BANK OF INDIA vs SATHYASEELAN

THIS appeal is directed against the order passed by the District Forum, Thiruvananthapuram, in O.P. No. 178 of 1995. The opposite party No. 2 is the appellant.

THE allegations in the complaint are as follows : THE complainant has availed of a loan from the second opposite party under the D.R.D.A. Scheme. THE project amount was released to the complainant by the second opposite party on 3.9.1993. THE complainant purchased chicks. THEse chicks were insured for and on behalf of the complainant by the second opposite party. THE premium was realised by the second opposite party from the complainant alongwith the loan instalment and remitted the same to the first opposite party. THE entire chicks of the complainant started dying from 12.12.1994 onwards, and the complainant has sustained loss to the tune of Rs. 30,000/-. THE complainant informed the matter to the first opposite party for realisation of insurance amount, but the claim was repudiated by the first opposite party. Hence the complainant sought a direction to the opposite parties to pay compensation. First opposite party filed a version stating that on 19.8.1994 the 1st opposite party received a draft for a total amount of Rs. 845/- issued by the second opposite party towards insurance premia in respect of 2 fire proposals and one shopkeeper proposal-cum-policy. The premium for the above 3 policies came to Rs. 731/-. The balance amount of Rs. 114/- was treated by the first opposite party as remittance without details, as no details regarding the purpose of remittance were made by the second opposite party. On 10.9.1994 the first opposite party received an insurance proposal with all material particulars required by the insurer left blank in the proposal form. The first opposite party informed that proposal was incomplete and the same could not be acted upon and the proposal was returned to the second opposite party to be duly completed in all respects, so that the proposal form could be acted upon. Subsequently the 2nd opposite party returned the proposal form back to the first opposite party on3.12.1994 filling certain portion of the porposals but all the same leaving material details. Since the proposals did not contain the material particulars it could not be acted upon and no policy was issued by the first opposite party and there was no contract of insurance between the second opposite party or the complainant regarding the chicks. So the claim was repudiated and the repudiation was valid. The first opposite party is willing to refund the amount remitted.

The second opposite party filed a version admitting the loan and contending that it is not liable to pay any compensation and they are unnecessary parties as there is no deficiency on their part. The Development Officer of the first opposite party used to visit the branch of the second opposite party for canvassing business and during his visit to the branch, the second opposite party entrusted all the concerned proposals with details including that of the complainant. The second opposite party also enquired about the non issue of the policy with the Development Officer so many times and he had also promised to issue the policy in favour of the complainant at an early date. In fact the Development Officer himself calculated the premium for the policy for risk against loss of chicks and requested to place the proposal. The first opposite party used to issue policy after lapse of 4 or 5 months after giving the particulars of premium amount. The first opposite party was negligent in dealing with the matter and in not issuing the policy and deficiency was really committed by the first opposite party. If all the details were necessary from the second opposite party, the first opposite party had a bounden duty to intimate the same to the second opposite party then and there immediately on receipt of premium from the second opposite party. The first opposite party did not do so and so the negligence is really on the side of the first opposite party.

THE proposal form was produced before the District Forum and Ext. Dl is the proposal form and it revealed that the opposite parties did not furnish the necessary details in the proposal form. THE District Forum has observed that even the 2nd opposite party has no case that Ext. Dl proposal with respect to the chicks of the complainant was accepted by the first opposite party and that the first opposite party issued policy for the same and their contention is since the first opposite party received the premium amount and proposal on 14.8.1994, the policy came into effect on that day. THE District Forum rejected this contention in the light of the decision of the Supreme Court in Life Insurance Corporation of India v. Rajavasavareddy Komalavally Kamba and Others reported in AIR 1984 Supreme Court, page 1014. THE Supreme Court has held that acceptance of proposal of policy is complete only when it is communicated to the offerer and silence or receipt and retention of premium cannot be construed as acceptance. District Forum also held that the complainant is a consumer since complaint relates to deficiency in service. It was contended on behalf of the appellant/second opposite party under the hypothecation agreement, the obligation is on the borrower to insure at its own expense against fire and such other risks as the Bank shall from time to time require and to deliver it. He admitted that Clause 15(b) however provides that in default of the borrower in doing so, the Bank may insure and recover the premium amount with interest. In this case it is not disputed that the second opposite party Bank debited the insurance amount for insuring the chicks and having debited the amount and undertaken to insure it would not be open to the Bank to say that there is no deficiency as the obligation is primarily on the borrower to take insurance policy. It is in these circumstances the District Forum found that there is deficiency on the part of the second opposite party in submitting the proposal with necessary details and in not pursuing the matter and getting the policy. It is in that view an order was passed by the District Forum directing the second opposite party to pay Rs. 3,780/- together with cost of Rs. 500/- to the complainant.

IN this appeal, learned Counsel raised the contention that complainant is not a consumer as the purchase of chicks is for commercial purpose. What is alleged in the case is deficiency in service and in such cases it does not matter whether the service availed of is for commercial purpose or not. IN the circumstances that contention has no validity. It is next pointed out by learned Counsel that the obligation is on the borrower under the hypothecation deed to insure and therefore the District Forum was wrong in fastening the liability on the second opposite party in not taking a valid policy. It is no doubt true that primary obligation is on the borrower but the agreement provided that the Bank has got a right to take the insurance if the borrower fails to do so. IN this case they have undertaken that responsibility by debiting the premium amount from the account of the complainant and having done so they cannot be absolved from the liability of indemnifying the complainant if no valid policy is taken and the complainant consequently was disabled from getting the amount from INsurance Company. It is next contended by the Counsel that the amount of premium was paid and the proposal was also sent and in the circumstances the policy came into force prior to the peril. This contention has no validity in the light of the Supreme Court referred to above. It is also contended that they having sent Ext. Dl proposal, the first opposite party has obligation to obtain the necessary details and the first opposite party having failed to do so cannot be heard to say that the contract of policy is not complete and that they are not liable to indemnify especially when they received the premium amount. In the light of the decision of the Supreme Court referred to above this contention has no legal validity. There should be acceptance of contract by the insurer and until then there cannot be a valid contract. It is lastly contended that there is no basis for fixing the compensation. The District Forum has considered the question. The complainant claimed Rs. 30,000/- as compensation. The District Forum has allowed only Rs. 3,780/-. That was on the basis that only 250 chicks died and it was only 39 days old and in such circumstances the complainant is entitled to get at the rate of Rs. 15/- per bird. So it cannot be said that the compensation is awarded an arbitrary basis. In our view, there is proper basis for awarding compensation. There is no merit in the appeal and it is accordingly dismissed. Appeal dismissed. ______________