M/s Maini Enterprises vs Oriental Insurance Co. Ltd. & Anr

Sudip Ahluwalia, Member

This Revision Petition has been filed by M/s Maini Enterprises under Section 21(b) against the impugned Order dated 27.11.2018 passed by the State Consumer Disputes Redressal Commission, Haryana in F.A. No. 552 of 2017 vide which, the Appeal filed by the Oriental Insurance Co. Ltd. was allowed, the Order of the District Forum was set-aside, and the Complaint was dismissed.

The factual background, in brief is that proprietor of M/s Maini Enterprises, located at 207, Jaggi Colony, Phase-1, Baldev Nagar, Ambala City, entered into a CC limited account with Punjab National Bank (Respondent No. 2). This account was covered by an insurance policy issued by Oriental Insurance Co. Ltd. (Respondent No. 1). However, a crucial error occurred in the policy issuance process, leading to the inclusion of the Complainant's residential address as "211, Jaggi Colony, Phase-1, Ambala City," instead of the actual business address.  On 06.07.2010, the business premises of the Complainant suffered significant flooding, resulting in a loss amounting to Rs. 5,02,226.74/-. Subsequently, the Complainant informed the Respondent No. 1, prompting the appointment of a Surveyor to assess the flood-induced damages. The Respondent No. 1 proposed a settlement amount of Rs. 3,50,000/-. However, the Complainant's claim was officially rejected on 06.09.2010, with the reason cited as the absence of any loss at House No. 211, Jaggi Colony, Phase-1, Ambala City.  Contending that the rejection of the claim was a result of the Respondents' clerical errors and amounted to deficient service, the Complainant took its grievance to the District Forum in Ambala by filing a formal complaint.Top of Form

The District Forum vide its Order dated 17.02.2017 partly allowed the complaint.

Aggrieved by the Order of the District Forum, the Respondent No. 1 filed Appeal before the State Commission. The State Commission allowed the Appeal vide the impugned Order dated 27.11.2018. The relevant extracts of the impugned Order are set out as below –

“10. It is true that at the instance of the bank, the H.No.211, Jaggi Colony Phase I, Ambala City was mortgaged with O.P.No.2 and on the same address, the insurance policy was also issued as the complainant was running a shop in a different premises. However, a plea was taken on behalf of the complainant that he suffered loss due to flood in the shop of complainant i.e. 207, Jaggi Colony, Phase-1 Ambala City. A specific plea was taken on behalf of the complainant was that later on when this fact came into the notice, the insurance policy was modified but inspite of the fact that this Commission has asked the learned counsel for the complainant to produce the modified copy of insurance policy, but, the complainant's counsel has not placed on record the modified insurance policy. It is a settled proposition of law that place or premises which is not insured, the insurance company is not liable to pay any compensation.

With the above observation and discussion, the learned District Forum has gravely and manifestly erred while allowing the complaint and similarly the amount of the claim has also been alleged while concurring with the arguments by the learned counsel for the complainant and while accepting the appeal in toto, the impugned order passed by the learned District Forum Ambala dated 17.02.2017 stands set aside for all intents and purposes. Resultantly, the complaint also stands dismissed.

The statutory amount of Rs.25,000/- deposited at the appeal be refunded to the appellant against proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.”

Aggrieved by the Order of the State Commission, the Petitioner filed this Revision Petition raising the following issues –

a. That the State Commission has overlooked a crucial fact that the corrected insurance policy dated 24.03.2011, a part of the Respondent No. 1's records, was concealed before the District Forum. This concealment was noted in the District Forum's order dated 17.02.2017. The original insurance record, summoned by the District Forum and documented as Annexure B, was included in the proceedings, yet this vital document hasn't been acknowledged by the Hon'ble State Commission in its consideration;

b. That the correction made by the Respondent No. 1 in the original policy implies an acknowledgment. It indicates that the actual business premises at 207, Jaggi Colony, are indeed the insured premises covered by the Respondent No. 1. They cannot simply claim the benefit of a clerical error made by either the Respondent No. 2 or an official of the Respondent No. 1 who issued the policy;

c. That the State Commission overlooked a crucial point that both the Respondents No. 1 and 2 were aware, and there was mutual understanding among all involved parties, that the insured premises pertained to a shop operated by the Petitioner. The Respondent No. 1 accepted the premium for this insurance policy with full knowledge that it covered a shop. This awareness on the part of the Respondent No. 1 is evident from the insurance policy itself, where the description of the insured premises is explicitly identified as a shop dealing in goods;

d. That the State Commission overlooked a significant detail that the clerical error was not the fault of the Petitioner but entirely attributable to the Respondents No. 1 and 2. This is evident from a letter dated 13.09.2010 issued by the Respondent No. 2 to the Respondent No. 1. In this letter, the Respondent No. 2 explicitly acknowledges that they procured the insurance policy and admits that the clerical error was a result of their oversight.

