JUDGMENT : ( 1. ) AGGRIEVED by the decree for Rs. 20,000 as damages with costs and interest on account of loss due to fire passed by the District Judge, Betul, in Civil Suit No. 3b of 1969, defendant No. 1, insurance company, has preferred this appeal. ( 2. ) THE facts not in dispute are that the plaintiff is a dealer in oranges and doing business at Santra Mandi in Multai. Defendant No. 1 is an insurance company while the defendants Nos. 2 and 3 were its agent and development officer at Jabalpur at the relevant time. The plaintiffs case is that he purchases oranges in the mandi and despatches them to Delhi and other places after packing them in wooden cases. For his business he has a structure in Santra Mandi of Multai where he has his office, stocks of oranges and packing materials. The value of the stock-in-trade during the orange season is not less than Rs. 20,000. In the month of January, 1969, almost all the dealers doing business at Santra Mandi at Multai got their shops and stock-in-trade insured by several insurance companies. Defendants Nos. 2 and 3 approached the plaintiff and at their instance he agreed to get his shop insured including the stock-in-trade, furniture and packing materials to cover a risk of Rs. 20,000. He, therefore, submitted a proposal form and paid a premium of Rs. 263. Defendant No. 3 issued a provisional receipt, Ex. P-1, on January 27, 1969, and also cover note, Ex. P-2, of the same date provisionally covering the risk for the period January 27, 1969, to January 27, 1970. The proposal of the plaintiff was accepted but no policy of insurance was issued in the usual way and the plaintiff was under the impression (sic) because the premium amount was retained by the defendants. On April 15, 1969, long time after the issuance of the said cover note, a big lire broke out in the Santra Mandi of Multai due to electric short circuit, completely gutting to ashes the entire Santra Mandi. At the time of fire, the plaintiff had stock of oranges worth more than Rs. 12,000 besides the shop structure, furniture and packing material, as it was then the peak season of oranges. The plaintiff lodged a report in the Multai police station on the same day and sent a telegram, Ex. At the time of fire, the plaintiff had stock of oranges worth more than Rs. 12,000 besides the shop structure, furniture and packing material, as it was then the peak season of oranges. The plaintiff lodged a report in the Multai police station on the same day and sent a telegram, Ex. P-24, to defendant No. 3 on April 16, 1969. Then the plaintiff sent through his counsel a registered notice, Ex. P-19, on April 23, 1969, to defendant No. 3. The plaintiff sent another registered notice through his counsel, Ex. P-20 on July 19, 1969, to defendant No. 1 with a copy to defendant No. 3. Defendant No. 3 forwarded the two notices to the branch office of defendant No. 1 at Nagpur on July 28, 1969, and forwarded a copy, Ex. P-21, to the plaintiff requesting him that all future correspondence may be addressed to the branch office at Nagpur. Since nothing was heard so far, the plaintiff served another registered notice, Ex. P-22, through his counsel on September 12, 1969, and this was replied to by the defendant No. 1 intimating that the proposal was never accepted and, consequently, no liability arises as the particulars in the proposal form were found incorrect. The plaintiff, therefore, filed the present suit claiming Rs. 20,000 as damages with interest from the date of the suit and costs. ( 3. ) DEFENDANT No. 1 in its written statement submitted that one Kolhatkar (DW 1) had contacted the defendant No. 3 on behalf of the plaintiff and furnished false" information in the proposal form which was signed by the plaintiff. The proposal of the plaintiff was not accepted by this defendant arid by its letter dated February 5, 1969, Ex. D-2, defendant No. 3 was informed about the rejection of the proposal and he was further told to collect the cover note from the plaintiff for cancellation and record. Defendant No. 1 did not receive the premium amount. Defendant No. 3 in his turn by letter No. 47 dated February 21, 1969, requested Kolhatkar to inform the plaintiff that his proposal has been rejected and to collect the cover note from the plaintiff. On the same day defendant No. 3 also wrote to the plaintiff, vide letter No. 48 to this effect. Defendant No. 3 in his turn by letter No. 47 dated February 21, 1969, requested Kolhatkar to inform the plaintiff that his proposal has been rejected and to collect the cover note from the plaintiff. On the same day defendant No. 3 also wrote to the plaintiff, vide letter No. 48 to this effect. Accordingly, Kolhatkar contacted the plaintiff and informed him that his proposal had been rejected but the plaintiff did not return the cover note saying that it had been misplaced. In spite of several visits by Kolhatkar, he could not collect the cover