State Consumer Disputes Redressal Commission
M/S. R.R.K. Enterprise vs Axis Bank Ltd. & Another on 11 May, 2026
STATE CONSUMER DISPUTES REDRESSAL COMMISSION
WEST BENGAL
CONSUMER COMPLAINT NO. SC/19/CC/1018/2019
M/s. R.R.K. Enterprise
PRESENT ADDRESS - Rep. by Sk. Rabiyal Ali, Vill. Ramchandrapur(Palpara), Anulia, Amta,
Howrah -711 401.,WEST BENGAL.
.......Complainant(s)
Versus
Axis Bank Ltd. & Another
PRESENT ADDRESS - Bagnan Br., rep. by Br. Manager, O.T. Road, Bagnan, Howrah -711
303.,WEST BENGAL.
Tata AIG Insurance Co. Ltd.
PRESENT ADDRESS - 2nd Floor, Constantia Building, 11, Dr. U.N. Brahmachari Road, Kolkata -
700 017.,WEST BENGAL.
.......Opposite Party(s)
BEFORE:
HON'BLE MR. RAJES GUHA RAY , JUDICIAL MEMBER
HON'BLE MR. SANTANU SAHA , MEMBER
FOR THE COMPLAINANT:
M/s. R.R.K. Enterprise, Mr. Bappadytta Mali, Mr. Chiranjib Bhattacharyya (Advocate)
FOR THE OPPOSITE PARTY:
Axis Bank Ltd. & Another, Ms. Soni Ojha. (Advocate)
Tata AIG Insurance Co. Ltd., Mr. Debasish Nath. Ms. Debjani Banerjee. (Advocate)
DATED: 11/05/2026
ORDER
Hon'ble Mr. Santanu Saha, Member I. Genesis The present complaint under the Consumer Protection Act, 1986 has been instituted by the complainant, M/s R.R.K Enterprise, alleging deficiency in service, negligence and unfair conduct on the part of Opposite Party No.1, Axis Bank Ltd., and Opposite Party No.2, Tata AIG General Insurance Co. Ltd., arising out of repudiation of an insurance claim concerning a fire accident that destroyed the complainant's factory premises.
II. Facts in Brief Loan of Rs.50 lakh was sanctioned in favour of the Complainant by O.P No. 1 on 21.02.2019 against security of equitable mortgage of Complainant's property valued at Rs.84.15 lakh at Ramchandrapur, Anulia, Amta, Howrah-711401 by way of depositing Title Deeds of the aforesaid property with O.P No. 1 (duly acknowledged by the latter with note "Original with Axis Bank for Security Creation" on the photocopy of the mortgaged Title Deed.
As per banking requirement, the said mortgaged property was insured with O.P No. 2 against the risk of fire and other perils at the initiative of O.P No. 1 as Banker/ Financier and also as agent of Insurance Co. i.e. O.P No. 2 to protect the banker's loan. Accordingly necessary papers and form were filled up by the O.P No. 1 and premium of Rs.17,873.00 was debited to the account of the Complainant followed by issuance of Fire and Special Perils Insurance Policy No.2270 1769 0000 under Client ID No.6043 296479 by the O.P No. 2 in favour of the Complainant for Rs.84.15 lakh (under "Agreed Bank Clause" meaning thereby that in case of any claim, money will be paid to the bank only) for the period from 13.03.2019 to 12.03.2020.
On 28.03.2019, the said property/factory at Ramchandrapur, Anulia, Amta, Howrah was completely destroyed by a devastating fire immediately after which O.P No.1 lodged claim of Rs.56.87 lakh with O.P No. 2 through O.P No. 1. This lodge of claim was acknowledged by O.P No. 2 vide their e-mail dated 29.03.2019.
On 03.04.2019, O.P No. 2 informed the Complainant by e-mail that the personal residence of the Complainant at Khanakul, District-Hooghly was mentioned as "Location of Risk" in the Insurance Application Form instead of mortgaged property i.e. the factory/workshop at Ramchandrapur, Anulia, Amta, Howrah.
Finally, the claim of insurance was repudiated by O.P No. 2 on 27.9.2019 (informed by e-mail) due to error in "Risk Location".
Being aggrieved, the present CC No. 1018 of 2019 was filed by the Complainant.
