By Sri. Mohamed Ismayil.C.V, Member
The case of the complainant is as follows:-
1. The complainant was running a furniture business under the name and style of Kunduthodi timber and furniture. The complainant availed open cash credit loan for his furniture business from the first opposite party. According to the complainant he was doing the business for the lively hood of his family members including himself. The loan amount was operated as the main account for his business activities. The loan amount was stipulated for Rs.25 lakhs and last 13 years the complainant was availing the above said loan for his business. All the time the first opposite party was used to secure insurance coverage to the business firm of the complainant with the second opposite party. According to the complainant the loan availed from the first opposite party was under trade the scheme. So that the first opposite party was used to take every steps to get insured the furniture firm and premium had taken from the complainant by the opposite party . In this way for the last 13 years the firm of the complainant had insured by the first opposite party and on 12/01/2018 the premium amount of Rs.16,612.50/- was also collected from the account of the complainant by the first opposite party for availing insurance coverage in the current year. The bank statement of the complainant’s account No.16962850013900 also revealed that on 12/01/2018 the amount of Rs.16,815/- had been transferred to the head of CASA OUTGOING INSUR CHAR. So according to the complainant, the first opposite party was bound to insure the complainant’s firm with the second opposite party from 12/01/2018 onwards.
2. According to the complainant in the 2nd week of August 2018, the entire ground floor of the complainant’s firm has been flooded with soil due to landslide occurred as result of heavy rain and thereby caused damages to the furniture stock and thereby sustained loss of Rs.10,00,000/- to the complainant. The revenue department assessed the damage to the tune of Rs.8,00,000/-. For the reimbursement of loss, the complainant approached the first opposite party and informed the damage of his business immediately after the water goes down from the firm. Then the first opposite party directed the complainant to get it in writing. So on 31/08/2018 the complainant send a registered letter illustrating the damages of his furniture business caused due to the flood.
After receiving the letter sent by the complainant, the first opposite party informed that surveyor was appointed to assess the damage of furniture business. But when the surveyor did not approach for the assessment of damages, then complainant contacted the opposite party. In his utter dismay, it is understood that the first opposite party do not insured the firm of the complainant even though the premium amount for insurance policy was collected from the account of the complainant. The first opposite party informed the complainant that there was no insurance coverage to the furniture business.
3. According to the complainant the amount of Rs.16,815/- was taken from the account as insurance premium but the first opposite party did not take any step to get enrolled for the insurance policy coverage . Due to the negligent act of the first opposite party, the complainant could not be availed the benefit of insurance policy coverage to furniture business. The first opposite party was liable to subscribe insurance policy coverage to the furniture firm when the complainant was doing business under the shield of a cash credit loan of the first opposite party. Even though the first opposite party taken premium amount from the account of the complainant, the opposite party failed and defaulted in making payment to the second opposite party and thereby failed to insure the assets of the complainant. According to the complainant the act of the first opposite party is deficiency in service and unfair trade practice. So the first opposite party is liable to pay compensation for the damages suffered to the complainant. In the complaint the complainant prayed for order to direct the first opposite party to pay Rs.10,00,000/- as value of damages of the furniture stock.The complainant also prayed to direct the first opposite to pay Rs.3,00,000/- as compensation for mental agony and hardship due to the act of the opposite party and also prayed for Rs.50,000/- as cost of the proceedings.
4. The complaint is admitted and issued notices to the opposite parties. The opposite parties entered appearance and filed their version separately.
5. In the version, the first opposite party denied the allegation raised in the complaint. According to the first opposite party averments in the complaint is incorrect, false and unsustainable. It is also stated in the version that this commission has no jurisdiction to entertain the complaint. The subject matter of the complaint was in respect of availing credit facility to the tune of Rs.25 lakhs for the purpose of purchase of wooden legs, making furniture and for the sale of the same. The nature of activity is commercial and service rendered by the opposite party was also commercial in nature. The first opposite party also contended that this commission lacks, pecuniary jurisdiction also. Since the subject matter credit facility is for Rs.25 lakh alleged insurance is for Rs.25/- lakh, compensation of Rs.10 lakh and another Rs.3 lakh, Rs.50,000/- as cost of the proceedings and as such the gross worth comes to Rs.63.5 lakh and then out of pecuniary jurisdiction and so complainant is liable to be dismissed. It is also contended that there is suppression of material facts in the complaint. According to the first opposite party it mandated under section II (1) of the Consumer Protection Act, 1986 that the Forum shall have jurisdiction to entertain complaint where the value of goods and service and the compensation claimed does not exceed Rs.20 lakh. In quality Foils India Pvt Ltd Vs Bank of Madhur Limited and another [II (1996) CPJ 103 (NC)], the Hon’ble National Commission categorically laid down that it is the aggregate value of goods or service and compensation that determine the pecuniary jurisdiction. The first opposite party also quoted some other decision of Hon’ble National Commission which are very explicit of limiting the jurisdiction of District Forum as per the mandatory provision of the statute.
