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Hemiben Ladhabhai Bhanderi v. Saurashtra Gramin Bank & Anr.

Civil Appeal · 2020 INSC 126Decided 3 Feb 2020
Civil Appeal No. 979 of 2020
Dr. Justice D.Y. Chandrachud · Justice Hemant Gupta

Background

The appellant's husband, a bank account holder, had applied for a group personal-accident insurance policy offered by the bank, under which the bank was supposed to deduct a small premium and forward his application to the insurer. He died in a motorcycle accident shortly after submitting his form. The insurer denied the Rs. 5 lakh claim because the bank had never forwarded the premium or the form, and the bank in turn blamed the deceased for allegedly withdrawing and resubmitting the form late. The District Forum and State Commission both ruled in the widow's favour and awarded Rs. 5 lakh, but the National Consumer Disputes Redressal Commission (NCDRC), while agreeing the bank was at fault, cut the award down to Rs. 2 lakh.

Decision Breakdown

The Supreme Court noted that all three consumer fora had concurrently found the bank guilty of deficiency of service: the bank could not even produce a receipt for the application and could not explain discrepancies in its own serial-number records for submitted forms. Since the bank never challenged the NCDRC's finding of fault, and its explanations were, in the Court's words, "an eye-wash," there was no valid reason for the NCDRC to have reduced the compensation from Rs. 5 lakh to Rs. 2 lakh. The Court restored the full Rs. 5 lakh award, directing payment within 60 days.

Lesson Learnt

When courts and consumer forums have already found an institution at fault, that institution cannot get the compensation amount reduced just because the final forum applied its own view in the absence of a cross-appeal: citizens who are failed by an intermediary's negligence (like a bank mishandling an insurance form) are entitled to the full, proven loss.

Official source (sci.gov.in)View Judgment (PDF)

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