This appeal has been filed by the appellant Punjab National Bank against the order dated 12.05.2015 of the State Consumer Disputes Redressal Commission, Punjab, (in short ‘the State Commission’) passed in Complaint No.84 of 2013.

2.      Brief facts of the case are that on 09.01.2009 respondent No.1 through respondent No.2 availed loan/credit facility of Rs.16 lacs from appellant bank.  On 13.02.2009, Insurance policy was purchased by the borrower from the respondent No.3 and the address mentioned was Jasdev Nagar, opposite Nankana Public School, Gill Road, Ludhiana.  However, subsequent policies were taken by the petitioner bank and these policies covered risk location of Pratap Nagar Ludhiana. The last relevant policy was bearing No.233902 /11 /2012 / 1322 with validity from 18.3.2012 to 17.03.2013.  Another policy bearing No.233902/11/2013/157 was taken on 03.05.2012 and was valid upto 02.05.2013.  These policies also described location of risk at Pratap Nagar, Ludhiana. On 09.06.2012 fire broke out at premises situated at Jasdev Singh Nagar, opposite Nankana Public School, Gill road, Ludhiana.  On 25.09.2012, the appellant bank has written a letter to respondent No.3 and asked to settle the claim as bonafide mistake was done on the part of the respondent No.3. On 22.10.2012 insurance claim was repudiated by the respondent No.3.  On 14.08.2013 complaint was filed by the complainant before the State Commission, against the appellant bank & respondent No.3. The complaint was resisted by both the opposite parties by filing their respective written statements.  The complaint was decided by the State Commission which passed the following order on 12.05.2015:-

“16. In view of the above, we accept the complaint in favour of the complainant and against OP No.1 and direct OP No.1 as under:-

(i)   to pay a sum of Rs.40,40,523/-, the loss suffered by the complainant on account of fire to his stock;

(ii)   to pay a sum of Rs.1 lac on account of compensation; and

(iii)   pay Rs.21,000/- as litigation expenses;

Opposite party No.1 is directed to comply with the above directions within 45 days from the date of despatch of the order to the parties, otherwise the complainant will be entitled to interest @9% on all these amounts from the date of filing the complaint till realization and proceedings under Section 27 of the CP Act shall be initiated against it.”

3.      On 26.09.2015, appellant bank came to know about the order when the appellant received letter dated 23.09.2015 from the counsel.  On 12.10.2015 present appeal has been filed before this Commission. 

