BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL COMMISSION AT BANGALORE (URBAN)

DATED 11^TH DAY OF NOVEMBER 2024

ORDER

SMT.M.SHOBHA, PRESIDENT

1. The complaint has been filed under Section 35 of C.P.Act (hereinafter referred as an Act) against the OP for the following reliefs against the OP:-

1. Direct the OPs to settle the claim of the complainant of Rs.24,00,000/- as insurance claim amount under policy No.6703033112001000550 and claim No.67030311210190000003 for fire accident together with interest @ 24% per annum from the date of incident till the date of realization.
2. Direct the OPs to pay Rs.25,00,000/- to the complainant towards business loss incurred due to undue delay, unfair trade practice, gross negligence and deficiency of services by both the OPs.
3. Direct the OPs to pay Rs.5,00,000/- to the complainant towards the mental agony.
4. Direct the OPs to pay Rs.50,000/- being the cost of the present proceedings and grant such other reliefs.

2. The case set up by the complainant in brief is as under:-

The complainant is a proprietorship concern involved in the manufacture of DC motors, alternators, diesel generators and electrical scooter holding a valid GST certificate.  The complainant had been availing credit facilities from OP1 since 27.11.2022 under the credit guarantee fund trust for micro and small enterprises scheme(CGTMSE).  An insurance policy was obtained from OP2 through OP1 covering perils under the standard fire and special perils policy, specifically for stocks stored at the business premises against damages including those caused by earthquakes (fire and shock).  The policy was renewed yearly with latest renewal made on 27.03.2021 for a sum insured of Rs.24 lakhs.  The OP2 assured that the complainant that any insurance claim under the policy would be promptly processed in case of fire accident.

3. It is the specific case of the complainant that on 29.01.2022 at about 5 AM the complainant was informed by his security person Mr.Bobjohn that he witnesses a lot of smoke bellowing out from the complainant’s business premises ventilator.  Thereafter the complainant along with others rushed towards the business concern in 10 minutes and while reaching the spot had called a fire brigade authorities Sunkadkatte fire station, Magadi main road, who arrived the spot and extinguished the fire in about three hours. The Karnataka state fire and emergency department have issued a certificate on 01.02.2022.  the complainant along with other employees from fire department spot to douse the fire for hours together however all the raw materials of scooters, generators and finished scooters were burnt and all plastic body parties,  head lights, tile lamps, digital speedo meters switches throttle had burnt to ashes.  
4. It is further grievance of the complainant that immediately he had reported the incident to the OP and the jurisdictional police station, Madanayakanahalli P.S., they have registered a complaint and issued the acknowledgement. The OP 1 confirmed the complainant address and the long term banking relationship since 27.11.2002 and OP2 has issued the sanctioned letters.  The complainant formally initiated the insurance claim with detailed documentation including a claim bill summary dated 21.02.2022 amounting to Rs.56,62,444/- towards damaged material.  
5. The OP2 on intimation has appointed a surveyor to conduct the survey and assess the consequential loss as mandatorily required under the insurance act.  The surveyor visited the spot on 31.01.2022 to conduct a survey and submitted detailed report and also assessed net loss towards damage to the business premises and loss covered under the standard policy at a net amount of Rs.47,57,900/-.  The surveyor also observed the probable cause for the accident is due to electrical short circuit and the loss is accidental.  The surveyor has also drawn an inference stating as follows;

“as per policy terms and conditions, as there is discrepancy in the location of loss i.e., change of address not inform to insurers for issue of endorsement to that effect. Therefore, the claim is not payable under the above policy.”

