State Consumer Disputes Redressal Commission
United India Insurance Co. Ltd. vs M/S Vijay Concerns, & Anr. on 19 January, 2012
CHHATTISGARH STATE
CONSUMER DISPUTES REDRESSAL COMMISSION,
PANDRI, RAIPUR (C.G)
(A/11/2422)
Appeal No.141/2011
Instituted on : 03/03/2011
M/s Vijay Concerns,
70, Shakti Nagar, Rajnandgaon,
Through : Proprietor - Sheetal Sahu,
R/o : Shakti Nagar,
Rajnandgaon (C.G.) ... Appellant
Vs.
1. State Bank of India,
Through : Branch Manager,
Branch : Gaushala Para,
Rajnandgaon (C.G.)
2. United India Insurance Company Limited,
Through : Branch Manager,
Kamthi Line, Patel Complex,
Rajnandgaon (C.G.) ... Respondents
(A/11/2440)
Appeal No.159/2011
Instituted on : 05/03/2011
United India Insurance Company Limited,
Through : Branch Manager,
Kamthi Line, Rajnandgaon (C.G.)
Through : Divisional Manager,
Divisional Office, Bhilai (C.G.) .... Appellant.
Vs.
1. M/s Vijay Concerns,
Through : Proprietor - Shri Sheetal Sahu,
Address : 70, Shakti Nagar, Rajnandgaon,
Post & District Rajnandgaon (C.G.)
2. State Bank of India,
Through : Branch Manager,
Branch : Gaushala Para, Rajnandgaon,
Rajnandgaon (C.G.) ... Respondents
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COUNSEL FOR THE PARTIES IN BOTH APPEALS :
Shri R.K. Bhawnani, for Complainant/ M/s Vijay Concerns.
Shri N.K. Shrivastava for O.P.No.1/State Bank of India, Rajnandgaon.
Shri P.K. Paul, for O.P.No.2/United India Insurance Co. Ltd.
PRESENT :
HON'BLE SHRI JUSTICE S.C. VYAS, PRESIDENT
HON'BLE SHRI V.K. PATIL, MEMBER
ORDER
DATED : 19/01/2012 PER :- HON'BLE SHRI V.K. PATIL, MEMBER This order will govern disposal of Appeal Nos.141/2011 & 159/2011, which have been filed respectively by the complainant as well as Insurance Company/O.P.No.2 having been aggrieved by the same order dated 10.02.2011 of District Consumer Disputes Redressal Forum, Rajnandgaon (C.G.) (hereinafter referred for short as "District forum") in Complaint Case No.56/2010, whereby the complaint was partly allowed. The complainant has filed appeal for enhancement of the awarded amount, whereas the Insurance Company, which was O.P.No.2 before the District Forum, has filed appeal for setting aside the impugned order. For convenience parties will be referred hereinafter as complainant and OPs as per their nomenclature before the District Forum. Original of this order will be retained in the file of Appeal No.141/2011 and its copy be placed in the file of Appeal No.159/2011.
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2. Briefly stated, facts of the case, as averred in the complaint are that the complainant, being a contractor by profession, had initially availed Cash Credit Limit of Rs.3,00,000/- from O.P.No.1 bank in the year 2004, which was subsequently raised to Rs.9,00,000/- and with its help he pursued his profession. Complainant further averred that O.P.No.1 had insured his property for Rs.3,00,000/- with O.P.No.2 Insurance Company as security of the loan amount, for which premium amount Rs.2,016/- was recovered by O.P.No.1 from his account and on enhancement of the Cash Credit Limit to Rs.9,00,000/-, Rs.5,663/- was paid to O.P.No.2 Insurance Company and in this way premiums had been regularly paid. Complainant further averred that a bridge, which was under the process of construction and in the course of a contract allotted to him by Government of Chhattisgarh at Village 'Ghiri' under Rajnandgaon District, got washed away out of flood water due to heavy rains, intimation of which was given to O.P.No.2 Insurance Company and necessary formalities were complied. Surveyor Mr.K.C. Mahapatra had assessed the net loss for Rs.3,73,942/-, but, O.P.No.2 did not pay the claim amount rather intimated him through its letter dated 04.03.2010 that cover of risk was under 'Shopkeeper Insurance Policy' as such it was not liable for the loss caused to the bridge undergoing construction. O.P.No.2 also mentioned in the aforesaid letter that the building material in connection with his profession pertained to the shop situated at // 4 // Shaktinagar. Complainant further averred that O.P.No.1 bank had initially got the proposal form signed for insurance suiting to its requirement and O.P.No.1 had only been paying the premium to O.P.No.2 Insurance Company, after deducting the amount from its account and used to keep the insurance policy in bank's possession. Complainant further averred that while making application with O.P.No.1 for 'Cash Credit Limit' it was informed that the credit facility was meant for augmenting fund for his contract work and not for running a shop. Complainant further averred that O.P.No.1 bank had initially taken insurance for the year 2004-2005 from O.P.No.2 Insurance company having filled in the proposal form towards Shopkeeper Insurance Policy and thereafter it had been regularly renewing the insurance increasing the sum assured as per raised limit of credit facility. Complainant further averred that complete said work was being done by O.P.No.1 & O.P.No.2 and no information to that effect was given to him, also no policy document was provided by O.P.No.2 to him. Complainant alleged deficiency in service on the part of O.P.No.1 bank by filling in form for 'Shopkeepers Insurance policy in stead of 'Contract Policy' for which Cash Credit Limit was availed. Complainant also alleged deficiency in service on the part of O.P.No.2 since it had repudiated his claim despite the loss assessed by its surveyor as such both O.P.No.1 & O.P.No.2 had committed deficiency in service. Complainant prayed before the District Forum seeking // 5 // compensation Rs.5,16,451/- towards loss caused to him on account of contract of bridge construction undertaken by him and Rs.25,000/- towards mental agony, interest @ 18%p.a. on entire amount with cost of Rs.10,000/-.
