JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

          The complainant before us is a large company engaged in undertaking several Hydro Carbon and Infrastructural Projects.  The complainant company was appointed as a contractor in execution of its Uran Trombay Pipeline Project.  As per the terms of the contract between the complainant and the ONGC, the complainant company was required to arrange insurance, covering risks that could crop up during the construction process.  According to the complainant, the respondent company approached it, claiming to be capable and competent experts in arranging insurance and reinsurance in respect of above referred project.  It appears that the respondent company pursued the matter of insurance and reinsurance of the aforesaid project with Oriental Insurance Co. Ltd. (hereinafter referred as the Insurance Company) and pursuant to the efforts made by it, a letter dated 17.08.2005 was written by the Insurance Company to the complainant quoting an insurance premium amounting to US$ 13,69,128.5, plus service tax.  A complete copy of the said letter dated 17.08.2005 from the Oriental Insurance Company to the respondent company however has not been placed on record.  Vide a letter of even date, the respondent company forwarded the aforesaid quotation from the Insurance Company to the complainant company, stating therein that the final premium quote by the Insurance Company is US$ 13,69,128.5.  It was further stated in the said letter that on the complainant approving the rates, Cover would be binded with the leader in the markets such as Wellington Underwriting Syndicate, SCOR and other markets to complete 100% of cover so that Oriental will issue the policy at the back of reinsurance security.  Instructions were sought from the complainant company so as to proceed further in the matter.

2.      Vide letter dated 19.08.2005, addressed to the Insurance Company, the complainant company gave in principal commitment for placing the insurance business through their office, subject to the conditions listed in the said letter.  The aforesaid conditions were as under:-

  “1.     We understand from your letter that Re-Insurance support is led by Swiss-Re.  Please provide the details of retention by Swiss-Re & Oriental and percentage retention by other Re-Insurers with their rating.  The policy shall be issued only after majority of the risks are placed with Re-Insurers acceptable to Punj Lloyd.

  2.      The draft policy wordings are to be approved by our principals ONGC, with reference to the terms and conditions of the contractual agreement of Punj Lloyd with ONGC.

  3.      We feel that deductible offered by Oriental are on higher side, please negotiate with Re-Insurer to reduce the deductibles not exceeding US $ 250,000/- for Offshore portion and US $- 75,000/- for Onshore portion of the pipeline. 

  4.      We also feel that premium quoted by you is still on higher side, now with this firm commitment you are requested to re-negotiate with the Re-Insurer to provide us with the most competitive premium and better terms.”

3.      Vide letter dated 25.08.2005, addressed to the complainant Company, the Insurance Company informed the complainant as under:-

  “This has reference to your letter of 19^th August, 2005 on the captioned subject.

  In this connection, we have to inform you as under:

1. The leader to your policy will be Swiss Re/Lloyds Underwriter and the following market shall be Syndicates from Lloyds with a minimum Security Rating “A”.  Please note that complete placement details shall be advised to you within three working days from the date of receipt of premium.  We have to inform that the gross retention of “ORIENTAL” shall be approximately Rs. 35 crores.
2. Normally all Offshore Construction Policies carry the wordings of WELCAR 2001.  We also confirm that the policy wordings shall conform to the requirements of ONGC.
3. On receipt of premium, it shall be our endeavour to obtain reduction in the deductible level or in the premium.  However, our primary objective shall be to obtain a reduction in the deductible level.

Kindly note that the quote submitted is valid only till 26^th August, 2005 and hence, we request you to remit the premium without any further delay.  Your urgent response will be much appreciated.”  

          The case of the complainant is that the above referred letter of the Insurance Company was received by it only on 29.08.2005.  Vide letter dated 29.08.2005, addressed to the Insurance Company and handed over to the representative of the respondent company, the complainant wrote as under to the Insurance Company:-

          “This is with reference to your letter dated 25^th Augurst, 2005 regarding terms for our Uran Trombay Pipeline Project for ONGC.  We hereby give our Firm mandate for placing this business through your Divisional Office.

          We understand from your letter that Re-Insurance support is led by Swiss-Re and the following market will be Syndicates from Lloyd’s with a minimum Security Rating “A”.

          The final policy is to be accepted or approved by ONGC with reference to the terms and conditions of the contractual agreement of Punj Lloyd with ONGC.

