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TMI Blog2020 (1) TMI 1683X X X X Extracts X X X X X X X X Extracts X X X X ..... ants from either approaching the insurer or any other insurance company for obtaining a policy that covered STFI perils. There is no merit in the present appeal - Appeal dismissed. - HON'BLE THE CHIEF JUSTICE DR DHANANJAYA Y CHANDRACHUD AND HON'BLE MR. JUSTICE AJAY RASTOGI For the Appellant : Aniruddha P. Mayee For the Respondent : Ranjan Kumar Pandey And Mrinmayee Sahu JUDGMENT 1 The National Consumer Disputes Redressal Commission [ National Commission ] allowed an appeal instituted by the first respondent and set aside the decision of the State Consumer Disputes Redressal Commission of Gujarat [ State Commission ] . The State Commission found substance in the consumer complaint of the appellants and decreed their claim for compensation in the amount of Rs 53,66,877 with interest at 9 percent per annum. In addition, the State Commission awarded Rs 25,000 towards mental agony and Rs 5,000 towards litigation costs. The claim of the appellants arose under an insurance cover pertaining to goods hypothecated by the appellants with the first respondent under a cash credit facility. The insurer, New India Assurance Company Limited, repudiated the claim of the appellants. As a 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation at Meghdoot Apartment, Surat noted above. However, a separate insurance cover in the amount of Rs 60 lakhs was issued in respect of the goods stored at following location: B-205, Plot No 17-B, Village Karnaj 5 Similarly, for 2003-04 and 2004-05 there were two insurance covers; one in the amount of Rs 25 lakhs in respect of the location at Meghdoot Apartment, Surat and the second in the amount of Rs 60 lakhs covering the location at B- 205, Plot 17-B, Village Karnaj. For 2005-06 and 2006-07, the position of the insurance cover is reflected in an extract from a tabulated chart filed by the insurer: 6 For 2005-06, the location contained in the policy with a sum insured of Rs 60 lakhs was changed from B-295, Plot 17-B, Village Karnaj to 12/1123-1124, Basement, Meghdoot Apartment, Surat. Thus, both the policies for 2005-06 covered the same location. For 2006-07, the same position continued for both the insurance covers. 7 On 3 August 2005, the first respondent while filling up the proposal form handed over a cheque of Rs 29,038 to the insurer for a cover which would also extend to STFI perils. On 26 September 2005, the premium of Rs 992 covering STFI perils was refunded by the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been served with any notice by the insurer explaining why the STFI perils were excluded from the policy of Rs 60 lakhs. The bank denied that its officers or staff had mistakenly indicated the location of the place of business in the proposal form associated with the policy cover where STFI perils had been excluded. 11 The defence of the insurer was that for the period between 1 August 2005 and 31 July 2006 the policy cover of Rs 60 lakhs specifically excluded STFI perils from the coverage. The insurer stated that upon receiving the claim, it had appointed a surveyor and the claim on account of damage due to flooding had been accepted in respect of the policy cover of Rs 25 lakhs. However, the policy cover of Rs 60 lakhs specifically excluded the STFI perils and the insurer had refunded the premium of Rs 992 paid for an STFI cover by a cheque dated 26 September 2005 which had been accepted and deposited by the bank in the appellant s account without any protest. The insurer denied its liability on the ground that the policy cover of Rs 60 lakhs excluded STFI perils. 12 The State Commission, by its order dated 14 February 2019, allowed the complaint only against the bank and its man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in the subsequent year that the loss was sustained. Consequently, the National Commission held that having accepted the policy without the STFI cover, both the bank and the borrower were estopped from questioning the terms of the policy. The National Commission held that the bank had specifically stated in its reply before the State Commission that a copy of the insurance policy was given to the borrowers and that the premium amount which was returned back by the insurance company had been credited to their account. It noted that the receipt of the insurance policy had not been specifically denied in the rejoinder filed by the complainants before the State Commission though there was a vague denial of the averments in the corresponding paragraph of the reply. In this background, the National Commission observed that the appellants did not take up the issue of the exclusion of the STFI perils with the insurer nor did they call upon the bank to do so. It was noted that though the appellants received the premium amount in their account, they did not seek any explanation in regard to the refund of the premium. In this view of the matter, the National Commission allowed the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank submitted that there was no deficiency of service on the part of the bank. It was argued that under the terms of the hypothecation agreement, the duty of obtaining an insurance cover was primarily that of the appellants as borrowers. Supporting the findings of the National Commission, it was urged that the bank had specifically denied having entered an incorrect address or a different address in the proposal form. Mr Pattjoshi urged that the bank had specifically stated that a copy of the policy had been furnished to the insured. The appellants could not, hence, disavow knowledge of the fact that STFI perils stood excluded from the insurance cover. 18 Mr K K Bhat, learned counsel appearing on behalf of the third respondent urged that the insurance cover of Rs 60 lakhs did not cover STFI perils. Though the bank had remitted the entire premium, the insurer had returned a part of the premium covering STFI perils. The cheque returning the premium amount of Rs 992 was deposited by the bank in the account of the appellants. Mr Bhat submitted that it was a commercial decision of the insurer to exclude STFI perils 3 (2001) 6 SCC 477 from the insurance cover of Rs 60 lakhs and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. (2) For the purposes of this section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation. Where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. (3) Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the insurer directly to the insured by a crossed or order cheque or by postal money order and a proper receipt shall be obtained by the insurer from the insured, and such refund shall in no case be credited to the account of the agent. (4) Where an insurance agent collects a premium on a policy of insurance on behalf of an insurer, he shall deposit with, or dispatch by post ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants have placed reliance on the decision of this Court in Biman Krishna Bose v United India Insurance Co Ltd (2001) 6 SCC 477 , where this court while dealing with a mediclaim policy, observed: 5. A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in the identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise. It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy. Where an insurance company which has exclusive privilege to carry on insurance business has refused to renew the mediclaim policy of an insured on extraneous and irrelevant consideration, any disease which an insured had contacted during the period when the policy was not renewed, such decease cannot be covered under a fresh insurance policy in view of the exclusion clause. The exclusion clause provides that the pre-existing diseases would not be covered under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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