1. This Appeal questions the Impugned order of the State Consumer Disputes Redressal Commission, Karnataka dated 06.07.2022 whereby the complaint filed by the first Respondent, who is a Jeweller, was allowed holding the Appellant Banker to be responsible for the alleged deficiency that impeded an Insurance claim to which the Complainant 1^st Respondent was otherwise entitled to under the Jeweller’s Block Policy acquired from the 2^nd Respondent, the National Insurance Co.
2. The background of the claim is that the Complainant jeweller was operating two shops bearing Door No.4-108 and 4-111 on main Road Bantwal, South Kanara District. The two shops are separated by a shop of a third party named Diamond Footwear. The main office or head office is run at Door No. 4-111 whereas shop bearing Door No. 4-108 is a Branch Office. The stocks in trade are common and the accounts as well as the income tax returns are all common. The shops are owned by a common proprietor namely the 1^st Respondent. Previously, the dealings were with the Syndicate Bank but later on the 1^st Respondent at the request of the Appellant transferred the overdraft facilities and the accounts with M/s Vijaya Bank that has now merged with the appellant Bank of Baroda. The hypothecation and the extension of working capital facility was extended by the Appellant to the tune of Rs.50 lakhs as against the stocks held by the 1^st Respondent.
3. The Insurance policy that was taken from the Respondent No.2, according to the Complainant was negotiated by the Appellant Bank with the Insurance Company through its agent and the proposal form of the Insurance policy mentioned the proposer as Branch Manager Vijaya Bank. However, the premiums were deducted from the account of the complainant. The business was running and the policy of Insurance was effective from 08.03.2007 to 07.03.2008 when the burglary took place on 09.06.2007.
4. It is this which gave rise to the claim made and from the documents on record it is evident that the claim form was accordingly submitted.
5. The Insurance Company repudiated the claim on 31.03.2010 by the following order:-

“Ref:602300/claims dept/2010

Dated:31.03.2010

To,

Sri. Suresh Vasudeva Baliga

Jewellers

No.4/108 & # 4/111

Bantwal Main Raod,

Bantwal, South Kanara District.

Re: Burglary claim in the shop no.4-111 in main road

Bantwal was not covered under the Jewellers Block Policy.

A complaint was lodged before the. Police alleging that dacoit took place at your shop premises bearing No.4-108 main road Bantwal. Subsequently, communication was made to us regarding the said dacoit.

We immediately appointed surveyors and investigators and obtained reports. There was also extensive communication between the surveyors and investigators on one hand with Vijaya Bank and yourself on the other hand. The Policy of insurance is issued by us at the request made by Vijaya Bank on your behalf representing your interest. Vijaya Bank submitted, proposal form seeking coverage of risk in respect of premises bearing no. 4-108, main road Bantwal under the name of financial institution, if any and the financial interest involved under the said Vijay Bank, Jarkibettu, Bantwal taluk was mentioned acting upon the proposal submitted, We agreed to cover the risk in respect of premises bearing no. 4-108 and the policy of insurance was issued.

The investigation revealed that you are running jewellery business at two separate and distinct premises. You have also procured separate licenses in respect of both the premises, namely, premises bearing No. 4-108 and premises bearing No.4-111. It is abundantly proved that dacoit took place causing loss in respect of shop bearing No.4-111. The letter written by you and the confirmation made by the insurer also Indicate that the dacoit took place only at premises bearing No.4-111. You have sought indemnification in respect of damages caused to you in respect of loss occasioned at Premises bearing No.4-111. The matter was taken up for consideration on the basis of the documents available on record Including the letter written by Vijaya Bank dated 15.10.2008 and your letter dated 22.01.2009 and the license that you have procured and investigation and survey report and explanation submitted by you.. We however after processing all the papers including legal and contractual angle and the liability of the insurer that arises under the terms and conditions of the policy has come to a definite conclusion the policy of insurance did not cover the risk in respect of premises bearing No.4-111 and the policy of insurance was intended to cover risk in respect of premises bearing No.4-108 only. There existed no dispute with regard to terms and conditions of the policy and the premises which was required to be covered. Yourself and our company had proceeded on the basis of coverage in respect of premises bearing No.4-108. Hence risk in respect of premises which was not part and parcel of coverage under the policy of insurance cannot be granted by our company.