6. It is admitted in the version that the complainant availed open cash credit for his business from the first opposite party and the same was only to meet his working capital requirement. According to the first opposite party meeting of working capital equipments is purely for commercial purpose. The averment that the entire business of the complainant was being insured for Rs.25 lakh with second opposite party by the first opposite party is incorrect and false. According to the opposite party the averment that the insurance premium were being collected party from the account of the complainant is not fully correct. Collateral security offered for the loan is the residential building of the complainant and the same is valued around Rs.38 lakh as on 22/06/2016. The contention of the first opposite party in that the loan is sanctioned to meet working capital requirement of furniture unit, so the assets created out of the loan also will be hypothecated and taken as security. Thus in this case the residential building and furniture stock of the firm are securities for the loan availed by the complainant.
7. According to the first opposite party the credit limit sanctioned and allowed to M/s Kunduthodi Timbers and furniture owned by the complainant was expired on 07/09/2017 and the first opposite party can permit transaction in an account after expiry is limited to 3 months. It is submitted by the first opposite party that the complainant did not produce the paper for renewal even after the elapse of the grace period. On 12/01/2018 the first opposite party had collected a sum of Rs.16,612.50/- from the account of the complainant not 100% true to facts. The bank collected premium from the complainant though the loan was in expired status and was informed the complainant to update his account and the complainant offered to produce all documents in couple of days. So according to the first opposite party, the amount collected as premium was kept in suspense account. It is added in the version that, the complainant did not submit the renewal papers even thereafter. In turn, the first opposite party couldn’t insure the same since the loan period was expired. The complainant was ensuring all the time that he shall up date forthwith and therefore the amount was kept in Bank account so as to insure the same once the applicant submit all the documents. When the account was becoming NPA during the beginning of March as the limit was not renewed , the first opposite party continuously contacted the complainant to submit financial papers as he was long standing customer of the first opposite party . On the basis of assurance given by the complainant to submit the valid forest NOC (statutory licence for running a furniture unit) the first opposite party renewed the limit to further one more year. But the complainant failed to submit the forest NOC. So the opposite party could not insure the stock with second opposite party. The complainant was always promised to furnish records but failed to submit the same. Later, after a lapse of six months natural calamity was occurred. According to the first opposite party non insuring of the stock was only because of non submission of the records pertaining to the manufacture and necessary licence, without which the first opposite party cannot insure the stock. It is contended that there were no stock of goods as per the records since nothing was submitted by the complainant. If the insurance premium was paid without details of stock, that would reflect as Nil stock and no indemnification will take place for any stock. The collateral security provided to the opposite party was the residential building which required no further documents. There were no records of stocks available which was incapacitated the first opposite party to insure the stock.
8. The first opposite party did not receive any letter from the complainant. The averment in the complaint that the first opposite party appointed a surveyor and details of disaster collected and sent a message to the complainant are not fully correct. According to the first opposite party no surveyor is appointed. It is stated in the version that no wooden logs are damaged but after washing same the complainant used it. So loss cannot be indemnified. According to the first opposite party collateral security was promptly insured and there was no deficiency in service. No insurance company will insure the stock without any records of stock especially the area is near to forest land. So the first opposite party prayed for the dismissal of the complaint with compensatory cost.
9. The second opposite party filed version and defended the allegation made in the complaint. According to the second opposite party the complaint has no bonofides and merits and has to be dismissed in limine with compensatory costs. It is stated in the version that there is no deficiency in service on the part of the second opposite party and so unnecessary party in the proceedings. The complainant had impleaded the second opposite party with due knowledge that the furniture shop was not insured with the second opposite party during the period of natural calamity. The second opposite party prayed for rejection of the complaint on the ground of mis-jointer of party also. According to the second opposite party the first opposite party has shifted their corporate agency from United India Insurance Company to New India Assurance company from the year of 2017 onwards. So the averment made in the complaint against the second opposite party is utter false. Also, the complainant or the first opposite party did not make any claim before the second opposite party.
