BEFORE THE STATE CONSUMER DISPUTES REDRESSAL COMMISSION AT PUDUCHERRY
THURSDAY, the 27th day of March, 2014
CONSUMER COMPLAIANT NO.3/2010
1.Kayalvizhi, W/o.R.T.Kirubakaran
2.R.T.Kirubakaran,S/o.Thirugnanasambandan
………. Complainants
Vs
1.The Chief Manager
Indian Overseas Bank
Reddiarpalayam Branch
Puducherry-605 010.
2. The Branch Manager
National Insurance Co. Ltd.,
Branch Office –II
J.N. Street,
Puducherry – 605 001. ……….. Opposite Parties
BEFORE:
HON’BLE THIRU JUSTICE K.VENKATARAMAN
PRESIDENT
TMT. K.K.RITHA,
MEMBER
FOR THE COMPLAINANT:
Thiru. R.Thirumavalavan
Advocate, Puducherry
FOR THE OPPOSITE PARTIES:
Thiru.K.Ranganathan,
Advocate, Puducherry - For O.P.1
Thiru K.Ravikumar,
Advocate, Puducherry - For O.P.2
O R D E R
(By Hon'ble Justice President)
The complainant No.1 states that she had availed a cash credit loan in her account No.1048 from the first opposite party Bank and for which, the complainant No.2, her husband, had given collateral security by depositing the title deed of his property.O.P.No.1 while granting the loan had insured the said property for fire with O.P.No.2 for five years from 30.01.2004 by filling the proposal form by O.P.No.1 itself..The fire policy amount (premium) was deducted from 1st complainant's account and the policy was in force till 29.01.2009 midnight. The complainants' had leased out the property to one M/s Southern Inks and Coatings
2. Meanwhile on 15.09.2008 at 1.00 a.m. a fire accident occurred in Southern Inks & Coatings due to electric short circuits. The whole building was damaged and the loss was estimated to a tune of Rs.30,00,000/-.The Police had insured a certificate to this effect on 26.09.2008.
3. The complainants further state that the O.P.No.1 directed them to approach the 2nd opposite party, the insurer, who in turn turned down to pay compensation on the ground that the policy was covered under "Residential Building" and not instead of "Industrial Building". Only at that moment, the complainants realized that the property was wrongly insured for a sum of Rs. 10,00,000/- only. The complainants state that O.P.No.2, Insurer, failed to inspect the Insured premises and it is a lapse on their part. The total damage sustained by the complainants has been ascertained by a competent engineer to a tune of Rs.30,00,000/-.Hence, both the opposite parties are jointly and severally liable to pay Rs.40,00,000/- in total as they are complainants' Proposer and Insurer.
4. The first opposite party in their reply version accepts the fact that the 1st complainant had availed a cash credit from their bank and the 2nd complainant offered collateral security of his immovable property at Kurumampet village. While granting the loan by 1st opposite party, the property was insured with 2nd opposite party's Insurance Company. The property was leased out to M/s Southern Inks & Coating Company and which was damaged by fire accident on 15.09.2008.
5. The opposite party No.1 denied that they never insisted the complainant to insure the premises for fire policy and issued a letter to O.P.No.2 stating that the proposal of insuring the property was made inadvertently as a Residential Building. The O.P.No.1 further states that the insurance policy was taken from 2nd O.P. for the said property as residential building and debited the premium amount for residential building from the account of the complainants. The premium amount for industrial building is always more than the premium amount for the residential building. Thus, the complainants were well aware of insuring their building as residential building while opting for the insurance policy. Also O.P.No.2, who inspected the insured property had not informed anything about the contrary nature of the building in the Insurance Policy. Moreover, the lessee of the said property who had insured his machineries and raw materials, the Branch Office of the 2nd opposite party at Kolkata, has claimed compensation for the damages caused due to the fire accident. The O.P.No.1 issued letter to the complainants only to facilitate the complainants for claiming compensation from OP2 and denied that the property was mentioned as residential due to inadvertence. The complainants have not filed the age of the building. The value of the property is not correct and the claim made by the complainants are in excess. Thus the complainants are not entitled for any compensation, since there is no deficiency in service on OP1's part.