III. Submissions on behalf of the Complainant
a) O.P No. 1 knew that the proprietor of the Complainant was 'an almost illiterate person' who can just somehow sign his name in Bengali but still never explained the contents of the Insurance Application Form prior to obtaining his signature in the Form. This constitutes gross negligence.
b) The issue of wrong "Risk Location" was never raised by or informed to the Complainant by O.P No. 1.
c) O.P No. 1 had made several visits to the factory before sanctioning loan and therefore was well aware of the 'Risk Location" but wrongly mentioned the residential address in the Insurance Application Form out of sheer carelessness which is gross negligence and constitutes deficiency in service both as banker and as agent to the insurance Company i.e. OP No. 2 because it was its responsibility as agent to provide correct inputs to the O.P No. 2 in its own interest to keep the loan secured.
d) O.P No. 2 stated in its written Notes of Argument that it "issues any insurance policy only according to instruction and data provided by O.P No. 1" and therefore the onus of providing wrong "Risk Location" falls squarely on O.P N o.1.
e) O.P No. 1 failed to inform the Complainant that due to erroneous entry regarding "risk location" the earlier insurance policy was invalid and hence new insurance policy needs to be procured.
f) After the incidence of fire, when the error of wrong "risk location" came to the surface from O.P 2's intimation to the Complainant, the latter made several requests to O.P No. 1 to rectify the mistake and was assured, falsely, by O.P No. 1 that the same would be rectified and O.P 2 would release the insurance claim. But all such assurances proved to be false and this ultimately resulted in wastage of precious time in seeking relief.
g) Such grave negligence on the part of O.P No. 1 in collusion with O.P No. 2 resulted in incurring huge loss of Rs.56.87 lakh which in turn caused enormous mental agony and harassment to its sole proprietor.
h) O.P No. 2 was also at fault and failed to verify the address of the "Risk Location"
before issuance of the policy which cannot be issued without physical site verification. This clearly indicates that O.P No.2 acted in collusion with O.P No.1 in issuing a policy which was void ab initio.
i) Contrary to the claim of O.P No. 2, the Complainant had no chance of intimating the former about any change or cancellation within the Freelook Period because the policy was issued on 19.03.2019 and received by the Complainant after the actual date of occurrence of fire.
j) Therefore, O.P Nos. 1 and 2 are jointly and severally liable to pay the Complainant
i) Rs.56.87 lakh against the insurance claim, ii) Rs.5.0 lakh as compensation for harassment, mental pain and agony caused due to such acts of negligence and iii) Rs.50000.00 as litigation cost apart from complying with such other instruction as may be directed by WB SCDRC.
IV. Submissions on behalf of O.P No.1
a) The loan of Rs.50.0 lakh was sanctioned to provide working capital for 12 months to the proprietor of the Complainant.
b) O.P No. 1, being the corporate agent of O.P No. 1, merely facilitated to enable the Complainant to get the insurance policy as a precondition to availing of the loan as per banking norms but is devoid of any authority to decide on any insurance claim or to govern the terms and conditions of the insurance policy.
c) The Complainant is not a consumer vis a vis O.P No. 1 as per CP Act, 1986 because he was availing of loan to get working capital and hence the entire transaction between him and the bank was commercial in nature and the case is not maintainable in the manner in which it has been framed.
d) As per Clause 13.12 of the loan agreement, parties go the agreement i.e. the Complainant and O.P No. 1 agreed to refer all disputes arising out of the loan agreement to the Arbitrator and in view of this binding arbitration clause, WB SCDR Commission is devoid of any jurisdiction to try or entertain the present complaint.
e) It is the responsibility of the Complainant to provide correct details for getting insurance coverage and it is prerogative of insurance company i.e. O.P No. 2 to disburse or reject any insurance claim on which bank has no control. Hence O.P No. 1 cannot be held responsible for rejection of the claim and no case lies against him.
V. Submissions on behalf of O.P No. 2a) The Complainant Company purchased a "My Business My Choice Package Policy", valid from 13.03.2019 to 12.03.2020 with Risk Location at Palaspai, Khanakul, District-hooghly-712416 with coverage of Fir and Special Perils which is a location specific policy. On 28.03.2019, the accident of fire occurred at Ramchandrapur, Anulia, Amta, Howrah and therefore, the claim had to be rejected as per terms and conditions of the insurance policy.
b) O.P No.1 is a separate entity in the eye of law, having separate management and MOU with O.P No. 2 for the purpose of business. O.P No. 2 "issues any insurance policy only according to instruction and data provided by O.P No. 1".
