Punjab-Haryana High Court
Haryana Pesticides And Ors. vs The Bank Of Rajasthan Ltd. And Anr. on 7 August, 2003
Equivalent citations: AIR2004P&H83, 2004(1)CTLJ499(P&H), (2003)135PLR711, AIR 2004 PUNJAB AND HARYANA 83, (2005) 2 BANKCLR 171, (2003) 4 RECCIVR 396, (2003) 3 PUN LR 711
Author: Viney Mittal
Bench: Viney Mittal
JUDGMENT Viney Mittal, J.
1. This order shall dispose of two regular second appeals being RSAs No. 3567 and 3593 of 2003 as the same arise out of a common judgment passed by the learned courts below and common questions of fact are involved.
2. For the sake of convenience, the Bank of Rajasthan Limited (respondent) shall be referred to as the "plaintiff whereas the present appellant-Haryana Pesticides shall be referred to as the "defendant".
3. A suit for recovery of Rs. 3,45,500.80 was filed by the plaintiff-Bank. It was claimed that defendant No. 1 was the sole proprietorship concern of defendant No. 2. Defendant No. 3 was a guarantor. The plaintiff-Bank had sanctioned cash credit limit as detailed in the plaint and defendant No. 2 a sole proprietor of defendant No. 1 had executed a cash credit pledge and a deed of hypothecation and other documents in favour of the plaintiff Bank. Account of defendant No. 1 was irregular and ultimately it was found that an amount of Rs. 3,45,500.80 was due again defendant No. 1 uptil December 10, 1989 and according suit was filed.
4. The suit was contested by the defendants. It was claimed that the hypothecated and pledged goods/stocks were in possession of the plaintiff and the same were destroyed due to fire and the defendants were deprived of insurance claim due to the negligence of the plaintiff in not getting the same insured. It was claimed that on June 10, 1990, fire broke out in the adjacent factory of M/s United Pesticides and spread to and engulfed and destroyed the hypothecated and pledged goods. However, the aforesaid pledged/hypothecated stocks were not insured, therefore, the defendants had suffered a loss to the extent of Rs. 10,00,000/-. On that basis the defendants claimed that the plaintiff had no cause of action to claim an amount of Rs. 3,45,500.80 as claimed by them. The defendants claimed that on the other hand, they were entitled to the claim of Rs. 10,00,000/- on account of loss suffered by them.
5. A separate suit for recovery of Rs. 10,00,000/- was filed by the defendants (Ms. Haryana Pesticides etc.). Similar allegations were levelled in the aforesaid suit claiming the said amount. It was claimed by the defendants that it was the duty of the plaintiff-Bank to have the pledged/hypothecated goods insured and since the insurance cover was not taken by the plaintiff-Bank, therefore, the defendants were entitled to recover the aforesaid amount of Rs. 10,00,000/-.
6. The said suit was contested by the Bank. It was claimed that as per the agreement between the parties it was for the borrowers to get the insurance cover for the aforesaid pledged/hypothecated goods and since the borrowers themselves failed to get the same, therefore, the bank could not be held liable for the aforesaid amount.
7. The learned trial court on the perusal of various Clauses of the hypothecation of the goods Ex. P10 as well as agreement of pledge Ex. P8 came to the conclusion that it was for the borrowers to get the insurance cover and since the borrowers had failed to get the same, therefore, the Bank could not be held liable for the loss suffered by the said borrowers. It was further held that as per the evidence led by the parties, the plaintiff-Bank had proved the liability of the defendants and, therefore, the suit filed by the plaintiff-Bank was decreed for an amount of Rs. 3,45,500.80 together with costs and interest at the rate of 16.5% per annum with quarterly rests. However, the suit filed by the defendants for recovery of Rs. 10,00,000/- was dismissed.
8. Two separate appeals were filed by the defendants. The learned first appellate Court reappraised the entire evidence. It also came to the similar conclusions as arrived at by the learned trial Court. Accordingly the aforesaid appeals were dismissed and the judgments passed by the learned trial Court in the two suits were upheld.