6. OP2 states that it does not have any knowledge that the complainants have leased out their property at Kurumbapet to Southern Inks and Coatings and also the said premises is an industrial building. The OP 1 had made a proposal dated 30.01.2004 on behalf of second complainant under "Fire insurance proposal" in the proposal form for residential building standard Fire and Perils Policy with OP2. On the basis of the said proposal the OP2 had insured a Fire Policy on 30.01.2004 for a period of five years till 29.01.2009 for a sum of Rs.10,00,000/-. As per the said Policy, the risk was covered for residential building.
7. The OP2 states that the complainant no.2 had submitted the completed claim form only on 12.05.2009 after delay of 8 months alongwith police certificate, fire certificate also the estimate of loss occurred. After receipt of the said claim form, OP2 came to know that the premises was used as a commercial building and not a residential building. On 21.05.2009 OP1 had issued a letter stating that it had made a mistake inadvertently by mentioning as residential building instead of commercial building and requested to settle the claim. Further, the claim of the complainant would lie only against the OP.1 who had insured the premises by a false proposal and caused loss to the complainants and this OP2 is not responsible for that. Moreover the complainants have not come before this Commission with clean hands and have suppressed the facts. Hence this OP2 prays to dismiss the complaint.
8. The following are the points that arise for our consideration :
- Whether there is deficiency of service on the part of the opposite parties?
- What is the amount of compensation, the complainants are entitled to?
9. It is the case of the first complainant that she has availed cash credit loan from the first opposite party Bank for which the second complainant has given collateral security by depositing the title deed of his property. It is the further case of the first complainant that the first opposite party while granting loan had insured the said property for fire with the second opposite party. The property so given as collateral security was leased out to one M/s.Southern Inks and Coatings. On 15.09.2008, a fire accident occurred in the said M/s.Southern Inks and Coatings and the whole building was damaged. The damage was estimated to a tune of Rs.30,00,000/-. When the first complainant approached the second opposite party for payment of compensation, it was rejected on the ground that the policy covered is only for a residential building and not for industrial building. It is the mistake committed by the first opposite party in mentioning the property given as collateral security as residential building instead of industrial building. Therefore, the complainants have approached this Commission claiming compensation of Rs.40,00,000/- from both the opposite parties.
10. It is the case of the first opposite party that the property was insured as residential building, which was within the knowledge of the complainants at the time of taking the insurance policy. Therefore, it is stated that the complainants are not entitled for any compensation from the first opposite party.
11. It is the case of the second opposite party that in the proposal form for taking insurance policy, it is mentioned as residential building and now it is claimed as non-residential building. As per the policy, the risk was covered only for residential building and hence, the second opposite party is not liable to pay any compensation.
12. On the side of the complainants, Ex.C.1 to Ex.C.12 have been filed and marked. The second complainant, who is the husband of the first complainant examined himself as C.W.1. One S.Ganesan, a Civil Engineer who is said to have inspected the premises in question and filed the estimate about the damages suffered by the complainants, which has been marked as Ex.C.2 was examined as C.W.2. One Segarane, Senior Manager of the first opposite party/Indian Oversees Bank examined himself as R.W.1. One K.Nagarajan, the Branch Manager of the second opposite party/insurance company was examined as R.W.2 and through him Ex.R.1 - copy of the proposal form dated 30.01.2004 made by the first opposite party on behalf of the second complainant was filed and marked.
13. Ex.C.1 is the copy of the insurance policy taken by the second complainant in respect of the property which is said to have been damaged due to the fire accident which has been given as collateral security for the due payment of loan obtained by the first complainant from the first opposite party. In the said copy of the insurance policy, the description of the property has been clearly mentioned as residential building. Ex.C.4 is the copy of the letter addressed by the first opposite party to the second opposite party wherein it is clearly stated that while submitting the proposal, due to inadvertence the property has been mentioned as residential building instead of industrial building. In clear terms in the said letter it is stated as follows:
“The proposer of the policy was the bank and the mistake has happened inadvertently and there was no malafide intention.”
14. Even the learned counsel who has appeared for the first opposite party has fairly admitted that the bank has inadvertently mentioned the building as residential building in the proposal form.