c) Wrong mention of the "Risk Location" notwithstanding, the Complainant could have informed the O.P No. 2 about the matter within the "Freelook Period" of fifteen days from receipt of policy contract with the direction to either cancel the policy or to make any rectification therein. Hence the complainant is also guilty of negligence and cannot shirk his responsibility of not being vigilant enough.
d) The estimate of loss of Rs.56.87 lakh assessed by the Complainant was not prepared by any Government approved valuer and therefore, IRDA licensed surveyor was engaged by O.P No.2 and as per Final Survey report of this surveyor, net estimated loss was assessed to be Rs.25,47,111.96. After adjusting policy excess of Rs.1,27,355.60, net amount payable by O.P No. 2 (in case the liability be admitted) stood at Rs.24,19.756.00 only.
e) However, due to wrong "Risk Location" disclosed by the Complainant, the surveyor recommended that "the claim arising out of the loss does not appear to be admissible on the part of the Insurer and may hence be repudiated and treated as 'No Claim'".
f) O.P No.2 has no legal liability to indemnify the insured because the alleged loss occurred at a place outside the Risk Location mentioned in the Insurance Policy.
g) In the repudiation letter of O.P No. 2 dated 09.01.2020, it was also mentioned that occupancy of the premises where accident occurred was Manufacturing of Mattress and Cover whereas occupancy mentioned in the policy was" Storage of hazardous Goods listed in category I in godown (closed)". This was a breach of policy condition no. 1 and as such was voidable due to "misrepresentation, misdescription and non- disclosure of any material particular"
h) O.P No. 2 is not guilty of any deficiency in service and the instant complaint has been lodged with mala fide intention.
VI. Points for Determination The following points arise for consideration:
1. Whether the complainant falls within the definition of consumer under the Act and whether the complaint is maintainable under the Consumer Protection Act, 1986.
2. Whether arbitration clause bars jurisdiction of this Commission.
3. Whether the complainant is bound by the contents of the signed proposal form.
4. Whether there was deficiency in service on the part of Opposite Party No.1
5. Whether there was deficiency in service on the part of Opposite Party No.2.
6. Whether repudiation of claim was justified.
7. To what relief, if any, is the complainant entitled.
VII. Discussion and Findings Point No.1 - Maintainability / Consumer Status The objection that the complainant availed loan for commercial purpose cannot be accepted in the facts presented.
In Laxmi Engineering Works v. P.S.G. Industrial Institute, the Hon'ble Supreme Court held that the expression 'commercial purpose' must be determined having regard to the dominant purpose and manner of use of the goods or services, and not merely by the value or magnitude of the transaction. The principles laid down in this case are relevant for determining whether a borrower availing financial assistance for commercial activity falls within the ambit of 'consumer'. The decisive test is whether the activity is undertaken exclusively for earning livelihood by means of self- employment, or whether it constitutes a profit-oriented commercial enterprise on a larger scale.
If the commercial use is by the purchaser himself for the purpose of earing his livelihood by means of self-employment, such purchaser of goods is yet a "consumer" as per Section 2 (1) (d) of the C.P Act, 1986. In the instant case, the Complainant has categorically declared that "the sole proprietor carries on a business in the name and style of M/s R. R. K Enterprise, exclusively for earning his livelihood by means of self-employment mainly with the help of his family members". No contrary evidence has been put forth by O.P No. 1 and therefore, the Complainant.
Further, insurance contracts and banking services are expressly recognized species of "service". The service hired from the bank was banking service including sanction of loan, custody of title deeds, and ancillary arrangement of insurance for secured asset.
Hence, the complaint is very much a consumer within the meaning of Section 2 (1)
(d) of the C.P Act, 1986 and the complaint is maintainable.
Point No.2 - Effect of Arbitration Clause The presence of an arbitration clause does not bar remedy under the Consumer Protection Act.
Section 3 of the Consumer Protection Act, 1986 makes it clear that the remedy available in that Act is in addition to and not in derogation of the provisions of any other law for the time being in force. This has also been reiterated in a plethora of Supreme Court Judgements.
In National Seeds Corporation Ltd. v. M. Madhusudhan Reddy, the Hon'ble Supreme Court held that the availability of arbitration does not bar proceedings under the Consumer Protection Act, since the remedy under the Act is additional in nature under Section 3 thereof. Arbitration was held to be an optional remedy available to the consumer and not an exclusive one.