9. At this stage, it may be pertinent to notice the relevant Clauses in the agreement.
10. Clause 6 of the agreement of hypothecation of goods Ex.P10 reads as follows:
"That the hypothecated goods shall be insured by the borrowers against fine risks and other risks as required by law and if required by the Bank against loss or damage by riot and civil common, in some insurance office or offices approved by the Bank and in the name and for the sole benefit of the bank for their full market value and that the Borrowers shall on demand deliver to the bank all policies for and receipts for premium paid on such insurance endorsed and assigned with the full benefit thereof in favour of the bank. Should the Borrowers fail to so inure or fail to deliver the polices or receipts for premium duly endorsed as aforesaid three days after demand, the Bank shall be without being terms at liberty to effect such insurance at the expenses of the Borrowers by debit to the cash credit account. In case of any claim arising under any of such policies, the Bank will be entitled to settle such claim with the Insurance Companies at its option."
11. Similarly Clause 5 of the agreement for pledge of goods Ex. P8 reads as under:
"That all securities already and hereafter delivered as aforesaid shall be insured against Fire risk by the Borrowers in some insurance office or office approved by the Bank and in the name of the Bank for the full market value of such securities and that policies for an receipts for premium paid in such insurance shall be endorsed, transferred and delivered to the Bank. Should the Borrower fail to do so insurance or fail to endorse, transfer and deliver the policies or receipt for premium as aforesaid, the Bank shall be at liberty to effect such insurance at the expense of the borrowers. The borrowers further agree that the Bank shall be at liberty at any time at its discretion (without being bound to do so) to insure the securities for their full market value against riot and civil commotion risk or any other type of insurance risk at the expense of the borrowers with any insurance company. It shall also be incumbent on the Borrowers to effect riot and civil commotion insurance in respect of the full market value of the securities thus pledged whenever such special insurance is considered necessary by the Bank."
12. Shri O.P. Gupta, the learned counsel for the appellant has argued that in fact as per the past practice adopted by the plaintiff-Bank, it was always the plaintiff-Bank getting the pledged/hypothecated goods insured and, therefore, for the period under the dispute it was for the bank to have secured the aforesaid insurance cover. Shri Gupta has relied upon Lallan Prasad v. Rahmat Ali and Anr., A.I.R. 1967 S.C. 1322, Durga Dass v. Sansar Singh, 2003(2) R.C.R. (Civil) 270 and N.R. Srinivasa Iyer v. New India Assurance Co. Ltd., A.I.R. 1983 S.C. 899 to contend that it was for the bailee to protect the property hypothecated and take such care of the goods pledged as required. As far as the proposition of law stressed by Shri Gupta is concerned, there is no dispute. However, in the facts and circumstances of the case, the aforesaid proposition of law does not arise. The relationship between the parities is governed by a specific agreement of hypothecation Ex.P10 and agreement for pledge Ex.P8. The two clauses with regard to the insurance cover of the aforesaid goods are Clauses No. 6 and 5, respectively, of the aforesaid agreement. The aforesaid clauses have been reproduced above, in the order. A bare perusal of the aforesaid clauses would show that the hypothecated goods were required to be insured by the borrowers against the fire and other risk. It was only if the borrower had failed to so insure the goods, then the Bank was at liberty to get the aforesaid insurance at the risk and expenses of the borrower. It was specifically mentioned that the aforesaid right was in the nature of a liberty to the bank without being bound to do so.
13. Under these circumstances, it is apparent that the aforesaid two clauses were barely enabling clauses for the benefit of the Bank and could not be used by the defendants to take a defence for denial of its own liability and for making a claim against the plaintiff-Bank. When it was primarily the duty of the borrower itself to get the insurance cover, then by any stretch of imagination the said obligation could not be fastened upon the plaintiff-Bank. The authorities relied upon by Shri Gupta are not applicable to the facts and circumstances of the present case.
14. Nothing has been shown that the findings recorded by the learned courts below suffer from any infirmity or are contrary to the record in any manner.
15. No question of law, much less any substantial question of law, arises in these appeals.
16. No merits. Dismissed.