3. O.P.No.1 defending the allegations averred that the insurance was done at the direction of the complainant as security towards 'Cash Credit Limit' granted to him for which premium was deducted from his A/C and this fact was well within his knowledge. O.P.No.1 further averred that the complainant was initially sanctioned Cash Credit Limit of Rs.3,00,000/- for which insurance was taken but O.P.No.2 wrongly issued 'Shopkeepers Policy' a copy of which was provided to the complainant also. O.P.No.1 further averred that agents of O.P.No.2 insurance company visit the O.P.No.1 bank for the purpose of procuring insurance business and after due inspection and due assessment of the value of stock, policy is issued so obviously O.P.No.2 must have issued the policy after due inspection and valuation of stock as such it was liable to compensate the loss. O.P.No.1 denied deficiency in service on its part and prayed for dismissal of the complainant against it.
4. O.P.No.2 in its written version while denying the allegations of the complainant averred that O.P.No.1 bank had initially submitted a proposal for 'Shopkeepers Policy' in the name of the complainant M/s // 6 // Vijay Concerns' along with premium so policy was accordingly issued and thereafter every year it was renewed. O.P.No.2 averred that O.P.No.1 bank never raised any objection about said policy. O.P.No.2 further averred that on getting claim from the complainant, a Surveyor Mr. K.C. Mahapatra, was entrusted to assess loss caused to the damaged bridge and his report clearly mentioned that the policy issued was a 'Shopkeepers Policy' and it did not relate to the said damaged bridge. O.P.No.2 further averred that it had intimated the complainant on 4.03.2010 that the policy issued was a 'Shopkeepers policy' so it was not liable to compensate loss caused to the bridge following flood as such it had not committed any deficiency in service by repudiating claim of the complainant thus prayed for dismissal of the complainant against it.
5. Learned District Forum having perused the documents produced before it and heard arguments of parties passed the impugned order directing O.P.No.2 Insurance Company to pay Rs.3,60,000/- inclusive of cost of proceedings, to be paid within a period of 1 month failing which it would pay interest @ 9%p.a.
6. We have perused the documents minutely available on record and heard arguments advanced by parties.
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7. It is not in dispute that the complainant is a contractor by profession and had availed 'Cash Credit Limit' from O.P.No.1 bank for which insurance policy was purchased by it from O.P.No.2 Insurance Company as security and every year the policy was being renewed after deduction of the premium amount through the bank account of the complainant.
8. The question to be decided is whether O.P.No.1 & O.P.No.2 had committed deficiency in service and whether the complainant was entitled to get his claim ?
9. Admittedly the complainant had got 'Cash Credit limit' from O.P.No.1 bank and as per document of 'Agreement for Cash Credit' (at page Nos.106 to 113) in clause no.5 it is provided "that the said goods shall be kept at the Borrower's risk and expense in good condition and fully insured against loss or damage as may be required by the Bank" In terms of said provision the complainant being the borrower had obligation to keep the goods duly insured at his risk & expense and there was no provision that O.P.No.1 bank had obligation to insure his goods. Further clause no.8 of the aforesaid agreement also provides that;
"that the Borrower will submit to the Bank monthly or offener as may be required stock statements with list of current insurance policies and amounts attached verified by certificates of Borrower(s) or the Manager for the time being that the quantities and amounts stated are correct and that all stocks are fully covered by insurance and will also furnish // 8 // and verify all statements reports returns certificates and information and will also execute all documents and do all acts and things which the Bank may require to give effect hereto and the Borrower authorises the Bank and each of its Agents and Nominees as Attorney for and in the name of the Borrowers to do whatever the Borrower may be required to do hereunder."