4.      Learned counsel for the appellant stated that respondent No.1/complainant is a firm and availed cash credit facility for the purpose of their business thus the respondent No.1 & 2/complainants are not consumer of appellant bank within the definition of Consumer Protection Act,1986.  That policy bearing No.425543 dated 13/02/09 was initially purchased in which address of the insured was clearly mentioned “M/s. Tarun Printers Gill Road, Opp- Nankana Public School, Jasdev Nagar, Ludhiana.  Thereafter the appellant bank used to pay the premium by debiting the account of the complainant.  The Insurance Company was deficient in service while issuing the fresh policy.  Bank has also written a letter dated 25.09.2012 stating that “we are of the view that mentioning of stock of Pratap Nagar, Ludhiana is the administrative lapse on the part of your employee who did the insurance and issued the cover note/policy.” The Insurance Company neither denied this letter nor settled the claim.  Further the Insurance Company also failed to produce the proposal form of the Insurance policy which is in their custody only.  As per para 10(a) of the loan agreement “the bank shall be at liberty, but not bound to effect such insurance at the risk responsibility and cost of the borrowers in such insurance companies as the bank in its absolute and unfettered discretion think fit and to the extent of the full market value of the security of which the bank shall be the sole judge, provided, however, that in the event of so insuring the security, the bank shall not be considered responsible or liable for the non-admission of the claims of the bank or their non-payment wholly or partly by such insurance company or the omission to insure or deficiency in insurance and the ultimate liability of the borrower to the bank shall continue notwithstanding such failure or non-admission as aforesaid.  The bank has provided adequate information regarding location stock etc. to the Insurance Company, but the Insurance Company failed to verify the stock and location and issued policy. It was further stated that in Syndicate Bank Vs. Nagarath Mechanical works and Anr. Appeal No.166 of 2006 decided on 31.05.2011, 2011 (3) CPC 376 (NC) this Commission observed that bank will not be liable for purchase of insurance policy on behalf of the borrower.  Similarly in HDFC Bank Ltd. Vs. Kumari Reshma AIR 2015 SC 290, the Hon’ble Supreme Court held that if the borrower failed to insure the vehicle it was absolute fault of owner not the fault of the financer.  In Central Bank of India Vs. Jagbir Singh Civil Appeal No.3645 of 2015 decided on 16.04.2015 the Hon’ble Supreme Court of India held that financer/bank is not liable for purchase/renewal of Insurance policy.  In M/s. Sam Fine O Chem Limited Vs. Union Bank of India CC No.39 of 2013 decided on 12.04.2013, the complainant had availed credit facility from Union Bank of India.  Alleging deficiency in service provided by the bank he preferred a complaint before the commission.  Rejecting the complaint the Commission inter alia noted that the complainant has availed the credit facility service of the bank for expansion of its manufacturing activity which was a commercial purpose and, therefore, the complainant did not fall within the definition of consumer given in Section 2(1)(d) of the Consumer Protection Act.  Learned counsel asserted that similar view was taken by this Commission in the matter titled as M/s. Anand Nishikawa Company Limited Vs. Punjab National Bank consumer complaint No.210 of 2006 and M/s. Anand Nishikawa Company Limited Vs. State Bank of Patiala, consumer complaint No.95 of 2006 decided on 12.09.2014.   

5.      It was stated by the learned counsel for the appellant that the main responsibility of taking insurance lies with the borrower.  However, if borrower did not discharge his onus, the bank would not like to leave the stocks financed from the loan account to be uninsured as in case of any eventually, the insurance amount would come to the bank.  Since 2010, the policy is being issued by the Insurance Company with risk location of stocks at Pratap Nagar, Ludhiana.  The complainant never objected to this risk location and never requested to include Jasdev Nagar location also. In the present case, the complainant/borrower never informed the bank about three places where he kept the stocks.  The loan agreement mentions the address of the borrower as 13038, ST No.14, Vishparna Colony, Ludhiana and the address given in the seal that has been put on the loan agreement by the borrower mentions the address of Pratap Nagar, Ludhiana.  Thus, the bank cannot have any inkling of stocks having been kept at any other place until informed by the borrower, which he has never informed.  The contention of the borrower/complainants is that the officers of the bank visited these sites including the address of Jasdev Nagar, Ludhiana for verification of the stocks and thus, the bank officers had full knowledge of the fact that the stocks are also kept at Jasdev Nagar premises.  In this regard, the learned counsel stated that first of all, the complainants have not filed any such evidence and moreover if the stocks were verified at the place shown by the complainants, the units for inspecting and maintaining the policy are different units and it is not possible to track two aspects together. 

6.      On the other hand learned counsel for respondent Nos.1 &2/complainants stated that the policy was taken by the bank and premium was deducted from the loan account of the complainants.  The policy was received by the bank and kept with the bank itself. No copy of the policy was sent either by the Insurance Company or by the bank to the complainants.  Thus, the complainants never knew as to what policy has been obtained by the bank for the stocks of the complainants. The 2009 policy was for Tarun Printers Gill Road, opp. Nankana Public School, Jasdev Nagar.   The bank officials called the complainants and informed that the bank has become the agent after the loan agreement was signed on 29.06.2011 of the respondent No.3/Insurance Company i.e. Oriental Insurance Company and stocks should be insured with them.  Then the bank itself got the insurance done from the respondent No.3 Insurance Company and no copies of the policy were supplied to the complainants.  The incident of fire happened on 09.06.2012 during the currency of the policy.  However, the claim was repudiated by the Insurance Company on the ground that the place of occurrence of fire was not covered under the policy as the location of risk was mentioned, as Pratap Nagar only.

