IMPORTANT POINT
Non-residential use of residential property by renting it out without informing Insurance Company – Repudiation of claim is not deficient service on part of Insurance company.

ORDER

Dr. Sadhna Shanker, Member.—The present appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (for short “the Act”) by Anand Kumar (hereinafter referred to as the “complainant”) assailing the Order dated 07.10.2022 passed by the State Consumer Disputes Redressal Commission, U.P. (hereinafter referred to as the “State Commission”) in complaint No. 278 of 2018, whereby the complaint was rejected.

2. We have heard the learned counsel for the appellant (hereinafter referred to as the ‘complainant’), learned counsel for the National Insurance Company Ltd. (hereinafter referred to as the ‘insurance company’), learned counsel for the Bank of India (hereinafter referred to as the ‘bank’) and have perused the record.

3. The facts, in brief, are that the complainant took home loan of Rs. 22 lakh for purchase of H. No. 103/2 , Sunderbag, Hewet Road, Lucknow from the bank and as a statutory requirements, the bank had purchased ‘Home Loan Suraksha Bima’ for the insurance of the house in question for a sum insured of Rs. 30 lakh, through their corporate partners ‘National Insurance Company Limited’. The premium of Rs.15,716/- was paid. The policy was valid from 28.03.2016 to 27.03.2031. It is alleged that the original policy was retained by the bank and as such the complainants had no opportunity to go through the contents of it, including its terms and conditions. It is mentioned in the complaint that when a loan is applied in the bank, an appraisal note was prepared by an officer, wherein the rental income of the house in question was mentioned as Rs.18,000/-(Rupees Eighteen thousand) per month and in the lease agreement dated 21.11.2009 it was mentioned to justify the financial viability of the loan and also the repayment capacity of the borrowers. In the said agreement it was disclosed by the complainant to the banker that the house shall be let out to M/s Gem Hotel Products on a rent of Rs.18,000/- per month and the relevant agreement dated 21.11.2009 was also supplied to the bank. It is alleged that the complainant did not conceal the prospective use of the house for commercial purpose. The said house caught fire on 03.09.2017 and the incident of fire including total loss was intimated to the insurance company on the same date. The complainants also sent a formal claim letter dated 05.01.2018 to the insurance company with the details of loss of Rs.21,14,000/-. The insurance company repudiated the claim vide their letter dated 24.05.2018 on the ground that ‘Home Loan Suraksha Policy’ did not cover any non-residential usage of the building. It is contended by the complainants that the proposer of the insurance policy was the financer ‘Bank of India’ and ‘the National Insurance Company’ was its corporate partner and in the purchase of policy the role of complainants was only for the payment of premium. It is alleged by the complainants that the insurance company has wrongly repudiated the claim as the purpose of the house in question was really never disclosed to the corporate partner of the insurance company.

4. The complainants filed a complaint before the State Commission with the following prayer:-

a. To approve the claim of the complainant and pay them value of the damages to the building due to fire, that is Rs.21,14,000/- (Twenty one lacs fourteen thousand only) as arrived by the valuer’s vide their report dated 02.12.2017 (Annexure-V).

b. To pay the complainant the interest @20% on the claim amount, for the delay on payment of claim, till the actual payment is made to the complainant;

c. To pay to the complainants a sum of Rs.20,00,000/- (Twenty Lac) for mental agony, loss of reputation, because of delay in payment of claim and also to compensate the exorbitant rates of interest paid to raise the short term funds impending payment of claim, with the expenditure involved in filling the complaint with professional charges of the advocate.

5. The State Commission, vide its order dated 07.10.2022, re