National Consumer Disputes Redressal
National Insurance Co. Ltd. vs M/S. Jaishree Industries & Anr. on 18 September, 2018
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI FIRST APPEAL NO. 601 OF 2012 (Against the Order dated 27/08/2012 in Complaint No. 20/2008 of the State Commission Rajasthan) 1. STATE BANK OF BIKANER & JAIPUR SUDARSHAN PURA, INDUSTRIAL AREA, 22 GODAM, JAIPUR ...........Appellant(s) Versus 1. M/S. JAISHREE INDUSTRIES & 2 ORS. THROUGH PRO. MAYA DEVI CHOTIYA, PLOT NO. 409A, EKTA PATH, VIDYUT NAGAR, AJMER ROAD, JAIPUR ...........Respondent(s) FIRST APPEAL NO. 629 OF 2012 (Against the Order dated 27/08/2012 in Complaint No. 20/2008 of the State Commission Rajasthan) 1. NATIONAL INSURANCE CO. LTD. 4TH FLOOR, TOWER IV, JEEVAN BHARTI BUILDING, CONNAUGHT PLACE, NEW DELHI-110001 ...........Appellant(s) Versus 1. M/S. JAISHREE INDUSTRIES & ANR. THROUGH PRO. MAY DEVI CHOTIYA, PLOT NO. 409-A, EKTA PATH, VIDYUT NAGAR, AJMER ROAD, JAIPUR ...........Respondent(s)
BEFORE: HON'BLE MR. PREM NARAIN,PRESIDING MEMBER
For the Appellant : For State Bank of Bikaner
& Jaipur : Ms. Kittoo Bajaj, Advocate.
For National Insurance Co. : Shri Yogesh Malhotra, Advocate.
Shri Rajnesh Kumar, Advocate.
Shri Udit Grover, Advocate.
For M/s. Jaishree Industries: Shri Y.K. Kapoor, Advocate. For the Respondent :
Dated : 18 Sep 2018 ORDER
First Appeal No. 601 of 2012 and First Appeal No.629 of 2012 have been filed by the appellant, State bank of Bikaner and Jaipur (now State Bank of India) and National Insurance Company Ltd. respectively against the order dated 27.8.2012 passed by the State Consumer Disputes Redressal Commission, Rajasthan (for short, 'State Commission') in CC No.20 of 2008.
2. Brief facts of the case are that the respondent no.1/complainant has taken the cash credit facility from the State Bank of Bikaner and Jaipur/OP-3. The stocks were insured under insurance policy given by the National Insurance Company Ltd./OP-1 and the policy was valid from 14.2.2004 to 13.2.2005 and the sum insured was Rs.8,00,000/-. It is mentioned in the policy that property is situated at above address and this address is given as A-89, Sunder Nagar, Ajmer Road, Jaipur, Rajasthan - 302 006. This policy was renewed from 18.2.2005 to 17.2.2006 with sum assured as rs.8,00,000/- only and risk location as A-89, Sunder Nagar, Ajmer Road, Jaipur. The policy was further renewed from 21.3.2006 to 20.3.2007. In this policy also it is mentioned that the property is situated at A-89, Sunder Nagar, Ajmer Road, Jaipur, Rajasthan - 302 006. However, in this policy the sum insured has been increased to Rs.25,00,000/- and description of risk insured shown as "Wooden Furniture". Another policy was taken from 27.12.2005 to 20.12.2006 for Rs.20,00,000/- basically to cover saw mills (including timber merchants premises where sawing is done).
3. During the night of 30.9.2006 and 1.10.2006 a fire broke out in the godown of respondent no.1. The claim was submitted before the insurance company. However, the insurance company repudiated the claim on 4.2.2008 on the ground that the surveyor has intimated that the stocks were kept at Plot No.215, Sunder Nagar, Ajmer Road, Jaipur and these stocks were not insured under the policy. The complainant then filed a consumer complaint bearing CC No.20/2008 before the State Commission. The insurance company/OP-1 resisted the complaint by filing the written statement stating that the proposal for insurance was only in respect of property situated at Plot No. A-89, Sunder Nagar, Ajmer Road, Jaipur, whereas the fire broke out at Plot No.215 and therefore, the stocks kept at Plot No.215 were not covered under the insurance policy. Hence, the insurance company has rightly repudiated the claim. On this basis, the complaint was requested to be dismissed.
