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
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
