State Consumer Disputes Redressal Commission
M/S. Sona Poultry Farm, A ... vs Canara Bank, Kurnool And One Another on 3 July, 2013
A. P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION : AT HYDERABAD CC.88/2012 Between : M/s. Sona Poultry Farm, a Proprietorship firm Rep by its Proprietor Mr. Mohammed suneer, S/o Dr. Md. Ghouse, age : 51 yrs, R/o d. No. 40-808-H6A, Srinivasa Nagar, Kurnool .. Complainant And 1. Canara Bank Park road,Kurnool Branch, Kurnool,Rep. by its Manager 2. United India Insurance Company Ltd Having its Divisional office at 40/304, Mourya Inn Complex Bhagyanagar, Kurnool 518 001 Rep. by its Manager .. opposite parties Counsel for the complainant : M/s. P. Raja Sripathi Rao Counsel for the opposite parties : M/s. K. V. Narusu for OP.1 M/s. V. Sambasiva Rao for OP.2 CC.89/2012 Between : M/s. Sona Poultry Farm, a Proprietorship firm Rep by its Proprietor Mr. Mohammed suneer, S/o Dr. Md. Ghouse, age : 51 yrs, R/o d. No. 40-808-H6A, Srinivasa Nagar, Kurnool .. Complainant And 1. Canara Bank Park road,Kurnool Branch, Kurnool,Rep. by its Manager 2. United India Insurance Company Ltd Having its Divisional office at 40/304, Mourya Inn Complex Bhagyanagar, Kurnool 518 001 Rep. by its Manager .. opposite parties Counsel for the complainant : M/s. P. Raja Sripathi Rao Counsel for the opposite parties : M/s. K. V. Narusu for OP.1 M/s. V. Sambasiva Rao for OP.2 CC.90/2012 Between : M/s. Sona Agencies, a partnership firm Rep by its Partner, Mr. Mohammed suneer, S/o Dr. Md. Ghouse, age : 51 yrs, R/o d. No. 40-808-H6A, Srinivasa Nagar, Kurnool .. Complainant And 1. Canara Bank Park road, Kurnool Branch, Kurnool, Rep. by its Manager 2. United India Insurance Company Ltd Having its Divisional office at 40/304, Mourya Inn Complex Bhagyanagar Kurnool 518 001 Rep. by its Manager .. opposite parties Counsel for the complainant : M/s. P. Raja Sripathi Rao Counsel for the opposite parties : M/s. K. V. Narusu for OP.1 M/s. V. Sambasiva Rao for OP.2 Coram ; Sri R. Lakshminarasimha Rao Honble Member
And Sri T. Ashok Kumar .. Honble Member Wednesday, the Third Day of July Two Thousand Thirteen Oral Common Order : ( As per Sri T. Ashok Kumar , Honble Member ) ****
1. These complaints are fled U/s. 17(1)(a)(i) of the Consumer Protection Act praying this Commission to direct the opposite parties 1 and 2 jointly and severally to pay insured amounts together with interest and also compensation described in the respective complaints. Since in all the three complaints, the parties are same and similar facts and law are involved we intend to dispose of all the said complaints by a common order. CC 88/2012 is taken as lead case.
2. The brief facts of the complaint in CC 88/2012 are that the complainant had obtained loan of Rs.30 lakhs from 1st opposite party bank for the purpose of his poultry business and to safeguard its interests, the bank had taken an insurance policy bearing No. 051100/11/08/11/00000971 from the second opposite party covering the period from 26.12.2008 to 25.12.2009 for an amount of Rs.50 lakhs covering the risk on the stocks of eggs and poultry feed . while the things thus stood, on 02.10.2009, on account of flash floods the entire Kurnool town was effected causing huge loss and the complainant also lost assets and material covered under the policy worth of Rs.1,26,16,534/- . when the claim was made the insurance company had deputed a surveyor. He inspected the premises bearing No. 40-30-3, Madum compound, Kurnool- 40-30-DA3, Madum compound, Kurnool; 40-30-DA5, Madum compound, Kurnool; 44-16-5, Roja Prakash nagar of Kurnool town, Survey No. 171/2(A)(1) of Mamidalapadu village and survey no. 519/2 of Pullur village and submitted his report to the second opposite party insurance company. However , the insurance company repudiated the claim of the complainant vide letter dt. 24.2.2010 stating that the complainant had changed the risk locations where the stocks were supposed to have been stored in Door No. 354/62, park road, Kurnool, as against the premises mentioned. The 1st opposite party bank is aware of premises where the stocks were stored and obtained the policy from OP. 2 on the office premises instead of premises bearing nos.. 40-30-3, Madum compound, Kurnool- 40-30-DA3, Madum compound, Kurnool; 40-30-DA5, Madum compound, Kurnool; 44-16-5, Roja Prakash nagar of Kurnool town, Survey No. 171/2(A)(1) of Mamidalapadu village and survey no. 519/2 of Pullur village,. Due to the negligence of OP.1 Bank the insurance company repudiated the claim of the complainant and without verification and inspection of sites and Godowns the 2nd OP insurance company issued the policies. On account of the omissions and commissions made by Ops 1 and 2 the complainant should not be penalized and hence the complaint for the insured amount, compensation and costs.
