IN THE CONSUMER DISPUTES REDRESSAL COMMISSION, KOTTAYAM
Dated, the 26th day of October, 2022.
Present: Sri. Manulal V.S. President
Smt. Bindhu R. Member
Sri. K.M. Anto, Member
C C No. 126/2020 (Filed on 08-09-2020)
Petitioner : Mathewkutty Jose,
S/o. Joseph,
Vellappallil House,
Akalakunnam,
Chengalam East Village,
Kottayam – 2.
(Adv. P.V. Joseph)
Vs.
Opposite party : (1) Bajaj Allianz General Insurance
Co. Ltd. 3rd Floor,
Coastal Chambers,
Opposite Mercy Estate,
M.G. Road, Cochin,
Ernakulam – 682015
Rep. by its Regional Manager,
Ernakulam.
(2) Bajaj Allianz General Insurance Co. Ltd. 3rd Floor,
YMCA Buildings,
Sastri Road, Kottayam
Rep. by its Branch Manager.
(Op 1 and 2, Adv. Praveen C.M.)
(3) The Federal Bank Ltd.
Kottayam Main Branch,
Thekkumkal Buildings,
T.B. Road, Kottayam – 1.
Rep. by its Branch Manager,
Kottayam.
(Adv. Boby George Kurian)
O R D E R
Sri. Manulal V.S. President
The complaint is filed under Section 35 of Consumer Protection Act, 2019
The complainant who was running small scale industrial unit for the manufacture, production ,sale and service of modular kitchen accessories and other allied works under the name and style ‘Velbrose International’, Vellapllil building, APIX/47A, Akalakkunnam, Chengalam East Kottayam Taluk with office address at Holy Family Building no. VI/14B11, K.K. Road, Kottayam. The said velbrose International is under the sole proprietorship of the complainant. The complainant had availed cash credit loan facility with over draft limit of Rs.1,20,00,000/- as per loan A/C no. 10255500005218 opened on 15-5-2017 and two term loans Rs.85,00,000/- and Rs.15,00,000/- as per loan A/C 10256900063146 and 10256900063153 respectively from the third opposite party bank by hypothecating the plant and machinery and the stock in trade in the godown at Vellapallil building Akalkkunnam towards primary security and one acre of land in which the factory building is situated as collateral security by way of mortgage create by his wife as co-obligent.
The stock in trade in the godown attached to the production unit at Chengalam being the primary security to the loan transaction is duly insured with the first opposite party insurance company through the third opposite party bank by taking a standard fire and special perils policy by paying the premium amount of Rs.25,277 directly from the cash credit loan account by the third opposite party bank on 15-1-2019 for an insurance coverage of Rs.1,44,00,000/- with coverage period starting from 10-1-2019 to 9-.-1-2020.
A fire accident occurred on 24-4-2019 and the complainant’s factory building and godown were partly destroyed and the entire stock in trade lying in the go-down were destroyed and he had suffered a loss of Rs.49,27,864/- by way of damage in stock in trade and Rs.3,25,000 by way of damages to building. The accident was duly intimated to the first opposite party. The third opposite party and the surveyor deputed by the insurance company assed the damage and submitted his report to the insurance company.
Thereafter the complainant had submitted the claim form through the third opposite party bank for the loss suffered by him in the fire accident with all connected documents. But the first opposite party had refused the claim by holding that the risk locations address shown in the insurance policy as given by the third opposite party is that of the office building of the complainant ,but the actual loss location address is IX /470A, Akalkkunnam Pachayath , Chengalam East Village.
It is averred in the complaint that after the receipt of the proposal form the officials of the first opposite party visited the production unit and go-down at Chengalam and satisfied themselves of the actual risk location and thereafter only issued the policy. Therefore the repudiation of the claim by raising such a flimsy ground amounts to unfair trade practice and deficiency in service of the part of the first opposite party.
It is further averred in the complaint that since, the insurance coverage is required to the stock in trade being the primary security to the bank loan availed from the third opposite party, and even though the address of the risk location is given by the complainant to the bank, third opposite party in a reckless and negligent manner furnished the office address given to the bank for communication purpose as the address of the risk location in the proposal form. According to the complainant the third opposite party is instrumental for the loss suffered by the complainant on account of the first opposite party insurance company’s rejection of the claim by pointing out the differences in the risk location address given to them at the time of furnishing the proposal form. It is averred in the complaint that entire matter relating to the insurance cover of the stock in trade in the go-down and taking of policy is done by the third opposite party bank by deducting the premium amount from complainant’s account. It is the responsibility of the third opposite party to furnish the correct address of the risk location in the proposal form. Therefore the third opposite party bank cannot abdicate its responsibility to pay damages to the complainant arising from its negligence. Instaed of taking steps for getting the claim settled by the insurance company, the third opposite party bank has proceeded against the complainant by invoking the provisions of the SARFASI Act for recovery of the loan amount. The huge loss suffered by the complainant is directly attributable to the third opposite party bank and it is liable to compensate the complainant’s loss. The third opposite party bank’s failure to make good the loss suffered by the complainant is unfair trade practice and deficiency in service on their part. According to the complainant the opposite parties are jointly and severally liable to compensate the loss suffered by the complainant.
