Mr. Y. Krishan, Member—The Complainant had obtained cash credit facilities from the Opposite Party No. 1, UCO Bank against hypothecation of its goods. The Opposite Party No. 1-Bank, in turn was insuring the hypothecated stocks of the Complainant with the Opposite Party No. 2-the New India Assurance Company. The existing Insurance Policy, which was a shop-keepers Insurance Policy, for a sum of Rs. 5 lakhs, expired on 20th December, 1990. On the same date viz., 20th December, 1990, the Opposite Party No. 2, the New India Assurance Company, wrote to the Bank for renewal of the policy by payment of premia on behalf of various insured parties including the Complainant.

2. On 12th January, 1991, the Petitioner informed the Bank that “we are taking the matter into our hands, so you are kindly requested not take any steps for the same” (godown insurance). Thereafter, according to the Petitioner, he wrote to the Bank on 7th March, 1991, to arrange for insurance cover for 22 lakhs. The opening sentence of this letter reads: “You are requested earlier and many times for “insurance of stocks”, we hereby request you to please arrange an insurance cover for 22,00,000/- from New India Assurance Company, Bhadrak, against fire, theft, burglary, looting etc. on the basis of our stock hypothecated to you against cash credit account with your branch.” A zerox copy of the stock statement for the month of February, 1991 was also enclosed. Referring to the letter of 7.3.1991 the petitioner on 20th March, 1991 informed the Bank of “our discussion with the above Assurance Company” and requested the Bank to debit the cash credit hypothecation account for Rs. 11,495/- on account of insurance premium cover policy against fire, theft, looting etc. and credit the same amount to the account of the New India Assurance Co. The Bank by its letter dated 13.4.1991 informed the Insurance Company that the godown of the petitioner, National Trading Corporation had been insured for 22 lakhs on 15.3.1991 for which the Insurance Company had issued the money receipt of 9th April, 1991. At this stage, it informed the Insurance Company that the godown insured had been looted and set on fire in the evening of 24th March, 1991.

3. On 22nd April, 1991, the Insurance Company informed the petitioner, National Trading Corporation, that even if the insurance is deemed to have been effected w.e.f 9.4.1991 It was not liable for loss prior to this date viz. 24th March, 1991.

4. Earlier by its letter dated 23rd March, 1991, the Bank informed the National Trading Corporation that their account had been debited with the premium of Rs. 11,491/- on 22nd March, 1991 and the credit for the same has been afforded in the account of New India Assurance Company on 23rd March, 1991.

5. The petitioner herein had originally filed a complaint against the New India Assurance Company and the United Commercial Bank. The District Forum passed an inconclusive order directing that the Opposite Party No. 2 before it, the Bank, should recredit the amount of Rs. 11,495/- with premium to the account of Opposite Party No. 1 (insurer) from the account of the Complainant, National Trading Corporation as originally made and that the Opposite Party No. 1 should accept the same and examine its liability and indemnify any loss in the light of the directions made by the District Forum in its order. The State Commission in appeal observed in its order of 21.1.1994 that the previously existing policy covered the risk only till 20th December 1990. In other words, after 20th December, 1990 the policy had expired and a fresh proposal was necessary for issuing a New Insurance Policy. Acceptance of the proposal could not provide the risk cover until the premium was paid. Although, the Bank debited the premium amount to the account of the Complainant and credited the same to the account of the insurer, the insured had no knowledge of the payment of premium and only on 9th April, 1991, the insurer became aware of the pre