admitted facts need not be proved -The premium having been paid by the Appellant’s husband during his life­time, the loan was to be adjusted from the insurance policy. – Ashatai w/o Anand Duparte …Appellant versus Shriram City Union Finance Ltd. …Respondent

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.3962 OF 2019
(Arising out of SLP (Civil) No. 4925 of 2019)
Ashatai w/o Anand Duparte …Appellant
versus
Shriram City Union Finance Ltd. …Respondent
J U D G M E N T
INDU MALHOTRA, J.
Leave granted.

  1. The present Civil Appeal has been filed to challenge the Order
    dated 30.11.2018 passed in Revision Petition No. 472 of 2018
    by the National Consumer Disputes Redressal Commission
    (hereinafter referred to as “the National Commission”).
    1
  2. The factual matrix in which the present case has been filed is
    as under :
    2.1. The Complainant/Appellant’s husband Late Anand
    Duparte had obtained a personal loan of Rs. 2,00,000/­
    on 27.02.2015 from the Respondent – Finance
    Company.
    The personal loan was advanced on 27.02.2015 after
    executing the loan agreement, and completing all legal
    formalities.
    The Respondent – Finance Company secured the loan
    by issuance of an insurance policy by its sister concern
    i.e. M/s Shriram General Insurance Company Ltd., on
    behalf of the Borrower.
    In the Cover Note of the said policy, the Insured was
    shown as: M/s Shriram City Union Finance Ltd. i.e. the
    Respondent – Finance Company.
    The insurance policy was a Group Insurance Policy
    issued to various borrowers, including the Appellant’s
    husband, whose name was at Serial No. 263 of the list.
    2.2. The loan was to be serviced by the Appellant’s husband
    in 48 monthly instalments of Rs. 7,933/­ each. The 1st
    loan instalment of Rs. 7,933/­ was paid on 07.03.2015
    vide Cheque No. 433931.
    2
    2.3. The Appellant’s husband admittedly paid the premium
    of the insurance policy. The Respondent – Finance
    Company received a Demand Draft of Rs. 400/­ from
    the Appellant’s husband towards the insurance
    premium. The Group Insurance Policy was issued from
    30.03.2015 to 29.03.2016.
    2.4. On 17.03.2015 i.e. within 18 days after obtaining the
    loan, the Appellant’s husband suddenly passed away.
    2.5. The Respondent – Finance Company issued a notice to
    the Appellant for payment of the loan instalments.
    2.6. The Appellant requested the Respondent – Finance
    Company to recover the loan through the insurance
    policy.
    2.7. A Legal Notice dated 16.12.2015 was addressed by the
    Appellant to the Respondent – Finance Company,
    requesting that the loan amount be recovered from the
    Insurance Company.
    2.8. The Respondent – Finance Company replied to the Legal
    Notice on 29.01.2016, and denied having received the
    Demand Draft of Rs. 400/­ from the deceased husband
    of the Appellant. It was further contended that the
    amount of Rs. 2,120/­ was deducted from the loan
    amount towards processing fee and stamp charges.
    3
    2.9. The Appellant filed a Consumer Complaint before the
    District Consumer Disputes Redressal Forum, Nanded.
    The Appellant submitted that after the loan was
    sanctioned on 27.02.2015, the amount was credited to
    the loan account after deducting the insurance
    premium. The Respondent – Finance Company obtained
    the insurance policy from its sister concern on
    30.03.2015. Had the insurance policy been issued when
    the loan was advanced, the amount would have been
    recovered through the insurance policy. There was
    therefore a deficiency of service by the Respondent –
    Finance Company in delay in obtaining the insurance
    policy from its sister concern. The Respondent –
    Finance Company was not entitled to recover the loan
    from the Appellant.
    The Appellant prayed that the Respondent – Finance
    Company be restrained from recovering the loan
    amount from her, since the recovery was wrong and
    unreasonable, and prayed for payment of compensation.
    2.10. The District Forum allowed the Consumer Complaint
    filed by the Appellant vide Order dated 27.02.2017. It
    was held that since the Appellant’s husband had paid
    4
    the 1st loan instalment on 07.03.2015, it could be
    presumed that all the loan formalities had been
    completed by that date. This proved that the Appellant’s
    husband had paid the insurance premium soon after
    the loan was sanctioned. The Respondent – Finance
    Company had been negligent in obtaining the policy
    late, since it had forwarded the premium amount to the
    Insurance Company after a delay of about 1 month.
    As per Section 64 VB (2) of the Insurance Act, 19381
    the risk was covered from the date of payment of
    insurance premium.
    The District Forum held that there was deficiency of
    service on the part of the Respondent – Finance
    Company. It was ordered that the Respondent – Finance
    Company shall not recover any amount from the
    Appellant towards the loan obtained by her deceased
    husband; and ordered compensation of Rs. 10,000/­
    towards mental agony, and Rs. 3,000/­ towards Costs.
    1 Section 64VB (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 money­order or cheque sent
    by post, the risk may be assumed on the date on which the money­order is booked or the
    cheque is posted, as the case may be.
    5
    2.11. The Respondent – Finance Company challenged the
    Order of the District Forum before the State Consumer
    Disputes Redressal Commission, Mumbai.
    The State Commission dismissed the Appeal vide
    Order dated 19.09.2017. It was held that since the
    insurance premium was deducted from the loan
    account of the Appellant’s husband, the District Forum
    had rightly allowed the Consumer Complaint.
