DOF.27.9.2010

DOO.04.06. 2011

IN THE CONSUMER DISPUTES REDRESSAL FORUM, KANNUR

Present: Sri.K.Gopalan:  President

Smt.K.P.Preethakumari:  Member

Smt.M.D.Jessy              : Member

Dated this, the 4^th day of  June, 2011

CC.237/2010

M.O.Varghese,

S/o.Ouseph,

Sreekandapuram.P.O.

Kannur Dist.                                          Complainant

(Rep. by Adv.Reeja Kunhimangalam)

1. Regional Manger,

    Keralal State Backward Class

    Development Corporation Ltd.,

    Kannur.

2. District Insurance Officer,

    Kannur.

    (Rep. by Adv.P.P.Venu)                      Opposite parties                                                         

O R D E R

Sri. K.Gopalan, President

          This is a complaint filed under sectin12 of consumer protection Act for an order directing the opposite parties to pay ` 20,000 as compensation with interest and cost.

          The case of the complainant in brief is as follows: Complainant availed a loan from 1^st opposite party for the purpose of purchasing an autorickshaw for self employment for his livelihood and the same insured with 2^nd opposite party. He renewed the policy every year from the office of 2^nd opposite party. The insurance for the vehicle was renewed till 18.8.2010. On 18.8.2010 complainant approached 2^nd opposite party for renewing the insurance. But 2^nd opposite party  informed that they are not in a position to  renew the vehicle since the loan of the 1^st opposite party has been closed. They advised to take the private insurance. Where the complainant approached the private Insurance companies they told him that he wanted to take comprehensive policy for which he has to pay the entire amount and take new policy. They were not ready to give non-claim bonus to complainant. Complainant closed the loan in the year 2006 and the same was informed to the concerned officer. Even after that in the year 2008-2009 complainant renewed the vehicle from 2^nd opposite party. Complainant could not run the vehicle after 18.8.10. Complainant sent lawyer notice to 2^nd opposite party. In the reply send by 2^nd opposite party he has admitted that they insured the vehicle of complainant till 18.8.2010. It is also stated in the notice that the vehicle was insured with the direction of 1^st opposite party as per No.L.A/160/M.C/2002-20033. The notice says that there was clause in the loan agreement that, till the loan is closed the vehicle should have been kept insured in Kerala State Insurance department. But 1^st opposite party did not explain this terms to complainant and not allowed to read any such condition. Complainant only signed whenever 1^st opposite party shown to sign. Even if there is such condition there is no condition that the insurance would be discontinued. Moreover such a condition has no meaning that insurance facility would only be given till the existence of the loan. Even after closing the loan insurance was continuously renewed for over three consecutive years. If there was such a condition 2^nd opposite party would not have allowed complainant to renew the insurance policy for the vehicle for the last three years. If there is any such agreement to that effect 1^st opposite party should have been informed 2^nd opposite party the information in respect of the closing. It is false to say there was such an agreement. Complainant himself informed 2^nd opposite party verbally when he went to the office of 2^nd opposite party for renewing the insurance of the vehicle in the year 2007 itself after closing the loan. If opposite party has stated from the outset that there will  be insurance till the closing of the loan only complainant could have make arrangements to take insurance from private companies and continue to enjoy the benefit of renewing the insurance with non-claim-Bonus benefit. Complainant is not financially sound to raise a big amount to take new policy from private company. Complainant is in need of comprehensive policy since the vehicle has been running in a hill area. The attitude of 2^nd opposite party informing that they will not renew the insurance on day of termination of the loan account amounts to deficiency in service. 2^nd opposite party is well aware that it is not possible to run the vehicle with out insurance and this attitude is cruel act on the part of 2^nd opposite party. Hence this complaint.

          Pursuant to the notice opposite parties entered appearance and filed version separately denying the main allegations of complainant.  The 1^st opposite party contended that they used to recommend the purchasers of vehicle by the loan provided by 1t opposite party to insure the vehicle with 2^nd opposite party as it is a company under the direct control of Kerala Govt.  1^st opposite party has neither interest nor hatred either with 2^nd opposite party or any other insurance company. There are purchasers who obtained loan from 1^st opposite party insured their vehicle with other insurance company. The notification LA/160/NMD/2002-03 does not contain any such condition with respect to taking of loan. The allegation that 2^nd opposite party has replied saying that the agreement signed by the complainant at the time of taking the loan consist of terms that insurance  should be taken from 2^nd opposite party till the closing of loan is without any basis. It is also not true to say that the signature in the loan agreement has been obtained without convincing the terms of agreement. So also the averment of 2^nd opposite party that the information with regard to the closing of loan has not been informed to 2^nd opposite party is false. Immediately after closing of loan account the 1^st opposite party shall in the usual course give. Hire Purchase Termination certificate to loan borrowers then and there. There is no agreement to inform 2^nd opposite party with regard to termination of loan account. There was no such practice existed ever before communicating the information of termination of any such loan. There is no deficiency in service on the part of 1^st opposite party in the matter of loan or insurance. If there is any deficiency in the case of insurance 1^st opposite party is not answerable. Hence to dismiss the complaint against 1^st opposite party.

