R.R.FINANCIAL CONSULTANTS LTD. vs SUNIL MALHOTRA

APPELLANT is engaged in the business of financing the vehicles. Respondent availed the service of the appellant to purchase a Santro Deluxe Car on hire purchase agreement. Insurance cover note was to be provided by the appellant in spite of having received requisite premium from respondent No. 1 the cheque issued by the appellant in favour of Insurance Company bounced. During the period of insurance mentioned in the cover note the vehicle of respondent No. 1 met with an accident. The claim of the respondent was repudiated by the Insurance Company (respondent No. 2) on account of there being no concluded contract in existence. Vide impugned order dated 19.2.2003 the appellant alone has been held liable on account of deficiency in service in not making the payment of premium of insurance as per term of the contract. Feeling aggrieved the appellant has directed this appeal.

AS a matter of fact appellant R.R. Financial Consultants Ltd. is the sub-agent of main financier respondent No. 3 AVCO Financial Consultants Ltd. However, it was appellant, who arranged loan and completed all the formalities to get the car financed. Respondent paid a cheque of Rs. 20030 on 8.10.1999 towards first instalment and further a cheque of Rs. 13,477 dated 8.10.1999 towards insurance premium of the car. However on the instruction of the appellant the respondent did not fill the name of the drawee on the cheque as the appellant had arrangement with different insurance companies who are subsidiary of General Insurance Corporation. The financed car was insured with respondent No. 2 United India Insurance Company Limited by the appellant and insurance cover note No. 826422 dated 3.10.1998 for the value of Rs. 3,73,000 was issued by respondent No. 2. When the cover note was received by respondent No. 1, it was noticed that premium amount was shown as Rs. 11,965 whereas the charged amount was Rs. 13,477. On the representation of the respondent No. 1 the appellant refunded the balance amount of Rs. 1,512 vide letter dated 24.12.1998 by way of cheque. The renewal notice dated 21.9.1999 was also received from the Insurance Company respondent No. 2 for the renewal of the insurance of the said car. Hardly few days before the expiry of the policy the car met with an accident on 6.10.1999. The FIR was lodged with the Police Station on the same day. The claim preferred with the Insurance Company was repudiated on the ground that the cheque given towards the premium of the insurance amount of the car against which the insurance cover note was issued was dishonoured on presentation and, therefore, now neither the cover note nor the policy was in existence. It is pertinent to mention that intimation about dishonouring of the cheque was never given either to the appellant or to respondent No. 1 by the Insurance Company respondent No. 2.

As is apparent from the aforesaid fact the service of appellant was obtained for insurance of the vehicle and it was left to the appellant to choose any of the Insurance Companies as the cheque given by the respondent No. 1 did not mention the name of the drawee. So much so the excess amount received by the appellant towards the premium was refunded by the appellant. Though the insurance cover note was issued by the respondent No. 2 in favour of respondent No. 1, the fact remains that the cheque issued by appellant in favour of the Insurance Company was never encashed as it was dishonoured. Thus primary liability to respondent No. 1 was of the appellant as he was deficient in service in not seeing that the cheque issued by it was duly encashed or honoured. So much so the respondent No. 1 did not receive any communication either from the appellant or from respondent No. 2 Insurance Company that the cover not issued to him has been cancelled due to the dishonouring of the cheque.

IT was appellant who provided the service of arranging the finance of the car as well as completing all the formalities in its capacity as agent of respondent No. 3. Once having received the cheque from respondent No. 1 against the premium of the insurance of the car, it was the duty of the appellant to see that proper insurance policy is issued. Any provider of service has to be held guilty for deficiency in service if there is any imperfection or shortcoming or inadequancy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertake to be performed by a person in pursuance of a contract or otherwise in relation to any service. Thus the appellant cannot escape from the liability on to respondent No. 1 by indemnifying the loss or injury suffered by respondent No. 1 on account of deficiency in service. At the same time the contention of the appellant that the respondent No. 2 Insurance Company was also deficient in service in not informing it about dishonour of the cheque for almost one year and non-intimation about this fact gave him impression that the cheque has been honoured and the insurance policy has been issued in favour of respondent No. 1 Insurance Company may not be liable vis-a-vis the respondent No. 1 directly but it has been deficient in service qua the appellant and consequently to qua the respondent No. 1 is the beneficiary of the services rendered by Insurance Company. Even though the insurance policy has not been issued but in case insurance cover note is issued the Insurance Company cannot take the plea that the contract was not concluded. This aspect only takes care of the liability of the Insurance Company qua the insurance amount or loss or damage caused to the vehicle and qua the deficiency in service on its part in not informing its consumer in time that the cheque issued by it has been dishonoured and, therefore, the insurance cover note has been cancelled. The service of the Insurance Company is availed by the consumer by way of obtaining insurance cover against payment of premium by way of cheque, if there is a mechanism of receiving the payment through cheque. It is also the duty of the Insurance Company to inform consumer well in time about dishonouring of the cheque otherwise there should be fool-proof mechanism to obtain the premium by way of demand draft so that the consumer is not left high and dry and in the darkness as to what had happened to the cheque through which he had paid the premium. To expect a consumer everyday to obtain statement of account issued from the bank is neither required nor expected. It is the person who receives the cheque who is liable and responsible to intimate the consumer about dishonour of the cheque. Such a provider of service cannot be allowed to throw a cheque in dustbin or in the drawers and keep it for years and whenever any accident or theft takes place and claim is preferred it may decline honour the claim and then inform of return the un-encashed cheque. Any term mentioned in the insurance policy in this regard is no term of the contract as the insurance policy is not issued and not signed by the consumer. Nobody can be allowed to take advantage of its own acts of omission and commission or be allowed to escape from its responsibility or obligation.

IT is not necessary that deficiency should attract the entire liability of the insurance amount against the Insurance Company but Insurance Company has to be burdened with the punitive damages for not informing the consumer about the dishonouring of the cheque well in time. In the instant case this information was not sent almost for a year. Had the accident not taken place the Insurance Company would not have sent the information at all about the dishonouring of the cheque. This is why the Legislature in its wisdom brought the Consumer Protection Act on the statute book by defining the deficiency in such a wide term that any kind of fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law for the time being in force or has been undertaken to be performed by a person in pursuance of a contract or otherwise in relation to any service is included. The word ''other'' has vide ramifications and, therefore, brings into its ambit any kind of lapse on the part of the provider of service. Without ferrying further on this aspect of the matter we dismiss the appeal of the appellant as the appellant was fully liable to respondent No. 1 after having received the cheque on account of premium but at the same time we feel inclined to burden respondent No. 2 with punitive damage of Rs. 10,000 to be paid to the appellant whom they did not inform about dishonouring of the cheque.

APPEAL is disposed of in aforesaid terms. FDR/Bank Guarantee, if any deposited by the appellant be returned forthwith after completing necessary formalities.

A copy of this order as per statutory requirements be forwarded to the parties free of charge and also to the concerned District Forum and thereafter the file be consigned to Record Room. Copy of this order be sent to President of all the District Forums for circulation. Appeal disposed of.