4. OP-3 Bank also filed written statement stating that the Bank obtained the insurance policy on the address given by the complainant in the loan application and therefore, there is no deficiency on the part of the bank too and it was requested to dismiss the complaint. The State Commission vide its order dated 27.8.2012 allowed the complaint as under:
"15. Therefore, for the aforesaid reasons, the complaint of the complainant firm is allowed. The complainant is entitled to get Rs.36,89,345/- (Rupees Thirty Six lac Eight Nine Thousand Three Hundred and Forty Five only) from the non-petitioners jointly and severally. The complainant shall also be entitled to get 9% interest on the aforesaid amount from the date of filing of the complaint. The complainant is also entitled to get Rs.30,000/- (Rupees Thirty Thousand) as compensation for mental agony and cost of the proceedings. The non-petitioners are directed to make the payment of the aforesaid amount to the complainant within one month from the date of the order."
5. Hence, the OP-1 insurance company as well as OP-3 bank have preferred these appeals before this Commission.
6. Heard the learned counsel for the parties and perused the record.
7. Learned counsel for the insurance company stated that the insurance company issued the insurance policy on the basis of proposal form. For the policy of Saw Mills, in the proposal form against the column Location of Risk to be covered "A-89, Sunder Nagar, Ajmer Road, Jaipur" is mentioned. Learned counsel for the insurance company further stated that all documents like IT Returns and Rent Agreement give the same address as "A-89, Sunder Nagar, Ajmer Road, Jaipur". In all legal documents on the basis of which the bank has taken the policy on behalf of the complainant same address is there. So even if there is some fault of address, the bank would be responsible and not the insurance company as the job of the insurance company is only to insure the properties as given in the proposal form. It was argued that the State Commission has taken this to be an admitted fact that the complainant started his business in 2000 and shifted his business to Plot No.215 Sunder Nagar, Ajmer Road, Jaipur" in 2001 whereas, there is no such admission on the part of the insurance company. Learned counsel for the insurance company stated that the observation made by the State Commission in Paragraph -14 of the judgment cannot be regarded as a justification for ordering payment of insurance claim to the complainant. This para reads as under:
"14. Thus, from the documents submitted by both the parties, it is evident that vide a joint note Ex.25, both the insurance company as well as the bank were in favour of granting relief and approve the claim of the complainant on the basis of the report of the surveyor. There is no report either of the surveyor or on behalf of the non-petitioners to show that the complainant firm was running its business at Plot No.89, instead of Plot No.215, where the fire actually took place. The surveyor also gave its report on the basis of loss due to fire at Plot no.215, where the stock of the complainant firm was kept. Despite strong recommendation of three senior officers of the insurance company vide their report Ex.25(B) dated 20.07/07, the recommendations Ex.25(C) dated 24.10.07 of three other senior officers of the regional office of the insurance company and recommendation of two officers of the RCC, one of whom was Chief Regional Manager, the claim of the complainant firm was repudiated on technical grounds in a very casual, mechanical and routine manner by the insurance company vide its letter Ex.12 dated 04.02.08, solely on the basis of a dissenting note of Dr. S.C. Pandiya, the Regional Manager, a member of the RCC. The insurance company should always take positive approach in considering such cases in the larger interest of the Company and we are of the opinion that the insurance company arbitrarily, erroneously and illegally repudiated the claim of the complainant firm and they were not justified in doing so. The repudiation and rejection of claim by the insurance company amounts to deficiency in service and therefore, the present complaint deserves to be allowed."