    2.12. Aggrieved by the Order of the State Commission, the
    Respondent – Finance Company filed a Revision Petition
    before the National Commission u/S. 21 (b) of the
    Consumer Protection Act, 1986.
    The National Commission set aside the Order passed
    by the State Commission, and allowed the Revision
    Petition filed by the Respondent – Finance Company
    vide Order dated 30.11.2018.
    The National Commission held that the Appellant –
    Complainant had taken a contradictory stand regarding
    payment of the insurance premium in her Legal Notice
    dated 16.12.2015. She had stated that a Demand Draft
    of Rs. 400/­ was received by the Respondent – Finance
    Company from her husband. However, there was no
    document evidencing receipt of the said Demand Draft
    6
    by the Respondent – Finance Company towards
    payment of premium.
    It was further held that there was no evidence of any
    deduction of the insurance premium from the loan
    account either. The Respondent – Finance Company
    could not be held to be negligent in rendering services.
    2.13. Aggrieved by the final Order dated 30.11.2018 passed
    by the National Commission, the Appellant has filed the
    present Civil Appeal.
  3. We have heard learned Counsel for both parties, and perused
    the pleadings on record.
    3.1. The National Commission, in exercise of its revisional
    jurisdiction, has set aside the concurrent findings of the
    District Forum and State Commission, by the impugned
    Order dated 30.11.2018.
    The revisional jurisdiction of the National Commission
    is a limited jurisdiction,2
    to be exercised in case the
    State Commission lacked jurisdiction, or acted with
    illegality or material irregularity. 3
    Section 21(b) reads as follows :
    “call for the records and pass appropriate orders
    in any consumer dispute which is pending
    before or has been decided by any State
    Commission where it appears to the National
    Commission that such State Commission has
    2 Galada Power and Telecommunication Limited v. United India Insurance Company Limited
    & Anr., (2016) 14 SCC 161.
    3 Rubi (Chandra) Dutta v. United India Insurance Co. Ltd., (2011) 11 SCC 269.
    7
    exercised a jurisdiction not vested in it by law, or
    has failed to exercise a jurisdiction so vested, or
    has acted in the exercise of its jurisdiction
    illegally or with material irregularity.”
    (emphasis supplied)
    3.2. 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 Respondent – Finance Company; second,
    that there was no evidence to prove that the Respondent
    – Finance Company deducted the insurance premium
    from the loan account.
    3.3. A perusal of the pleadings and record, would show that
    both these findings are factually incorrect.
    With respect to the first ground, the Respondent –
    Finance Company in paragraph 4(c) of 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.
    The relevant extract is set out herein below for ready
    reference :
    “That sometime in the month of March 2015, a
    request for availing the Personal Accidental
    Insurance Policy from Shriram General
    Insurance Company Limited (hereinafter referred
    to as the ‘Insurance Company’) was received
    8
    from Late Sh. Anand Duparte alongwith the
    Demand Draft towards the payment of the
    insurance premium, whereupon the same was
    forwarded to ‘Insurance Company’ and after
    carrying out their due diligence, the Group
    Personal Accidental Insurance Policy was
    thereon issued by ‘Insurance Company’.”
    (emphasis supplied)
    Hence, the first ground on which the National
    Commission has set aside the Order of the State
    Commission is factually incorrect.
    3.4. 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 viz.
    M/s Shriram General Insurance Company Limited. It
    was a composite inter­linked transaction.
    The Cover Note issued by M/s Shriram General
    Insurance Company Limited, shows that the beneficiary
    9
    of the insurance policy is the Respondent – Finance
    Company viz. M/s Shriram City Union Finance Ltd.
    The Cover Note further shows that the Group
    Insurance Policy dated 30.03.2015 was issued to 280
    borrowers, with the loan amounts mentioned against
    their respective names.
    Thus, the deduction of Rs. 2,120/­ from the loan
    account was towards processing of the composite
    transaction.
    3.5. 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.
    3.6. The Respondent – Finance Company however delayed in
    forwarding the amount to the Insurance Company for
    obtaining the insurance policy, which was issued on
    30.03.2015 for the period 30.03.2015 to 29.03.2016.
    Hence, there was a clear deficiency of service by the
    Respondent – Finance Company in delay in obtaining
    the insurance policy from its sister concern.
    3.7. Section 64VB(2) of the Insurance Act, 1938 provides
    that :
    “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
    10
    than the date on which the premium has been
    paid in cash or by cheque to the insurer.”
    It is the admitted position that the deceased husband
    of the Appellant had paid the insurance premium by a
    Demand Draft in favour of the Insurance Company.
    This has been acknowledged in paragraph 4(c) of the
    Revision Petition filed by the Respondent – Finance
    Company, as referred to above.
    As a consequence, 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 life­time, the loan
    was to be adjusted from the insurance policy.
    3.8. The National Commission has 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.
  4. In view of the aforesaid discussion, the Order dated
    30.11.2018 passed by the National Commission in Revision
    11
    Petition No. 472 of 2018 is hereby set aside. The Civil Appeal
    is allowed.
  5. The Appellant – widow has been unnecessarily dragged
    though legal proceedings on account of deficiency of service
    by the Respondent – Finance Company. We deem it
    appropriate to direct the Respondent – Finance Company to
    pay Compensation of Rs. 50,000/­, and Costs of Rs.
    25,000/­ to the Appellant.
    All pending Applications, if any, are accordingly disposed of.
    Ordered accordingly.
    ……………………………….J.
    (UDAY UMESH LALIT)
    .………………………………J.
    (INDU MALHOTRA)
    New Delhi,
    April 16, 2019
    12