The complainant had caused lawyers notice to the opposite parties and demanded to settle the claim by paying damages for loss suffered by him in the accident. Though the opposite parties received the notice but they have not cared to send any reply or to settle the claim so far. Hence this complaint is filed by the complainant praying for an order to direct the opposite parties to pay Rs. 49,27,864 towards the damages suffered by him in fire accident along with a compensation Rs.5 lakhs and litigation cost of Rs.50,000/-.
Upon notice the opposite parties appeared before this commission and filed version.
The first and second opposite parties contested the case by stating that as per policy occupation mentioned as shop, covering stock of modular Kitchen and its accessories and risk location address as : Bldg no. 14B7, Wrd no. VI , Kottaym
municipality, Muttambalam Village Kottaym Kerla. But the actual loss location address is IX/470A, Akalkkunnam, Chengalm, Kottayam and occupied as factory and godown. It is submitted in the version that the said policy location and occupation is not covered under the cover of policy. The first and second opposite parties issued a policy bearing no. OG-19-1606-4001- 0000-4024 covering the stock of modular kitchen and its accessories and item description is also shown as stock and risk location address as Bldg no. 14B7, Wrd no. VI , Kottayam municipality, Muttambalam Village Kottayam Kerala . No fire accident was occurred in the insured shop. The first and second opposite parties never visited the godown at Chengalam at the time of issuing the fire policy . the first and second opposite parties have no knowledge about the godown at Chengalam.
The first and second opposite parties came to know about the godown at Chengalam only after the fire accident was happened.
After receiving the claim from the first and second opposite parties appointed a surveyor for inspecting the place and assessing the damages. The survey report also shows that the fire accident was not occurred in the premises which was insured with the first and second opposite parties. The policy was sent to the complainant. After receiving that policy the complainant has not raised any objection regarding the address and risk location in it. In the policy it was also stated that the risk location is shown as shop and the stocks in the shop was insured with the first opposite party. In the year 2018 also policy having no. Og-18-1606-4001-00003929 was sent to the complainant. While the bank was proceeded against the complainant by invoking the provisions of the SARFASI act for recovering of the loan amount, for escaping from the proceedings the complainant filed this complaint with false allegations against the opposite parties. The complainant is not entitled to get any reliefs as prayed for.
The third opposite party has filed its version contending that the complainant runs a commercial establishment employing large number of people and hence the complainant is not a self employed person and complainant is not a consumer as defined under the consumer protection act. The impugned contract of insurance in only between the complainant and the first opposite party. As per RBI guidelines all Cash Credit and Term loans given to business shall be compulsory insured. Therefore when the complainant availed the loans the third opposite party informed him of the same and recommended the first opposite party insurance company for taking the insurance policy. The complainant approached the first opposite party and the particulars and terms of the insurance policy were negotiated between the complainant and the first opposite party. The third opposite party filled up the application for insurance as directed by the complainant and on his request the third opposite party transferred the premium amount to the account of the first opposite party. Other than that there was no active involvement of the third opposite party in contract of insurance entered
between the complainant and the first opposite party. The averment regarding the fire accident are true except that the averment regarding the loss sustained by the complainant is not within the knowledge of the third opposite party. It is not stated
in the repudiation letter dated 3-7-2019 issued by the first opposite party that the location address was given by the third opposite party. The complainant is misrepresenting facts only to serve his purpose. The proposal form for the policy was filled up and particulars were entered by the third opposite party directed by the complainant. The complainant was aware of the location address in the policy as it was he who gave the location address in the proposal form and he could have verified it after issuance of the policy document to him by the third opposite party. The mistake if any happened in giving the office address of the complainant as location address in the insurance policy is solely attributable to the complainant and there is no negligence or recklessness on the part of the third opposite party in the said aspect. There was no negligence on part of the third opposite party and the third opposite party is not liable for any loss or damages suffered by the complainant.