          We are enclosing herewith our provisional premium of Rs. 2,500,000.00 vide cheque No. 367340 Dated 29.08.05, drawn on ICICI Bank, New Delhi.  Now with this premium cheque we feel that you can put your best efforts to negotiate with Re-Insurer to reduce the deductibles and premium.

          We not await your URGENT response on the final improved terms.”

          The above referred letter dated 29.08.2005 was forwarded by the respondent to the Insurance company and an intimation in this regard was sent to the complainant Company vide letter dated 31.08.2005.  To the extent, it is relevant the letter of the respondent dated 31.08.2005 reads as under:-

  “We have forwarded your letter along with the premium to Oriental with a request to communicate the final premium, number of instalments (if paid in instalments) and other issued based on our discussions with them on various occasions.

  We shall revert as soon as we receive information from Oriental, which is likely to be expected this week.

  We sincerely thank you for the confidence reposed in us to service this prestigious contract.”

4.      On receipt of the letter of the complainant company dated 29.08.2005 alongwith a cheque of Rs. 25 lakhs, the Insurance Company informed the complainant as under:-

  “During the intervening period of our giving quote on 12/08/2005 and your enclosing mandate letter of 28/08/2005, the States of New Orleans, Mississippi and Louislana were hit by Hurricane KATRINA.  Nearly 25% of the US market’s oil production was affected due to the unprecedented damage caused by the Hurricane to offshore and onshore oil and gas installations.  Preliminary reports suggest that the losses could well be over ISD 10bn in the oil and energy sector alone.

  Had our quote of 12/16-8-2005 been accepted immediately, the placement at USD 1.36mn would have been achieved by now.  The delay and the consequent developments could impact the placement at that price.

  The devastation unleashed by ‘Katrina’ has had a deep impact on the bottom lines of many Underwriters in the Energy Sector.

  The sudden developments have had an impact on the pricing of your programme too.  Whilst we are constantly monitoring the placement programme being carried out by our brokers, the final placement may be achieved/firmed up at higher premiums.

  We would stand by for your instructions as to whether to still pursue the matter at this awkward time.

  Please also refer to our letter dated 31/8/2005 seeking certain information.  Kindly send us the required information as it is urgently required.”

5.      The case of the complainant company is that there has been gross negligence and deficiency on the part of the respondent company in rendering the services as an agent for obtaining the insurance on its behalf.  This is also the case of the complainant that had the respondent company performed its duty diligently and promptly, it would have been able to enter into a contract of insurance with the Oriental Insurance Company at the premium which they had quoted in their letter dated 17.8.2005 and which, on account of the said offer having not been accepted till 26.08.2005 has resulted in the premium going substantially higher.  The complainant is, therefore, before us, seeking compensation amounting to Rs. 5,26,70,654/-, the sum representing the difference in cost of insurance cover in August, 2005 as against the cost at which it was available in September, 2005 alongwith interest on that amount at the rate of 12% per annum.

6.      The complaint has been resisted by the respondent company on several grounds.  The first plea taken by the respondent company is that since the complainant is not a consumer as defined under Section 2(1)(d)(ii) of the Consumer Protection Act, this Commission has no jurisdiction to entertain the present complaint.  The respondent has also denied that the complainant had hired or availed its services for any consideration either paid or promised.  It is also pointed out in the reply that neither the respondent was appointed as a broker nor was it authorised to represent the insurance before the complainant Company.  It is further stated in the reply that during a courtesy call made to the Executor Director of the complainant Company, the respondent was informed that the complainant was negotiating to obtain Insurance Company for its Uran Trombay Pipeline Project and they were negotiating with ICICI Lombard Insurance Company and several other brokers were involved.  According to the respondent, with a view to help the respondent and without having been appointed as a broker, the respondent approached the Oriental Insurance Company and obtained a quote which they passed on to the complainant.  Thereafter, the complainant started negotiating directly with the Insurance Company.  However, it is admitted that the letter dated 29.08.2005 addressed to the Insurance Company was handed over by the complainant to the representative of the respondent company and was then delivered by them to the Insurance Company.

7.      The first question which arises for our consideration in this complaint is as to whether the complainant is a ‘consumer’ of the respondent within the meaning of Section 2(1)(d)(ii) of the Act.  The aforesaid provision to the extent it is relevant provides that the Consumer means any person, who hires or avails any services for a consideration, which has been paid or promised or partly paid or partly promised or under any system of deferred payment, and includes any beneficiary of such services other than the person who hires or avails of the services for consideration paid or promised, or partly paid and partly promised or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person but does not include a person who avails of such services for any commercial purpose.

