United India Insurance Co. Ltd vs Krishna Panels And Doors

THIS appeal is filed by M/s. United India Insurance Company Ltd. against the order of the Andhra Pradesh State Consumer Disputes Redressal Commission in CD No.105 of 2001. The appellant was OP-1 in the proceedings before the State Commission. Respondent No.1 Sai Krishna Panals and Doors, was the Complainant in the impugned proceedings and Respondent No.2/Bank of Baroda was OP-2.

FACTS of the case as seen from the record are that R-1/ Complainant was the authorized dealer M/s. Novapan Industries Ltd. with its shop and office in Topaz building, Panjagutta Hyderabad and godown in the cellar of Kavitha Apartments, Srinagar Coloney Hyderabad. While the display of the products was in Topaz building, stocks of goods were kept in Kavitha Apartments. The Complainant had taken two separate polices from appellant/OP-1, one relating to the shop and office and other for protection of goods in the godown. The case of the Complainant was that due to sudden rain on 14.11.1997 the godown in Kavitha Apartments got flooded which resulted in damage to the stocks to the tune of Rs.9 lakhs. A claim under the insurance policy for coverage of stocks against fire, flood etc. was made on 7.10.1998 for Rs.8.6 lakhs. On 26.11.1997, i.e. 12 days after the incident of flood, Respondent No.2/OP-2 wrote a letter to appellant Insurance Company informing that due to oversight the address of the shop had wrongly been mentioned as the address of the godown also. It is alleged, that despite this letter the Insurance Company repudiated claim by its letter of 2.11.1999. The repudiation letter reads as follows:- "We are sorry to state that we are compelled to repudiate your claim for the flood loss that occurred on 13/14-11-1997. We have issued two policies for your proposals. The co-insured Bankers viz. the Bank of Baroda had mentioned in the proposal form the situation of risk at G1-A/3, Topaz Building, Smajiguda, Hyderabad. Pursuant to the said proposal forms, we have issued the said two policies covering the locations at G1-A/3 Topaz Building, Somajiguda, Hyderabad for the said period mentioned above. The premises effected by the peril has not been covered by any of the polices issued by us. As such, we have neither covered the risk nor the premises under the said policies at the relevant time. As such, we are unable to settle your claim as the same is not tenable."

As against the above, the case of the appellant/OP-1 before the State Commission was that the policy had been issued on the basis of the proposal given by OP-2/Bank of Baroda. Accordingly, the insured property was situated at Topaz Building as per the policy, not at Kavitha Apartments. The insurance therefore, urged that they have rightly repudiated the claim. The State Commission has observed that no counter was filed on behalf of OP-2 i.e. Bank of Baroda. The State Commission has also relied upon the report of the Surveyor appointed by the Insurance Company. The report has mentioned that the loss had occurred due to overflow of nala, which made the rainwater enter the cellar. The Surveyor"s report also referred to letter No.337 of 26.11.1997 from respondent No.2/Bank of Baroda, stating that they were regularly inspecting the insured stocks, which were in the cellar of Kavitha Apartment and that the address of insured godown had erroneously been mentioned in the proposal form while taking the policy for the year 1997-98.

THE State Commission had allowed the complaint and directed the Insurance Company to pay an amount of Rs.6,63,845/-, being the amount of loss assessed by the Surveyor. The appellant- United India Insurance Company has challenged the above order of the State Commission primarily on the ground that the policy had been issued with reference to the address given in the proposal form. It is claimed that there is no mistake on the part of the appellant as it was not necessary for it to inspect the site, "as the second respondent is linking the care on behalf of the first respondent whose goods were hypothecated with the second respondent".

DURING the course of the argument before us, learned counsel for the appellant/United India Insurance Company, referred to a copy of the proposal form submitted by respondent No.2/Bank of Baroda and stress that as the mistake had been categorically accepted by the Bank, the repudiation of the claim is fully justifiable. In the grounds of appeal, it has been stated, more than once, on behalf of the appellant that the State Commission should have taken serious view of the letter of respondent No.2/Bank of Baroda admitting its error and should have fixed liability for the same. According to the appellant, the view of the State Commission completely absolving Respondent No.2/OP No.2 from any liability is called "unsound and unsustainable." Counsel for respondent No.2/Bank of Baroda accepted before us that the problem has been caused by mistake on the part of the Bank, which had been admitted by the Bank. However, the mistake occurred in the course of action taken by the Bank, on behalf of Respondent No.1/Complainant. The part played by the Bank, according to the counsel, was in the nature of free service and therefore, no liability should devolve on Bank from the error committed in the process. We are unable to persuade ourselves to accept this argument advanced on behalf of Respondent No.2/Bank of Baroda for the following reasons. The question of rendering of free service will not arise as no evidence has been led to show that the service was rendered on the request of the Complainant. The letter of 2.11.1999, in which the claim of the Complainant under the policy was repudiated by the Insurance Company, very appropriately mentions the Bank of Baroda as co-insured. It is not the case of the Bank/OP-2 that the benefit of insurance cover did not flow to it in the form of protection of the credit advanced to the Complainant. It is again not the case of the Bank that insurance premia, in this behalf, were not being debited, from time to time, to the Complainant"s account. We also do not find any explanation for the failure of the Bank to file a counter before the State Commission particularly when it had already accepted its mistake in the letter of 26.11.1997.

COMING to the position taken by the appellant/Insurance Co., the fact of damage to the goods and the assessment of the extent of damage, has not been questioned by the appellant in the proceedings before the State Commission or before this Commission. The appellant has also failed completely to explain non-inspection of the premises, mentioned as godown in the proposal submitted by Bank of Baroda on 23.9.1997, when its own records would clearly show a different location for the godown in the earlier years. Further, a perusal of the prescribed format of the "Proposal Form For Fire Insurance" would show that elaborate details regarding construction and occupation of the building were required to be furnished by the proposer. In the present case, the proposal form gives very sketchy details, which should have made it all the more necessary for the appellant to inspect before proceeding further. We are therefore, not in a position to accept the contention of the appellant that it was not necessary for it to inspect the site as the Bank/OP-2 had submitted the proposal on behalf of the Complaint "whose goods were hypothecated to the Bank."

FOR the reasons discussed above, we come to an inescapable conclusion that there is equal deficiency in service on the part of the appellant/Insurance Company as well as the Bank/OP-2. Neither can be permitted to take advantage of the deficiency on the part of the other, to deny the Complainant his claim under the policy. The impugned order is therefore, upheld with the modification that United India Insurance Company/OP-1 and the Bank of Baroda/OP-2 will discharge this liability in equal proportion. There are no orders as to costs.