6.  The OP2 formally repudiated the claim stating that the complainant had shifted the business location without informing them which was only updated post incident by OP1.  The complainant had sent an email seeking copy of the survey report on 30.08.2022 to the OP which was not supplied to him. Inspite of repeated request the OP2 have not settled the claim. 
7. The complainant has also made several correspondences with the OPs regarding confirmation of the address.  The OP1 in response had issued a letter dated 13.06.2022 addressed to the OP2 about confirming the address of the complainant’s business.  Again the OP2 addressed the letter to confirm the address where the fire accident has taken place. As the registered place of the complainant’s business. Despite the complainant’s efforts and documentation confirming the current business address the claim was unjustly denied by the OP2.  The OP2 has formally repudiated the claim by issuing letter on 20.11.2022.  The ground stated in the repudiation letter is that this complainant had shifted the place of business to the place where fire accident took place seven years ago and the same was not informed by the OP1 to the OP2, even though the OP1 was well aware of the change in location address of the insured while renewing the policy and also change of risk from shop to manufacturing unit.  For the aforesaid reasons the OP2 has closed the file as no claim.  Hence the complainant has filed this complaint.
8. In response to the notice, OPs have appeared and files version. It is the case of the OP1 that it is merely an intermediary responsible for paying the insurance premium on behalf of the complainant and not liable for the claim amount. It has no contractual obligation to submit the complainant’s address when paying the premium to OP2.  The complainant had obtained a business loan from OP1 by hypothecating stocks and debts with the OP1 paying the annual premium of Rs.24 lakhs insurance policy under the Standard Fire and Special Peril Policy.  The OP1 have contended that they have submitted all necessary information to OP2 who closed the claim asserting there was no deficiency in service and denying the liability for any claim amount or interest and prays for dismissal of the complaint.
9. On the other hand the OP2 have filed their version stating that there is a date of discrepancy in the Fire Accident Report noting that the accident report states 28.01.2022 while the complainant states 29.01.2022. 
10. It is further case of the OP2 that it is for the policy holder to provide details subscribed to the policy as per his requirement and the relationship between the complainant and OP1 is that of banker and customer and not agent and principle.
11. It is further case of the OP2 that the claim under the fire floater and specific peril policy for Rs.24 lakhs is deemed invalid due to discrepancy the covered properties location and nature.  It was the complainant’s duty to inform OP1 of changes in location and business which would then be communicated to the insurer this OP2. The OP2 further taken the contention that there was no negligence on their part.  The complainant failed to read and understand the policy details leading to the discrepancy.  The fire occurred at a none covered location and any post accident communication about changes is prospective.  There is no delay or negligence on their part in communicating the decision of rejecting the claim on valid grounds as per the terms of the policy.  There cannot be any consideration of claim payment for a location different from the location mentioned in the policy.  After thoroughly applying its mind this OP had informed the complainant that no claim is payable. A concept of insurance is only indemnity and not profit making out of insurance contract.
12. It is further contention taken by the OP2 that it is the duty of the customer bank to insured the property adequately and for the bank to verify the same to protect their interest. The insurer is liable to honour the policy only in respect of covered location and the risk which is covered under the insurance policy and any other amount as claimed by the complainant.  Both the complainant and the OP1 have failed in their statutory obligations.  They cannot attribute the same to this OP. Hence the OP2 prays for dismissal of the complaint.
13. The complainant has filed his affidavit evidence and relies on 15 documents.  OP1 has filed their affidavit evidence, but not filed any documents. Affidavit evidence of official of OP2 has been filed and OP2 relies on 8 Documents.
14. Heard the arguments of both parties.  Perused the written arguments filed by both the parties.
15. The following points arise for our consideration as are:-

1. Whether the complainant proves deficiency of service on the part of OP?
2. Whether the complainant is entitled to relief mentioned in the complaint?
3. What order?

16. Our answers to the above points are as under:

Point No.1:  In the Negative

Point No.2: In the Negative

Point No.3: As per final orders

REASONS

17. Point No.1 AND 2: These two points are inter related and hence they have taken for common discussion.  We have perused the allegations made in the complaint, affidavit evidence and written arguments and documents filed by both the parties.

18. It is undisputed fact that the complainant is a proprietorship concern involved in the manufacture of DC motors, alternators, diesel generators and electrical scooter holding a valid GST certificate.  The complainant had been availing credit facilities from OP1 since 27.11.2002 under the credit guarantee fund trust for micro and small enterprises scheme(CGTMSE).  An insurance policy was obtained from OP2 through OP1 covering perils under the standard fire and special perils policy, specifically for stocks stored at the business premises against damages including those caused by earthquakes (fire and shock).  The policy was renewed yearly with latest renewal made on 27.03.2021 for a sum insured of Rs.24 lakhs.  The OP2 assured that the complainant that any insurance claim under the policy would be promptly processed in case of fire accident.

19. It is also undisputed fact that the fire accident was occurred in the complainant’s business premises on 29.01.2022 at 5 AM.  The complainant came to the spot along with others and also informed the fire brigade authorities and they have extinguished a fire in about three hours.  The Karnataka state fire and emergency services department had issued the certificate on 01.02.2022. Even though the complainant and others and employees from the fire department tried to douse for hours together. All most all the raw materials had burnt into ashes.  Immediately the complainant had reported the same to the OPs and also jurisdictional police.  The jurisdictional police had registered the complaint and issued acknowledgement as per Ex.P3. The OP1 had also issued letter confirming the complainant’s business premises address as per Ex.P4.  The complainant has assessed the damage amounting to Rs.56,62,444/-.

20. After intimation to OP2 the surveyor was appointed by the OP2 and he has assessed the damages amounting to Rs.47,57,900/-.  The surveyor has also made an observation that the probable cause for the fire accident is due to electrical short circuit and the loss is accidental. In addition to this the surveyor has also made a further report that as per the policy terms and conditions as there is a discrepancy in the location of loss i.e., change of address not informed to the insurers for issue of endorsement to that effect. Therefore the claim is not payable under the above policy.

