For a deficiency in service, the Panipat District Commission holds HDFC Bank and Universal Sompo Insurance Co. liable for failure to disburse the amount required by the PM Fasal Bima Yojna.
Case Title: Ramesh Kumar vs HDFC Bank Ltd. and Anr.
Summary
The District Commission in Panipat, Haryana, held HDFC Bank Limited and Universal Sompo General Insurance Co. Ltd. accountable for deficiency in service. The Commission found that the companies failed to compensate a farmer who had incurred losses on his insured crops. The farmer, Mr. Ramesh Kumar, lodged a consumer complaint with the Commission, claiming that the premium amount had been unpaid and withheld.
The Commission observed that the complainant’s assertion that HDFC Bank withdrew the premium amount and deposited it with the Insurance Company was corroborated by bank statements and reports from the Agriculture Department. The District Commission held both parties jointly and severally liable for the compensation, plus interest and an additional Rs 10,000 for harm caused by harassment, mental anguish, and litigation costs. The Commission’s findings highlight the need for better service and compensation for farmers.
About the case
By holding HDFC Bank Limited and Universal Sompo General Insurance Co. Ltd. accountable for deficiency in service, the bench of the District Consumer Disputes Redressal Commission in Panipat, Haryana, composed of Dr. R.K. Dogra (President) and Dr. Suman Singh (Member), determined that the companies failed to compensate a farmer who had incurred losses on his insured crops. In addition to the reimbursement of the insurance premium, the farmer was awarded a compensation of Rs. 10,000/- from HDFC Bank and the insurance company.
A KCC/Agriculture loan was deposited into a joint bank account that Mr. Ramesh Kumar (“Complainant”) maintained with HDFC Bank Ltd. at the Madlauda Branch in Panipat. The Universal Sompo General Insurance Company Limited (“Insurance Company”) insured his crops in accordance with the Pradhan Mantri Fasal Bima Yojna (“PMFBY”). Insurance premiums were routinely deducted from the Complainant’s account by HDFC Bank every six months. Alas, inundation caused significant crop damage for Mr. Kumar in 2018. Immediately, he notified the Agriculture Department in Panipat of the situation. The department assessed a 50% reduction in his paddy crops, which equated to a financial loss of Rs. 1,12,680.
Notwithstanding numerous requests and endeavors, the premium amount remained unpaid by both HDFC Bank and the Insurance Company. In addition, HDFC Bank withheld Rs. 9878 from the insurance company’s account as premium. The Complainant lodged a consumer complaint with the District Consumer Disputes Redressal Commission in Panipat, Haryana, (“District Commission”), out of frustration.
As per the Pradhan Mantri Fasal Bima Yojna (“PMFBY”) regulations, HDFC Bank maintained that the premium amount had been deducted from the Complainant’s account and deposited with the Insurance Company. They contended that in the event that the Insurance Company failed to disburse compensation to the Complainant, the bank could be held liable for the delay. HDFC Bank maintained that it was not responsible for calculating the complainant’s payments and had no role in providing compensation.
The Insurance Company refuted the allegations made in the complaint and maintained that the premium amount had not been deposited with them by HDFC Bank, which consequently led to the postponement of the Complainant’s compensation.
They contended that their service was impeccable and that the complaint contained additional unfounded allegations. In the Commission’s Observations: The District Commission observed that the complainant’s assertion that HDFC Bank withdrew the premium amount and deposited it with the Insurance Company was corroborated by documents such as bank statements and reports from the Agriculture Department. Both HDFC Bank and the Insurance Company, in the opinion of the District Commission, manifested a glaring disregard for service. The complainant was not granted the compensation to which he was entitled in accordance with the PMFBY guidelines. Consequently, the District Commission issued an order requiring both HDFC Bank and the Insurance Company to remunerate the complainant with Rs. 1,12,680 in compensation, plus interest and an additional Rs 10,000 for harm caused by harassment, mental anguish, and litigation costs. For the aforementioned payments, the District Commission held both parties jointly and severally liable.
