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ANDHRA PRADESH STATE CONSUMER DISPUTES
REDRESSAL COMMISSION, HYDERABAD
Hon’ble Mr. Justice P. Ramakrishnam Raju, President &
Mr. C.P. Suresh, Member
GODAVARI GRAMMENA BANK—Appellant
versus
TEJA POULTRY FARM—Respondent
F.A. No. 118 of 1998—Decided on 12.3.2003
For the Appellant :Mr. V. Gourisankara Rao, Advocate.
For the Respondent:Mr. R. Venkata Rao and Mr. V.S. Subrahmanyam, Advocates.
The bank's failure to remit the insurance premium as per the agreement constituted deficiency in service, leading to liability for the insurance claim.
Headnote:
Deficiency in Service - Insurance Premium Dispute - Insurance Act, Section 64VB
Fact of the Case:
The complainant received a loan for a poultry farm, and the sheds were damaged during a cyclone. The insurance company refused to pay the claim, citing non-compliance with the insurance agreement.
Finding of the Court:
The District Forum found deficiency in service on the part of the bank for not remitting the premium amount as per the agreement, and directed payment of compensation. The National Commission upheld this decision, citing a similar precedent.
Issues: Whether there was deficiency in service on the part of the bank and the insurance company, and the liability for the insurance claim.
Ratio Decidendi: The bank was found to have committed deficiency in service by not remitting the premium amount as per the agreement, and was held liable for the insurance claim.
Final Decision: The appeal was dismissed, and the order of the District Forum was confirmed, with costs imposed on the appellants.
Mr. C.P. Suresh, Member—The unsuccessful opposite parties 1 and 2 are the appellants before this Commission.
2. The facts in brief are on the application of the complainant, the second opposite party sanctioned a loan of Rs. 11,30,000/- for running a poultry farm of 10,000/- birds and an amount of Rs. 6,00,648.50 ps. was disbursed to the complainant. A comprehensive policy was taken to cover the risk of the sheds in which the poultry farm is to be located and opposite parties 1 and 2 undertook to pay the premium towards the live stock and sheds. Opposite Party No. 1 has deducted Rs. 5,810/- on 7.5.1996 towards premium for the live stock and paid it to opposite party No. 3. On 16.10.1996 a further amount of Rs. 837/- was debited to the account of the complainant towards the premium for the sheds.
3. On 6.11.1996 the sheds were damaged during the cyclone, that occurred on the intervening night of 6th/7th November, 1997, damaging the live stock and the sheds completely. The claim for damage of live stock was settled at Rs. 60,000/- and was paid away. The opposite parties 1 and 2 have estimated the damages to the sheds at Rs. 3,10,000/-.
4. Opposite parties 1 and 2 filed their written version stating that the responsibility for insuring the assets is solely on the borrower and that the Bank respresented by its Chairman entered into Grameena Package Master Policy Agreement, with the third opposite party represented by its Divisional Manager, on 11.4.1996 and as per the terms of Clause 7 of the said Agreement, the Bank debited the insurance premium of Rs. 848/- to the account of the complainant on 16.10.1996 and filled Annexure-I with various premia of different loan amounts and sent it to opposite party No. 3 on 4.11.1996. On intimating to the third opposite party about the cyclone, a Surveyor was deputed and the liability is on the part of the third opposite party to settle the claim.
5. Opposite party No. 3 filed its written version stating that the statement dated 31.10.1996 (Clause 7) was received by Dowleswaram Branch on 18.11.1996 after the cyclone and the remittance of the premium was sent in the monthly statement dated 25.11.1996 and the specific conditions in the agreement and under Section 64VB of the Insurance Act are not complied with and, therefore, there is no valid and enforceable contract of insurance and the opposite party is, therefore, not liable to pay any amount.
6. Basing on these pleadings and the evidence adduced, the District Forum found that there was deficiency in service on the part of opposite parties 1 and 2 in not sending the premium amount as per clause in time and directed them to pay Rs. 3,85,015/- with interest at 12 per cent per annum and also compensation of Rs. 10,000/- together with subsequent interest at 12 per cent per annum. It also held that there is no deficiency in service on the part of the third opposite party.
7. Aggrieved by the said finding and order, opposite parties 1 and 2 have preferred this appeal.
8. The point for consideration is, whether there is any deficiency in service on the part of the opposite party Nos. 1 and 2 ?
9. It is not in dispute that opposite party No. 2 has sanctioned a loan amount of Rs. 11,30,000/- to the complainant and advanced a sum of Rs. 6,00,648.50 ps. and obtained a policy covering the sheds, and debited the premium of Rs. 848/- to the account of the complainant on 16.10.1996.
Opposite Party No. 2 says that it has sent the statement along with the Banker’s cheque to the third opposite party on 4.11.1996 and opposite party No. 3 is, therefore, liable to pay the insured amount.
10. Opposite Party No. 3 on the other hand contends that opposite parties 1 and 2 have violated the terms and conditions of Clause 7 of the agreement entered into between their Zonal Manager and the Chairman of the Grameena Bank in that they have received the statement on 25.11.1996 instead of 31.10.1996 and, therefore, they are not bound to pay the amount. Clause 7 of the agreement