note. Defendant No. 1 is, therefore, not liable to pay any damages because (i) defendant No. 3 was not authorised to work at Multai as per his appointment letter, he being appointed to work only in the districts of Jabalpur, Satna, Damoh, Sagar and Chhatarpur. He was also informed not to accept insurance of goods kept in temporary, kuchcha and tatta sheds which is a third class risk. So even if defendants Nos. 2 and 3 had accepted the premium and issued a cover note, defendant No. 1 is not bound by the same as they acted beyond their jurisdiction and against the rules and regulations of the company, (ii) The plaintiff had suppressed and concealed material facts and gave inaccurate particulars in the proposal form and, as such the cover note was vitiated and there was no valid contract between the plaintiff and the defendants, (iii) The cover note was provisional pending rejection or acceptance of the cover by the controlling branch of defendant No. 1 and, in any case, it lapsed after a period of 30 days. The fire had occurred after the lapse of the cover note, (iv) Defendant No. 1 did not accept the risk and the plaintiff was duly informed by defendant No. 3 as well as through Kolhatkar who was a representative of the plaintiff. The cover note thus stood cancelled before the fire took place; and (v) the plaintiff had not given the schedule of the loss of goods destroyed in the fire. Defendants Nos. 2 and 3 in their written statement admitted that they had taken the proposal form from the plaintiff after receiving a premium of Rs. 263, the provisional premium receipt was passed and the cover note was issued. Defendants Nos. 2 and 3 in their written statement admitted that they had taken the proposal form from the plaintiff after receiving a premium of Rs. 263, the provisional premium receipt was passed and the cover note was issued. Since the proposal was not accepted, the premium was refunded to the plaintiff through Kolhatkar, vide cheque No. A-3234 dated April 12, 1969, drawn on Co-operative Central Bank Ltd. , Jabalpur. On one pretext or another, the plaintiff did not hand over the cover note to Kolhatkar. Defendant No. 3 received telegram on April 16, 1969, about the fire and the subsequent notices which he forwarded to the branch office at Nagpur. Defendant No. 3 acted in his official capacity as Development Officer of defendant No. 1 and had accepted the risk, issued a provisional cover note and a provisional receipt and, as such, he cannot be made liable for the risk covered. These two defendants were neither necessary nor proper parties to the suit. ( 4. ) THE learned District Judge came to the conclusion that at the relevant time defendants Nos. 2 and 3 were working as agent and development officer of the defendant No. 1 at Jabalpur. They had accepted the proposal of the plaintiff insuring his shop with stock-in-trade and other goods for Rs. 20,000 after receiving the premium amount of Rs. 263. They then issued the cover note which was valid till the issuance of the insurance policy or rejection of the proposal and its intimation to the plaintiff. The cover note did not lapse after a period of 30 days. Defendant No. 1 has failed to prove that Multai was out of the working jurisdiction of defendants Nos. 2 and 3 and there were rules and regulations of the company prohibiting acceptance of risk covering temporary structures. Defendants Nos. 2 and 3 acted in the discharge of their duties and they were only proper parties to the suit. Defendant No. 1 was bound by the contract entered into by the defendants Nos. 2 and 3 and the risk was covered under the cover note till the rejection of the proposal was communicated to the plaintiff. No such communication was made to the plaintiff. The amount of the premium was also not refunded to the plaintiff. The cover note was not vitiated because of any inaccurate particulars or misrepresentation of material facts. 2 and 3 and the risk was covered under the cover note till the rejection of the proposal was communicated to the plaintiff. No such communication was made to the plaintiff. The amount of the premium was also not refunded to the plaintiff. The cover note was not vitiated because of any inaccurate particulars or misrepresentation of material facts. The loss suffered by the plaintiff was not less than Rs. 20,000 and, therefore, decree for Rs. 20,000 as damages has been passed with interest at 6% per annum from the date of the suit till realisation and costs. ( 5. ) THE findings are assailed on the following grounds ; (i) There is no enforceable insurance contract as the plaintiffs proposal was never accepted nor the premium was paid. (ii) Material fact was suppressed inasmuch as the value of the stock-in-trade on the date of the fire was not less than Rs. 60,000 but in the proposal the plaintiff gave the value to be Rs. 8,000. (iii) Since the fire broke out after the rejection of the proposal, the risk is