IMPORTANT POINT
Insurance policy – Exclusion clause – Burden of proof is on the insurer to show that case falls within the purview of exclusion clause – In case of ambiguity, benefit goes to insured.

ORDER

These two Revision Petitions are filed under Section 21(b) of the Consumer Protection Act, 1986 (the “Act”) against order dated 26.05.2016, passed by Rajasthan State Consumer Disputes Redressal Commission, Jaipur (‘State Commission’) in FA Nos.781 and 782 of 2013 respectively wherein the State Commission allowed the Appeals and set aside the District Consumer Disputes Redressal Forum, Nagaur (District Forum) order in CC Nos.229 and 233 of 2012 dated 02.07.2013 wherein the Complaints were dismissed with costs.

2. Since the facts and questions of law involved in both Revision Petitions are substantially similar, except for minor variations in dates and events, both the petitions are being disposed of by this common Order. For ease of reference, RP No.2572 of 2016 is considered as the lead case, and the facts below are drawn from CC No.229/2012.

3. For convenience, the parties involved in this matter are referred to as per the Complaint before District Forum. “M/s. Sunrise Bio Fuel through Partners Rajpal Singh and Rakesh Kumar” is referred to as the Complainant and “Bank of Baroda” is Opposite Party No.1 (OP-1) and National Insurance Company is Opposite Party No.2 (OP2).

4. Brief facts of the case, as per the complainant, are that the complainant who had bank A/s with OP-1 (Bank) was provided Rs.30 lakhs loan along with a cash credit facility of Rs.10 lakhs. As security for the loan, their business assets, such as raw materials, stock, plant & machinery and furniture & fixtures were equitably mortgaged. The bank also took out an insurance policy for Rs.5 lakhs for the building and Rs.50 lakhs for the plant, machinery, and stock. The insurance premium was deducted from the account. On 11.05.2012, an incident occurred at the complainant’s premises that caused damage to the building, plant, machinery, and stock. They submitted a claim of Rs.8,42,470 to OP-2 (insurer) through OP-1 (bank), but this claim was rejected on 11.07.2012. Later on, 02.08.2012 a fire broke out at their business premises, damaging about 400 tons of raw material. The complainant reported the incident on 03.08.2012 to OP-2 through OP-1. A loss claim for Rs.8,00,000 was also submitted. OP-2 rejected both claims as the stock was not insured under the policy. While the complainant claimed that the bank had deducted the insurance premium, the insurer argued that the policy only covered fire and earthquake damage for building and machinery, not the stock. Being aggrieved, they filed the CC No.229/12 seeking Rs.8,42,470 with interest for the first incident; and CC No.233/12 seeking Rs.8,00,000 with interest for the second incident before the District Forum.

5. In its Reply, OP-1 admitted that the cash credit facility and the insurance premium deduction were made, but they argued that they had forwarded the claim information to the insurer on time and that the insurance company was responsible for the claim denial, not the bank. The bank claimed that there was no deficiency in service on their part and requested the dismissal of the complaints.

6. In its Reply, OP-2 stated that a standard fire and special perils policy was taken out, which covered fire and earthquake damage for the building (Rs. 5 Lakhs) and machinery (Rs. 50 Lakhs), but not the stock. The claim for the stock loss was denied because it was not covered under the policy, and they contended that no premium was paid for stock insurance. The Surveyor’s report assessed the complainants’ losses as Rs.68,927, which was also not covered under the policy.

7. The learned District Forum vide order dated 02.07.2013 dismissed the both the complaints as under:

“18. According to the Insurance proposal and Insurance Policy, respondents are not liable to pay any compensation with regard to stock because respondent No.2 has not charged any premium for the stock. As far as the question of insurance of stock by the respondent No.1 is concerned, complainants themselves have not given information of stock to the res