10 The complainant and the opposite parties filed their affidavits. The complainant produced documents and marked them as Ext. A1 to A4. Ext. A1 document is the copy of statement of account held by the furniture firm of the complainant. Ext. A2 document is the copy of certificate dated 20/08/2018 issued by the village officer, Edavanna stating the damage occurred to the furniture firm due to the flood. Ext. A3 document is the copy of letter dated 31/08/2018 issued to the first opposite party by the complainant. Ext. A4 document is the copy of insurance policy schedule issued by the second opposite party in the previous year. No documents were produced by either opposite parties. The complainant filed IA 495/2018 to appoint an advocate commission to assess the damage of the furniture firm. The application was allowed by the commission and a report filed by the Advocate Commissioner and same is marked as Ext. C1 document.
11. Heard both parties in detail. The affidavits and documents are perused. The points arised for consideration are:-
- Whether there is any deficiency of service or unfair trade practice on the part of the opposite parties?
- Relief and cost
12. Point No.1 and 2
The complainant availed a cash credit loan having limit of Rs.25 lakh for facilitating his furniture business from the first opposite party. It is stated in the complaint and affidavit that the complainant paid Rs.16,815/- to the first opposite party for securing insurance coverage to his furniture business. In order to prove the payment of premium the complainant produced Ext. A1 document before this commission. Due to the natural calamity occurred in month of August 2018, the complainant suffered huge damage to his furniture shop and thereby caused a loss of Rs.10,00,000/- to his business. Then the complainant approached the first opposite party for indemnify the loss under the expected insurance policy coverage arranged with the second opposite party. But the first opposite party stated that there was no insurance coverage to the furniture business at the particular time of occurrence of damage due to the flood. So the complainant approached this commission on the ground of deficiency of service on the part of the opposite parties. As per the version and affidavit filed by the first opposite party, even though the complainant remitted premium it was kept in suspense account due to non production of NOC from the forest department by the complainant. Does the first opposite party could not take policy coverage from the second opposite party to the furniture firm of the complainant due to lack of necessary documents.
13. The very case of the complainant is that for the last 13 years he had used to avail cash credit loan from the bank of first opposite party for conducting furniture business. At the same time the first opposite party was doing everything for subscribing insurance policy coverage to the furniture firm from the second opposite party. The complainant produced Ext. A4 document to substantiate his pleadings in the complaint. Ext. A4 document is the copy of insurance policy schedule showing the insurance coverage of the firm of the complainant by the second opposite party. By going through Ext. A4 document it can be seen that the first opposite party was acted as an agent to get enrolled the policy coverage to the furniture firm during the period between 19/07/2016 to 18/07/2017. The consistent argument of the complainant was that he subscribed insurance policies for the last 13 years under the agency of the first opposite party and same fact was not denied by the first opposite party. At the same time the second opposite party stated in the version and affidavit that there was no insurance coverage existed during the period of natural calamity. Considering the facts the first opposite party was liable to make arrangement to get insured the furniture stock of the complainant with the second opposite party or other insurance company in order to indemnify the assets in case of damages especially in the circumstances where the business of the complainant was run by the cash credit loan from the first opposite party . It is also admitted by the first opposite party that the loan limit was also renewed for further one more year to the complainant. So there was compelling situation existed on the part of the first opposite party to avail an insurance coverage to the furniture firm.