3. OP.1 Bank filed counter resisting the complaint and disputing the claim while admitting sanction of loan to the complainant and contended that whatever the information furnished by the complainant was forwarded to the 2nd opposite party insurance company for issuance of policy and it never acted on its own while furnishing information to the 2nd opposite party. A copy of the insurance company would be made available to OP. 1 as well as the complainant. There were flash floods in the year 2009 in which most of the places in Kurnool and nearby villages were washed away. If there are any omissions or mistakes in the policy the complainant ought to have brought the same to the notice of the second OP Insurance company for rectification but he did not take any steps to mention the correct address of the go downs either to 1st opposite party or 2nd opposite party to cover the risk . The contract is between the complainant and the 2nd OP insurance company and the OP 1 bank has nothing to do with the claim of the complainant.
There was no liability on its part so also deficiency in service and that the State Commission has no jurisdiction to entertain the complaint and thus prayed to dismiss the complaint.
(4). The 2nd OP insurance company filed written version disputing the claim and admitting the issuance of standard, fire and Special perils policy for the sum assured of Rs.50 lakhs covering the period from 26.12.008 to 25.12.2009 to M/s. Sona Poultry Farm at Door No. 40/354-62, park road, Kurnool covering the risks on storage of stocks of eggs and poultry feed, belonging to the insured trade and occupied as Godown only. In view of the fact that the complainant obtained loan from the 1st opposite party bank and in the interests of the bank, based on the information provided the policy was issued. Neither the 1st OP bank nor the complainant intimated about the change of address at any point of time subsequent to issuance of the policy. On intimation, second opposite party deputed a surveyor and without prejudice he assessed the loss at Rs.44,75,000/- as per the location furnished by the insured but as per the general conditions of the policy, the policy shall be voidable in the event of mis-representation, mis-description or non-disclosure of material particulars. Therefore neither the bank nor the complainant is entitled to claim the amount for the alleged loss occurred on 2.10.2009. when the complainant got issued a legal notice dt. 10.3.2012 to the 1st opposite party finding fault with the bank , the bank addressed a letter to its AGM, Canara bank Nrayanaguda, Hyderabad admitting that by oversight the address and door no. 40-354-61, Park road , Kurnool in the policy was submitted by the bank officials in the proposal form to the insurance company and for the fault of bank OP 2 insurance company cannot be made liable. The insurance company rightly repudiated the claim in view of the change of the risk locations from the policy in question. The complainant is not entitled for the claim as per the terms and conditions of the policy and OP 1 alone is liable to pay for the mistake committed by it. OP. 2 did not issue any policy at the premises where the alleged loss occurred and therefore it is not liable to pay any amount and thus prayed to dismiss the complaint with costs.
5. Complainant and Ops 1 and 2 filed their evidence affidavits reiterating their respective stands aforesaid and Ex. A-1 to A -8 were marked on behalf of the complainant and Ex. B1 to B3 were marked for the Opposite parties.
6. Heard both sides counsel with reference to their respective contentions in detail.
7. Now the points for consideration are
(i) whether this Commission has jurisdiction to entertain the complaint ?
(ii) whether there is any deficiency in service on the part of Ops 1 and 2 ?
(iii) Whether the complainant is entitled for the claim amount, and if so from whom?
