National Consumer Disputes Redressal
Jagruk Nagrik & Anr. vs Bank Of India & Anr. on 8 May, 2019
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 881 OF 2015 (Against the Order dated 30/04/2015 in Complaint No. 64/2010 of the State Commission Gujarat) 1. JAGRUK NAGRIK & ANR. THROUGH ITS MANAGING TRUSTEE SHRI P.V. MOORJAANI NEAR PRERNA SCHOOL, SANGAM CHAAR RASTA, KARELIBAUG, VADODARA-06 GUJARAT 2. SHRI PRAKASHBHAI S. PATEL, A PARTNER NAMOSHA MINERALS, HAVING ITS PLACE OF BUSINESS AT PLOT NO. 616 AND 617, GIDC, VAGHODIA, VADODARA GUJARAT ...........Appellant(s) Versus 1. BANK OF INDIA & ANR. SAYAJIGUNJ BRANCH, VADODARA GUJARAT 2. THE NATIONAL INDIA INSURANCE CO. LTD., 5-A, RAJKUMAR CHAMBERS, PRODUCTIVITY ROAD, NEAR NEPTUNE TOWER, ALKAPURI, VADODARA GUJARAT ...........Respondent(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Appellant : Mr. P.V.Moorjani, Auth. Representative For the Respondent : For the Respondent No.1: Mr. Ashish Rana, Advocate
For the Respondent No.2 : Mr. R.B.Shami, Advocate
Dated : 08 May 2019 ORDER
This appeal has been filed by the appellant Jagruk Nagrik & anr. against the order dated 30.4.2015 of the State Consumer Disputes Redressal Commission, Gujarat, (in short 'the State Commission') passed in Complaint No.64 of 2010.
2. Brief facts of the case are that appellant No.1 is the consumer association. The appellant No.2 is the policy holder. Appellant No.2 obtained loan and cash credit facility from respondent/opposite party no.1 Bank. Appellant obtained two insurance policies from respondent No.2/opposite party No.2 Insurance Company. The first insurance policy No.311400/11/08/3100000052 was for the period 13.4.2008 to 12.4.2009 and the same was being continued from the opposite party since 2005 being continuously renewed by the respondent No.1. This policy covers the risk of storm, tempest, flood and inundation (STFI). The policy covered building for Rs.9,00,000/-, plant & machinery for 24,17,000/-, furniture & fixtures for Rs.5,00,000/- and other stocks for Rs.1,00,000/-. The bank had obtained another policy No.311400/11/07/3100000803 for the period from 19.8.2007 to 18.8.2008 which was continued since year 2004. In this policy the risk of STFI were not covered and this policy was only for stock for Rs.16,20,000/-. For these policies the opposite party No.1 bank paid premium of insurance and debited same to the account of the complainant. There was heavy rain on 10.8.2008 and there was damage to the building, plant and machinery as well as to the stock of the complainant. The insurance claim was submitted to the insurance Company. The Insurance Company appointed the surveyor, who submitted his report on 06.10.2009, wherein the surveyor assessed the net loss of Rs.1,21,544/-. The Insurance Company sent a voucher for this amount. However, the complainant did not sign the voucher. The complainant then filed consumer complaint before the State Commission. The complaint was resisted by the opposite parties by filing their respective written statement. The State Commission however accepted the report of the surveyor and passed the following order on 30.4.2015:-
"(i) The complaint is partly allowed.
(ii) The opponent no.2 The National Insurance Company Limited is hereby directed to pay Rs.1,21,544/- (Rupees one lac twenty one thousand five hundred forty four only) within two months from the date of this order failing which the insurance company will be liable to pay interest at the rate of 9% p.a. from the date of filing of the complaint.
(iii) The complaint is dismissed against the opponent no.1 Bank.
(iv) Parties to bear their own costs.
(v) Copy of the judgment be provided to the parties free of costs."