21. The OP2 has formally repudiated the claim on the ground that the complainant has shifted the business location without informing them.  The main grievance of the complainant is that it is the duty of the OP1 to update the details of the business premises to the OP2 and it is further duty of the OP2 to visit and inspect the premises of the complainant before issuing the policy which has not been done.  Inspite of given all clarification and on several email correspondences between the OPs and the complainant regarding confirmation of the address of the complainant’s business the OP2 has repudiated the claim on the ground that the complainant has shifted the place of business to the place where fire accident took place seven year ago and the same was not informed by the OP1 to the OP2 even though the OP1 was well aware of change in location address of the insured while renewing the policy and also change of risk from shop to manufacturing unit.

22. After the incident the OP1 has sent a letter to the OP2 intimating the change in address. It is the specific contention taken by the OP2 that the changes in the policy will be effective from the date of intimation by the OP1 and due to the aforesaid reasons the OP2 has closed the file as no claim.  
23. The main grievance of the complainant is that the OP1 and 2 both are responsible for repudiation of the claim.  The OP1 and 2 have failed in their respective duties towards the complainant which results in clear deficiency of service and unfair trade practice.

24. On the other hand, the contention taken by the OP1 is that the complainant being a proprietary concern have obtained loan from the OP1 for their business purpose by hypothecation of stocks and books debits.  This complainant has also obtained an insurance policy Mitigated Peril Insurance under the standard fire special peril policy for the stocks stored in the shops and business place of the complainant.  The said policy was renewed every year and this OP1 was paying the premium on behalf of the complainant to the OP2.  The insured policy was for Rs.24 lakhs. As per the policy the OP2 is only liable to pay the insured amount to the complainant in case of fire or any other damages.  As per the request of the OP2 this OP1 has issued the letter dated 13.06.2022 about the information requested by the OP2 including the change of address of the complainant. This OP1 is not liable to pay any insured amount and there is no deficiency of service on their part.  The OP2 have renewed the policy without collecting the KYC details of the complainant which clearly shows their negligence in renewing the policy. if they have collected the GST certificate of the complainant when the policy was renewed they definitely know that where the stocks and materials have been stored. Further they have automatically renewed the insurance policy without visiting the premises of the complainant and not verified the stocks available in the premises and further after the fire accident they have visited the premises and made the assessment of the damages which itself shows that they are aware of the premises where the complainant has stored the stocks which got fired otherwise they should not assess the damages. The OP2 is negligent when they have renewed the policy since they have not followed the proper procedure while renewing the insurance policy and they are only liable to pay the amount to the complainant. The OP1 has not at all produced any document in their support.

25. On the other hand, the contention taken by the OP2 is that there is no delay or negligence on their part. The description of the property covered by the policy is a shop whereas the fire was occurred in a manufacturing unit.  The OP1 had made the communication about the location of the property only after the accident which can only be considered prospectively and not retrospectively.  It is the duty of the customer of the bank to insure the property adequately and for the bank to verify the same to protect their interest.  This insurer is liable to honour the policy only in respect of covered location and the risk which is covered under the insurance policy and any other amount as claimed by the complainant.

26. It is clear from the evidence and documents adduced by both the parties that the location of the address given by the complainant is “#4 Kabbele Road, Hanumantha Nagar, Sunkadakatte, Magadi Road, Bangalore 560 091,” and this property is a shop dealing in generators and electrical items covering stocks of Rs.24 lakhs.

27. It is also clear after perusal of the documents that the fire accident occurred at “United Electric Co, Shed No.90, Sy.No.47/2, Opp Vani International School, Kachohalli, Bangalore 560 091.”

28. The complainant has not at all informed the OP2 the insurance company about the change of his business place.  Originally the complainant was running a shop dealing in generators and electrical items at Kabbele Road, Hanumanthanagar, Magadi Road.  After that she has shifted his business to the Kachohalli Bangalore, and it is a manufacturing unit. It is the duty of the complainant to inform the change of the address of his business place and also the nature of the business to the OP2.  Even though the complainant has changed his business from the shop to the manufacturing unit he has not disclosed the same and the address of the manufacturing unit is not at all updated in the policy.  When the place of incident and the place covered under the policy are entirely different, the OP2 is not at all liable to pay the insurance claim to the complainant. It is not the duty of the OP1 who is the bank to inform the OP2 about the change of address of the complainant place of business. The OP1 is only liable to pay the premium as and when it was due to the OP2.

29. Under these circumstances, the complainant has failed to establish the deficiency in service and negligence on the part of the OP1 and 2.  On the other hand, the complainant himself is negligent in updating the details of his business place and the nature of business in the policy issued by the OP2. Hence the complainant is not entitled for any relief and complaint is liable to be dismissed.  Hence we answer point No.1 and point No.2 Negative.
30. Point No.3:- In view the discussion referred above we proceed to pass the following;

O R D E R

1. The complaint is Dismissed.  No costs.
2. Furnish the copy of this order and return the extra pleadings and documents to the parties.

(Dictated to the Stenographer, got it transcribed and corrected, pronounced in the Open Commission on this 11^TH day of NOVEMBER 2024)

Documents produced by the Complainant-P.W.1 are as follows:

Documents produced by the representative of opposite party 2 – R.W.1;