Ld. Counsel for the Petitioner has argued that the State Commission had erroneously allowed the First Appeal filed by the Respondent No. 1, thereby, dismissing the complaint on the ground that the modified copy of the Insurance Policy was not produced on record by the Petitioner. The record maintained by the Respondent No. 1 including the corrected insurance policy dated 24.03.2011 was summoned by the District Forum, and was part of the record of the District Forum; That pursuant to the letter dated 13.09.2010, issued by the Respondent No. 2 and the letter dated 24.03.2011, issued by the Petitioner, both requesting the correction of the clerical error with respect to the address of the insured premises in the original policy, the Respondent No. 1 duly corrected the original insurance policy and the premises no. 207 was entered as the insured premises; That the correction made by the Respondent No. 1 in the original Policy itself amounts to an admission on the part of the Respondent No. 1.

Ld. Counsel for the Respondent No. 1 has argued that the Order passed by the State Commission is based on the facts and evidence on record and it calls for no interference from this Hon’ble Commission as the premises where the loss occurred was different from the premises mentioned in the policy and therefore the claim does not fall within the scope of the terms and conditions of the insurance policy. The Order of the State Commission is in accordance with the judgements of this Commission in “Orient Clothing Co. Pvt. Ltd. v. Bajaj Allianz General Insurance Co. Ltd., IV (2015) CPJ 364 (NC)” and “State Bank of India v. Anil Kumar, I (2015) CPJ 1 (NC)”; That the Respondent No. 1 cannot be held liable for error on the part of the Respondent No. 2.

Ld. Counsel for the Respondent No. 2 has argued that there is no deficiency on the part of the Respondent No. 2. In the Proposal Form, the registered office of the Petitioner was written as 211, Jaggi Colony, Phase-1, Baldev Nagar, Ambala City whereas the address of the business premises in the security documents executed on 10.06.2010 was 207, Jaggi Colony, Phase-1, Baldev Nagar, Ambala City; That the official of the Respondent No. 1 visited the branch office of the Respondent No. 2 and himself noted the address of insured premises which was merely showed as the registered office of the Petitioner in the proposal form. The business premises of the Petitioner were physically inspected and verified by the concerned official from the Respondent No. 1 at the time of issuance of the insurance policy, therefore there is no deficiency of service on the part of the Respondent No. 2.

This Commission has heard both the Ld. Counsel of the Petitioner and the Respondents, and perused the material available on record.

When the matter had come up for hearing earlier on 6.11.2023 it was noted in the Order passed on that date –

“It transpires that a wrong Premises No. “211” was depicted in the Original Insurance Policy (Annexure P-8 - page 75) issued by the Respondent No.1, which was rectified to mention Premises No. “207” on 24.03.2011 as seen from the corrected Policy (Annexure P-9 - page 77), and the same was done on the basis of the request letter issued by the Respondent No.2 i.e. the Punjab National Bank (Annexure P-11) dated 13.09.2010.

In the meantime, the damage to the insured properties had already occurred on 06.07.2010.

Ld. Counsel for the Respondent No.1 has drawn specific attention to the Original Proposal Form for the insurance coverage which is Annexure R-1 to the said Respondent’s Written Synopsis (Respondent No.1 Written Synopsis on Page 93 of the Paper Book), which clearly goes to show that the address of the Premises was mentioned at “211, Jaggi Colony, Phase-1”, and the Proposal Form dated 19.06.2010 had been issued under the official seal of the Bank and the signature of its authorized person.

Faced with the above situation, Ld. Counsel appearing for the Respondent No.2 seeks a short adjournment to take appropriate instructions for making submissions on behalf of the Respondent Bank.”

On the adjourned date 4.12.2023, the Ld. Counsel appearing for the Bank (Respondent No. 2) submitted on instructions that actually the number of insured premises in the Proposal Form was wrongly mentioned as 211 instead of 207.  Consequently, the Insurance Company was not unjustified in repudiating the claim as the premises in which the damage took place was not covered in the relevant Insurance Policy, on account of the mistake in the information provided in the Proposal Form, whether by over-sight or otherwise.

But since such Proposal Form had been actually submitted by the Respondent Bank under its own official seal and signatures of its Authorised Person, so the liability would have to be borne by the Bank itself instead of the Insurance Company (Respondent-1).

For the aforesaid reasons, the Revision Petition is allowed after setting aside the Order of the Ld. State Commission and modifying the earlier Order of the Ld. District Forum passed on 7.2.2017 to the extent that instead of the Insurance Company (original OP-1), the Punjab National Bank (original OP-2), would be liable to compensate the Complainant.  The directions passed against the Opposite Party No. 1 in Para 6 of the District Forum’s Order shall instead apply to the Respondent/Opposite Party No. 2.  No further orders as to costs.

Pending application(s), if any, also stand disposed off as having been rendered infructuous.