Under these circumstances, we are not liable to indemnify in respect of the claim made by you under Jewellers block insurance policy bearing no.602308/46/06/9700000/90 under the aforesaid circumstance your claim under Jewellers Black Policy is not payable and the said claim is repudiated. Trust you would understand the contractual obligations of the parties in this behalf.

Thanking You

Yours faithfully

Sd/-

(Manjunath J Mysore)

Divisional Manager”

6. Reference was also made to the Police Investigation Report which mentioned the burglary to have taken place at the premises Door No.4-108.
7. The Policy documents also contain the same address which is evident from the cover note. The address of the premises mentioned in the policy is Door No.4-108 Main Road Bantwal.
8. The Insurance Company was therefore clear in its repudiation that since the loss occurred in the shop bearing Door No.4-111, in that event since the covered risk was only in respect of the premises bearing Door No.4-108 therefore the claim was not indemnifiable as the premises where the burglary occurred, that is Door No.4-111 was not part and parcel of the coverage.
9. Aggrieved the Complainant, filed CC/192/2010 before the State Commission where the Insurance Company was arrayed as Opposite Party No.1 and Vijaya Bank as Opposite Party No.2. It was alleged therein that on 09.06.2007 at about 9’o clock at night 10 unknown persons looted the shop bearing Door N0.4-111 and about 7.360 Kg of gold jewellery was taken away the cost whereof was estimated on the date of loss to the tune of Rs.63,27,160/- and at the time of the filing of the complaint in 2010, it was Rs.1,18,00,000/- approximately.
10. It was alleged in the complaint that Vijaya Bank had issued a letter on 04.08.2007 immediately after the incident to the Insurance Company that the Insurance proposal, by a clerical mistake and by oversight, had omitted to include Door No.4-111. The stock statement mentioned by the Complainant was the total stock held by them at Door No.4-111 and 4-108 which was stated to have been certified through monthly inspections. Accordingly, a request was made to the Insurance Company to settle the claim.
11. The State Commission after exchange of affidavits and pleadings as well as the proof on record came to the conclusion that the insurance was of the stocks but since the Bank had been deficient in not incorporating the address of Door No.4-111, this omission on the part of the Bank made it liable, and not the Insurance Company, for the loss as the Insurance cover could not be encashed on account of this lapse. Accordingly, it held the Appellant Bank to be responsible and liable for the deficiency and awarded the claim against the Bank for a sum of Rs.63,27,160/- together with interest @12%p.a from the date of repudiation till actual realization and to pay Rs.2 lakhs as compensation for mental agony and Rs.50,000/-as cost of litigation.
12. Learned Counsel for the Appellant Bank has urged that the Bank is only a facilitator for the Insurance Coverage and it was the obligation of the borrower to take an Insurance cover as per clause 11 of the hypothecation agreement. Hence the Bank cannot be held liable for the same. It has further been submitted that there is no privity of contract between the Appellant and the Respondent No.1 Complainant for indemnifying any such loss, and even assuming that a letter had been written on 04.08.2007, the same does not absolve the Insurance Company from the liability which cannot be transferred on the Bank.
13.  It is also submitted that the letter dated 04.08.2007 by itself cannot create any liability contrary to the terms of the agreement and the insurance contract and hence the impugned order cannot be sustained.