In Skypak Courier Ltd. Vs. Tata Chemicals Ltd. (2000), the Apex Court observed that even if there exists an arbitration clause in an agreement and a complaint is made by the consumer, in relation to a certain deficiency of service, then the existence of an arbitration clause will not be a bar to the entertainment of the complaint by the Redressal Agency, constituted under the Consumer Protection Act since the remedy provided under the Act is in addition to the provisions of any other law for the time being in force.
Hence it is safe to infer that the protection provided under the C.P Act to consumers is in addition to the remedies available under any other statute. It does not extinguish the remedies under another statute but provides an additional or alternative remedy.
Accordingly, jurisdiction of this Commission is not ousted.
Point No.3 - On Sanctity of Proposal Form and Duty of Disclosure by the Complainant Submissions of the opposite parties in this regard cannot be brushed aside.
In Satwant Kaur Sandhu v. New India Assurance Co. Ltd. (2009), the Hon'ble Supreme Court held that insurance contracts are governed by the doctrine of uberrima fides, and suppression or non-disclosure of material facts by the insured may justify repudiation of the policy.
Likewise, in Reliance Life Insurance Co. Ltd. v. Rekhaben Nareshbhai Rathod, (2019), the Court reiterated that statements in proposal form are foundational to underwriting, and incorrect disclosure may justify denial of claim.
Further, In P.C. Chacko v. LIC of India (2008), the Hon'ble Supreme Court held that where a proposer signs and accepts the proposal form, he ordinarily cannot avoid the consequences of incorrect statements therein merely by contending that the form had been filled up by the insurance agent.
These authorities are binding and continue to hold the field.
This Commission therefore accepts, as a matter of law, that a proposer who signs a proposal form is ordinarily bound by its contents, and that wrong declaration of risk location is materially relevant in fire insurance.
But the important point to consider here is whether the present case is analogous to the citations referred to above and the answer is a resounding No. The cited decisions lay down general principles. However, law must be applied to facts, and the present case contains distinctive features.
(a) Insurance was not independently solicited by insured in ordinary retail fashion.
The policy here arose out of a loan transaction where insurance was procured to secure the bank's own exposure under an Agreed Bank Clause.
(b) The bank had prior and direct knowledge of true facts.
The bank itself:
• sanctioned loan against Howrah property, • accepted original title deeds of that property, • created mortgage over that property, • valued that property at Rs.84.15 lakh, • arranged insurance for identical value.
Thus, the bank knew beyond doubt that the relevant insurable asset was the Howrah premises. This Commission finds that Opposite Party No.1 cannot escape liability by describing itself as a mere facilitator.
(c) The wrong statement did not originate solely from private knowledge of insured.
Many cases of suppression concern facts known only to proposer (health history, prior policies, previous illness, etc.). Here, the correct location was equally and independently within the bank's own documentary knowledge.
In view of the observations above, this Commission holds that while sanctity of proposal forms cannot be diluted, it is also to be borne in mind that sanctity cuts both ways.
If a corporate agent or banker entrusted with filling proposals may negligently insert false particulars despite having authentic records, collect premium, issue policy, and later shirk its responsibility by passing on the buck to the insured merely because the insured happened to sign on the dotted lines, then the proposal form becomes an instrument of unilateral immunity rather than mutual good faith.
The doctrine of utmost good faith binds both sides. The insurer is entitled to truthful disclosure. Equally, the insured is entitled to fair and competent processing through the insurer's authorised distribution channel.
At the same time, the complainant cannot be treated as wholly blameless. A person signing insurance documents must exercise reasonable diligence and contributory responsibility has to be fixed on him. Total exoneration of insured would indeed undermine seriousness of proposal disclosures.
Accordingly, equity requires apportionment rather than complete victory to either side.
Point No. 4 - Deficiency in Service on the part of O.P No.1 This Commission answers firmly in the affirmative.
The bank cannot occupy inconsistent positions:
• It required insurance to protect its secured loan; • It debited premium from borrower's account;
• It facilitated issuance as corporate agent;
• It held documents showing actual risk location;
• Yet allowed issuance of policy on a different address.
Such conduct falls below the standard of reasonable banking care.
Even if insured is bound by signature, that does not extinguish the bank's independent tortious/deficiency liability for negligent preparation of proposal documents.