8. POINT NO. 1 :
OP.1 contended that since the matter is pending before the Debt Recovery Tribunal, Hyderabad, this Commission has no jurisdiction to entertain the complaint and cited a decision reported in 1996 (1) CPR 128 between M/s. Deep Piston private Limited Vs SBI and others, wherein it was held that when the matter is pending before the Civil court the Consumer Commission should not entertain the petitions in respect of the identical subject matter. He also submitted another decision the Honble Supreme Court 2000(3) ALD (SC) page 83 wherein it was held that where there are two special laws the latter law will normally prevail over the former law if there is a provision in the latter special Act giving it over riding effect. In the said context he referred to section 35 of SARFACSI Act which contains overriding effect and the Consumer Protection Act which has no such overriding effect. Ex. A7 certified copy of order in IA 1012/2012 in SA No. 367/2012 of the Debt Recovery Tribunal, Hyderabad, discloses that OP. 1 bank filed the said proceedings in SA no. 367/2012 for recovery of relevant debt against the complainant herein. Thus, we are satisfied to hold that the said the matter between the OP. 1 and the complainant is pending in connection with recovery of loan. Insurance company is not a party to the said proceedings and claim against Insurance Company cannot be enquired into by the said DRT and as such the jurisdiction point agitated by OP.1 holds no water in this case and thus point No. 1 is decided against the OP.1
09. POINT NO. 2 :
There is no dispute that the complainant was dealing with Poultry business at Kurnool under the name and style M/s. Sona Poultry Farm represented by its Proprietor Mohd. Summer and that he availed Rs.30 lakhs loan from the OP.1 bank for the purpose of the said business vide Ex. A1 loan agreement and also and to cover the risks Ex. A2 ( Ex.A8) insurance policy was obtained for an amount of Rs.50 lakhs from the 2ND opposite party covering the risk on stocks of eggs and poultry feed. The complainnt filed IA 166/2013 praying to receive copy of policy No. 051100/11/08/00000971 and mark it as Ex. A2 instead of policy No. 051100/11/09/00000053 and the same was allowed on 30.01.2013 and thus the subsequently filed copy of policy was marked as Ex. A-8. The complainant contends that to safeguard its interest to Op.1 obtained the policy which could not be appreciated because the proposal was submitted by the complainant in his name to safeguard his interest and it is presumed because the policy was issued in favour of the complainant and being facilitator Op.1 bank forwarded the same to the second OP insurance company. It is true that the said policy was in force from 26.12.2008 to 25.12.2009. It is also not dispute that on 2.10.2009, there were flash floods and it affected Kurnool town and surrounding areas very badly and Ex. A3 certificate issued by MRO establishes the same. In such circumstances the complainant put forth his claim under the said insurance policy. Consequently, 2nd opposite party appointed a surveyor by name, Anoor Naveen, to assess the loss without prejudice to the rights of the said OP.2. Then the surveyor sought for certain information and vides Ex. A4 information was furnished by the complainant. The said surveyor assessed the loss at Rs.44,75,000/- basing on the locations provided by the complainant viz., premises bearing No. 40-30-3, Madum compound, Kurnool- 40-30-DA3, Madum compound, Kurnool; 40-30-DA5, Madum compound, Kurnool; 44-16-5, Roja Prakash nagar of Kurnool town, Survey No. 171/2(A)(1) of Mamidalapadu village and survey no. 519/2 of Pullur village. The important plea taken by the 2nd OP insurance company is that as per general conditions of the insurance policy it is voidable in the event of misrepresentation, mis-description or non-disclosure of material facts and that in the insurance policy and that in the insurance policy the premises bearing D. No. 354-62, Park road, Kurnool is shown as against the premises mentioned above and therefore on account of such discrepancy in the description of premises and change of address the 2nd OP insurance company is not at all liable to pay any amount much less the amounts claimed by the complainant as the policy does not cover the premises that was damaged.
In a decision reported in Oriental Insurance Co. Ltd. and Anr. Vs. P.R. Automobiles & Oils and Anr, [1 (2010) CPJ 83 (NC)], the Honble National Commission held that :
assuming that the letter dated 30.10.1998 was sent by the complainant and was received by the Insurance Company before the date of peril, it is an admitted position that the Insurance Company had not made any endorsement in the policy document in regard to the change of address before the date of peril.
To make such endorsement in respect of new location is entirely in the discretion of the insurer. In the case of S. Rathinavelu vs. The New India Assurance Co. Ltd. & Ors. II (1995) CPJ 135 (NC), Honble National Commission unambiguously held that mere receipt of a request for change in address is not sufficient to make the policy applicable to the changed premises. It is required to be incorporated in the policy by way of a separate endorsement and till then, no risk is assumed in respect of the new location. To make such endorsement in respect of new location is entirely in the discretion of the insurer That decision was made applicable by Honble National Commission in the aforesaid case of P.R. automobile (supra) and it was observed that the insurer was not liable. Honble Supreme Court in the case of Deokar Exports Pvt. Ltd. vs. New India Assurance Co. Ltd. I (2009) CPJ 6 (SC) in paragraph No. 11 has observed that a policy of insurance is a contract based on an offer (proposal) and an acceptance.
