Alerting Insurer About Renewal Of Insurance Is Bank's Responsibility: NCDRC Holds Syndicate Bank Liable For Deficiency In Service

Brief Facts of the Case

The complainant financed a tractor through Syndicate Bank, and the same was hypothecated with the bank. Although the complainant paid Rs. 6,000 for insurance, the bank failed to secure the insurance. Subsequently, the tractor was involved in an accident that resulted in one death and three injuries. Consequently, the Motor Accident Claim Tribunal issued an award against the complainant. The complainant argued that the bank's failure to obtain insurance, despite receiving the premium, led to the tribunal's decision. Dissatisfied, the complainant initially filed a complaint with the District Forum, which dismissed it. The complainant then appealed to the State Commission of Madhya Pradesh, which partly allowed the appeal. Now, the bank has brought the case before this Commission through a Revision Petition.

Contentions of the Opposite Party

The bank contested the State Commission's decision, arguing that the commission incorrectly stated the complainant's claim of providing Rs. 6,000 advance cheque for insurance. According to the bank, this claim was not mentioned in the original complaint to the District Forum. The bank also argued that it was the complainant's responsibility, as per the loan agreement, to insure the vehicle on time. The State Commission overlooked the complainant's negligence in failing to insure the vehicle during the relevant period. Additionally, the complainant was a defaulter on the loan, with recovery proceedings initiated under the Madhya Pradesh Public Money (Recovery of Dues) Act, 1981, for an outstanding amount of Rs. 2,72,000. The bank had also requested the complainant to pay Rs. 2,72,415 due to the account being irregular. The bank maintained that once the loan terms were accepted and the loan was disbursed accordingly, the responsibility for insuring the vehicle lay with the complainant.

Observations by the Commission

The Commission highlighted that the complainant issued a cheque for Rs. 6,000 to the bank for insurance. The bank insured the tractor deducting Rs. 6,437 from the complainant. The complainant had paid Rs. 6,000 for the insurance period, but the bank failed to inform the complainant of any deficiency in this amount. Despite previous successful insurance transactions, the bank did not arrange the insurance this time, indicating a deficiency of service. The Commission observed that the bank should have either insured the tractor or insisted the complainant do so and provide proof. The commission cited the Supreme Court case Canara Bank V. Leatheroid Plastics (2020), emphasizing the bank's responsibility to alert the complainant about insurance. Due to the bank's service deficiency, the complainant suffered financial losses and is entitled to compensation.

The commission dismissed the revision petition and upheld the State Commission's order, noting no legal or procedural errors.

Case Title: Bank Manager, Syndicate Bank Vs. Ishwar Dayal

Case Number: R.P. No. 439/2020