8. It was further argued that internal recommendation of some officers of the insurance company and the bank does not mean anything if the matter is finally decided and repudiated at a higher level. This insurance company is a public sector undertaking and hierarchy system of decision making is there. The question to be considered should be whether the repudiation is against the law. If the premises where the fire broke out is not insured, then how the insurance company can pay the claim? Learned counsel for the insurance company has relied upon the decision in National Insurance Company Ltd. vs. Vinod Puri and another, I (2014) CPJ 341 (NC), wherein the revision petition filed by the insurance company has been allowed on the basis of the fact that the machinery was lying in the godown which was about 30 ft. away from the shop. The relevant portion of the judgment reads as under:
"10. Insurance Policy clearly shows that only the plant, machinery and stock lying in the shop was insured. Therefore, the petitioner was justified in repudiating the claim of the respondent in respect of the loss caused to the plant, machinery and stock lying in the godown due to fire."
9. It was further submitted that the complainant has not filed any document to prove that he ever informed about change of address either to the bank or to the insurance company. All the policies were sent to the bank because the insurance company was getting proposal form from the bank. There was no relationship of principal and agent between the insurance company and the bank as there was no such agreement signed between the insurance company and the bank. There was only a tie up which only meant that the insurance company was insuring property against the loans sanctioned by the bank. The complainant was free to have taken the insurance of his stocks from any other insurance company.
10. The learned counsel for the insurance company emphasized that the terms of the policy are to be construed as they are and they are not to be interpreted differently. Nothing can be presumed while interpreting the policy contract. Learned counsel for the insurance company relied upon the judgment in Suraj Mal Ram Niwas Oil Mills Private Limited Vs. United India Insurance Company Ltd. and another, (2010) 10 Supreme Court Cases 567, wherein it has been observed as under:
"23. Similarly, in Harchand Rai Chandan Lal's case (supra), this Court held that:
The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended."
11. Learned counsel for the appellant bank/OP-3 stated that the loan documents clearly mention the address as A-89, Sunder Nagar, Ajmer Road, Jaipur and no document was ever given to the bank for either change of address or relating to Plot No.215 prior to the date of fire. The bank in its written statement has clearly stated that the bank did not have any knowledge about Plot No.215. The learned counsel stated that the State Commission has observed that the bank officials have visited and verified the stocks of the complainant every month which were kept at Plot No.215 and therefore, it was the duty of the bank to get the address changed in the policy. Learned counsel submitted that the complainant was supposed to present the stock statement every month, however, no stock statement has been presented to the bank stating the stock kept at Plot No.215. As the plots are not easily recognizable and identifiable and plot numbers are not clear on the ground, even if bank officials inspected the stock, they were not sure where the stocks are kept. They were under the impression that the stock is lying on the address given in the loan agreement. It was the duty of the complainant to inform about change in address or to have submitted stock statement clearly mentioning the placement of stock. It is true that the bank had recommended the insurance company on 20.8.2007 that the stock burnt in fire which broke out on Plot No.215 was the stock of the complainant, however, the following is also mentioned in the same letter:
"As per our records, the unit is situated at A-89 whereas the borrower was keeping their stocks at Plot No.215 where our officials have verified the stock from time to time but no identification no. are marked on plots, which caused confusion. we have been verifying the stocks time to time where it was damaged due to the fire. We confirm that the stocks were lying at the place of fire and belonged to M/s Jai Shree Industries were physically verified."
12. From the above letter also, it is clear that until the complainant informed about the change of address, there was no occasion for the bank officials to find out that the stocks being inspected by them were lying at Plot No.215. It was further pointed out that the State Commission has mentioned that the bank officials inspected six times between 10.4.2006 to 22.9.2006 but the fact is that all these dates are after the policy was already issued and moreover as the Plot nos. were not clearly identifiable, the bank officials did not know the location of the stock whether it was at Plot No.215. Thus, there was no question of sending any intimation to the insurance company regarding change of address.