not covered. (iv) Defendants Nos. 2 and 3 exceeded their jurisdiction by taking the proposal form from an area which was beyond their charge and by accepting the risk covering the temporary structure ; and (v) The plaintiff is not sure about his case against defendant No. 1 and that is why defendants Nos. 2 and 3 have also been made parties. ( 6. ) THE plaintiff on the other hand supported the findings contending that the risk covered by the cover note subsisted when the fire broke out because the rejection of the proposal was never intimated to the plaintiff. Even if Multai was beyond the jurisdiction of defendants Nos. 2 and 3 the plaintiff being a third party, he cannot be bound by the internal arrangements between the defendants as he was never told about the limitations of defendants Nos. 2 and 3. ( 7. ) THE Supreme Court in R. Ratilal and Co. v. National Security Assurance Co. Even if Multai was beyond the jurisdiction of defendants Nos. 2 and 3 the plaintiff being a third party, he cannot be bound by the internal arrangements between the defendants as he was never told about the limitations of defendants Nos. 2 and 3. ( 7. ) THE Supreme Court in R. Ratilal and Co. v. National Security Assurance Co. Ltd. (In liquidation) [1964] 34 Comp Cas 275 ; AIR 1964 SC 1396 , while dealing with a question whether duty was payable on a cover note, has made the following observations regarding the nature of a cover note (at p. 279): " It may be shortly stated that a letter of cover no doubt contains a contract of insurance but it is not a policy of insurance in the common understanding of that word in the trade. It is well known that in order to obtain an insurance against the risk of fire the assured has first to send a proposal to the insurer and then the insurer takes a little time in making enquiries as to whether it would accept the proposal and undertake the obligation of covering the risk. He issues a policy only after he is satisfied that it would be a prudent business proposition to do so. Experience of trades people has however shown that some kind of protection for the interim period, when the insurer is making the enquiries, is necessary. This protection is given by what is called a letter of cover. It is expressly a contract granting insurance for the period between its date and until a policy is prepared and delivered if one is eventually issued or otherwise up to a date mentioned in it, just as a period of 30 days is mentioned in the interim protection note issued in this case. . . . . . A letter of cover is chargeable to stamp duty under article 47 of the Stamps Act unless the letter cover is used only for compelling delivery of the policy mentioned in it. " ( 8. ) IN the present case, the cover note, Ex. P-2, covered risk to the extent of Rs. 20,000: Rs. 6,000 for the structure ; Rs. 6,000 for furniture and packing materials arid Rs. 8,000 for stock of oranges kept in the shop. " ( 8. ) IN the present case, the cover note, Ex. P-2, covered risk to the extent of Rs. 20,000: Rs. 6,000 for the structure ; Rs. 6,000 for furniture and packing materials arid Rs. 8,000 for stock of oranges kept in the shop. The following note has been appended : "the society does not assume any risk under this cover note until the premium is paid by the insured and receipt is obtained. Please pay your premium by cheque in favour of the Hindusthan General Insurance Society Ltd. except in case of Bank Guarantee and Deposit account. The insurance in subject to the terms and conditions of the Societys standard policy and Tariff terms, conditions and warranties. Notwithstanding the period of liability mentioned in this cover note, the insurance is held covered and continues to be valid until the policy in lieu of this cover note is received by the insured or the insurance is cancelled. In the event of cancellation, premium will be charged for the period during which the insurance has been in force. " ( 9. ) A reading of this cover note shows that the cover note was valid till the policy in lieu of this cover note was received by the insured or the insurance was cancelled. Cover note was not valid for a period of 30 days only as was in the Supreme Court case. Since the cover note is a contract of insurance it is governed by the Contract Act. Under Section 66 of the Act, revocation has to be in the same manner and subject to the same rules as apply to the communication or revocation of a proposal. Under Section 4, the communication of a revocation is complete as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it; as against the person to whom it is made, when it comes to his knowledge. Therefore, in the present case, the revocation of the proposal could be complete against the plaintiff when the same was communicated to him and not earlier. This position is admitted by defendant No. 1 in its written statement, para. 17 (d), that the cover note stood cancelled when the information