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2025 Supreme(Online)(NCDRC) 3361
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
A.P. SAHI, PRESIDENT, DR. INDER JIT SINGH, MEMBER
Sri Bijay Kumar Sah – Appellant
Versus
Chairman-cum-Managing Director, Punjab National Bank – Respondent
Revision Petition No. 1485 of 2016
For the Appellant: Mr. Sunil Kumar Verma
For the Respondents 1-3: Mr. Ajay Shanker, Mr. Mani Kant Sahi, Mr. Ajay N. Jha, Ms. Aarti Singh
For the Respondent No.4: Mr. Naveen Kumar, Mr. Harsh Kumar
A bank's negligence in accurately representing an insured property's details constitutes a deficiency of service, warranting liability under consumer protection laws.
Headnote:(A) Consumer Protection Act, 1986 - Section 21(l)(b) - Revision Petition against the order of the State Commission which set aside the District Forum's decision directing the Bank to pay damages for negligence in failing to insure the complainant's godown leading to rejection of an insurance claim - The State Commission erroneously attributed the duty to insure to the complainant whereas the Bank had assured the complainant's interests - The Bank's negligence in insuring the correct address led to the loss of the claim by the Insurance Company. (Paras 10, 9)
(B) Deficiency of Service - The court reaffirmed that it is common practice for banks to secure insurance for hypothecated properties to protect both the borrower's and lender's interests - The Respondent Bank's failure to correctly represent the insured property as 'shop cum godown' constitutes a material irregularity. (Paras 10)
Facts of the case:
The petitioner established a kirana shop and engaged with the Bank for a cash credit facility which was not properly insured for his new godown location following a move. The theft at the new location led to a claim being rejected due to incorrect address.
Findings of Court:
The court upheld the District Forum's finding of negligence against the Bank for failing to ensure their records accurately reflected the insured property, restoring the District Forum's order for compensation.
Issues: The primary issues addressed were the responsibilities of the Bank related to insurance verification and the nature of consumer protection as it applies to banking services.
Ratio Decidendi: The court stated that where a bank arranges insurance for a customer, it is duty-bound to ensure that the correct and complete details are provided to avoid liability gaps.
Result: Order of the State Commission is set aside, and the District Forum's order is reinstated.
| Table of Content |
|---|
| 1. revision petition filed regarding insurance negligence (Para 1 , 2) |
| 2. district forum's decision on compensation (Para 3) |
| 3. challenging the appeal's findings (Para 4) |
| 4. parties' arguments on negligence and obligations (Para 5 , 6) |
| 5. court's findings on bank negligence (Para 7 , 9) |
| 6. court remedies and final decision (Para 10 , 11) |
ORDER
DR. INDER JIT SINGH, MEMBER
1. This Revision Petition (RP) have been filed by the Petitioner against the Respondent(s) as detailed above, under section 21(l)(b) of Consumer Protection Act 1986, against the orders dated 31.03.2016 of the State Consumer Disputes Redressal Commission, Bihar (hereinafter referred to as the 'State Commission'), in First Appeals (FA) No. 439/2012 in which orders dated 22.08.2012 of District Consumer Disputes Redressal Forum, Munger (hereinafter referred to as District Forum) in Consumer Complaint (CC) No. 38/2009 were challenged.
2. Brief facts of the case, as emerged from the RP, Order of the State Commission, Order of the District Commission and other case records are that:-
The Petitioner started his business as a Kirana Shop, namely 'Vijay Bhandar' in the year 1995 at Betwan Bazar, Munger and had taken Cash Credit Account with the Respondent Bank initially for a credit limit upto Rs.5,00,000/-, which was enhanced upto Rs.9,80,000/- in the year 2006. The petitioner shifted his business and shop- cum-godown from Betwan Bazar, Munger to Krishi Utpadan Bazar Samity, Safiabad, Munger. The Petitioner communicated about the change of address to the PNB, Munger on 22.09.2000. The business/shop-cum-godown of the Petitioner was insured with the National Insurance Co. Ltd. from the year 2000-2006, wherein the address/business place has been shown as Krishi Utpadan Bazar Samiti, Safiabad, Munger. In the year 2007, the Respondent Bank took the policy from United Insurance Company, mentioning the address of the Petitioner as Betwan Bazar (the old address). During the intervening night of 2nd/3rd April, 2007, incident of theft occurred in the shop of the petitioner at Safiabad. The Petitioner lodged the police complaint and also intimated the Respondent Bank on the day of incident. The United Insurance Company rejected the claim filed by the Respondent Bank on the ground that the insured's business place is a shop at Betwan Bazar and not the shop cum godown at Safiabad. Hence, the Petitioner filed complaint before the District Forum against the Bank and the Insurance Company for direction to the OPs; to pay the amount of Rs.9,00,425/- to the Petitioner against the claim of the insured goods of the Petitioner.
3. Vide Order dated 22.08.2012, District Forum partly allowed the complaint and directed the OPs-1 to 3 (Bank) to pay Rs.9,00,425/- by way of compensation, jointly and severely with interest at the rate of 15% p.a. to the complainant w.e.f. the date of filing of complaint i.e. 23.09.2009 with punitive damage of Rs. 1,00,000/- and litigation cost of Rs. 10,000/-.
4. Aggrieved by the order dated 22.08.2012 of the District Forum, the OP Bank preferred an Appeal before the State Commission. The State Commission vide its order dated 31.03.2016, set aside the order passed by the District Forum and allowed the Appeal.
5. The Complainant/Petitioner herein has challenged the said Order dated 31.03.2016 of the State Commission mainly on following grounds:
The State Commission has erroneously held that it was the
(i) obligation of the petitioner/borrower to get the goods/ stock insured with the Respondent Insurance Company. The State Commission erroneously held that the shop of the Petitioner was insured but the godown of the petitioner was not insured. The State Commission failed to appreciate that it was the shop cum godown of the Petitioner which was insured, which is also evident from the earlier insurance with the National Insurance Company for the period from 24.06.2003 to 23.06.2004 and for the period from 04.07.2005 to 03.07.2006.
The State Commission failed to appre