10. Aforesaid provisions of the agreement also indicate that the complainant was required to submit periodical statements of stock and also list of current insurance to the effect that all stocks are fully insured. The complainant was therefore required to ensure that all his stock of materials were insured and thus he could not take a plea that it was O.P.No.1 bank which had been doing insurance on its behalf. If O.P.No.1 bank had initiated any action about insurance on its behalf by deduction of premium amount from its a/c, then it was simply to safeguard bank's interest and to facilitate its customer i.e. the complainant. Further as per the proposal form (document at page No.120) insurance in the name of the complainant was initiated for the first time on 24.11.2004 under "Shopkeepers Insurance Policy" wherein the sum assured was Rs.3,00,000/-, which covered risk of Furnitures,Fixtures,Fittings and stock in trade. From the documents on record the address of Business/Trade was mentioned as 'Shakti Nagar RJN' and thereafter reportedly the policy was renewed every year. Another policy available on record was for period 25.11.2008 to 24.11.2009 in favour of the complainant (document at page Nos.36 to 41 & also page nos.121 to 126) also mentions the address as "Shakti // 9 // Nagar, RJN District Rajnandgaon, Chhattisgarh. For the aforementioned entire period, in respect of insurance policies i.e. 2004 to 2008, the complainant never intimated either to the O.P.No.1 bank or to the O.P.No.2 Insurance Company about his intention to cover risk of material at its sites of construction with due address and had also not lodged any complaint about the aforesaid policies with both the OPs. O.P.No.1 Bank had rendered the services of providing Cash Credit loan facility to the complaint and also facilitated the complainant for insurance purpose to safeguard its own interest then it had not committed any deficiency in service.
11. O.P.No.2 Insurance Company had issued the insurance policy right from the year 2004 in favour of the complainant, on the basis of proposal form submitted with it and no intimation about change of the insured's site was ever given to it as such the insurance company was liable to cover risk of property as per address mentioned in the questioned policy only. Complainant incurred loss of material at a site, the address of which was not that what was mentioned in the questioned policy. The Surveyor Mr.K.C.Mahapatra on last page of his report in the 'Remarks' column mentioned (document at page no.60) mentioned that :-
"The assessment made above is as EAR policy because SKI policy cannot be issued to a bridge under construction." He further mentioned that it was the discretion of the insurer whether to accept liability."
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12. The questioned insurance policy appears to have been taken to cover the risk in respect of property mentioned therein just to fulfill the requirement of bank to cover loan credit facility only otherwise the complainant could have gone for insurance of his other sites as well which he failed to do so. The aforementioned remark of the surveyor about the discretion of O.P.No.2 so as to accept liability or not, can not be a ground to justify claim of the complainant.
13. Learned counsel for O.P.No.2 relied upon the decision of Hon'ble Supreme Court in the case of DEOKAR EXPORTS PVT. LTD. VS. NEW INDIA ASSURANCE COMPANY LTD., I (2009) CPJ 6 (SC). In para 12 of the reported case, it has been held that "The contention of the learned Counsel for the appellant that an equitable view must be taken is untenable. In a contract of insurance, rights and obligations are strictly governed by the policy of insurance. No exception or relaxation can be made on the ground of equity." Learned counsel for O.P.No.2 further relied upon the judgment of Hon'ble Supreme Court in the case of United India Insurance Co. Ltd., Vs. M/s. Harchand Rai Chandan Lal, 2005 (1) CPR 64 (SC), where under facts though were different but the underlying principle therein "the terms of the policy have to be construed as it is and we cannot add or subtract something." is applicable also in the instant case.
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14. In view of the aforesaid, we are of the considered opinion that O.P.No.2, as well as O.P.No.1, can not be held liable for paying compensation on account of loss suffered by the complainant at the site of bridge construction. which was other than the site mentioned in the questioned policy i.e. Shakti Nagar, RJN DIST; Rajnandgaon, Chhatisgarh.
15. Under the foregoing discussion and facts of the case, we are of considered opinion that both O.P.No.1 & O.P.No.2, had not committed any deficiency in service, as such the appeal of Insurance Company is allowed and the impugned order of learned District Forum, is set aside. The appeal as well as complaint of the complainant being devoid of any merits, is dismissed. No order as to cost of both these appeals.
(Justice S.C. Vyas) (V.K. Patil)
President Member
/01/2012 /01/2012