          2^nd opposite party filed version separately contending as follows: The complainant’s vehicle insured with 2^nd opposite party till 18.8.2010. The office of the 2^nd opposite party came to know the fact of termination of the loan of complainant only when complainant submitted the insurance renewal application. Complainant saying that the loan was completed in 2006. But it was not informed earlier neither in2007, 2008 nor in 2009. If it was not informed insurance would not have renewed in the years 2007, 2008 and 2009. Kerala State Insurance Department conducting Insurance business making use of the facility provided under section 36(1)(a)(b)2(c) of General Insurance Business (Nationalization) Act 1972. As per section 36 insurance cannot be taken if the govt. has no interest so also after the termination of loan the insurance cannot be renewed. That is the reason why 2^nd opposite party rejected the renewal of insurance. The contention of complainant that he will not get the benefit of No claim bonus that he had been getting for the last 8 years is baseless. A vehicle insured with a company if changed its insurance to another company they have to give the benefit of no claim bonus that had been given by the earlier company. Similar cases companies are doing so and 1^st opposite party have been receiving so much of letters seeking bonus details and sending reply to them. If any company refused to give this benefit exploiting the ignorance of complainant this opposite party is not liable for such actions. The insurance is not renewed only because of the reason that opposite party is not able to do it as such rules and regulations are not permitting it to do so. There is no deficiency in service on the part of this opposite party and hence to dismiss the complaint.

          On the above pleadings the following issues have been taken for consideration.

1. Whether there is any deficiency on the part of opposite parties?

2. Whether the complainant is entitled for the relief as prayed in

     the complaint?

3. Relief and cost.

The evidence consists of oral evidence of PW1and documentary evidence Exts. A1 to A7 marked on the side of complainant. 1^st opposite party has no oral evidence but marked Exts.B1 and B2 on his side. 2^nd opposite party has not adduced any evidence neither oral nor documentary.

Issue Nos.1 to 3

Admittedly complainant availed loan from 1^st opposite party for purchasing of Autorickshaw and the same was insured with 2^nd opposite party. The case of the complainant is that 2^nd opposite party denied to continue the renewal of the insurance from 18.8.2010 onwards on the reason that after closing the loan account the rules does not allow them to grant permission to renew the policy. At the same time it is an admitted fact that loan account was closed in the year 2006 and the complainant renewed the policy thereafter for subsequent 3 years up to 18.8.2010. 2^nd opposite party contended that renewal could not be allowed since the loan account was closed. It was allowed to renew for previous three years only because they were not aware of the fact of closing of the loan. Neither the complainant nor 2^nd opposite party informed them about this fact of loan closure. 1^st opposite party has the case that he has no obligation to inform the closure of loan to 2^nd opposite party by any agreement. Hence he has no liability.

Complainant filed affidavit in tune with the pleadings. He was cross examined by 1^st opposite party but 2^nd opposite party did not utilize the opportunity to cross exam PW1 so as to challenge the allegations raised against 2^nd opposite party  that he had denied the renewal of insurance policy without any reason. The chief affidavit in lieu of chief examination and facts that came out in cross examination together with the documents Ext.A1 to A7 undoubtedly proved that complainant availed loan from 1^st opposite party for purchasing autorickshaw and the same insured with opposite party till 18.8.2010. It has also been proved beyond doubt that the loan closed in the year 2006. 2^nd opposite party admitted in version that the vehicle was insured up to 18.8.2010. It is quite evident that even after closing of loan 2nd opposite party renewed the insurance policy to complainant’s vehicle for 3 years. Ext.A1 renewed the policy for a period of one year from 20.7.07 to 19.7.08 on remitting an amount of 2050. Ext.A2 reveals that the policy again renewed from 19.8.09 to 18.8.10. Ext.A4 is the letter sent by District Insurance officer informing the complainant that they cannot renew the insurance policy. Ext.A5 is the lawyer notice sent to 2^nd opposite party wherein it has been specifically alleged that he has not informed that the insurance could be renewed only up to the date of closure of loan. Notice continued to say that there was no such condition in insurance certificate if not he would not have insured the vehicle with 2^nd opposite party. If there was no such condition in insurance certificate he would not have insured the vehicle with 2^nd opposite party. He was not given any notice. He came to know that the 2^nd opposite party was not ready to renew the policy of insurance only when he went for renewing the insurance on 18.8.10. If it was informed earlier he could have avoided unnecessary expenses. Ext.A6 is the letter replied by 2^nd opposite party to Ext.A5, wherein he has replied with contention same as that of the version. They have contended that the vehicle of the complainant was insured in accordance with the letter of 1st opposite party on 6.6.02. It can be seen that 2^nd opposite party did not produce any such letter before the Forum. 2^nd opposite party did not produce even a single piece of paper nor adduced oral evidence so as to prove his contention. 2^nd opposite party was not even cross examined PW1 to dispute the allegations raised against him. Being a responsible authority 2^nd opposite party has the liability to produce evidence to show that they have reasonable ground to justify refusal of renewal of policy. If 2^nd opposite party is entitled for denial of continuation of insurance policy they could have prove it by merely producing the relevant documents in their hands. Even the letter dt.6.6.02 mentioned in Ext.A6 alleged to be received from 1^st opposite party upon which 2^nd opposite party allowed to insure the vehicle. This negligence 2nd opposite party has shown in conducting the case is also stands as a typical evidence to assume that there is deficiency in service on the part of 2^nd opposite party in the refusal of renewing the insurance policy. It is the prime duty of 2^nd opposite party to prove that complainant has realized all the terms and conditions which the opposite party has not attempted at all.

