage to Rs.10.00 Crores, the same was agreed by the appellant
and entered into an MoU with the similar terms and conditions of the          F
previous year policy which was with IFFCO-TOKIO. Except the amount
of coverage was increased from Rs.5.00 Crores to Rs.10.00 Crores in
the policy issued by the appellant, all other terms and conditions were
the same. The appellant was aware of the earlier insurance policy entered
into by the respondent with the IFFCO-TOKIO prior to issuance of the          G
subject policy in favour of the respondent for the period covering from
07.07.2002 to 06.07.2003. If they were to examine the hydrology data
of the previous year, it was well within the knowledge of the appellant to
ask for such data even before entering into contract. It is not a case of
suppression or non-disclosure of data as pleaded, and whatever data
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944             SUPREME COURT REPORTS                          [2021] 11 S.C.R.


A     was available, the respondent has made known to the appellant. When
      the appellant was aware of the earlier insurance policy obtained from
      IFFCO-TOKIO by the respondent, there was no reason for not asking
      for such hydrology data of the previous year. As such, it cannot be said
      that there was non-disclosure of hydrology data or any fraud from the
      side of the respondent, as is projected by the appellant so as to repudiate
B
      the claim.
              12. Further, it is to be noticed that the cancellation of the subject
      policy vide proceedings dated 25.11.2002 was also not on account of
      suppression or fraud played by the respondent, but it was only for the
C     reason that the respondent has not acceded to the request of the appellant
      to modify the sum insured from Rs.10.00 Crores to Rs.5.00 Crores.
      Further, the cancellation of policy is on the ground that they were not
      able to re-insure the claim in the re-insurance market for protection of
      their interest. If there was any suppression or non-disclosure, as pleaded,
      the appellant would have cancelled only on such ground. No such ground
D     was raised at any point of time either at the stage of issuing notice dated
      20.11.2002, or while issuing the proceedings dated 25.11.2002 cancelling
      the policy for the remaining period by refunding premium on pro-rata
      basis.
            13. Though it is contended by Mr. Mahavir Singh, learned Senior
E     Counsel that the respondent has encashed the cheque which was issued
      towards refund of pro-rata premium, we are of the view that the same
      will not make any difference as the claim was only for the period for
      which the insurance policy was in force.
            14. In view of the above, we are of the view that there was no
F     non-disclosure or fraud, as pleaded by the apellant to repudiate the claim.
      Whether there was any material suppression or not, is a matter of fact,
      which is to be verified from the facts and circumstances of each case
      and material on record.
             15. Though the learned counsel for the appellant relied on the
G
      judgment of this Court in the case of Oriental Insurance Company
      Limited v. Mahendra Construction1, but the same would not render
      any assistance to support his case. In the aforesaid judgment, there was
      non-disclosure of previous claim against the insured goods in the proposal
      for insurance itself. In view of the same, this Court has held that insured
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 THE ORIENTAL INSURANCE CO. LTD. v. MALANA POWER                                 945
        COMPANY LTD. [R. SUBHASH REDDY, J.]

made a false representation and suppressed relevant material. Coming             A
to the case on hand, the previous policy with IFFCO-TOKIO for the
preceding year, for the period from 07.07.2001 to 06.07.2002 was made
known to the appellant, as such, it cannot be said that there was any
suppression or non-disclosure.
        16. For the aforesaid reasons, we are of the view that there is no       B
merit in this Civil Appeal, and the same being devoid of merit, is dismissed.
The appellant has deposited an amount of Rs.1.25 crores before Registry
of this Court which is kept in fixed deposit. We permit the respondent to
withdraw the said amount of Rs.1.25 crores along with accrued interest,
if any, without furnishing any security. The appellant shall pay the balance
amount due to the respondent within a period of three (03) months from           C
today.


Nidhi Jain                                                   Appeal dismissed.

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