3. Not satisfied with the order of the State Commission, the present appeal has been filed by the complainants.
4. Heard the learned counsel for the parties and perused the record. The learned counsel for the complainant stated that the complainant was not aware about the discount obtained by the bank from the insurance Company in the premium paid for relinquishing the risk of STFI as no instructions were given in this regard by the complainant to the bank which was obtaining the policy from the Insurance Company year after year. If the bank has acted on its own, the complainant is not responsible for the same and as the loss has occurred to the complainant due to not including risk of STFI in one of the policy taken by the bank on behalf of the complainant, the bank is liable to pay the loss if the same cannot be paid by the Insurance Company. The bank never informed the complainant that the policy was not covering the risk of STFI.
5. Learned counsel for the appellant stated that the respondent No.1 has taken the policy from respondent No.2 on behalf of the appellant No.2 and respondent No.1 used to pay premium to respondent No.2 and deduct the amount of premium from the bank account of the appellant No.2. Respondent No.1 has taken the policy for appellant No.2 without stating such terms to him and without taking his consent for the same. Appellant No.2 had no idea as to what were the terms and conditions of the policy as they were neither supplied to the appellant No.2 nor the consent was taken for this same. The State Commission has failed to consider this fact while passing order. Hence, this conclusion made by the State Commission is required to be reconsidered.
6. Learned counsel for the appellant further stated that the State Commission has held that bank has not produced any written documents as regards any instruction given by the complainant for obtaining insurance policy, but as the policy is continued from 2004 upto 2010, it cannot be believed that the complainant was unknown about the exclusion of the risk for the STFI. It was stated by the learned counsel for the appellant that all the policies were issued in the name of the bank and therefore, it clearly shows that the bank was responsible for taking these policies. Hence, as the bank has taken the policy without taking the consent of the complainant, the bank is liable to pay for the loss suffered by the complainant as the same cannot be indemnified by the Insurance Company.
7. On the other hand learned counsel for respondent No.1 stated that it is duty of the borrower to take insurance policy for the building, plant and machinery and the stock. This policy was carried from the year 2004 and the incident has happened in the year 2008. Thus, the complainant was fully aware of the nature of the policy as well as risk covered and the terms & conditions of the policy. Learned counsel stated that to protect hypothecated stocks, if the borrower does not take the policy, the bank can take the policy on behalf of the borrower.
8. It was further stated by the learned counsel for the respondent No.1 that the State Commission has dismissed the complaint against the opposite party no.1 i.e. bank. Learned counsel for the complainant has not shown any new thing to fix liability on the respondent No.1/bank. Though the policy was issued in the name of the bank but in the bracket (A/c of the insured is mentioned) is written.
9. Leaned counsel for the respondent No.2 Insurance Company stated that the Insurance Company has appointed a surveyor to assess the loss under the two polices and the position has been explained to the complainant vide letter dated 04.01.2010. The surveyor has assessed the loss under both the policies, however as the risk of STFI is not covered under one of the policies the stocks were assessed only under another policy. The total stocks which suffered a loss as assessed by the surveyor was for Rs.14,01,440/-, but this stock cannot be covered under STFI under policy No.311400/11/07/3100000803. Under the other policy, the value of Insurance coverage for stock was only Rs.1,00,000/-. Thus, there was under insurance of 94.39% and the same has been applied for assessing the loss to the stock and thus the total assessment as made by the surveyor reached to the level of only Rs.1,21,543.02. Terms of the insurance have to be construed as it is and the same cannot be changed even by a court. In this regard learned counsel referred to the following judgments:-
"(1) National Insurance Co. Ltd. Vs. Jeet Engineering Works, III (2007) CPJ 400 (NC).