Evidence of this case consists of deposition of PW1 and DW1 and the proof affidavit of Reshma who is the senior executive legal of the first opposite party. Exhibits A1 to A17 were marked from the side of the complainant and Exhibits B1 to B6 were marked from the side of the opposite parties.
On a detailed examination of the evidence on record and the pleadings of both the parties we frame the following issues:
1. Whether there is deficiency of service on the part of either of the opposite parties or with both.
2. If so who is liable to compensate and what should be the quantum of compensation?
Point no 1
The case of the complainant is that he was running small scale industrial unit for the manufacture, production, sale and service of modular kitchen accessories and other allied works under the name and style ‘Velbrose International. The opposite parties contended that the complaint is not maintainable, as the complainant does not come under the purview of the consumer under the consumer protection act. It is admitted by both opposite parties that the complainant had availed a cash credit hypothecation facility with an overdraft limit of Rs.1,20,00,000 over the stocks kept by him. The complainant specifically pleaded in the complaint that complainant has been carrying out the said unit as a means of self-employment to earn his livelihood. The third opposite party admits that they had provided the insurance cover to occupation mentioned as shop, covering stock of modular Kitchen and its accessories and risk location address as : Bldg no. 14B7, Wrd no. VI , Kottaym municipality, Muttambalam Village Kottaym Kerala. On reading section 2 (7) of consumer protection Act 2019, it is clear that a person is a consumer who buys goods or hires or avails of services for consideration. However, there is an Explanation inbuilt in section 2 (7) (ii) which excludes the buyer of the goods or hirer of the services for commercial purpose But in explanation clause it is stated that the commercial purpose does not include if the service availed by him exclusively for the purpose of earning his livelihood by way of self employment. Therefore we are of the opinion that the complainant is a consumer of the opposite parties and the complaint is maintainable.
The specific case of the complainant is that he had to suffer loss on his stocks due to fire. But the policy claim was repudiated by the first and second opposite party on the ground that the actual loss location and occupation is not covered under the Fire policy. The complainant further pleaded that though the third opposite party availed the insurance to the machinery and stocks for and on behalf of the complainant, which were mortgaged with the third opposite party, they did not hand over the insurance policy to the complainant.
The first and second opposite parties admit that they issued Exhibit A1 policy bearing no. OG-19-1606-4001-0000-4024 covering the stock of modular kitchen and its accessories and item description is also shown as stock and risk location address as Bldg no. 14B7, Ward no. VI, Kottayam municipality, Muttambalam Village, Kottayam Kerala.
It is admitted by the third opposite party that the complainant had availed a cash credit loan facility with over draft limit of Rs.1,20,00,000 as per loan A/C no. 10255500005218 opened on 15-5-2017 and two terms loans of Rs.85,00,000/- and Rs.15,00,000 /- as per terms loan A/c no. 102569000063146 and Term loan A/C no. 10256900063153 respectively from them. Term loan agreement for Rs. 15 lakhs dated 15-5-2017, which is executed by the complainant, and Cissy Mathew as co-obligant in favour of the third opposite party is marked as exhibit B1. Exhibit B2 is the term loan agreement for Rs.85 lakhs dated 15-5-2017 which is executed by the complainant and Cissy Mathew as co-obligant in favour of the third opposite party. Agreement of cash credit /overdraft / demand loan for Rs. 1,20,00,000 dated 16-5-2017 which is executed by the complainant and Cissy Mathew as co-obligant in favour of the third opposite party is marked as exhibit B3.
There is no dispute on the fact that the a fire accident occurred on 24-4-2019 and the complainant’s factory building and godown were partly destroyed and the entire stock in trade lying in the go-down were destroyed. It is proved by exhibit A9 fir accident report dated 6-5-2019 issued by Station officer, Fire and Rescue station Pampady that fire accident was occurred on 24-4-2019 in the building situated in ward no 8 of Akalakkunam Panchayath and the said building was owned by Mathewkutty Jose, Vellapallil house, Chengalam East, Kottayam. Exhibits A6 which is the Certificate of Registration issued by the Commercial Tax Officer Kottayam proves that the Godown of Velbrose International, Holy family Building no. VI/14/B11 , K.K. Road Muttambalam is situated Vellappallil building, AP IX, 47A, Akalakkunnam, Chengalam, Kottayam. On perusal of exhibit A1 policy we can see that the insured sum was Rs.1,44,00,000/- and the period of insurance was 10-1-2019 to 09-1-2020. Thus the accident was occurred within the period of insurance coverage. Upon receipt of claim form a surveyor has been appointed by the first and second opposite parties to inspect the location and assess the damages caused due to the fire accident. Report filed by the surveyor A. Gnankumar is marked as exhibit B5. The surveyor reported that the he had assessed the stock of modular kitchen to the tune of Rs.49,27,864 and after deducting the 40% of the sums as profit he had assessed the damages caused to the tune of Rs.29,54,517/- and after deducting policy excess the actual loss is calculated as Rs.27,67,271.