13. Learned counsel for the bank further argued that the bank is not in the insurance business and is not an insurer, therefore, even if the insurance claim has been repudiated by the insurance company, no liability regarding insurance claim lies on the bank. Accordingly, no deficiency to indemnify loss can be attributed to the bank. The basic responsibility as per loan agreement lies on complainant to insure the stocks on which credit has been given. However, in the interest of recovery of loan, the bank has taken this policy so that if there is any loss, the complainant should not suffer and the bank should also be in a position to recover the loan. This cannot mean that the bank has insured the stocks. The insurance claim has to be dealt under the conditions of the insurance policy issued by the insurance company.
14. It was further argued by the learned counsel for the bank that so far as the bank is concerned, the complainant is not a consumer qua the bank. The cash credit facility has been taken for commercial purpose and therefore, the complaint is not maintainable against the bank. So far as the insurance company is concerned, the claim of insurance by the complainant is maintainable before a consumer forum. However, no claim is maintainable against the bank before the consumer forum as the complainant has obtained the services of the bank for commercial purpose. Nowhere in the complaint, the complainant has pleaded that he is a consumer as he is not engaged in this business for earning his livelihood through self-employment. In fact, the complainant has a turn over of roughly 5 crores, meaning thereby, he is running a business of large scale. To substantiate his assertion, the learned counsel referred to the profit and loss account of the complainant for the year ending 31st March, 2006 wherein the profit of Rs.24,04,380/- has been shown. To support his arguments, the learned counsel relied upon the judgement of this Commission in Kishore Kumar Kochar Vs. State Bank of Bikaner & Jaipur, Consumer Case No.98 of 2005 decided on 15.9.2015, wherein it has been held as under:
"For the following reasons, we are unable to locate substance in these arguments. The term 'discounting facility' clearly means that the loan was to be obtained by the complainant. This is an admitted fact that no application for loan was ever moved. However, it stands established beyond reasonable doubt that we are dealing with a commercial transaction. The complainant himself admits in his complaint that he is engaged in the business of international trade of food-grains, etc. As per new definition of the word 'consumer', the complainant is not a 'consumer', as such."
15. Learned counsel for the Bank has further relied upon the judgement of this Commission in Ajay Kumar Singh Vs. Canara Bank, decided on 18.8.2015, wherein it has been held as under:
"7. I have carefully perused the record. I do not find merit in the contention of the petitioner. At the outset it may be mentioned that admittedly the complainant had opened an account with cash credit facility with the opposite party bank in respect of his trading business. Thus, the services of the bank availed by the complainant are in relation to a commercial purpose."
16. It was further argued by the learned counsel that the State Commission has not given any clear findings that the bank was deficient on any account but has fastened liability jointly and severally alongwith the insurance company. The bank has not sanctioned any facility for Plot No.215 and therefore, bank is not concerned about any activity on Plot No.215.
17. Learned counsel for the bank further stated that the loan sanction letter mentions the address as "A-89, Sunder Nagar, Ajmer Road, Jaipur". The bank never received any communication from complainant informing that they have changed their business location from "A-89, Sunder Nagar, Ajmer Road, Jaipur" to Plot no. 215, Sunder Nagar, Ajmer Road, Jaipur". No request was ever made by the complainant for change of address in the loan documents. In fact, the bank was acting as an agent of the complainant for getting the insurance on behalf of the complainant from the insurance company. Thus, it is totally wrong to allege that bank was working as an agent of the insurance company.