(2) Zainul Abedin & anr. Vs. New India Assurance Co. Ltd. & Ors., II (2008) CPJ 173 (NC) (3) Sikka Papers Limited Vs. National Insurance Co. Ltd. & Ors., III (2009) CPJ 90 (SC) (4) United India Insurance Co. Ltd. Vs. Cavincare Pvt. Ltd. I (2016) CPJ 309 (NC) (5) Vinay Kumar Swarnkar Vs. Life Insurance Corporation of India & Ors. I (2016) CPJ 312 (NC) (6) Dharmchand Vs. New India Assurnace Co. Ltd & anr. I (2017) CPJ 266 (NC)"
10. Based on the above judgements, the learned counsel has stated that if the risks of STFI are not covered under the policy, then no claim can be admitted under the risk of storm, tempest, flood and inundation. Thus, the surveyor has assessed the loss as per the terms of the policy and the State Commission has accepted the same. No ground is made out to enhance the assessment or coverage of the stock under the two policies.
11. I have considered the arguments advanced by the learned counsel for the parties and have examined the record. The gist of the assessment of the loss by the surveyor is as follows:-
"SUMMARY OF ASSESSMENT Sr. Particulars Estimated Assessed
1. Building Rs.06,90,743.39 Rs.00,55,821.61
2. Machinery Rs.01,08.239.63 Rs.00,55,162.23
3.
Stock Rs.14,70,000.00 Rs.14,01,440.00 Total Rs.22,68,983.02 Rs.15,12,423.84 Less (A) Depreciation Rs.18,442.36 Building (5/60) 0.08 of 55821.61= 4651.80 Machinery 0.25 of 55162.23= 13790.56 (considered 5 yrs old M/c & average life as 20 year) Stock = 0.00 (B) Salvage Rs.4,500.00 Building Lumpsum= Rs.500.00 Machinery Lumpsum =Rs.4000.00 Stock Lumpsum = Rs.0.00 (C) Underinsurance Rs.13,57,938.46 Building 69.31% of 50669.81 = 35119.24 (55,821.61-4,651.80-500.00) Machinery 0% of 37371.68 = 0.00 Stock 94.39% of 1401440.00 = 1322819.22 Adjusted loss = Rs.1,31,543.02 Excess 5% of 131543.02 hence Rs.10,000.00 Rs.10,000.00 Net Assessed Amount Rs.1,21,543.02"
12. The major reason for less assessment under the policy is under insurance of 94.39% in respect of the stock. Position has been explained by the Insurance Company to the complainant vide their letter dated 04.1.2010, wherein the following has been informed:
"There were two following policies with us for your stock insurance in the year 2008 in which year the accident happened:
1. Policy no.311400/11/08/3100000052 for the period 13.4.2008 to 12.4.2009 in which you have covered the following:
Building Rs.9,00,000/-
b. Plant/machinery and accessories Rs.25,00,000/-
c. Furniture, Fixture and Fittings Rs.5,00,000/-
d. Other stock Rs.1,00,000/-
The policy is with the coverage of STFI (Storm, Tempest, Flood and Inundation)
2. Policy No.311400/11/07/3100000803 for the period from 19.8.2007 to 18.8.2008 in which you have covered stock for Rs.16,20,000/- without the coverage of STFI (Storm, Tempest, Flood and Inundation) For this exclusion of coverage you have availed 25% discount on the basic rate of premium.
The loss is occurred due to inundation. Therefore we have considered the first policy for loss assessment in which the inundation risk is covered. Due to non coverage of inundation, under the second policy (311400/11/07/31000000803) the claim does not fall within the purview of consideration for settlement for this claim.
Hence, you are requested to please accept the claim voucher for Rs.1,21,544/- as full and final settlement of the above mentioned claim."
13. From the above, it is clear that so far as Insurance Company is concerned, they have allowed the claim as per the terms of the policy. Accordingly, the State Commission has ordered the payment of Rs.1,21,544/- to the complainant as assessed by the surveyor. The main grievance of the appellant/complainant is that the bank has not taken the correct policy and the risk of STFI were relinquished for getting 25% discount on premium for which the bank was not authorised by the complainant. In this regard the State Commission has observed the following:-
"21. It is true that the bank has not produced any written evidence as regards any instruction given by the complainant for obtaining insurance policy with particular detail. However, it is not necessary. In fact, from the very beginning from 2004 the insurance policy is obtained excluding the risk for STFI. It is continued with subsequent years upto 2010. Therefore, it cannot be believed for a moment that the complainant was unknown about the exclusion of the risk for STFI.
