Vipin Kumar, Proprietor vs United India Insurance Company Limited & Anr

V.K.Jain, J

The complainant/petitioner took a loan of Rs.3.5 lacs from respondent no.2 State Bank of Patiala, which now stands merged with State Bank of India, for the construction of a commercial showroom and godown on plot measuring 4 marlas near Harchowal Road, White Avenue, Qadian in District Gurdaspur of Punjab. Clause 6 of the letter of arrangement issued by the bank to the petitioner/complainant pertained to insurance of the asset charged to the bank and read as under:

"Insurance:

All the assets charged to the Bank should always be fully insured by the Borrower against fire, lightning, riots, strikes, floods, cyclones, earthquakes, civil commotion, and other natural calamities, etc., with a company approved by the Bank in the joint names of the Bank and yourselves, at your cost for full market value or Bank's interest, whichever is higher. The policies/cover notes should be lodged with the Bank. The policies should be kept alive (current) during the currency of the advance. In the event of non-compliance, the Bank reserves the right (but not be bound to exercise) to take the insurance cover as required by the Bank by debit to your account. The machinery to be purchased out of the Term Loan, if any, to be insured for the full market value or original cost of the machinery, whichever is higher. Likewise all the renewals of the policies should also be effected/done by the Borrower at all materials."

No insurance policy in respect of the proposed building was taken by the complainant/petitioner. The bank however, took an insurance policy no. 400424 in the name of the complainant, for the period from 13.04.2009 to 12.04.2019 for a sum assured of Rs.3.5 lacs. But, the bank took the insurance policy in respect of a shop at Guru Nanak Market, Qadian which was a shop taken on rent by the petitioner/complainant and was not the subject matter of the loan of Rs.3.5 lacs. The bank therefore, gave wrong particulars of the insured property while taking the aforesaid policy. The policy should have been obtained in respect of the building which the petitioner was to construct at White Avenue, whereas it was taken in respect of the shop at Guru Nanak Market.

The petitioner/complainant had also taken cash credit facility of Rs.2 lacs from the bank in respect of the stock kept in its shop at Guru Nanak Market, Qadian. Insurance policy no. 535370 was obtained by the bank in respect of the said stock, for a sum insured of Rs.2 lacs.

In an incident of fire which happened on 02.02.2011, the stock of the complainant/petitioner kept in White Avenue building got damaged/destroyed and the said building was also damaged. There was no incident of fire in the shop at Guru Nanak Market. A claim was lodged by the complainant/petitioner with the insurer United India Insurance Company Ltd. for re-imbursement of the insurance policy taken by the bank. The claim however, was rejected on the ground that neither the building at White Avenue nor the stock kept in the said building had been insured by the said insurer. Being aggrieved, the petitioner/complainant approached the concerned District Forum by way of a consumer complaint, impleading the insurer as well as the bank as the OPs in the complaint.

The District Forum vide its order dated 28.11.2013, allowed the complaint and directed the respondents to pay a sum of Rs.3.5 lacs to the complainant alongwith interest @ 9% per annum.

Being aggrieved from the order passed by the District Forum, both, the insurer as well as the bank filed two separate appeals. Vide impugned order dated 12.01.2015, the State Commission allowed both the appeals and consequently dismissed the complaint. Being aggrieved from the order of the State Commission, the complainant/petitioner is before this Commission by way of these two revision petitions.

As far as the insurer United India Insurance Company Ltd. is concerned, a perusal of the insurance policy issued by it would show that one policy issued by it was in respect of the stock kept in the shop at Guru Nanak Market, whereas the other policy issued by it was in respect of the building of the said shop at Guru Nanak Market. Since no incident of fire happened in the shop at Guru Nanak Market, the insurer is not liable to pay any amount to the petitioner/complainant. Therefore, the order of the State Commission, to the extent the appeal filed by United India Insurance Company Ltd. was allowed by it, does not call for any interference by this Commission in exercise of its revisional jurisdiction.