18. On the other hand, learned counsel for the complainant stated that there was tie-up between the bank and the insurance company and therefore, the bank is an agent of the insurance company. In the policy issued, there is a code number that is mentioned and that is the code number of the bank as an agent. The office address of the complainant is "A-89, Sunder Nagar, Ajmer Road, Jaipur" but the business is being conducted from Plot No.215 Sunder Nagar, Ajmer Road, Jaipur. Even this fact has been recorded by the surveyor in its report. The surveyor has clearly stated that since beginning the complainant is doing business from Plot No. 215. It was further argued by learned counsel that even in the Joint Note dated 20.7.2007, wherein the officers of the insurance company and the bank participated, the following has been observed:
"We have observed that there is a bona fide mistake occurred at the time of taking insurance cover by the bank and the insured was not aware of the contents and address mentioned in the policies. The denial of liability only on this ground can affect our Tie-up relationship with SBBJ, Jaipur from where we are getting very handsome premium of more than Rs.30 crores per annum."
19. The above observation in the meeting where both parties were present clearly reveals that mistake was on the part of the bank and the insurance company was inclined to indemnify the loss. The bank was debiting premium amount from the loan account of the complainant and no copy of the policy was ever supplied to the complainant and the same was even never shared with the complainant. The learned counsel for the complainant stated that the bank has admitted the following in its reply to the questionnaire raised by the insurance company :
"Reply to this question is that no such understanding was arrived at with complainant and the Bank. The policies used to be received by us from your company. Your company never sent policies to the complainant firm. No occasion arose to give either original or copy to the complainant firm prior to the damages caused by fire.
20. After the meeting of bank officials and the officers of the insurance company, the claim was recommended on non-standard basis to the tune of Rs.23,77,292/- by the Chief Regional Manager of the insurance company and the file was sent to the head office on 16.11.2007. However, the claim was repudiated from the head office on the ground that the location of risk is not the same as mentioned in the policy. The report of the joint committee was not accepted by the head office of the insurance company, whereas the officers of the insurance company and bank had accepted their mistake and recommend for payment of the insurance claim. One thing is clear that the liability has not been denied at least till the level of the Chief Regional Manager.
21. As stated earlier that there is a relationship of principal and agent between the insurance company and the bank, therefore, both are liable for compensating the loss. In this regard, the learned counsel pointed out towards the reply submitted by the bank in respect of the interrogatories wherein the following has been stated:
"Yes, State bank of Bikaner and Jaipur had a banc assurance tie up with the National Insurance Company under which Bank gets its clients insured availing CC limit from the Bank. Hence Bank also got stock of Jai Shree Industries insured whose proposal forms were prepared by Bank."
22. In support of the above arguments, learned counsel has relied upon the judgment of the Hon'ble Supreme Court in Delhi Electric Supply Undertaking Vs. Basanti Devi and another, AIR 2000 SC 43, wherein it has been observed as under:
"11. In the present case, we are not concerned with the insurance agent. It is not the case of the Life Insurance Corporation that the DESU could be permitted as an insurance agent within the meaning of the Insurance Act and the regulations. The DESU is not procuring or soliciting any business for the Life Insurance Corporation. The DESU is certainly not an insurance agent within the meaning of the aforesaid Insurance Act and the regulations but the DESU is certainly an agent as defined in section 182 of the Contract Act. The mode of collection of premium has been indicated in the scheme itself and employer has been assigned the role of collecting premium and remitting the same to the Life Insurance Corporation. As far as the employee as such is concerned, the employer will be agent of the Life Insurance Corporation. It is a matter of common knowledge that insurance companies employ agents. When there is no insurance agent as defined in the regulations and the Insurance Act, the general principles of the law of agency as contained in the Contract Act are to be applied.
12. Agent in section 182 means a person employed to do any act for another, or to represent another in dealings with third persons and the person for whom such act is done, or who, is so represented, is called the principal. Under section 185, no consideration is necessary to create an agency. As far as Bhim Singh is concerned, there was no obligation cast on him to pay the premium direct to the Life Insurance Corporation. Under the agreement between the Life Insurance Corporation and the DESU, premium was payable to the DESU who was to deduct it every month from the salary of Bhim Singh and to transmit the same to the Life Insurance Corporation. The DESU had, therefore, implied authority to collect premium from Bhim Singh on behalf of the Life Insurance Corporation. There was, thus, valid payment of premium by Bhim Singh. The authority of the DESU to collect premium on behalf of the Life Insurance Corporation is implied. In any case, the DESU had ostensible authority to collect premium from Bhim Singh on behalf of the Life Insurance Corporation. So far as Bhim Singh is concerned the DESU was the agent of the Life Insurance Corporation to collect premium on its behalf.
