Consumer Protection Act, 1986:
Deficiency in service – Complainant-appellant’s husband took personal loan from the Finance Company and Finance Company secured the loan by issuance of an insurance policy by its sister concern – Payment of insurance policy premium by the complainant’s husband and Finance Company received a Demand Draft for the same – Thereafter, death of complainant’s husband – Issuance of notice by Finance Company to complainant for payment of the loan instalments – Legal notice by complainant to the Finance Company to recover the loan through the insurance policy – However, Finance Company denied having received the premium amount and that the amount was deducted from the loan amount towards processing fee and stamp charges – Consumer complaint by appellant alleging deficiency in service – Allowed by the District Forum as also State Commission, however, set aside by the National Commission – On appeal, held: Husband of the appellant had paid the insurance premium by a Demand Draft in favour of the Insurance Company – Finance Company in the revision petition filed before the National Commission, itself admitted that it had received the Demand Draft from the complainant’s husband towards payment of the insurance premium; and that it had deducted an amount towards processing of the loan, and payment of stamp charges – Finance Company however delayed in forwarding the amount to the Insurance Company for obtaining the insurance policy – Thus, there was a clear deficiency of service by the Finance Company – Furthermore, the risk would be covered from the date of payment of the insurance premium – Loan was secured from the date on which the insurance premium was paid – Premium having been paid by the appellant’s husband during his life-time, the loan was to be adjusted from the insurance policy – In view thereof, order passed by the National Commission set aside – Finance Company to pay compensation and costs to appellant – Insurance Act, 1938 – s. 64VB (2).
s. 21 (b) – Revisional jurisdiction – Exercise of, by the National Commission – Held: Revisional jurisdiction of the National Commission is a limited jurisdiction, to be exercised in case the State Commission lacked jurisdiction, or acted with illegality or material irregularity.
Allowing the appeal, the Court
HELD: 1.1 The National Commission, in exercise of its revisional jurisdiction, set aside the concurrent findings of the District Forum and State Commission. The revisional jurisdiction of the National Commission is a limited jurisdiction, to be exercised in case the State Commission lacked jurisdiction, or acted with illegality or material irregularity. [Para 3.1][64-F-G]
Galada Power and Telecommunication Limited v. United India Insurance Company Limited & Anr. (2016) 14 SCC
161 ; Rubi (Chandra) Dutta v. United India Insurance Co. Ltd. (2011) 11 SCC 269 : [2011] 3 SCR 977 – referred to.
1.2 The National Commission has allowed the Revision Petition of the respondent-Finance Company on two grounds; first, that the appellant had failed to produce any evidence to prove that the insurance premium was paid to the respondentFinance Company; and second, that there was no evidence to prove that the respondent-Finance Company deducted the insurance premium from the loan account. The respondentFinance Company in the Revision Petition filed before the National Commission, has itself admitted that it had received the Demand Draft from the appellant’s husband towards payment of the insurance premium. Hence, the first ground on which the National Commission has set aside the order of the State Commission is factually incorrect. With respect to the second ground, the respondent-Finance Company has admitted that it had deducted an amount of Rs. 2,120/- towards processing of the loan, and payment of stamp charges. However, it was contended by the Respondent-Finance Company that this deduction was not made towards payment of the insurance premium. A perusal of the documents shows that the Respondent-Finance Company was providing a loan facility to the borrowers, which was secured by an insurance policy issued by its own sister concern. It was a composite inter-linked transaction. The Cover Note issued by the sister concern shows that the beneficiary of the insurance policy is the respondent-Finance Company. Thus, the deduction of Rs. 2,120/- from the loan account was towards processing of the composite transaction. [Paras 3.2, 3.4][65-C-F; 66-A-F]
1.3 The deceased husband of the appellant had fulfilled his part of the transaction, by depositing Rs. 400/- by way of the Demand Draft towards the insurance premium, and also the charges of Rs. 2,120/- towards processing of the loan transaction. The respondent- however delayed in forwarding the amount to the Insurance Company for obtaining the insurance policy. Hence, there was a clear deficiency of service by the respondent-Finance Company in delay in obtaining the insurance policy from its sister concern. [Paras 3.5, 3.6][66-F-H]
1.4 The risk would be covered from the date of payment of the insurance premium. The loan was secured from the date on which the insurance premium was paid. The premium having been paid by the appellant’s husband during his life-time, the loan was to be adjusted from the insurance policy. The National Commission erroneously set aside the order passed by the State Commission on factually incorrect grounds. The appellant has made out a clear case of deficiency of service on the part of the respondent-Finance Company. The order passed by the National Commission is set aside. The respondent-Finance Company is directed to pay compensation of Rs. 50,000/-, and costs of Rs. 25,000/- to the appellant. [Paras 3.7, 3.8, 4, 5][67-C-G]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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