The claim of the complainant was repudiated by the first and second opposite party on 3-6-2019 vide Exhibit A10. On perusal of exhibit A10 we can see that the first and second opposite parties repudiated the claim of the complainant on the ground that as per policy occupation mentioned as shop, covering of modular kitchen and its accessories and risk location address is Bldg no. 14b7, ward no.VI, Kottayam municipality Muttambalam Village, kottaym and the actual loss location address is IX/470A, Akalkkunnam ,Chengalam ,Kottayam and the said risk location and occupation is not covered under the policy.
On perusal of Exhibit A1 policy schedule and annexure II attached to the same it can be seen that the risk location address is shown as Bldg no. 14b7, ward no.VI, Kottayam municipality, Muttambalam Village, Kerala, kottaym and block descript as occupied as shop item details as stock of modular Kitchen and its accessories. Thus it is clear that the first and second opposite parties had offered insurance coverage to the stock of modular kitchen and its accessories which were kept in the shop in Bldg no. 14b7, ward no.VI, Kottayam municipality Muttambalam Village, Kerala, Kottayam and not at IX/470A, Akalkkunnam, Chengalam, Kottayam. Therefore we are of the opinion the complaint failed to establish any deficiency in service on the part of the first and second opposite parties.
Another contention of the complainant is that entire matter relating to the insurance cover of the stock in trade in the go-down and taking of policy is done by the third opposite party bank by deducting the premium amount from complainant’s account and it is the responsibility of the third opposite party to furnish the correct address of the risk location in the proposal form. The third opposite party resisted the complaint stating that as per RBI guidelines all Cash Credit and Term loans given to business shall be compulsorily insured and when the complainant availed the loans the third opposite party informed him of the same and recommended the first opposite party insurance company for taking the insurance policy. The complainant approached the first opposite party and the particulars and terms of the insurance policy were negotiated between the complainant and the first opposite party. According to third opposite party they filled up the application for insurance as directed by the complainant and on his request the third opposite party transferred the premium amount to the account of the first opposite party. The contract of insurance is only between the complainant and the first opposite party. On perusal of exhibit B1 and B2 which are the terms loan agreements for Rs.85,00,000 and Rs.15,00,000 respectively we can see that in last pages it is stated that the secured assets are situated at M/S Vellbros International Holy family Complex, Muttambalam P.O. Kottayam. Similarly in paragrghraph no 1 of page 3 of exhibit B3 loan agreement address of the borrower god-down is stated.
The said paragraph is reproduced hereunder “that the whole of the Goods, produce, Merchandise and any other stocks mentioned in the schedule hereto or in the Stock Statement attached hereto which now or hereafter from time to time during this security shall be brought into, stored or be in or about the borrower’s godowns or premises at Holy Family Complex, Muttambalam, Kottayam – 686004 in building bearing No.14 B7 in Ward No.VI of or wherever else the same may be (including any such goods in course of transit or delivery) and which may come into existence by accretion, modification or purchase or otherwise shall be hypothecated to the Bank and its assigns by way of first charge as security for the payment by the borrower to the bank of all moneys at any time payable by the borrower’s to the bank in respect of the said credit facility and also as security for the payment and discharge of all indebtedness or liability of the borrower to the bank in respect of any bill of exchange, promissory note or instrument at any time drawn, made accepted or endorsed by the borrower solely or jointly with others which the bank may discount or become, interested in together with all interest, discount commission, charges, costs (between Attorney and client) and expenses payable to or incurred by the bank in relation thereto”
Thus it is clear from Exhibit B1 to 3 loan agreements that the complainant had availed the loan from the third opposite party against the stock which were kept at Bldg no. 14b7, ward no.VI, Kottayam municipality Muttambalam Village, Kerala, Kottayam. Dw1 who is the then branch manager of third opposite party would depose that the proposal form for the insurance had been filled up jointly by the complainant, officials of the bank and the insurer. He further deposed that the address of the factory cum store where in the stock were kept was Holy family complex, Muttamabalm, Kottayam the proposal form for the policy along with policy schedule is produced by the third opposite party and marked as exhibit B4.