14. The complainant produced Ext. A2 document to establish the damage occurred to his furniture business due to flood. By going through it Ext. A2 document, it reveals the damage caused due to heavy flood. Ext. C1 document also reveals the damages are caused to the business firm of the complainant. The details of the damage also explained in the report. Moreover the opposite parties did not file any written objection to the Ext. C1 commission report. The first opposite party did not deny the fact of occurrence of flood in the month of August 2018. According to the version of the first opposite party the complainant did not produce sufficient documents for subscribing policy coverage of the furniture firm. But the first opposite party failed to adduce evidence with respect to non production of document for availing insurance coverage. If the incident happened as stated by the first opposite party with regard to non production of document, there should have been some communication between the first opposite party and the complainant. So, the absence of evidence of communication between the complainant and the first opposite party favours the case to the complainant. Ordinarily the assessment of stock was done by the insurance company with the help of surveyor. So even without initiating the proposal of policy the first opposite party cannot unilaterally arrive in a conclusion that there was non production of sufficient documents, especially for the last many years the furniture firm as get insured by the second opposite party. Moreover the second opposite party , in its version and affidavit categorically stated that the first opposite party has shifted their corporate agency from United India Insurance Company to New India Assurance Company from the year of 2017 onwards. This averment of the second opposite party was not denied by the first opposite party. From the evidence it can be seen that there was no communication with regard to change of insurance company by the first opposite party. Even without informing this change the first opposite party collected premium from the complainant. So the act of the first opposite party can be considered as negligent one which resulted in curtailing the right of the complainant in knowing or choosing the insurance company and thereby availing insurance coverage to his business. It can be also noted that the insurance coverage as provided by strength of Ext. A4 document was also ended on 18/07/2017. Thus it can be finding that there is no insurance coverage to the furniture stock of the complainant from 19-07-2017 onwards. The commission could not find out what caused to prevent the first opposite party to make arrangement for insurance coverage to the furniture firm of the complainant from 19-07-2017 onwards especially the furniture stock was also came within the security of the loan provided by the first opposite party itself.
15. When going through Ext. A2 document it can be seen that there is valid licence to run the furniture business of the complainant. If the complainant was doing his business without backing of legal sanction, definitely the village officer would not issue Ext. A2 document. Moreover it is admitted by the first opposite party that the limit of loan was also renewed for further one more year. So in this juncture, it can be seen that the first opposite party is failed to take necessary steps for availing the insurance coverage to the furniture business. The complainant claimed Rs.10,00,000/- as reimbursement for damages of furniture firm including stock and Rs.3,00,000/- as compensation for mental agony and hardship and also for Rs.50,000/- cost of the proceedings. So the claim is limited to Rs.13,50,000/- then this commission finds that it has got pecuniary jurisdiction to entertain the complaint. At this point it can be noted that the pecuniary jurisdiction has to be determine on the basis of contentions raised in the complaint and also value of goods or services and compensation claimed.
16. The contention of the first opposite party that the transaction between the first opposite party and the complainant was purely commercial transaction cannot be acceptable. The insurance policy is taking for reimbursement or indemnity of the loss which may be suffered on account of insured perils and so the services of the insurer and the first opposite party cannot be said to have hired for availed for a commercial purpose. The person engaged in business activity for his livelihood can avail services for the conduct of his business and so the service availed fall within the inclusion clause of service as contemplated in Consumer Protection Act 1986. There is no relief is sought against the second opposite party by the complainant. The evidence also reveals no deficiency of service on the part of the second opposite party. The commission finds that there is deficiency of service on the part of the first opposite party and so the complaint allowed as follows:
1) The first opposite party is directed to pay Rs.10,00,000/- to the complainant
for the damages occurred to his furniture stock.
2) The first opposite party is also directed to pay Rs.1,00,000/- as compensation for mental agony and hardship due to the negligent act of the first opposite party .
- The first opposite party is also directed to pay Rs.10,000/- as the cost of the proceedings to the complainant
The first opposite party shall comply this order within one month from the date of receipt of this order, failing which the entire amount shall carry interest at the rate of 9% per annum from the date of this order till realization.
Dated this 30th day of September, 2022.
Mohandasan K., President
PreethiSivaraman C., Member
Mohamed Ismayil C.V., Member
APPENDIX
Witness examined on the side of the complainant: Nil
Documents marked on the side of the complainant: Ext.A1 to A4
Ext.A1: Copy of statement of account held by the furniture firm of the complainant.
Ext.A2: Copy of certificate dated 20/08/2018 issued by the village officer, Edavanna
stating the damage occurred to the furniture firm due to the flood.
Ext A3: Copy of letter dated 31/08/2018 issued to the first opposite party by the
complainant.
Ext A4: Copy of insurance policy schedule issued by the second opposite party in the
previous year.
Witness examined on the side of the opposite party: Nil
Documents marked on the side of the opposite party: Nil
Ext. C1: Advocate Commissioner report
Mohandasan K., President
PreethiSivaraman C., Member
Mohamed Ismayil C.V., Member