15. It is the definite case of the complainants that while the first complainant has availed the cash credit facility with the first opposite party, the second complainant has offered his property as collateral security. At the time of giving collateral security, the first opposite party bank required the complainants to insure the building under fire insurance with the second opposite party. The first opposite party was the proposer to the second opposite party which fact has been admitted by R.W.1/Branch Manager of the first opposite party bank.
16. Even in the chief examination R.W.1 has clearly stated that the first opposite party has made proposal on 30.01.2004 on behalf of the second complainant in the fire insurance proposal form. Thus, it is crystal clear that the first opposite party has made a proposal on behalf of the second complainant for fire insurance with the second opposite party.
17. It is the case of the second opposite party that the insurance policy show that the property which is the subject matter of fire was shown as residential building, but however it is an industrial building. It is not in dispute that the building in question is an industrial building and not a residential building. In the Ex.R.1/Proposal form, copy of which is also marked as Ex.C.2 through the complainants, the building is mentioned as residential building. Ex.C.4/letter addressed by the first opposite party bank to the second opposite party clearly reveals that by mistake the building was inadvertently shown as residential building instead of industrial building in the proposal form. When such a clear admission was made in the Ex.C.4/letter of the first opposite party, it may be too much for the first opposite party to say at this stage that the said letter was sent to the second opposite party at the instance of the complainants and at the request of the complainants. In fact, during the course of the arguments, the learned counsel appearing for the bank has fairly conceded that the bank has sent the proposal inadvertently mentioning the building as residential building instead of industrial building. The second opposite party refused to honour the claim made by the complainants only on the ground that the building insured with them is shown as residential building and not industrial building in the insurance policy.
18. Therefore, We are of the considered view that the first opposite party who has revealed the property that has been given as collateral security as residential building instead of industrial building has to be faulted. It is clearly a deficiency of service on its part.
19. The second opposite party who has issued the fire insurance policy has not chosen to inspect the building before issuing the fire policy. Though R.W.2/Branch Manager of the second opposite party has stated in the cross-examination that when a particular building is covered by the insurance policy, no personal inspection of the property is necessary, We are of the considered view that the second opposite party should have inspected the building before issuing the policy. Failure to do so is clearly a deficiency of service on the part of the second opposite party. However even C.W.1, the second complainant says in his evidence that there is no deficiency of service on the part of second opposite party and that he has no claim against the second opposite party. The particular portion of C.W.1’s evidence is reproduced here under:
“There is no deficiency of service on the part of 2nd opposite party”
20. Therefore, though there is deficiency of service on the part of the first opposite party, We are constrained to hold that there is no deficiency of service on the part of the second opposite party in view of the clear evidence on the part of C.W.1 in his cross-examination which is extracted above. The first issue is answered accordingly.
21. The next point that has to be answered is what is the amount of compensation payable to the complainants.
22. In the chief examination, C.W.1/the second complainant had deposed that the first opposite party has to pay a sum of Rs.30,00,000/- as compensation for the loss sustained by them, a sum of Rs.7,50,000/- for the loss of mental peace and agony and a sum of Rs.2,50,000/- for the other expenses incurred by them.
23. One S.Ganeshan, a Civil Engineer who has inspected the premises and filed the report about the damages, was examined on behalf of the complainants. At the time of cross-examination by the first opposite party, he has clearly stated that he has given the estimate only for construction of a new building and he has not ascertained the damages that occurred, in the course of the fire accident. He had further deposed that he is not a surveyor to assess the building and give report regarding the damages caused by the fire. When the learned counsel for the second opposite party cross-examined him, he has clearly stated that he cannot state the actual loss incurred by the complainants due to fire as he has not seen the building before the damage. He had also further deposed estimate of damage can be given only by a surveyor and he cannot give the estimate of damage.
24. The portion of cross-examination of C.W.2 by the learned counsel’s for the opposite parties are reproduced here under:
“Cross-Examination by Mr.K.Ranganathan for O.P.1
I have given estimation only for a construction of a new building. It is true that I have inspected the property, but I have not given any details of damage caused to the building by fire. I am not a surveyor to assess the damage and give report regarding to the damage caused to the building by fire. I inspected the building in the year 2008, but I cannot say the exact month and date. Ex.C.12 furnished by me mentioning the cost of estimate for the construction of new building.