8.      Admittedly no consideration was either paid or promised by the complainant company to the respondent company.  The learned senior counsel for the complainant submits that the consideration to the respondent company would have come in the form of commission from the Insurance Company, which could be as much as 10% of the insurance premium.  Reference in this regard is made to a letter dated 31.08.2005, purporting to be written by the respondent to the Insurance Company.  The said letter was not filed with the complaint and a copy has been handed over to us during the course of arguments.  However, it is not disputed that no payment was actually made or promised by the Insurance Company to the respondent even if the negotiations did not translate into the quoted contract between the complainant Company and the Insurance Company.  The Insurance Company would have paid a percentage of the Insurance premium to the respondent company as commission only in the event of the complainant company actually obtaining the insurance cover from the Oriental Insurance Company.  Thus, in the case before us, neither the complainant nor the Oriental Insurance Company either paid or promised any consideration to the respondent company.

9.      The learned senior counsel for the complainant relies upon the decision of the Hon’ble Apex Court in Regional Provident Fund Commissioner vs. Shiv Kumar Joshi, (2000) 1 SCC 98.  In the aforesaid case, the issue before the Hon’ble Apex Court was whether an employee who is a member of Employees Provident Fund Scheme was a consumer within the meaning of the Consumer Protection Act.  The Hon’ble Supreme Court, in this regard noted that the administrative charges were being paid by the Central Government to the Regional Provident Fund Commissioner in terms of para 30 of the relevant scheme and it was pursuant thereto that the said Commissioner was rendering services due to the employees, who were members of the Scheme.  The employees, therefore, were beneficiaries of the services hired by the Central Government.  However, in the case before us, no one hired the services of the respondent by paying consideration and therefore, no benefit of the aforesaid judgment accrues to the complainant.

10.    Coming to the merits of the case, admittedly, the respondent company was not formally appointed as an agent, though it can hardly be disputed that the complainant company had agreed to avail its services for the purpose of obtaining an Insurance cover for the Uran Trombay Pipeline Project.  Of course, no consideration for availing the said services was paid or promised by the complainant company.

The contention of the learned counsel for the complainant is that the business of obtaining insurance in respect of large projects which necessitates domestic Insurance Company obtaining reinsurance from a national reinsurer is such that the quantum of premium keeps on varying, depending upon several factors on which the domestic insurance company may have no control and therefore it was imperative for the respondent company, it being a specialist in obtaining such insurance covers, to inform the complainant company that the offer made by the Oriental Insurance Company was a time bound offer and therefore they should act with promptitude and accept the same without any delay, failing which the offer may lapse on account of reinsurance premium in the international market going higher in the meanwhile.  He also submits that had the respondent advised the complainant company that the offer made by the Oriental Insurance Company was valid only till 26.08.2005, the complainant company would have acted with greater promptitude and accepted the offer well before expiry of the aforesaid deadline.  We, however find no merit in the aforesaid contention.  In the letter dated 17.08.2005, whereby quote was given by the Oriental Insurance Company, there was no indication that the offer made by them was for a limited period and would expire on expiry of a particular deadline.  We have no material before us which would show that it is always the practice of the Insurance Company to make offer for a limited period and therefore, the respondent was expected to know that the offer made by the Oriental Insurance company would be for a limited time period.  As noted earlier by us, the letter dated 17.08.2005 had no such indication.  More importantly, what we find is that even after receipt of the letter dated 25.08.2005 on 29.08.2005, the complainant company did not accept unconditionally, all the terms and conditions,  subject to which the offer dated 17.08.2005 was made by the Insurance Company.  Though the letter dated 29.08.2005 purported to give a firm mandate for placing business with the Divisional Office of the respondent company, the said letter was in fact not an unconditional acceptance of the offer which the Insurance Company made vide its letter dated 17.08.2005.  It was clearly stated in the said letter dated 29.08.2005 that the final policy was to be accepted or approved by ONGC with reference to the terms and conditions of the contractual agreement of the complainant company with ONGC.  In the absence of approval from ONGC when the requirement of such approval having been clearly conveyed to the Insurance Company, it can not be said that the terms and conditions of the policy which Oriental Insurance Company had offered, were unconditionally accepted by the complainant company. It is quite possible that ONGC might not have agreed to one or more of the terms and conditions of the policy which Oriental Insurance Company had offered to the complainant.  Therefore, in our opinion, the reservation with respect to the requirement of approval from ONGC to the terms and conditions of the policy agreement, by itself is sufficient to prove that the offer made by the Insurance Company was not accepted by the complainant company in toto despite its having come to know that the deadline of acceptance of the said letter had already expired on 26.08.2005.  This is a clear indicator that even on 25.08.2005, the complainant company had neither accepted nor was in a position to accept the terms and conditions on which insurance cover was offered by the Oriental Insurance Company.