10.Before the date of the said flash floods neither the complainant nor the OP.1 made correspondence with the OP.2 with a request to change the address in the policy on the ground that by oversight wrong address was mentioned in the proposal form and in such circumstances question of insurance company making any endorsement in the policy regarding the change of address before the date of flash floods does not arise. In view of the said decision, when the policy does not cover the premises that was damaged , the Insurance company was justified in repudiating the claim. In Ex. A7 orders, the said Tribunal observed that the complainant herein has established a prima facie for his genuine claim of compensation which has been rejected by the insurance company but the said opinion is not binding on this Commission and is in no way helpful for the complainant in view of the said decision. None of the parties to proceedings submitted proposal form duly signed by the complainant. But when in the policy Door No. 354-62, Park road, Kurnool is mentioned it has to be inferred that the same address was given in the proposal form as the premises for coverage of the risk. The complainant did not mention in the complaint that he furnished the premises as bearing No. 40-30-3, Madum compound, Kurnool etc. to the Bank authorities and that they wrongly or deliberately furnished his office address for the purposes of policy. OP. 1 specifically pleaded that copies of policy were furnished to it and the complainant by the 2nd opposite party and the complainant did not dispute the same and on the other hand marked Ex. A1 policy copy. OP. 1 bank contended that whatever information was furnished by the complainant was forwarded to second OP insurance company for the purpose of issuance of the policy. There is no dependable evidence from the side of the complainant that he furnished the premises bearing no. 40-30-3, Madum compound, Kurnool- 40-30-DA3, Madum compound, Kurnool; 40-30-DA5, Madum compound, Kurnool; 44-16-5, Roja Prakash nagar of Kurnool town, Survey No. 171/2(A)(1) of Mamidalapadu village and survey no. 519/2 of Pullur village and that deliberately OP. 1 mentioned Door No. 354-62, Park road, Kurnool in the relevant papers. If there are any mistakes, in the policy in the said context the complainant ought to have brought to the notice of second opposite party for rectification but did not do so and the said inaction on his part is certainly fatal to his case as he was not vigilant. When there is no liability against insurance company the bank also cannot be made liable as it is only a facilitator which had limited role in forwarding the proposal forms duly signed by the complainant. Even assuming that by oversight in the proposal form the location of risk to be covered is mentioned as D.No.354-62, Park road, Kurnool, the complainant ought to have verified the proposal form when he signed to know whether the correct address was mentioned in it or not as he took the policy to claim insured amount in the event of damage his property. Since he slept over in the said context and blindly signed the proposal form he cannot point out the mistake on the part of OP.1. It appears that to see that his valued client gets insured amount the bank made feeble attempt supporting the complainant in making correspondence with OP. 2 insurance company and therefore it is not helpful for the complainant. In such circumstances, even if the complainant submitted monthly stock statement of the stocks stored at different locations in and around Kurnool town and the bank officials inspected the locations periodically at the premises bearing No. 40-30-3, Madum compound, Kurnool etc. it is of no consequence in favour of the complainant. When the claims against both the Ops are not maintainable, there is no need to go into the details whether the claim is exorbitant or not. Thus, point no. 2 is also decided against the complainant holding that Ops 1 and 2 did not render any deficiency service to him.
11. Point No. 3 :
In view of finding of point no. 2 against the complainant he is not entitled for any claim amount(s), from Ops 1 and 2. Thus point No. 3 is also decided against the complainant. Consequently, the complaint is liable to be dismissed.
