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KARNATAKA STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, BANGALORE
Hon’ble Mr. Justice D.R. Vithal Rao, President &
Mrs. Susheela Cheluvaraju, Member
C. YOGISH MALLYA—Complainant
versus
THE NATIONAL INSURANCE CO. LTD. & ANR.—Respondents
Complaint No. 6 of 1993—Decided on 30.9.1996
A settlement of an insurance claim with a bank, as per a Bank Clause in the policy, is valid and binding on the insured, and does not constitute a deficiency in service.
Headnote:
CONSUMER PROTECTION ACT - SECTION 17 AND 12 - INSURANCE POLICY - BANK CLAUSE - SETTLEMENT OF CLAIM - FULL AND FINAL SETTLEMENT - NO DEFICIENCY IN SERVICE - COMPLAINT DISMISSED.
Fact of the Case:
Complainant insured his machinery and stock with the opposite parties. A fire accident occurred during the policy period, damaging the insured items. Complainant claimed compensation, but the opposite parties settled the claim with the complainant's bank, which had a Bank Clause in the policy. Complainant filed a complaint alleging deficiency in service and seeking compensation.
Finding of the Court:
The court found that the opposite parties had settled the claim with the complainant's bank as per the Bank Clause in the policy. The court held that the receipt of the bank was a complete discharge of the opposite parties' liability and was binding on the complainant.
Issues: Whether the opposite parties were deficient in service in settling the claim with the complainant's bank.
Ratio Decidendi: The court relied on the Bank Clause in the insurance policy, which authorized the bank to receive payment of compensation on behalf of the insured. The court held that the settlement of the claim with the bank was valid and binding on the complainant, and that there was no deficiency in service on the part of the opposite parties.
Final Decision: The court dismissed the complaint, holding that there was no substance in the complainant's claim.
Mr. Justice D.R. Vithal Rao, President— In this complaint under Section 17 read with Section 12 of the Consumer Protection A ct, 1986, the complainant has sought compensation in a sum of Rs. 9,01,644/- from the opposite partiesThe National Insurance Company Ltd.
2. The complainant an industrialist insured the machinery and the stock of his plastic industry with the opposite parties. The insured sum of the machinery was Rs. 1,50,000/- and the stock for a sum of Rs. 4,00,000/-. The period of insurance was from 3.3.90 to 2.3.91. A fire accident took place in the said industrial unit at about 9.45 a.m. on 18.9.90 during the currency of the policy period, wherein the stock and the machin ery insured got damaged. It is the case of the complainant that the loss towards the machinery was Rs. 3,04,000/- and loss towards stock was Rs. 4,34,161/-.
3. The complainant after the said mishap made claim with the opposite parties. The opposite parties deputed its Surveyors and on receipt of the said survey report settled the claim of the complainant with opposite party No. 2, the Canara Bank, the Banker of the complainant for a sum of Rs. 1,48,000/-.
4. It is the grievance of the complainant that the said settlement with opposite party No. 2 was arbitrary and the loss sustained by him was as a matter of fact, more than Rs. 7,00,000/-. So the complainant filed the complaint seeking the balance amount of Rs. 4,01,644/- towards the loss for the damage to the machinery and the stock and also a sum of Rs. 5,00,000/- towards the loss of income.
5. Opposite party No. 1 filed its version and averred that soon after receipt of the report of the fire accident, a Surveyor was deputed and on receipt of the said survey report the claim in a sum of Rs. 1,48,386/- was settled with opposite party No. 2 as the policy was obtained by the insured through opposite party No. 2. So the said amount so settled was paid to the Canara Bank on obtaining settlement voucher.
6. Opposite party No. 1 averred that the claim settled with opposite party No. 2 was perfectly in order and there was no deficiency in service.
7. Opposite party No. 2 filed its version and averred that the complainant had borrowed huge sums of money from it for the purpose of business on the security of the machinery and stock in the said factory premises. As such goods were insured against the risks of fire and other risks.
8. The policy was obtained with the Bank Clause which enabled opposite party No. 2 to claim and receive payment of compensation directly from opposite party No. 1. So opposite party No. 2 had received the said amount of Rs. 1,48,356/- from opposite party No. 1 in full and final settlement of the claim and the said amount was credited to the account of the complainant.
9. During enquiry the complainant examined himself as C.W. 1 and got Exs. C. 1 to C. 7 marked in evidence. Opposite party No. 1 examined its Administrative Officer as R. W. 1 and its Surveyor as R. W. 2 and got Exs. R1 to R 6 marked in evidence.
10. We heard the learned Counsel for the opposite parties, perused the pleadings and the material on record.
11. The complainant has admitted that the said policy of insurance was obtained from opposite party No. 1 under a Bank Clause. The complainant in his evidence in this regard stated thus :
“…..The Insurance Company has already paid a sum of Rs. 1,48,356/- to the Canara Bank towards the loss in the said fire accident. There was a Banker Clause appliable in the policy. I was making payment of the premiums to the Insurance Company. It is not true to suggest that I had not sustained the loss more than the amount settled by the Insurance Company with the Canara Bank. The Insurance Company immediately deputed the Surveyor on receipt of my claim, assessed the claim, assessed the loss and settled the same with Canara Bank within six months.”
12. Ex. R. 3(B) is the said Bank Clause in the insurance policy, Ex. R.3. The said Bank Clause reads as under:
It is hereby declared and agreed :