7.      It was further stated by the learned counsel for respondents Nos.1 & 2/complainants that earlier policy was for the stocks kept at Jasdev Nagar by the same Insurance Company, therefore, the subsequent policies should have also been issued for the same particular location of Jasdev Nagar as well. However, due to negligence of the bank, the only location of Pratap Nagar was mentioned in the policies.  It was also in the knowledge of the insurance company that earlier policy was for Jasdev Nagar, the Insurance Company should have also clarified from the bank or from the complainants whether Jasdev Nagar was to be excluded or retained in the policy. Due to negligence of both the opposite parties i.e. the bank as well as Insurance Company, the complainant has suffered a great loss.  The surveyor was appointed by the Insurance Company and the State Commission has awarded the amount on the basis of the loss assessed by the surveyor.  The State Commission has found the bank deficient in service and therefore, the amount has been ordered to be paid by the appellant.  The deficiency on the part of the bank is self-evident and the bank has not shown any evidence if the complainants ever asked them to obtain the policy for Pratap Nagar.

8.      Learned counsel for the Insurance Company/respondent No.3 stated that the Insurance Company is liable to pay the loss suffered at the location of risk covered in the policy. The location of risk is mentioned as Pratap Nagar.  Therefore, the stocks kept in Jasdev Nagar was not covered under the policy.  Hence, the claim was rightly repudiated by the Insurance Company.  The State Commission has found no deficiency on the part of the Insurance Company. It was further stated by the leaned counsel that the insurance policies are issued as per the requirements given by the concerned party or the bank and Insurance Company does not make any modifications by itself.

9.      I have given a thoughtful consideration to the arguments advanced by the learned counsel for the parties and have examined the material on record.  It is true that the policy in question mentions the location of risk as Pratap Nagar.  It is accepted principle now that the contents of a policy cannot be interpreted differently by the courts and they have to be interpreted in the terms they are provided.  In this regard, I deem it appropriate to refer to the following judgments of the Hon’ble Supreme Court:-

(a) In General Assurance Society Ltd. Vs.Chandmull Jain, [1966 ]3SCR 500, it was held as under:-

17.” …In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves.”

 (b) In Oriental Insurance Co. Ltd. Vs. Sony Cherian II(1999 )CPJ 13 (SC ), it has been observed as follows:-

“16. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein.”

(c) In United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal, (2004) 8 SCC 644, the Hon’ble Apex Court held as follows:-

“6. ….The terms of the policy have to be construed as it is and we cannot add or subtract something: Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.

9. …It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment.

14. Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous.”

10.    From the above judgments, now it is clear that the location covered under the policy will be treated only as Pratap Nagar and no claim is admissible for the stock kept at Jasdev Nagar, Ludhiana, which is not covered under the policy.  Therefore, respondent Nos.1 & 2 are not entitled to get insurance claim for their loss under the policy. 

11. Another aspect of the present case is that the complainant has suffered loss due to certain deficiencies of the petitioner Bank as well as of the Insurance Company, respondent No.3 as alleged by the complainant. Clearly the bank is at fault as it has not explained as to on what basis the address of Pratap Nagar was given as location of risk.  Though this address is mentioned in the loan agreement, but loan agreement does not mention the location of stocks. It is important to note that the earlier policy was with risk location of Jasdev Nagar. The bank did not explain on what ground they were taking policy at Pratap Nagar address. Even if, it was based on the address of the applicant on the loan application, then also the bank should have asked or should have known where the stocks are kept as the stocks were to be insured and this was for the interest of the bank.  It seems that without any proposal form having been filed by the complainants, insurance was obtained without obtaining the correct information from the complaints about the stocks. The bank could not show that a copy of any of the policies was sent to the complainants to apprise the complainants about the policy. When the previous policy was for the Jasdev Nagar address and the bank obtained the insurance for the Pratap Nagar address without any such request from the complainants and without verifying where the stocks were kept.  The stocks were verified at Jasdev Nagar address also as well by the bank officers, but still it was not seen whether these stocks were insured.    

