CANARA BANK versus M/S UNITED INDIA INSURANCE CO. LTD. & ORS.

Citation: [2020] 7 S.C.R. 498 · Decided: 06-02-2020 · Supreme Court of India · Bench: S. ABDUL NAZEER · Disposal: Disposed off

Cited by 3 judgment(s) · cites 3 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2020] 7 S.C.R.
CANARA BANK
v.
M/S UNITED INDIA INSURANCE CO. LTD. & ORS.
(Civil Appeal No. 1042 of 2020)
FEBRUARY 06, 2020
[S. ABDUL NAZEER AND DEEPAK GUPTA, JJ.]
Consumer Protection Act, 1986 – s.2(d) – “Beneficiary” under
the insurance policy availed by the insured, if “consumer” under
the Act – Tripartite agreement between farmers, Bank and cold store
– Farmers’ agricultural produce was stored in cold store – Cold
store got the stocks insured from an insurance company – Farmers
hypothecated agricultural produce to the Bank – Bank issued loans
– Agricultural produce destroyed by fire – Farmers claimed that the
insurance company was liable to pay the value of the agricultural
produce as on the date of fire – Insurance company contended that
the fire was not accidental and farmers were not consumers – State
and National Commission concurrently held that fire was accidental;
farmers were held consumers – On appeal, held:Whether the fire
took place by a short circuit or any other reason, as long as insured
is not the person who caused the fire, the insurance company cannot
escape its liability in terms of the insurance policy – Contention of
the insurance company that the fire was ignited by the use of kerosene
and hence it is not liable, rejected – Tripartite agreement read along
with the terms of the insurance policy make it clear that the intention
of the parties was that they would be compensated by the insurance
company in case of any untoward loss – Definition of consumer
under the Act is very wide and includes beneficiaries taking benefit
of the insurance availed by the insured – Thus, the farmer is a
beneficiary under the policy and therefore, definitely a consumer –
Orders of both the Commissions that the complaint under the Act is
maintainable, upheld – Value of the goods as reflected in the
warehouse receipts be taken to be the value on the date of fire –
Insurance company to indemnify the cold store with regard to the
value of goods – Farmers  to get the amount payable under the
policy, subject to the bank clause – Further directions issued –
Insurance – Contract.
[2020] 7 S.C.R. 498
498
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Consumer Protection – Insurance Policy – Principles of
interpretation – Discussed.
Consumer Protection Act, 1986 – s.2(1)(d)(i) – Insurance
policy – Privity of contract between insurance company and
claimants – If required – Held:  As far as the Act is concerned, it is
not necessary that there should be privity of contract between the
insurance company and the claimants – It is not necessary that
those beneficiaries should be parties to the contract of insurance.
Contract – Bailor and bailee relationship – Farmers’ goods
stored in a cold store was destroyed by fire – Cold store had got it
insured from the insurance company – Insurance company
contended that since the cold store held the goods in trust, they
were not liable – Held: Rejected – Farmers paid consideration to
the cold store and, therefore, the goods were not held in trust per se
– Possession of the farm produce was handed over by the bailor,
i.e. farmer to the cold store i.e. the bailee, in terms of the contract –
This is not a case envisaged under Exclusion Clause 5 of the
insurance policy – Goods were neither held on commission –
Insurance.
Doctrines/Principles– Principle of uberrima fides – When not
applicable – Discussed.
Consumer Protection – Insurance policy – Non-disclosure of
material facts – Effect of – Held: To make a contract void the non-
disclosure should be of some very material fact – Misrepresentation
or misdescription only makes the policy voidable –If the insurance
company while accepting the proposal form does not ask the insured
to clarify any ambiguities then after accepting the premium it cannot
urge that a wrong declaration was made by the insured.
Consumer Protection – Insurance Policy – Tripartite agreement
between farmers, Bank and cold store – Farmers’ goods were stored
in cold store – Goods insured with insurance company – Farmers
hypothecated goods to the Bank – Bank issued loans – Tripartite
agreement not disclosed to the insurance company – Goods destroyed
by fire – Held: When the Bank issues loans against the
hypothecation of goods, as in the present case, and insists that the
goods should be insured to safeguard its outstandings then a duty
lies upon the Bank to inform the insurance company of the policy –
CANARA BANK v. M/S UNITED INDIA INSURANCE CO.
LTD. & ORS.
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