was received by the plaintiff. ( 10. Therefore, in the present case, the revocation of the proposal could be complete against the plaintiff when the same was communicated to him and not earlier. This position is admitted by defendant No. 1 in its written statement, para. 17 (d), that the cover note stood cancelled when the information was received by the plaintiff. ( 10. ) FIRST of all it has to be considered whether the proposal was submitted by the plaintiff to defendants Nos. 2 and 3 by paying premium of Rs. 263 and the defendants thereafter issued receipt, Ex. P-1, and cover note, Ex. P-2. This fact has been admitted by defendants Nos. 2 and 3 and not seriously disputed by defendant No. 1. Its main contention is that Multai was outside the working jurisdiction of defendants Nos. 2 and 3 and it was not open to them to accept the risk covering temporary structurers. Even assuming that this was so, still the plaintiff, who is an outsider, cannot be, bound by the internal arrangements between the defendants of which he had no notice. A Division Bench of this court in Firm Rai Bahadur Bansilal Abirchand v. Kabulchand, ILR 1945 Nag 204; AIR 1945 Nagpur 121, has held that if an agent acts in excess of his authority, the liability of the principal remains if the third party enters into a contract with the agent under an honest belief in the existence of the authority to the extent apparent to him. This apart, there is no evidence in support of these submissions. P. N. S. Narain (DW 3), who was branch secretary at Nagpur, could not say as to what was the area of work of defendant No. 3. Simi- larly, defendant No. 3, Jawaharlal Jain, was also unable to state the area of his work. On behalf of defendant. No. 1, a copy of the appointment letter, Ex, D-3; has been produced which is not original nor it is signed. No rules or regulations of the company are produced to show that defendants Nos. 2 and 3 were prohibited from accepting the proposal covering temporary structures. P. N. S, Narain, though spoke of such a prohibition, yet Jawaharlal Jain did not say that any such instruction was received by him from the insurance company. No rules or regulations of the company are produced to show that defendants Nos. 2 and 3 were prohibited from accepting the proposal covering temporary structures. P. N. S, Narain, though spoke of such a prohibition, yet Jawaharlal Jain did not say that any such instruction was received by him from the insurance company. Admittedly, defendant No. 3 was the development officer and he was authorised to accept the proposal, issue premium receipt and cover note which were subject to their acceptance by the branch office at Nagpur, Therefore, there was a valid contract of insurance entered into by the plaintiff with defendant No. 1 through defendants Nos. 2 and 3 who were its authorised agents. The contention of the defendants is that the cover note is vitiated because the plaintiff had given an underestimate of the stock of oranges in his proposal. According to the plaint allegation, the stock-in-trade was not less than Rs. 20,000, but in his rojnamcha sanha, Ex. P-26, he mentioned the value to be Rs. 60,000. According to defendant No. 1, because of this undervaluation, the proposal is vitiated. This plea has been rightly rejected by the trial judge. There can be no doubt that misrepresentation or suppre-sion of a material fact renders the contract of insurance void. There has to be utmost good faith and unless there has been full disclosure of all material facts, the contract will be vitiated. It requires that the insured should not keep back anything which might influence the insurer in deciding whether to accept or reject the risk. Assuming that the value of the stock-in-trade was Rs. 60,000 while it was insured only for Rs. 20,000, at worst it is a case of under-valuation and there is no material suppression of facts. The thing would have been otherwise if goods worth Rs. 20,000 were insured for Rs. 60,000. In Rohini Nandan Goswamy v. Ocean Accident and Guarantee Corporation Ltd. [1961] 31 Comp Cas (Ins) 17; AIR 1960 Cal 696 , it has been held that if the facts has any bearing on the risk, it is a material fact, if not, it is immaterial. In General Assurance Society v. Mohmed Salim, AIR 1965 All 561 , it has been held that where the entire stock-in-trade and goods with the assured were worth more than Rs. In General Assurance Society v. Mohmed Salim, AIR 1965 All 561 , it has been held that where the entire stock-in-trade and goods with the assured were worth more than Rs. 70,000 but in order to pay a lesser premium he insured it for Rs. 20,000, it was held that there was no misrepresentation and the contract of insurance was not liable to be avoided due to excessive undervaluation. ( 11. ) NOW, the question remains whether the proposal was rejected on February 5, 1969, and the same was communicated to the plaintiff on February 21, 