As far the liability of the bank is concerned, as noted earlier, the loan of Rs.3.5 lacs was extended by the bank petitioner/complainant for construction of a shopping complex at White Avenue. Therefore, it was the building at White Avenue and not the building of the shop at Guru Nanak Market which to be got insured by the bank. Though the primary obligation was of the petitioner/complainant to get the said building insured, the bank also had liberty in terms of clause 6 of the Letter of Arrangement to take insurance cover at the cost of the complainant/petitioner. It was in exercise of that right that the bank chose to take an insurance cover of Rs.3.5 lacs, vide policy no. 400424. A perusal of the statement of account in respect of the loan of Rs.3.5 lacs taken for construction of building at White Avenue building shows that a premium of Rs.4,247/- in respect of policy no.400424 was debited by the bank in the said account. Therefore, the bank obviously was seeking to take insurance cover in respect of the building for construction of which a loan of Rs.3.5 lacs had been extended by it to the petitioner/complainant. The bank also sent a letter dated 17.05.2011 to the complainant confirming having taken insurance policy of Rs.3.5 lacs for a period of 10 years in respect of the commercial building. The said letter to the extent it is relevant, reads as under:

To

Sh. Vipan Kumar

White Avenue,

Harchowal Road, Qadian.

This is to confirm that we have taken long term policy covering the commercial building for ten years against any mishappening of fire etc. in the building. Cover note regarding the above mentioned cover is attached herewith for the reference & conformation. (Policy No.400424 Dated 13.04.2009, Sum Insured Rs.3.50 Lac (Three Lacs Fifty Thousand only).

Therefore, it cannot be disputed that the bank had claimed to have taken an insurance policy of Rs.3.5 lacs from United India Insurance Company Ltd. in respect of the commercial building which the complainant was to construct at White Avenue, Qadian. The bank obviously committed a mistake in giving particulars of the insured property since it gave particulars of the shop at Guru Nanak Market, Qadian instead of giving the particulars of the building at White Avenue, Qadian while obtaining the said policy no. 400424 for a period of 10 years w.e.f. 13.04.2009 to 12.04.2019. There is no evidence or even allegation of the bank having sent the said policy no. 400424 to the petitioner/complainant at any point of time. Therefore, the petitioner/complainant had no opportunity to detect the aforesaid mistake on the part of the bank and request it to take the remedial measures by requesting the insurance company to issue the insurance policy in respect of the commercial building at White Avenue, instead of the shop at Guru Nanak Market.

Had the bank not taken the aforesaid policy for Rs.3.5 lacs, either the complainant would have obtained a policy in respect of the said commercial building at his own responsibility or he would have suffered loss but could not have blamed the bank for the loss suffered by him, as far as damage to the commercial building at White Avenue, Qadian is concerned. It is therefore, evident that the bank was deficient in rendering service to the petitioner/complainant as it obtained policy in respect of a wrong building though the premium for the said policy was charged by it from the petitioner/complainant by debiting the same to his account. The bank therefore, must necessarily compensate the petitioner/complainant for the loss suffered by him as far as the damage to the commercial building at White Avenue is concerned with the said liability cannot in any case, exceed Rs.3.5 lacs. As far as stock kept in the said commercial building is concerned, the bank was not under an obligation to get the same insured.

No evidence was led by the complainant to prove the actual loss on account of damage to the commercial building at White Avenue. The surveyor appointed by the insurer also did not make any assessment of loss in respect of damage to the said building. Therefore, it becomes imperative to remit the matter back to the District Forum to determine the loss suffered by the petitioner/complainant on account of damage to the commercial building at White Avenue building in the incident of fire which took place on 02.02.2011. As noted earlier, the said liability, in any case, cannot exceed Rs.3.5 lacs. The parties i.e. the petitioner/complainant and respondent State Bank of India are directed to appear before the concerned District Forum on 12.02.2019. The District Forum shall thereafter, proceed to determine the loss suffered by the complainant on account of damage to the commercial building at White Avenue, Qadian and award suitable compensation to the petitioner/complainant in the light of this order, after giving opportunity to both the parties to lead evidence as regards the loss on account of the said damage. The insurer United India Insurance Company Ltd. would not be a necessary party to the said proceedings and its name is therefore, deleted from the array of parties. Both the revision petitions stand disposed of accordingly.