14. The aforesaid contentions have been vehemently opposed and the learned Counsel for the Insurance Company submits that there is no liability of the Insurance Company as admittedly the premises disclosed in the proposal form and in the cover note did not cover the risk of Door No.4-111, and since the burglary took place only in that premises, the coverage of Door No.4-108 cannot be utilized to indemnify the loss. He also submitted that the error was on the part of the Bank itself which stands established in view of the letter dated 04.08.2007.
15. The Insurance Company therefore is neither liable nor is it obliged under the contract of Insurance to indemnify for a loss that has occurred in a premises other than which was covered as a risk in the policy.
16. Learned Counsel for the Complainant has vehemently opposed the appeal contending that admission is the best piece of evidence and the document dated 04.08.2007 is an undisputed testimony and a piece of evidence which leaves no room for doubt that the Bank itself has accepted its mistake which is a gross deficiency by not correctly describing the premises in the proposal form that was filled up by it and the entire Insurance coverage documents were negotiated by it. The Complainant had simply been informed about the premium being debited from this account. The contention of the Appellant that the Bank was only a facilitator is absolutely incorrect inasmuch as the Bank had hypothecated the entire stocks including the gold which was lost in the burglary. In this background, the business transaction with the Bank was clearly intended for the facilities as against the stocks which were kept in both the premises. The Bank never differentiated or objected to the running of the business from both the premises and to the contrary as referred to in the letter dated 04.08.2007 the license for the business itself was being run at both addresses. The stock inspection has also been stated to have been carried out at both the locations.
17. It is submitted that it was clearly intended and understood between the Bank and the Complainant that the stocks at both the locations belonging to the same proprietor was subject matter of hypothecation. Not only this the license issued to the Complainant is for both the premises and the copies of the licenses are on record which were also filed as evidence before the Forum below.
18. It has also been pointed out that the Police report dated 10.06.2007 even though mentions Door No.4-108 yet the Bank itself admitted the burglary at Door No.4-111. It is therefore submitted that merely because only one Door number was mentioned in the Police Report, the same did not in any way dilute the location of the burglary of the stocks that were secured under an Insurance cover obtained by the Bank itself.
19. It has also been pointed out by the learned Counsel for the Insurance Company that the Respondent No.1 Jeweller had also filed First Appeal No.112 of 2024 before this Commission challenging the impugned order which has been dismissed on 21.03.2024 on the ground of an inordinate delay as the Appellant therein had failed to show sufficient cause for the same. A copy of the order dismissing the Appeal on 21.03.2024 has been placed before the Bench.
20.  Having considered the submissions raised, the first document which needs to be considered is the proposal form tendered to the Insurance Company. The said proposal form, which is exhibit C5 before the State Commission, is an admitted document and is signed and has been filled up by the Branch Manager of the Vijaya Bank as the proposer. This document leaves no room for doubt that the Insurance was proposed by the Branch Manager of the Bank and not by the borrower/the Respondent No.1 Complainant. Even though the policy was issued in favour of the borrower and the premium was debited by the Bank from his account but this fact confirms that the Appellant Bank was not only a facilitator but was also the proposer of the Insurance Policy and it was exclusively handled by it. The proposal form which got converted into the cover note mentions only Door No.4-108. The error therefore was on the part of the Bank that stands admitted by the letter dated 04.08.2007 which is extracted hereinunder:-