On perusal of proposal form we can see that in personal information of the insured the permanent address is shown as Holy Family Building, No VI/14/B11. K.K. road and mailing address is also as same. In proposal form the occupation description is shown as shop-others and risk location address/risk location Description is shown as Bldg no. 14b7, ward no.VI, Kottayam municipality Muttambalam Village, Kerala, Kottayam. Therefore we are of the opinion that the contention of the complainant that the third opposite party in a reckless and negligent manner furnished the office address given to the bank for communication purpose as the address of the risk location in the proposal form is not sustainable.
Learned counsel for the complainant placed reliance on decision Hon’ble supreme court in Canara Bak vs M/S Leatheroid Plastics Pvt Ltd(AIR Online 2020 SC 560, AIR 2020SC 2414), and decision of Hon’ble NCDRC in Union Bank of India vs Anuu Vasthralaya & ( IV 2007CPJ 187 (NC) and Alahabad Bank vs J.D.S. electronic Company (I (2007)CPJ 270 (NC).
In Canara Bak vs M/S Leatheroid Plastics Pvt Ltd it was held that once the bank had exercised liberty to effect insurance, it was their duty to take out policies covering entire set of hypothecated assets against which credit facilities were extended. In Alahabad Bank vs J.D.S. electronic Company (I (2007)CPJ 270 (NC) the primary obligation to get the stock insured was of the bank. Similarly in Union Bank of India vs Anuu Vasthralaya & Anr the insurance was being taken since 1988 onwards by the bank.
On mere reading of clause 5.7 of exhibit B1 and B2 it can be seen that the borrower(s)/co obligant shall keep the secured assets offered as security at their risk and expenses in good condition and fully insured against loss, fire, or damage as may be required by the bank from time to time. It is further stated in said clause that it shall be the primary responsibility of the borrower(s)/ co-obligent to keep the secured assets insured by remitting the insurance premium regularly and bank’s responsibility will be only secondary and discretionary. Similar condition is incorporated in clause 10 of exhibit B3 agreement also. Thus we are of the opinion that the ratio laid down in the above cited decision would not help the complainant and the complainant has failed to prove any deficiency in service on the part of the third opposite party bank.
The Hon’ble Supreme Court in a recent Judgment dtd.6th October 2021 i.e. in “SGS India Limited v/s Dolphin International Limited”, categorically held that the onus of proof that there was deficiency in service is on the complainant.
Here in this case as discussed above we are of the opinion that the complainant has failed to prove any unfair trade practice on the part of the opposite party. Thus the complaint is dismissed.
Pronounced in the Open Commission on this the 26th day of October, 2022
Sri. Manulal V.S. President Sd/-
Smt. Bindhu R. Member Sd/-
Sri. K.M. Anto, Member Sd/-
Appendix
Sworn statement from the side of complainant
Pw1 – Mathewkutty Jose
Sworn statement from the side of opposite party
Dw1 – Roy Mathew
Exhibits marked from the side of complainant
A1 – Copy of policy schedule
A2 – Copy of product details
A3 – Copy of statement of account statement (No.10255500005218)
A4- Copy of statement of account statement (No.10256900063153)
A5- Copy of statement of account statement (No.10256900063146)
A6- Copy of certificate of registration (TIN 32050570904)
A7- Copy of licence (No.7431/12-A6) dtd.17-12-12 from Secretary,
Akalakunnam Grama Panachayath
A8-Copy of Aadhar registration (392621032727)
A9 – Copy of fire force report from Fire & Rescue station officer, Pampady
A10 – Copy of letter dtd.03-07-19 from Bajaj Allianz to Velbros International Holy Family.
A11 – Copy of lawyers notice from Adv. P.V. Joseph to the Federal bank Ltd.
A12- Copy of postal receipt
A13- Postal AD card
A14 – Copy of lawyers notice dtd.02-07-2020 to Bajaj Allianz General
Insurance Co. Ltd.
A15- Postal receipt
A16 – Postal AD card
A17- Copy of notice from LCRD Kottayam
Exhibits marked from the side of opposite party
B1- Copy of terms of agreement No.9996 dtd.11-05-17
B2 – Copy of terms of agreement No.9994 dtd.11-05-17
B3 – Copy of agreement of cash credit / overdraft / demand loan No.9992
dtd.11-05-17
B4 - policy schedule issued by Bajaj Allianz General Insurance
B5 - Survey report by A.Gnanakumar B.E.
B6 – Copy of letter dtd.03-07-2019 to Velbros International
By Order
SD/-
Assistant Registrar