Cross-Examination by Mr.K.Ravikumar for O.P.2
It is true that I cannot say the actual loss caused to the building in terms of money as I have not seen the condition of the building before the damage. An estimate of damage can only be given by a surveyor who is a loss assessor and I cannot give any estimate of damage.”
25. As far as C.W.1 is concerned, though in his evidence he has stated that the damage that has been caused to the building is ascertained as Rs.30,00,000/- he has not placed any substantial evidence for the same.
26. In the back drop of the said facts, We are unable to find out the actual extent of damage suffered by the complainants. The Complainants have to approach this Commission with a clear evidence about the damage that has been caused to the building. However they have failed to establish the same by oral and documentary evidence.
27. However, We are of the view that since it is not disputed by the opposite parties that the property in question was damaged in the fire accident coupled with the fact that the complainants have proved that the building caught fire and was damaged, though there is no proof for assessment of damage to the building, We are of the view that interest of justice would be met, if the first opposite party is directed to pay a sum of Rs.75,000/- to the complainants.
28. In fine, We direct the first opposite party to pay a sum of Rs.75,000/- (Rupees Seventy Five Thousand Only) as compensation to the complainants. The second point is answered accordingly.
29. The complaint stands ordered on the above terms.
Dated this the 27th day of March, 2014.
(Justice K.VENKATARAMAN)
PRESIDENT
(K.K.RITHA)
MEMBER
LIST OF COMPLAINANTS' WITNESSES:
CW1 – R.T.Kirubakaran, 2nd complainant filed proof-affidavit and cross-examined on
16.12.2011
CW2 – S.Ganesan, Civil Engineer, examined on 19.09.2013.
LIST OF COMPLAINANTS' EXHIBITS:
Ex.C1 – Xerox copy of Standard Fire and Special Perils Police, dt. 30.01.2004,
issued by 2nd opposite party to the complainants building, marked through
CW1
Ex.C2 – Xerox copy of Fire Claim Form, dt.12.05.2009 submitted by complainants to
the 2nd opposite party, marked through CW1
Ex.C3 – Letter, dt.12.05.2009 by 2nd complainant to the 2nd opposite party, marked
through CW1
Ex.C4 – Copy of letter, dt.21.05.2009 issued by the 1st opposite party to the 2nd
opposite party, marked through CW1
Ex.C5 – Copy of letter, dt.26.05.2009 by the 2nd opposite party to the 2nd
complainant, marked through CW1
Ex.C6 – Copy of letter, dt.11.06.2009 by the 2nd complainant to the 1st opposite party
requesting it to make arrangements for insurance claim, marked through
CW1
Ex.C7 – Copy of complainants' legal notice, dt. 09.09.2009 to both the opposite
parties, marked through CW1
Ex.C8 – Postal acknowledgement signed by 1st opposite party, marked through CW1
Ex.C9 – Copy of reply notice, dt.21.10.2009, by 2nd opposite party's lawyer to
complainants' lawyer, marked through CW1
Ex.C10- Copy of Certificate, dt.26.09.2008, issued by S.I. of Police, Mettupalayam
P.S.,Puducherry regarding the fire accident happened to complainants'
building, marked on consent of both sides
Ex.C11- Copy of Certificate, dt.30.09.2008, issued by Divisional Fire Officer,
Puducherry regarding the fire accident that took place in complainants'
building, marked on consent of both sides
Ex.C12- Copy of Summary of Estimation of damage caused to complainants'
building, Prepared by and marked on consent of both sides.
LIST OF OPPOSITE PARTIES' WITNESSES:
RW1 – Thiru. Segarane, Senior Manager in 1st opposite party bank, proof affidavit
filed and cross-examined on 08.10.2012
RW2 – Thiru K.Nagarajan, Branch Manager in 2nd opposite party Insurance
Company, proof affidavit filed and cross-examined on 05.10.2012
LIST OF OPPOSITE PARTIES' EXHIBITS:
Ex.R1 – Copy of Proposal Form, dated 30.01.2004, made by 1st opposite party on
behalf of 2nd complainant, marked through RW2.
(Justice K.VENKATARAMAN)
PRESIDENT
(K.K.RITHA)
MEMBER