Therefore, the bank bears primary responsibility. As already analysed at point 3 (b) above, the bank possessed actual knowledge of the true location of the asset intended to be insured. If despite such knowledge the proposal/policy mentions an entirely different residential address, it evidences gross negligence in discharge of duty. A banker acting as intermediary must exercise reasonable care. Having procured insurance for protection of both borrower and lender, it cannot disclaim responsibility once the cover proves worthless due to erroneous data fed by itself.
The plea that the complainant signed documents is insufficient in the circumstances. Standard form documentation obtained from an unsophisticated borrower by institutional entities cannot by itself absolve negligence where core facts were within the bank's own records.
Point No.5 &6- Deficiency in service on the part of Opposite Party No.2 and Validity of Repudiation Point Nos. 5 & 6 will be taken up together due to interwined nature of the issues.
From a strictly contractual underwriting perspective, the insurer's stand that a fire policy is location-specific cannot be termed wholly untenable. Risk location is undeniably material. Therefore, repudiation by the insurer cannot be equated with mala fide conduct per se.
However, once the insurer itself admits that policy was issued on particulars supplied through its banking channel/corporate agent, the insurer cannot altogether disclaim downstream responsibility. The negligence of its authorised channel remains legally relevant.
The insurer accepted premium, issued policy under Agreed Bank Clause for the exact value of mortgaged property, and did so without reconciling glaring inconsistency between insured value, banking arrangement and risk location.
The insurer cannot enjoy business procured through agent and later completely disown responsibility for agent's negligence.
Here, the root cause was erroneous insertion of location particulars during policy issuance through bank channel. At the very minimum, that error is attributable to the bank (OP No. 1) and insurer (OP No.2) acting through agency structure.
Hence while repudiation, depriving the complainant of his substantive entitlement, may be technically sustainable under policy wording, given the particular facts that repudiation flowed from negligence attributable to the insurer's own intermediary/agent, consumer relief does still arise. Point No.7 - Quantum of Relief The complainant claims Rs.56.87 lakh. The insurer relies on licensed surveyor's net assessed loss of Rs.24,19,756/- after adjusting excess.
Surveyor's report under insurance law carries evidentiary value unless shown perverse. No cogent expert evidence has been produced by complainant to displace the quantified assessment. Therefore, while repudiation is unsustainable, loss assessment of licensed surveyor may reasonably guide compensation.
At the same time, complainant has suffered prolonged denial due to negligence of opposite parties.
Accordingly, ends of justice would be met by awarding:
• Rs.24,19,756/- towards insured loss;
• interest thereon;
• compensation for harassment and litigation costs.
Considering material wrong declaration in proposal, bank's proven negligence, insurer's technical defence and complainant's partial lack of diligence, the just course would be not to direct full policy pay out against insurer alone, nor to dismiss the complaint entirely.
The equitable solution is to fasten principal liability upon the bank, with limited shared liability of insurer due to acts of its authorised channel.
VIII. Final Order The complaint is partly allowed on contest with the following directions:
1. Axis Bank Limited (Opposite Party No.1) shall bear primary liability and pay to the Complainant 75% of Rs.24,19,756/- (Rupees Twenty Four Lakh Nineteen Thousand Seven Hundred Fifty Six only), and Tata AIG Insurance Company Limited (Opposite Party No.2) shall pay to the Complainant remaining 25% of Rs.24,19,756/-, the said amount representing the assessed loss suffered by the Complainant.
2. The aforesaid awarded amount of Rs.24,19,756/- shall carry simple interest @ 7% per annum from the date of repudiation of the claim by Opposite Party No.2 until full realization, and such interest shall also be borne and paid by Opposite Party No.1 and Opposite Party No.2 in the same proportion of liability, namely 75% and 25% respectively.
3. Opposite Party No.1 shall further pay a sum of Rs.2,00,000/- (Rupees Two Lakh only) to the Complainant as compensation for harassment, inconvenience, and mental agony suffered by the Complainant.
4. Both the Opposite Parties shall jointly and severally pay a sum of Rs.50,000/-
(Rupees Fifty Thousand only) to the Complainant towards litigation costs.
5. The aforesaid payments shall be made by both the Opposite Parties within 45 (forty-five) days from the date of pronouncement of this Order, failing which the Complainant shall be at liberty to put the Order into execution in accordance with law.
Let free copies of this Order be supplied to the parties forthwith as per rules.
..................
RAJES GUHA RAY JUDICIAL MEMBER ..................
SANTANU SAHA MEMBER