22. Considering the facts and circumstances of the case, there is no negligence on the part of the bank. The bank has in fact obtained the insurance policy as per the instruction of the complainant. The bank has paid the premium on behalf of the complainant to the insurance company. All the terms and conditions are provided for the insurance about the exclusion and inclusion of risk between the complainant and the insurance company. The exclusion of risk of STFI is due to discount in the premium. The complainant is benefited for getting the discount. During all this period for 5 years, the complainant has not raised any objection against the policy. He subsequently obtained second policy in the year 2005 and included STFI risk. However, he did not include STFI risk in the first policy for stock for a sum of Rs.16,20,000/-= at the time of renewal on 18-8-2005."
14. From the above, it is clear that the State Commission has not found any deficiency on the part of the bank on the ground that the policy was running from 2004 and the risks of STFI were not covered right from the very beginning and therefore, it was not possible that the complainant may not have known the nature of the policy and the risks covered or uncovered. It is not the case of the complainant that the policies were not supplied to the complainant. It was the duty of the complainant to have seen the nature of the policy and the risk covered. Even if the complainant was not able to see policy for one or two years, the same policy was being renewed year after year for four years before the incident took place and if the complainant does not examine his policy during four years then the complainant is guilty of contributory negligence. If the money for premium was being deducted from the account of the complainant, the complainant must have inquired as to for what purpose this money has been deducted. After knowing that the money was deducted for the insurance policy, it was the duty of the complainant to have seen the policy and to have examined the various details of the policy including the risk cover. This is also not the complainant's case that after giving some specific instructions to the bank for taking insurance for building, plant and machinery and stocks, these have not been followed by the bank. Though it is unclear under what circumstances risk STFI were relinquished in the policy, it is certain that the complainant must be aware about these risks having not been covered under the policy and that is why, perhaps the complainant got another policy in the year 2005 where risks of STFI were covered.
15. Based on the above discussion, it is clear that the State Commission has rightly reached to the conclusion that no liability can be fastened on the respondent No.1 bank. Keeping the terms of the policy in view, I do not find any aberration in the report of the surveyor and the State Commission has rightly accepted the report of the surveyor. As the surveyors are appointed under the provisions of Insurance Act, 1938, their report cannot be brushed aside without any cogent reason. Hon'ble Supreme Court in its judgment ["Sri Venkateswara Syndicate vs. Oriental Insurance Company Limited & Anr", (2009) 8 SCC 507], has observed that:
"31. The assessment of loss, claim settlement and relevance of survey report depends on various factors. Whenever a loss is reported by insured, a loss adjuster, popularly known as loss surveyor, is deputed who assesses the loss and issues report known as surveyor report which forms the basis for consideration or otherwise of the claim. Surveyors are appointed under the statutory provisions and they are the link between the insurer and the insured when the question of settlement of loss or damage arises. The report of the surveyor could become the basis for settlement of a claim by the insurer in respect of the loss suffered by the insured.
32. There is no disputing the fact that the surveyor/surveyors are appointed by the insurance company under the provisions of the Insurance Act and their reports are to be given due importance and one should have sufficient grounds not to agree with the assessment made by them. We also add, that, under this Section the insurance company cannot go on appointing surveyors one after another so as to get a tailor-made report to the satisfaction of the officer concerned of the insurance company; if for any reason, the report of the surveyors is not acceptable, the insurer has to give valid reason for not accepting the report."
16. The complainant has not shown any error in the report of the surveyor, hence the same has to be accepted. Once the report of the surveyor is accepted, there is no other ground to enhance the compensation under the insurance claim. Based on the above discussion, I do not find any merit in the appeal and accordingly, the First Appeal No.881 of 2015 is dismissed.
...................... PREM NARAIN PRESIDING MEMBER