23. Learned counsel for the complainant has further relied upon the judgement of this Commission in Central Bank of India and another Vs. Smt. Heera Soni and others, decided on 4.11.2004, wherein it has been held as under:
"14. The Hon'ble Supreme Court further observed that the authority of DESU to collect premium on behalf of LIC was implied. In any case, DESU had ostensible authority to collect premium and so far the employee was concerned, DESU was an agent of LIC to collect premium on its behalf.
15. Accordingly, we hold that Central Bank of India was acting as an Agent having implied authority of the LIC of collecting the insurance premium from the employees. The moment the amount was deducted from the salary of employees by the Central Bank it would be deemed to have been paid to the Life Insurance Corporation. Failure on the part of the agent having an implied authority to receive premium on receipt by deduction from the salary coupled with failure to deposit the same with LIC could not lead to lapse of the policy by any stretch of imagination."
24. The learned counsel for the complainant further stated that the bank has admitted that their officers were inspecting the stocks at Plot No.215 as would be clear from the following reply of the bank given in respect of the questionnaire :
"We replied you on 20-08-2007 in clear terms of above query that, "The unit is located in Sunder Nagar, Ajmer Road, Jaipur and plot had been allotted by a society. As per our records, the unit is situated at A-89 whereas the borrower was keeping their stocks at Plot No.215 where our officials have verified the stock from time to time but no identification number are marked on plots, which caused confusion. We have been verifying the stocks time to time where at it was damaged due to the fire. We confirm that the stocks were lying at the place of fire and belonged to M/s. Jai Industries were physically verified. Since sanction of limit, the same address is mentioned. We, as a banker can assure you again that the unit had actually suffered loss and the proprietrix is of high integrity. As far as the number of plot is concerned, we may state that the number advised by the surveyor may be correct but we have been visiting the same sight for inspection, as there has been no marking of plot numbers being a scatterly populated colony.
Above both referred letters are there on the record. Further all stocks of the firm concerned wherever lying including in transit were under insurance with your insurance company."
25. Learned counsel further stated that in the proposal form, though the location of risk is mentioned as "A-89, Sunder Nagar, Ajmer Road, Jaipur", however, in the same proposal form, the following is also mentioned:
DETAILS ABOUT BUSINESS COVERED AT THE INSIURED LOCATION:
The insured property is Please Tick Yes/No Residence, Office, Shops Hotels etc.
-
Industrial/Manufacturing risks Mfg. of wooden furniture Storages outside industrial risks Yes
26. It was argued that as per this entry in the proposal form, the stocks kept at Plot No.215 were also covered. The learned counsel further mentioned that bank in its letter dated 19.4.2007 has clearly stated that the monthly inspection was done by the Deputy Manager and quarterly inspection was done by the Branch Manager at the expense of the firm. The learned counsel wanted to infer that the complainant firm was paying for the inspection of the bank officers and they were frequently inspecting the stocks, however, they obtained the policy on a wrong address. The Branch Manager in its reply to questionnaire by the insurance company has stated the following:
"Yes, initially when the agreement was executed on 2.3.2000 the place of business was A-89, Sunder Nagar, Ajmer Road, Jaipur . Subsequently the business of firm had shifted to Plot No.215, Sunder Nagar, Ajmer Road, Jaipur. M.s, Vaibhav Crafts Pvt. Ltd. started their business at A-89, Sunder Nagar, Ajmer Road, Jaipur which is also insured with your company through us. However, as the surveyor observed the correspondence address of complainant firm remained the same although the firm shifted to and carried on business from plot no.214, since year 2001."
