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NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
Mrs. Rekha Gupta, Presiding Member and Mr. Anup K. Thakur, Member
CANARA BANK - Appellant
Versus
NEW INDIA ASSURANCE CO. LTD. - Respondent
Revision Petition No. 4781 of 2012 (Against Order dated 6.9.2012 in First Appeal No. 177/2011 of Maharashtra State Consumer Disputes Redressal Commission, Mumbai)
Decided on : 05-10-2016
Mr. Arif Siddiqid and Mr. Ansari Feroz, Advocates, for the Respondent No. 2; Mr. R.S. Rana, Advocate, for the Respondent No. 1; Mr. Premtosh Mishra and Mr. Mohit, Advocates, for the Petitioner
The main legal point established in the judgment is the duty of the insured and the bank to ensure that the changed address is duly endorsed on the insurance policy and the principle of utmost good faith in insurance contracts.
Headnote:
Insurance Claim - Change of Address - Consumer Protection Act, 1986 - Section 21, Section 24 - The court discussed the requirement of informing the insurance company about the change of address and the implications of not reflecting the changed address on the insurance policy. It highlighted the duty of the insured and the bank to ensure that the changed address was duly endorsed on the policy and emphasized the principle of utmost good faith in insurance contracts.
Fact of the Case:
The respondent's company availed a cash credit facility from the petitioner bank against hypothecation of stock in trade, furniture, and fixtures. The stock was insured, and the address was changed, leading to a claim denial by the insurance company. The District Forum allowed the complaint, but the State Commission modified the order, directing the bank to pay the insurance amount.
Finding of the Court:
The court found that there was a deficiency of service on the part of both the bank and the insurance company. It held that the liability for the insurance claim cannot be transferred to the bank, and the insured also had a duty to follow up on the insurance policy.
Issues: The main issues revolved around whether the insurance company was informed in time about the change of address and if the insurance liability could still have been repudiated. The court also considered the responsibility of the bank and the insured in ensuring the endorsement of the changed address on the policy.
Ratio Decidendi: The court held that there was a deficiency of service on the part of both the bank and the insurance company. It emphasized the duty of the insured and the bank to ensure that the changed address was duly endorsed on the policy and highlighted the principle of utmost good faith in insurance contracts.
Final Decision: The court set aside the State Commission's order and upheld the District Forum's order, directing the insurance company to pay the insurance claim amount and the bank to pay the cost of the proceeding.
ORDER
Mr. Anup K. Thakur, Member - This Revision Petition No. 4781 of 2012 is against the order dated 6.9.2012, passed by Maharashtra State Consumer Disputes Redressal Commission, Circuit Bench at Nagpur (State Commission) in First Appeal No. 177 of 2011 and has been filed by the petitioner/opposite party No. 2/Canara Bank.
2. The genesis of this RP lies in the case of the respondent No. 2/complainant. His company, M.S. Hasan Steel Co. availed a cash credit facility from the petitioner/opposite party 2/Canara Bank against hypothecation of stock in trade, furniture and fixtures. As an added security, the Bank required these stocks to be insured, as per standard practise. Accordingly, shop-keeper's insurance policy was purchased from respondent/opposite party No. 1-Insurance Company, for the period 29.6.2004 to 28.6.2005. This was renewed further for the period from 30.6.2005 to 29.6.2006 on payment of insurance premium of Rs. 7,899, for a sum insured of Rs. 15,00,000. On 25.5,2005, respondent No. 2/complainant shifted his place of business to the address given in the complaint. Intimation about this change of address was given to both the Bank and the insurance Company vide letters dated 25.5.2005 and 26.5.2005 respectively. About two months later, on 26.7.2005, due to heavy downpour and thereby deluge, the Company incurred heavy losses of their stock. This was Informed to the Insurance Company who appointed a surveyor. The surveyor assessed the loss at Rs. 7,32,913. In his report, he mentioned specifically that the existing address was not the address incorporated in the policy document. The Insurance Company sought clarification on this matter of address and was informed that respondent No. 2 had already intimated change of address to both the Bank and the Insurance Company. Despite this, the opposite party No. 1 - Insurance Company repudiated the claim on the ground that the address in the survey report was different from the one in the policy, and that as per terms and conditions of the policy, once the goods are shifted from the premises insured under the policy, the insured loses his insurable interest. Respondent No. 2 then filed a consumer complaint before the District Forum, praying for:
Insurance claim amount of Rs. 7,32,913 as assessed by the surveyor with interest @15% p.a.
Fees and cost of proceedings.
3. The respondent No. 1/opposite party No. 1 - Insurance Company in their reply stated that the complainant is misguiding the Forum by saying that he has informed the change of address. Such letter of intimation was not traceable in their office. Under the terms of the policy, the insured is obliged to specify the location to be added to the policy with complete details.
4. The opposite party No. 2 - Bank in their reply denied all the allegations made by the complainant and alleged unclean hands on their part inasmuch as they had already been compensated by the Government and had failed to disclose this in their complaint. Strangely, the Bank also made averments such as the complainant not entitled for compensation for flood damage since the policy was issued under the Shopkeeper's Insurance, which does not provide protection from flood, something that was not made by the Insurance Company itself.
5. District Consumer Disputes Redressal Forum, Bandra (District Forum) vide their order dated 26.11.2010, allowed the complaint and passed the following order:
"The complaint is partly allowed.
The opposite party No. 1 is directed to pay to the complainant, an amount in sum of Rs. 7,32,913 towards insurance claim together with interest thereon @ 9% p.a. from 1.10.2007 till the date of payment
The opposite party No. 2 is directed to pay to the complainant, an amount in sum of Rs. 10,000 towards cost of proceeding."
6. Dissatisfied with this order, respondent No. 1/Insurance Company filed an appeal before the State Commission. The State Commission allowed the appeal and observed as under:
"Appeal is allowed. Impugned order dat