1969. Exhibit D-2 is the copy of the letter sent by the insurance company to defendant No. 3 on February 5, 1969, informing that the proposal has been rejected and directing him to take back the cover note from the plaintiff. There is an endorsement on this letter by defendant No. 3, dated February 10, 1969, that the insurance company may reconsider the matter as it was a first case in that area. There is further endorsement of regret. So the learned trial judge was not justified in holding this letter to be not admissible as the original of the letter had not been produced. In view of the endorsements it is an original letter and is admissible in evidence, but this letter does not advance the case of defendant No. 1 in any way. This is a communication to defendant No. 3 and unless it is proved that in pursuance of this letter the plaintiff was informed by defendant No. 3, it cannot be held that there was any communication about the rejection of the proposal to the plaintiff. It is pleaded that defendant No. 3 in turn issued letter No. 47 to Kolhatkar and letter No, 48 to the plaintiff on February 21, 1969, informing about the rejection of the proposal, but these letters have not been produced. It has further been averred that there was a series of correspondence between defendant No. 3 and Kolhatkar but those correspondence have not been placed on record. It is true that at the time of evidence, Jawahadal Jain (DW. It has further been averred that there was a series of correspondence between defendant No. 3 and Kolhatkar but those correspondence have not been placed on record. It is true that at the time of evidence, Jawahadal Jain (DW. 2), volunteered to produce certain documents which he had brought but the same were rightly not permitted to be taken on record in the absence of any application under Order 13, Rule 2 of the CPC, Jawaharlal Jain being a party to the suit, he could not have been permitted to produce these documents without making out a case for their production at a later stage. Nothing also prevented the plaintiff from summoning those records. But then Kolhatkar who was in possession of the original letters has deposed that he has destroyed all the letters. A dispute having arisen between the parties, his conduct in destroying the letters, if that is a fact, is most unnatural. It may also be mentioned that Kolhatkar is a friend of defendant No. 3, and not of the plaintiff as has been alleged by defendant No, 1. At the relevant time Kolhatkar was a development officer of the LIC at Multai. Kolhatkar (DW. 1) and Jawaharlal Jain (DW. 2) have both been found to be unreliable witnesses. It is difficult to believe that Kolhatkar would have handed over the premium amount of Rs. 263 without obtaining any receipt from the plaintiff. He was not sure what was the amount refunded and also about the date. According to him, he had handed over the amount either two days prior or two days after the fire. It is difficult to believe that two days after the fire, the plaintiff would have taken back the premium amount when his shop was already gutted by fire. It has been pleaded that defendant No. 3 had issued a cheque No. A 3234 dated April 12, 1969, drawn on Co-operative Central Bank, Jabalpur, to Kolhatkar and Kolhatkar has deposed that he had encashed the cheque and then handed over the amount to the plaintiff. The cheque was of the Co-operative Central Bank, Jabalpur, and it could not have been encashed at Chhindwara immediately, the encashment would have taken at least 7 days. Therefore, the story of refund of premium has rightly not been accepted. The cheque was of the Co-operative Central Bank, Jabalpur, and it could not have been encashed at Chhindwara immediately, the encashment would have taken at least 7 days. Therefore, the story of refund of premium has rightly not been accepted. It may be pertinent to note that in spite of telegram and registered notices, defendant No. 1 never came forward with the story that the proposal has been rejected and the premium refunded. Only reply was that the proposal was rejected because the particulars given were incorrect. Defendant No. 3 did pay the premium to defendant No. 1 by issuing a cheque, Ex. D. 1, but it was not honoured since the proposal was not accepted. If defendants Nos. 2 and 3 acted beyond their jurisdiction, defendant No. 1 would not have deposited the cheque for encashment in the bank. It has been found that defendants Nos. 2 and 3 are proper parties to the suit and, therefore, it cannot be said that the plaint is shaky because of joinder of defendants Nos. 2 and 3 as parties. Obviously, the liability is of defendant No. 1, but by way of abundant caution, the plaintiff joined defendants Nos. 2 and 3 as parties because, in the reply notice, defendant No. 1 had repudiated the contract. ( 12. ) ACCORDINGLY, the appeal fails and it is dismissed with costs. Counsels fee as per schedule, if certified.