27. On the basis of the above admissions by the branch manager of bank, it is clear that the business was shifted from "A-89, Sunder Nagar, Ajmer Road, Jaipur" to Plot No.215, Sunder Nagar, Ajmer Road, Jaipur in the year 2001.
28. It was strongly argued by the learned counsel for the complainant that the negligence on the part of the opposite parties is to be compensated properly. In this regard, learned counsel for the complainant relied upon the decision in Rajkot Municipal Corporation Vs. Manjulben Jayantilal Nakum and others, (1997) 9 SCC 552, wherein it has been observed :
"15. Negligence would include both acts and omissions involving unreasonable risk of having done harm to another. The breach of duty must cause damage. How much of the damage to be compensated by the defendant should be attributed to his willful conduct and how much to his willful negligence or careless conduct or remissness in performance of duty, are all relevant facts to be considered in a given act or omission in adjudging duty of care. The element of carelessness or the breach of duty and whether that duty is towards plaintiff or class of persons to which the plaintiff belongs are important components in tort of negligence/ Negligence would, therefore, mean careless conduct in commission or omission of an act, whereby another to whom the plaintiff owed duty of care has suffered damage."
29. I have carefully considered the arguments advanced by the learned counsel for the parties and have examined the material on record. In the present case, the State Commission has found joint and several liability of both the OPs. Both OPs/appellants herein have filed separate Appeals No.601/2012 and 629/2012. So far as the liability of the insurance company is concerned, the insurance company has repudiated the claim on the ground that the risk location mentioned in the policy is not the same where the accident of fire took place. In my opinion, this is a sufficient reason for repudiation of the claim as this Commission has already taken similar view in National Insurance Company Ltd. vs. Vinod Puri and another(supra). Otherwise also, the conditions and terms of insurance are to be interpreted exactly in the manner they are described in the policy and in all the policies, the address of risk location is given as A-89, Sunder nagar, Ajmer Road, Jaipur. The ruling of the Hon'ble Supreme Court given in Suraj Mal Ram Niwas Oil Mills Private Limited Vs. United India Insurance Company Ltd. and another (supra) are important in this regard. Similarly Hon'ble Supreme Court in the following matters has already taken similar view that conditions and terms of the insurance policy cannot be interpreted differently by the courts as against the manner in which they are actually entered into the contract of policy by the parties:
(a) In General Assurance Society Ltd. Vs.Chandmull Jain, [1966 ] 3 SCR 500, it was held as under:-
17." ...In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves."
(b) in Oriental Insurance Co. Ltd. Vs. Sony Cherian II(1999) CPJ 13 (SC ), it has been observed as follows:-
"16. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein."
30. The facts of interim recommendations by a committee of officers of the insurance company and the bank and even forwarding of those recommendations by the Chief Regional Manager to the Head Office do not make the situation different if the insurance company has repudiated the claim after getting orders form the Head Office. I agree with the contention of the learned counsel for the insurance company that there is a hierarchy in administration of the insurance company and final orders of the highest authority shall only be valid.
31. Coming to the arguments of the learned counsel for the appellant bank that the complainant is not a consumer qua the bank, it is observed that Section 2(o) of the Consumer Protection Act, 1986 includes the services of bank and in the light of the judgement of this Commission in M/s. Harsolia Motors Vs. M/s. National Insurance Company Ltd. [F.A. No.159 of 2004 and others, decided on 3.12.2004] , it is clear that services of the bank will be covered under Section 2(o) of the Consumer Protection Act, 1986. Therefore, Complainant would be deemed to be a consumer even though the complainant has obtained the credit facility from the bank.
32. It is also seen that the State Commission has awarded a compensation of Rs.36,89,345/- whereas the surveyor had assessed the loss to the tune of Rs.31,69,722/- only. Moreover, the State Commission has given weightage to the report of the committee of officers of the insurance company and the bank which recommended for settling the claim on non-standard basis for Rs.23,77,292/- but the State Commission has awarded compensation of Rs.36,89,345/- for which there was no justification.