11.    We also find that alongwith the letter dated 29.08.2005, the complainant had enclosed a cheque only for Rs. 25 lakhs, whereas the amount of the premium was much more, the same being US $  13,69,128.5.  Even at the time of writing this letter, the complainant was expecting the Insurance Company to negotiate with the re-insurer to reduce the deductibles and the premium.  It was clearly indicated in the said letter that the complainant company was awaiting urgent response on the “final improved terms”.  This clearly shows that the final terms of the insurance had not yet been agreed between the complainant and the Insurance Company at the time the letter dated 29.08.2005 was written.  In these circumstances, it can not be said that had the respondent company, based upon its knowledge and experience, informed the complainant company that the offer made by the Insurance Company was likely to lapse with the passage of time, that would really have made any difference, despite having come to know on 29.08.2005 that the last date for acceptance of the letter had already expired on 26.08.2005, the complainant company was neither willing nor in a position to accept all the terms and conditions, subject to which insurance cover was offered to it by the insurance company.  We would like to note here the contention of the learned counsel for the respondent that in fact the complainant company was directly negotiating with the insurance company after 17.8.2005 and prior to writing letter dated 29.08.2005, as would be evident from the fact that the letter dated 19.08.2005, was written and sent directly by the complainant to the insurance company and only its copy was endorsed to the respondent.  It is also pointed out that even the letter of the Insurance Company dated 25.8.2005 was addressed directly to the complainant company and was not routed through the respondent company.  The contention thus is that since the office of the complainant company was negotiating directly between the office of the Insurance Company, the respondent was not even in a position to know that the offer made by the Insurance Company was valid till 26.08.2005.

12.    The learned senior counsel for the complainant states that in fact the entire correspondence was routed through the respondent company however, there is no evidence or any allegation that the letter dated 19.08.2005 addressed to the Insurance Company was handed over to some representative of the respondent Company.  It appears to us that had this letter been handed over to the representative of the respondent company instead of having been sent directly to the Insurance Company, there could be no occasion to endorse the copy of the said letter to the respondent company.  As far as the letter of the Insurance Company dated 25.08.2005 is concerned, no copy of the said letter is endorsed to the respondent company.  The complainant has placed on record a letter dated 25.08.2005 addressed to the Insurance Company.  There is an endorsement made on the copy of this letter which indicates that it was faxed to the Insurance Company on 25.08.2005.  However in the letter of the Insurance Company dated 25.08.2005, there is no reference to this letter.  The letter to the Insurance Company rather refers to the letter of the complainant dated 19.08.2005.  Two possibilities arise from the aforesaid endorsement on the letter dated 25.08.2005 purporting to have written by the complainant to the Insurance Company.  The first possibility is that the letter was sent to the Insurance Company after it had already sent its own letter dated 25.08.2005.  The second possibility is this letter was actually not faxed on 25.08.2005 but was sent at a later date.  On a perusal of the letter dated 29.08.2005, which the complainant sent to the Insurance Company, we find that this letter contains absolutely no reference to the aforesaid letter of the complainant dated 25.08.2005.  In our opinion, had the said letter been sent by the complainant company on or before 26.08.2005, which was the last date for accepting the quotation given by the Insurance Company, the complainant company would certainly have referred to the said letter in its letter dated 29.08.2005 and would have told to the Insurance Company that they had already accepted the offer prior to its having expired on 26.08.2005.  We also notice that in a subsequent letter dated 01.09.2005, the Insurance Company in para 2 of the letter referred to complainants mandate letter of 28.08.2005.  It thus appears to us that the letter dated 25.08.2005 addressed to the Insurance Company was in fact received by the Insurance Company on 28.08.2005 and that is why the aforesaid letter is referred has mandate letter dated 28.08.2005.

13.     For the reasons stated hereinabove, we are of the considered view that neither the complainant has been able to establish that it was a consumer of the respondent company nor has it been able to show any deficiency or any loss on account of the alleged deficiency in the services provided to it by the respondent company.  The complaint is accordingly dismissed.  No order as to cost.