          1^st opposite party has taken the contention that they are not bound by any terms to communicate the date of closure of loan to 2^nd opposite party. There was no such condition in any agreement with the 1t opposite party. The learned counsel for the 1^st opposite party argued that Ext.B1 and B2 produced by 1^st opposite party goes to show that no such conditions are inserted either in the loan sanction order or in the agreement executed between the complainant and the 1^st opposite party. 2^nd opposite party did not produce any document to show that 1^st opposite party is bound to inform him the date of closure of loan. Complainant also failed to produce any document to show that 1^st opposite party is duty bound to communicate 2^nd opposite party with regard to closing date of loan taken by the complainant. Complainant relied on Ext.A6 to contend that it is upon the notification of 1^st opposite party dated 6.6.02, 2^nd opposite party insured the vehicle. But that is a fact which not proved either by the complainant or by 2^nd opposite party. Complainant has not taken steps to produce that notification. So it is difficult to say that the vehicle insured on the basis of direction N.A.160/M.C/2002-03 by 1^st opposite party as stated in Ext.A6. No such document produced before the Forum. Thus we find no link to attach liability on 1^st opposite party on the ground of deficiency in service.

          The main contention raised by 2^nd opposite party is that neither the complaint nor 2^nd opposite party informed them the date of closure of loan. They are not allowing to renewing the policy after closing of loan. If that be so the question first of all is whether there is any agreement that makes liable 2^nd opposite party or complainant to inform the date of closure of the loan. There is no evidence to that effect. There arose another important question what is the set up arranged by 2^nd opposite party to know the date of closing of loan in the ordinary course? What is the procedure usually adopted by 2^nd opposite party in order to get the information of closing the loan. Is there any column in the application form to show the date of closure of loan in the usual course? It is quite natural that there shall be period for every loan. The above case is one in which the loan was closed in the year 2006 but the renewal continued again till 2010. 2^nd opposite party has not explained whether or not the procedure adopted or followed by them in the ordinary course of business met with failure to know the date of the closure of loan.  2^nd opposite party has the liability to answer all these questions. As per the contention taken by 2^nd opposite party they are bound to discontinue the renewal of policy right from closing of the loan. Then definitely they must have followed a definite procedure to know the date of closure without fail, since it is part and parcel of alleged condition. 2^nd opposite party can be escaped from legal liability only by proving this set up and its result. Merely by alleging that date of closure has not been informed by1st opposite party or complainant there cannot be any escape from liability as far as 2^nd opposite party is concerned. We have no hesitation to hold that 2^nd opposite party is liable to met the expenses to take a new comprehensive policy and its cost together with the compensation for the  mental agony suffered by the complainant.  Comprehensive Insurance is an essential need to run the vehicle especially in hill areas. Complainant has only 3^rd party Insurance which he has admitted in evidence. The mental agony of the complainant with regard to the risk that is followed in the absence of comprehensive policy of the vehicle which is the only source of livelihood, is so great which can not be ignored. Hence we hold that an amount of `15,000 as compensation will meet the end of justice. Complainant also entitled for an amount of `1000 as cost of this litigation. Thus issues 1 to 3 are found in favour of the complainant and order passed accordingly.

          In the result, the complaint is allowed directing the 2^nd opposite party to pay an amount of  `15,000 (Rupees Fifteen thousand only)  as compensation together with `1000 (Rupees One thousand only) as cost of this proceedings  to the complainant within one month from the date of receipt of this order, failing which the complainant is entitled for 12% interest from the date of order till the payment. The complainant is entitled to execute the order after the expiry of 30 days as per the provisions of consumer protection act.

                           Sd/-                     Sd/-                    Sd/-

President              Member                Member

APPENDIX

Exhibits for the complainant

A1. Schedule of premium of insurance dated 03.07.07.

A2. Certificate of Insurance

A3. Leter dt.22.9.06 issued by 1^st OP to Joint RTO, Taliparmaba

A4. Letter dt.18.8.10 issued by2nd OP 

A5. Copy of Lawyer notice sent to 2^nd OP

A6. Reply notice

A7. Copy of the RC

Exhibits for the opposite party

B1.  Copy of order dt.6.6.02 of LA.160/NMD/02-03 of 2^nd OP

B2.  Agreement between complainant and 1^st OP dt.31.5.02.

Witness examined for the complainant

PW1.Complainant

Witness examined for the opposite party: Nil

   /forwarded by order/

                     Senior Superintendent

.