“VIJAYA BANK

Branch/Office

Jakribettu, Bantwal-574211

Dated 04.08.2007

To,

The Manager,

National Insurance Co.

B.C. Road.

Sub: Claim Settlement of Suresh V Baliga

With reference to the above we would like to state as follows.

Suresh V Baliga, Jewellers is one of our good and reputed customs of Bantwal. They are enjoying a C.C. Limit of Rs. 50 lakhs and a term loan of Rs. 16 lakhs. Their dealing with us are good and prompt.

Previously, they were enjoying a credit limit of Rs. 20 lakhs in Syndicate Bank Panemangalore and a credit limit of Rs. 5 lakhs in Karnataka Vikas Grameena Bank, Bantwal, against the stock of B. Suresh V Baliga, Jewelers bearing door No. 4/111. After a long persuation the party has agreed to open a account with us. On 10.02.2006, we took over the entire liabilities from Syndicate Bank along with all connected records and on 11.02.2006, we took over the entire liabilities from Karnataka Vikas Grameena Bank respectively. During the period the business transaction was only with D.No.4/111. Thereafter the party opened a branch bearing D.No. 4/108 nearby the D.No.4/111. Hence the credit limit of Rs.50 lakhs granted to B Suresh V Baliga, Jewellers main Raod, Bantwal, against the stock held at 4/11 and 4/108.

We regreat to inform you that, in the insurance proposal, by clerical mistake and by oversight we have omitted to include the D.No. 4/11. The stock statement submitted by the party is the total stock held by them at D.No.4/111 and 4/108. This is certified by our monthly inspection. Considering all the above, we request you to settle the claim at the earliest date and issue the claim cheque/draft in favour of the Bank.

Thanking You

Your's Faithfully

For VIJAYA BANK”

21.  The said document has not been disputed nor it could be successfully denied and its contents therefore are a clear admission on the part of the Bank. The recital therein leaves no room for doubt that the proposal had been submitted by the Bank and they erroneously did not mention Door No.4-111 in the address of the premises in spite of the fact that they clearly intended to insure the entire stocks that were held in hypothecation by them. This fact is also admitted in the same letter and there is nothing to indicate that the stocks which were being regularly inspected by them as stated in the said letter were separately kept only in one of the premises. Thus, the Bank on its part had contracted with the Respondent No.1 to extend all its facilities as against the entire stock of the firm of which the Respondent No.1 was the sole proprietor. It is also not in dispute that the firm was one and the entire trade and business was one and the same that was being run through the two shops 4-108, 4-111 by the same proprietor. There is no dispute about the identity of the nature of the trade and the stocks that were subject matter of trade. The Bank therefore cannot absolve itself and its business connect and relationship with the Respondent No.1 about which there is no misunderstanding. The gold ornaments which was subject matter of burglary were therefore part of the same stock that was clearly intended to be insured by the Bank which was in effect also to protect its interest as well.
22. The Bank therefore was conscious about these facts and therefore it wrote the letter on 04.08.2007 accepting the same.
23. The Insurance Company on technicalities taking notice of the address of the premises mentioned in the cover note repudiated the claim which cannot be said to be erroneous as it is obvious that there were two separate shops divided by a third party’s shop in between, and hence the locations even though close in proximity were two separate door numbers. Nonetheless the Bank was fully aware of this and it accordingly extended the facilities to the firm which was run from both these shops as already noted above. The Bank therefore had no misgiving about the locations or the stocks kept at these locations which were hypothecated with it. The Bank has nowhere taken a plea of the bifurcation of the business premises and to the contrary has treated both the premises to be the place of business and trading of the Respondent No.1 for the same business and for the same stocks as discussed hereinabove.
24. The mentioning of only one door number in the Police Report therefore is of no consequence when the intention and understanding between the Appellant Bank and the Respondent No.1 Complainant does not in any way create any doubt about the business relationship between the Bank and the Complainant.
25. The contention that it was the borrower’s obligation to take an Insurance cover and therefore the Bank cannot be held liable, is an argument which deserves rejection on the facts of the present case where it is established that the entire negotiation of the Insurance Coverage was exclusively undertaken by the Bank itself commencing with the filling up of the proposal form for the Insurance cover by the Branch Manager of the Bank itself.
26.  The deficiency therefore was clearly of the Bank in not having mentioned the additional door number 4-111 in insurance documents nor did they take care to inform the Insurance Company even though the stocks hypothecated for which insurance coverage was taken included those stocks which are part of the insurance coverage.
27. For all the aforesaid reasons and in view of the findings recorded by the State Commission, we do not find any error in the impugned order of the State Consumer Disputes Redressal Commission dated 06.07.2022 so as to interfere in this appeal on any available ground. The Appeal lacks merit and is accordingly dismissed and the impugned order of the State Commission is hereby confirmed.