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1993 Supreme(Bom) 355
IN THE HIGH COURT OF BOMBAY
BOMBAY
Justice G.G. Loney, President Smt. Ellen Dharkar, Member.
Mrs. Manjum Nissar Yerunkar ... Complainant.
Versus
United India Insurance Co. Ltd. and another... Opposite-Parties.
Complaint No. 570 of 1992, decided on 13-8-1993.
An insurance company is liable to settle a claim despite non-receipt of premium before the occurrence of loss if the delay is due to the negligence of its agent.
Headnote:
CONSUMER PROTECTION - INSURANCE - SECTION 64-VB OF THE INSURANCE ACT - DEFICIENCY IN SERVICE - INSURANCE COMPANY LIABLE TO SETTLE CLAIM DESPITE NON-RECEIPT OF PREMIUM BEFORE OCCURRENCE OF LOSS DUE TO NEGLIGENCE OF AGENT - BANK ALSO LIABLE FOR DELAY IN ARRANGING PAYMENT OF PREMIUM.
Fact of the Case:
Complainant, a civil, structural, mechanical, and electrical consultant, obtained a loan from Opposite Party No. 2 (Bank) and hypothecated his stocks as security. The Bank was to obtain insurance cover for the hypothecated stock from Opposite Party No. 1 (Insurance Company). Due to unprecedented floods, the complainant's stock was damaged. The Insurance Company refused to settle the claim due to non-receipt of premium. The complainant filed a consumer complaint alleging deficiency in service.
Finding of the Court:
The court found that the complainant had paid the premium amount through a pay order issued by the Bank to the Insurance Company's agent before the occurrence of the floods. The delay in transmission of the pay order to the appropriate table was due to the negligence of the Insurance Company's agent. The court held that the complainant had a valid insurance policy on the date of the loss and that the Insurance Company was liable to settle the claim.
Issues: 1. Whether the complaint is maintainable? 2. Whether the complainant has suffered the loss due to negligence in the service of the opposite parties? 3. Who is liable to compensate the loss of complainant?
Ratio Decidendi: 1. The complainant is a consumer of the services of both the opposite parties, the Insurance Company and the Bank, and hence the complaint is maintainable. 2. The complainant has suffered the loss due to negligence in the service of the opposite parties. The Insurance Company was negligent in not settling the claim despite receiving the premium amount through a pay order before the occurrence of the loss. The Bank was negligent in delaying the payment of premium. 3. The Insurance Company and the Bank are jointly and severally liable to compensate the complainant for the loss suffered.
Final Decision: The court ordered the Insurance Company and the Bank to jointly and severally settle the complainant's claim for Rs. 1,83,963/- within 30 days from the receipt of the order, failing which the amount shall carry interest at the rate of 18% p.a.
2. The opposite party No. 1 filed written version and opposed the complainant' claim on various grounds. Inter alia it is contended by the Opposite Party No. 1 that the complainant has no remedy against it due to non-acceptance of the fire/shopkeeper insurance proposal for want of premium. It is further contended that the complaints proposal for the shopkeepers policy was received by Opposite party No. 1 on 27-7-1989 with pay order. Therefore, the loss caused to the complainant on 23/24-7-1989 cannot be compensated. In short, according to Opposite Party No. 1 they are not liable to settle the complainant's claim for the aforesaid reason. According to Opposite Party No. 1, the Opposite Party No. 2 is liable to compensate the complainants' loss because of their failure to pay the premium in time.
We have heard Shri Jayawant Advocate for complainant and Shri Limaye Advocate for Opposite Party No. 1 and Shri Ramdas Advocate for the Opposite Party No. 2. We have carefully considered the allegations made in the complaint and the written version filed by the Opposite Party No. 1. The points that arise for our consideration are :-
i) Whether this complaint is maintainable?
ii) Whether the complainant has suffered the loss due to negligence in the service of the opposite parties?
iii) Who is liable to compensate the loss of complainant?
3. As regards the first point, we find that the complainant had hired the service of both the opposite parties viz. the insurance company and the Co-operative Bank. The O.P. No. 1 was to provide insurance policy to the complainant on payment of consideration whereas the Opposite Party No. 2 provided the loan facility to the complainant. Thus, we find that the complainant is a consumer of the services of both the opposite parties and hence, this complaint is maintainable.
4. The chronological events are useful to understand this consumer dispute. The complainant hypothecated his goods with O.P. No. 2 in the month of May, 1989. The necessary requirements including the proposal form to obtain insurance policy from O.P. No. 1. The amount of premium was to be paid from complainants loan account directly to the O.P. No. 1 by O.P. No. 2 by pay order. The complainant therefore, did not directly pay the amount of i