12. In CC 89/2009 , the loan sanctioned by OP. 1 to the complainant in 2005 was Rs.30 lakhs and it was enhanced to Rs.one crore in December 2007. For enhanced loan limit and for covering the risk policy bearing No. 051100/11/09/11/00000053 for Rs. 50 lakhs was obtained from OP. 2 and it was force from 09.04.2009 to 08.04.2010. The claim is for Rs.50 lakhs insured amount with interest at 18% and Rs. 5lakhs compensation and Rs.50,000/- costs. The surveyor assessed the loss at Rs. 44,75,000/-
13. In CC 90/2009, Open cash credit of Rs. 10 lakhs was sanctioned in favour of the complainant by OP. 1 in the year 1986 and the same was enhanced to Rs.70 lakhs on 4.11.2008 .and for covering the risk Policy bearing nos. 051100/11/09/11/00000318, 051100/11/08/11/00001057 ,051100/11/09/11/00000316, 051100/11/08/11/00001052 for Rs. 5 lakhs, Rs.21,68,000/-, Rs.11 lakhs and Rs.10 lakhs respectively totaling to Rs.47,68,000/- were obtained. The Surveyor assessed the loss at Rs.98,86,956/-
14. In both the said complaints also the defence of Ops 1 and 2 is similar to that of the defence taken in CC 88/2012. Therefore, the findings given in CC 88/2012 holds good for CC 89/2012 and CC 90/2012, and thus all the complaints are liable to be dismissed as devoid of merits.
15. In the result, the complaints in CC 88/2012, CC 89/2012 and CC 90/2012 are dismissed. In the circumstances, parties shall bear their own costs.
MEMBER MEMBER DATED 03.07.2013.
MEMBER MEMBER DATED 03.07.2013 CC No. 89/2012 M/s. Sona Poultry Farm and another (Complainant) And Canara Bank and another (Opposite parties) Chief affidavit of Complaint filed and Ex. A1 to A6.
List of Documents filed and Ex. B-1 to B-4 marked.
APPENDIX OF EVIDENCE EXHIBITS MARKED For the complainants Ex. A1 Loan agreement Ex. A2 Insurance Policy Ex. A3 Certificate issued by MRO Ex. A4 letter addressed to surveyor by proprietor Ex. A5 Letters addressed to OP1 and OP2 Ex. A6 Copy of legal notice Opposite parties:-
Ex. B1 Standard Fire and special perils policy No. 051100/11/09/11/00000053, issued to M/s. Sona Poultry farm from 09.04.09 to 08.04.2010.
Ex.B2 Repudiations letter dated 21.09.2011 addressed to the complainant by the op No. 2 company.
Ex.B3 Repudiations letter dated 21.09.2011 addressed to the complainant.
Ex.B4 The Surveyors Report dated 07.04.11 by the surveyor FINTEQ, rep by Anur Naveen.
MEMBER MEMBER DATED : 03.07.2013 CC No. 90/2012 M/s. Sona Poultry Farm and another (Complainant) And Canara Bank and another (Opposite parties) Chief affidavit of Complaint filed and Ex. A1 to A17.
List of Documents filed and Ex. B-1 to B-8 marked.
APPENDIX OF EVIDENCE EXHIBITS MARKED For the complainants Ex. A1 Partnership certificate Ex. A2 Partnership deed Ex. A3 Loan agreement/ sanction Memorandum Ex. A4 Insurance policies Ex. A5 certificate issued by MRO Ex. A6 Claim terms and repudiation letter Ex.A7 Copy of legal notice Ex.A8 Claim firm Ex.A9 Bill for washed away stocks due to floods Ex.A10 Letter addressed to surveyor by canara bank Ex.A11 Letter addressed to United India Insurance company ltd by canara Bank Ex.A12 Letter addressed to AGM, Circle office by canara Bank Ex.A13 Letter addressed to DGM, Canara bank Ex.A14 Letter addressed to GM, United India insurance company lted by canara bank.
Ex.A15 Letter addressed to GM Technical department united India insurance company ltd by canara bank.
Ex.A16 Letter addressed to the AGM, Bancassurance section , by canara bank Ex.A17 Order copy of debt Tribunal , Nagpur.
Opposite parties:-
Ex. B1 Standard Fire and special perils policy No. 051100/11/09/11/000000316, valid from 21.07.09 to 20.07.2010 Ex.B2 Standard Fire and special perils policy No. 051100/11/09/11/00000318, valid from 21.07.09 to 20.07.2010 Ex.B3 Standard Fire and special perils policy No. 051100/11/09/11/00001052, valid from 07.01.09 to 06.01.2010 Ex.B4 Standard Fire and special perils policy No. 051100/11/09/11/000001057, valid from 07.01.09 to 06.01.2010 Ex. B5 Standard Fire and special perils policy No. 051100/11/09/11/000001057, valid from 07.01.09 to 06.01.2010 Ex. B6 Surveyor report by D.A. Somayaji Ex.B7 Surveyor report by D.A. Somayaji Ex.B8 Surveyor report by D.A. Somayaji MEMBER MEMBER DATED : 03.07.2013