12.    Coming to the role of the Insurance Company, it is seen that the Insurance Company could not produce the proposal form as filled by the bank or the complainants.  This is a major deficiency on the part of the Insurance Company as this would have clarified many issues.  A party cannot get benefit by not producing the relevant documents which are the basis to prove party’s innocence or negligence.  As the bank has written a letter to the Insurance Company claiming that the address has been changed by some official of the Insurance Company, the proposal form should have been the main evidence to verify the same.  Though this letter was only a ploy by the bank to save their skin, however, by not replying to this letter or by not producing the proposal form, the Insurance Company cannot negate its negligence. 

13.    When the Insurance Company had insured at Jasdev Nagar address in the year 2009-2010, why did not the Insurance company try to verify from the bank or the complainants about the risk location of the stocks. The Insurance Company issued subsequent polices with risk location at Pratap Nagar, however, the Insurance Company could also not file any proof for this change.

14.  On the other hand, it is also noted that as per the loan agreement, the basic responsibility remains with the borrower to ensure the stocks and as per the concerned clause, if the bank obtains the policy to secure the stocks for their benefit, the bank cannot be blamed for dishonouring or rejection of the claims.  The complainants have failed to insure their stocks as per the conditions of the loan agreement and consequently, the bank had to take the insurance policy.  The complainants did not bother to see whether its stocks were insured at all locations.  There does not seem to be any record to show that the complainants ever tried to get the copy of the insurance policy.  This only means that either the complainants were receiving the copies of the Insurance policies or they were very negligent in protecting and insuring their stocks.  If they had received the policy and still they did not object, would clearly speak of their  carelessness and if they were so negligent towards the insurance of their stocks that they never bothered to see whether the stocks were insured and which stocks they would be responsible for their contributory negligence.  In both situations, their lapse and negligence is self proved .  Therefore, I find that there was contributory negligence on the part of the complainants also and therefore, the complainants cannot blame only other parties like the bank and the insurance company for non-coverage of the stocks kept at Jasdev Nagar under the policy.

15.    As has been seen that clearly the stocks at location of Jasdev Nagar were not insured under the policy, there can be no question of allowing the insurance claim in terms of the complaint. However, as the complainants have suffered loss due to negligence on the part of the bank as well as on the part of the Insurance Company as examined in aforesaid paragraphs, the complainants deserve some compensation from the bank and the Insurance Company, though their contributory negligence is also to be kept in mind.  In this background, I deem it appropriate to allow a compensation of Rs.6,00,000/- from the bank and a compensation of Rs.2,00,000/- from the Insurance Company.

16.    Based on the above discussion, the appeal filed by the bank is partly allowed and the order dated 12.05.2015 of the State Commission passed in Complaint No.84 of 2013 is modified to the extent that the appellant bank/opposite party No.1 shall be liable to pay only Rs.6,00,000/- (rupees six lakhs only) to the complainants and the respondent No.2/opposite party No.2 the Insurance Company shall be liable to pay Rs.2,00,000/- (rupees two lakhs only) to the complainants for deficiencies on their part.  These amounts of compensation shall be paid with interest @6% p.a. from the date of filing of the complaint till actual payment.  As there is also contributory negligence on the part of the complainants, the order of the State Commission relating to compensation of Rs.1,00,000/- is  set aside. This order be complied with within a period of 45 days, failing which, an additional interest @4% p.a. shall be payable on these amounts from the date of this order till actual payment.