National Consumer Disputes Redressal
State Bank Of India, Branch Bellary vs B. Nagaraj And Ors. on 14 July, 2005
Equivalent citations: IV(2005)CPJ112(NC)
ORDER
K.S. Gupta, J. (Presiding Member)
1. These revisions are directed against a common order dated 3.7.2003 passed by Karnataka State Consumer Disputes Redressal Commission, Bangalore allowing Appeal No. 682/00 of complainant, B. Nagaraj and dismissing Appeal No. 685/00 filed by petitioner/ opposite party No. 1 against the order of a District Forum dated 30.6.2000. District Forum while partly allowing complaint had directed the petitioner and opposite party No. 2 to pay amount of Rs. 2,50,000/- with interest. In said Appeal No. 682/00, amount was enhanced from Rs. 2,50,000/- to Rs. 4,16,380/-.
Facts giving rise to these revisions lie in narrow compass. B. Nagaraj, complainant was running business in consumer goods under the name and style of Maheshwari Enterprises. He had taken loan of Rs. 60,000/- from opposite party No. 1, bank. A sum of Rs. 2,00,000/- was due from him on 8.12.1995 and to secure that amount he hypothecated the stock-in-trade with opposite party No. 1.
2. It was alleged that at the time of execution of hypothecation agreement the opposite party No. 1 had agreed to insure the stock at the cost of complainant. Opposite party No. 1 debited a sum of Rs. 778/- towards insurance premium in complainant's account on 11.3.1997. It was further alleged that fire took place in the godown on 30.9.1997 and entire hypothecated stock of the value of Rs. 4 lakhs was destroyed. Surveyor estimated the loss at Rs. 4,16,380/-. It was stated that complainant asked opposite party No. 1, bank to hand over the insurance policy to claim insurance amount. Then, it was revealed that no policy was taken by the bank. Alleging Deficiency in service, complainant filed complaint which was contested by the opposite parties. In. written version, it was alleged that complainant was having account for the last 10 years and outstanding loan as on 8.12.1995 was Rs. 2,00,000/-. It was claimed that amount of Rs. 778/- which was debited towards insurance premium pertained to Maheshwari Industries, another borrower of the bank. It was denied that opposite party No. 1 ever undertook to insure the hypothecated stock and value of damaged stock was Rs. 4,16,380/- as alleged.
3. Copies of sanction of cash credit (hypothecation) limit of Rs. 2 lakhs to Maheshwari Enterprises and agreement of hypothecation executed by complainant in favour of opposite party No. 1 on 8.12.1995 which were also before the District Forum, are placed on the file. Submission advanced by Mr. Rajiv Kapoor for bank was that under Clause 8 of the said sanction letter and Clause 5 of the agreement of hypothecation it was the duty of complainant to obtain insurance policy for the hypothecated stock and amount of Rs. 778/-which was shown in the pass book as having been debited in the account of said firm on 11.3.1997 in fact pertained to Maheshwari Industries, another borrower. According to Mr. Kapoor both the Fora below erred in passing the award against opposite parties on the basis of debit entry of Rs. 778/.- and alleged assurance to insure the stocks. Reliance was placed on the decision in Pradeep Kumar Jain v. Citibank and Anr., . Clause 8 of aforesaid sanction letter which is relevant, runs as under:
"8. INSURANCE : The entire assets/ machines charged to the bank should be fully insured for full market value or 10% over the aggregate limits whichever is higher against fire with a company/ companies approved by the bank in the joint name of the Bank and yourself at your expenses. Insurance policies and, cover notes, premium paid receipts etc. should be deposited with us. He should make punctual payment of all premia and ensure that no acts/ omissions occur in this regard which may invalidate such Insurance during the currency of the advance. You should also agree to take out cover for riot and strike and break-down risks as and when called upon by the Bank to do so. In case he fails to do so, we reserve the right to take out insurance cover as above and all expenses incurred in this regard by the bank such as insurance premia etc. will be debited to your account."
Clause 5 of agreement of hypothecation provides that the stock goods shall be kept at borrower's risk and expenses in good condition and fully insured against loss or damage as may be required by the bank.
4. Copy of fire policy issued by Oriental Insurance Company Ltd. filed during the course of argument would show that hypothecated stock was got insured by the complainant for a sum of Rs. 4,50,0007- for the period from 24.4.1996 to 23.4.1997 by paying premium of Rs. 943/-. In support of the averments made in complaint, complainant examined himself as P.W. 1. In his examination-in-chief (copy of statement at pages 64 to 70) he stated that there is entry in the pass book Exhibit P-1 (a) at page 44 that premium amount of Rs. 778/- was debited in his account in the month of March, 1997 but the opposite party No. 1 failed to remit this amount to the insurance company. In cross-examination he voluntarily stated that in the year 1997 one official by the name of Harischandra told him to have insurance from National Insurance Company and he assured that he would get the insurance done through the bank. In cross-examination he further stated that he did not ask Harischandra as to how much risk was covered under the policy and what were the terms and conditions thereof Though opposite parties examined B.A. Balasubramanyam, Field Officer as R.W. 1 but his deposition is silent in regard to said amount of Rs. 778/- being related to Maheshwari Industries. In the absence of evidence of that effect and the entry as made in above pass book, we are proceeding on assumption that amount of Rs. 778/- towards premium was charged from Maheshwari Enterprises by the bank on 11.3.1997. Admittedly, this amount was not sent to Insurance Company for obtaining policy beyond 23.4.1997 by the bank. Bare perusal of aforesaid Clause 8 of sanction letter and Clause 5 of agreement of hypothecation would show that it was primarily the obligation of complainant to keep the hypothecated stocks insured during the currency of advance. To be noted that name of said Harischandra does not figure either in the complaint or examination-in-chief of the complainant. If aforesaid voluntary statement made in cross-examination by the complainant is accepted the fresh insurance policy for the period beyond 23.4.1997 was to be taken from National Insurance Company instead of Oriental Insurance Co. Ltd. which issued the policy up to 23.4.1997. For obtaining fresh policy from said insurance company an application had to be given, it was to be indicated whether any claim had been made in previous year or not, materials as regards valuation of hypothecated stocks and nature and extent of risk to be covered were to be furnished which the complainant did not do. Admission made in cross-examination above by the complainant would show that he did not even bother to know as to how much risk was covered and what were the terms and conditions of policy from said Harischandra. Mere debiting of amount of Rs. 778/- towards premium would not result in automatically taking of a fresh policy. In our view, this case is squarely covered by Pradeep Kumar Jain's case (supra) relied upon by Mr. Kapoor, Advocate. Order passed by State Commission, therefore, deserves to be set aside being not legally sustainable.
Consequently, while allowing revisions, impugned order is set aside and complaint dismissed. No order as cost.