The Supreme Court rules that an insurer must provide reasonable denials for rejecting a surveyor’s report.
Case Title: National Insurance Company Ltd V. Vedic Resorts and Hotels Pvt. Ltd.
Summary
The Supreme Court ruled in a case involving National Insurance Company Ltd v. Vedic Resorts and Hotels Pvt. Ltd that an insurer must provide “cogent and satisfactory” reasons for rejecting a surveyor’s report in an insurance claim. The court emphasized that in cases where an insurance policy contains an exclusionary clause, the insurer bears the burden of demonstrating that the policy covers the particular incident in question. The court also emphasized that in situations where an insurance contract contains ambiguity, it is the responsibility to construe it in the insured’s favor. The case involved a resort owner in West Bengal who held two insurance policies for the resort’s hotel buildings with the Insurance Company. The insurance company denied the complainant’s claim, asserting that the resort management committed a malevolent act that caused the loss.
The National Consumer Disputes Redressal Commission issued a directive to the insurance company, requiring repayment of Rs. 202,216 lakhs plus interest at the rate of 9% per annum from the date the claim was filed until the payment was received. The court rejected the appeal, referencing cases National Insurance Company Limited vs. Ishar Das Madan Lal (2007) 4 SCC 105 and General Assurance Society Ltd. vs. Chandumull Jain and Another AIR 1966 SC 1644.
About the case
In a case involving National Insurance Company Ltd v. Vedic Resorts and Hotels Pvt. Ltd, the Supreme Court ruled that although the Surveyor’s Report is not conclusive and may be modified in an insurance claim, the insurer must provide “cogent and satisfactory” reasons for rejecting the report. A division bench consisting of Justices Ajay Rastogi and Bela M. Trivedi further emphasized that in cases where an insurance policy contains an exclusionary clause, the insurer bears the burden of demonstrating that the insurance policy covers the particular incident in question.
The Supreme Court further emphasized that in situations where an insurance contract contains ambiguity, it is the responsibility to construe it in the insured’s favor. “Though it is true that the Surveyor’s Report is not the last and final one nor is so sacrosanct as to the incapable of being departed from, however, there has to be some cogent and satisfactory reasons or grounds made out by the insurer for not accepting the Report.” The Supreme Court ruled.
The subject of this dispute was the resort owner (Respondent) in West Bengal, who held two insurance policies for the resort’s hotel buildings with the Insurance Company (Appellant). A throng of approximately 200-250 individuals caused damage to the resort property when they entered the premises following an altercation with a group attempting to disrupt a football game. The police conducted an investigation into the incident in response to FIRs filed. The investigation revealed that Gaffar Molla and his associates, in pursuit of the mob, concealed in the resort of the complainant after firing and throwing bombs at a football match venue adjacent to the resort.
Following this, the rabble caused damage to the insured property. In addition to pipe guns, live grenades, and explosive substances, the police discovered them within the resort’s compound. According to the surveyor’s concluding report, the complainant incurred a loss of approximately Rs 202,216 lakhs across both policies. Nevertheless, the insurance company denied the complainant’s claim, asserting that the resort management committed a malevolent act that caused the loss suffered by the complainant.
As such, the resort management claimed that the expense fell within one of the exclusions specified in Clause V(d) of the insurance policy. Subsequently, the complainant filed a complaint with the National Consumer Disputes Redressal Commission, which issued a directive to the insurance company, requiring the repayment of Rs. 202,216 lakhs plus interest at the rate of 9% per annum from the date the claim was filed until the payment was received. In opposition to the Commission’s directive, the insurance company petitioned the Apex Court for an appeal.
Advocate Vishnu Mehra, representing the insurance company, contended that the complainant had provided sanctuary to a criminal and his accomplices who made use of the resort’s stored firearms and explosives. Before hiding at the resort, Gaffar Molla and his cohorts incited the mob by fatally wounding one individual and injuring several others at the football stadium. The throng was provoked by their actions and subsequently attempted to cause damage to the insured property.