33. Now coming to the deficiency on the part of the bank, it is clear that bank was taking the policy on behalf of the complainant and was even filing the proposal form before the insurance company without getting the signature of the complainant, though the amount of premium was being debited to the loan account of the complainant. Even after receiving the policy document from the insurance company, the same was not shared with the complainant, neither copy of the same was sent to the complainant. The complainant also never tried to get copy of the insurance policy from the bank and in all the papers available with the bank, the address is mentioned A-89, Sunder Nagar, Ajmer Road, Jaipur. At no point of time the complainant submitted an application for change of address from A-89, Sunder Nagar, Ajmer Road, Jaipur. to Plot No.215, Sunder Nagar, Ajmer Road, Jaipur. It is true that the bank officials inspected the stock kept at Plot No.215, Sunder Nagar, Ajmer Road, Jaipur. It has been argued that the plots were not clearly identifiable and therefore, there was no question of believing that the stocks were not kept at the risk location. The complainant also never submitted any statement of stocks to the bank mentioning that the stocks are kept at Plot No. 215, Sunder Nagar, Ajmer Road, Jaipur. Thus, there was no occasion for the bank to believe that the stocks were not kept at the risk location and were kept at some other place. The Branch Manager in reply to an interrogatory of the insurance company has admitted that originally when the agreement was executed, the business of the complainant was being run from A-89, Sunder Nagar, Ajmer Road, Jaipur. whereas it was shifted to Plot No.215, Sunder Nagar, Ajmer Road, Jaipur in the year 2001. Obviously, the original stand of the bank was to support the complainant so that he gets the claim and bank ensures its repayment of loan by this process and that is why, the bank had written letter dated 20.7.2007 to the insurance company supporting the claim of the complainant. Even if one takes this admission at its face value, though there was no record with the bank on the basis of which the branch manager would have stated this, but even then the admission could not have been used to make changes in the proposal form without any written request or any written proof submitted by the complainant. Thus, it cannot be said beyond doubt that the bank officials knew about the change of risk location but did not purposely or knowingly intimate the same to the insurance company. The deficiency of the bank lies mainly in obtaining the policy without informing the complainant or even without getting any signatures of the complainant on the proposal form as well as in not sharing the policy and its details with the complainant even after getting the policy document from the insurance company. The complainant had every right to know the details of the policies that were taken by the bank to secure the hypothecated stocks.
34. From the above examination, it is clear that the bank was deficient in the aspect of obtaining the policy and not sharing the policy with the complainant though some sort of contributory negligence is also attributable to the complainant as he never tried to get the policy document or the details of the policy from the bank or from the insurance company. Keeping these two aspects in mind, I am of the view that in any case the bank cannot be burdened with the whole policy amount or amount as assessed by the surveyor. However, the bank is definitely responsible to compensate the complainant for the deficiency as observed above. Accordingly, in my view, in the facts and circumstances of the present case, an amount of Rs.8 lakhs would be reasonable compensation to the complainant to be paid by the bank.
35. Based on the above discussion, First Appeal No. 629 of 2012 filed by the insurance company is allowed and the order of the State Commission is set aside qua the insurance company. So far as First Appeal No.601 of 2012 filed by the bank is concerned, this appeal is partly allowed and appellant bank is directed to pay a compensation of Rs.8,00,000/- (Rupees Eight Lakhs) to the complainant alongwith interest @ 8% p.a. from the date of order of the State Commission i.e. 27.8.2012 till actual payment. It is made clear that if any repayment amount of loan is due against the complainant , this amount shall be adjusted towards recovery of that amount. If the amount is adjusted then the bank shall give a letter to this effect to the complainant within a period of 45 days from the date of this order. If only part amount is to be adjusted, the remaining amount shall be paid to the complainant within a period of 45 days from the date of this order. The order of the State Commission dated 27.8.2012 stands modified accordingly.
...................... PREM NARAIN PRESIDING MEMBER