State Consumer Disputes Redressal Commission
Shankar Agarwal vs The Chairman, Bank Of India. on 9 January, 2017
Cause Title/Judgement-Entry STATE CONSUMER DISPUTES REDRESSAL COMMISSION WEST BENGAL 11A, Mirza Ghalib Street, Kolkata - 700087 Complaint Case No. CC/08/37 1. Shankar Agarwal S/O late Sohanlal Agarwal. H.C.L. Road. Rangamatia (East) PO. Rupnarayanpur Bazar, PS. Salanpur, Burdwan, West Bengal 2. Sumitra Devi. W/O Shankar Agarwal. H.C.L. Road. Rangamatia (East) PO. Rupnarayanpur Bazar, PS. Salanpur, Burdwan. West Bengal ...........Complainant(s) Versus 1. The Chairman, Bank of India. C-5, NG Block, Banolra East, Star House, Mumbai- 51. West Bengal 2. The Zonal Manager, Bank of India. Madhusudan Apartment, P-18, Dobson Lane, Howrah- 711101. Howrah. West Bengal 3. The Branch Manager, Bank of India. Chittaranjan Branch. PO. Chittaranjan. Burdwan. West Bengal 4. The Chief Regional Manager, National Insurance Co. Ltd. Kolkata Regional Office No. II. 8, India Exchange Place, Kolkata- 71. West Bengal 5. Chairman-cum-Managing Director, National Insurance Co. Ltd. Middleton Street. Kolkata. West Bengal 6. The Divisional Manager, National Insurance Co. Ltd. Asansol Divisional Office, "Shyama" ; Apcar Garden, PO. Asonsol. Burdwan. West Bengal ............Opp.Party(s) BEFORE: HON'BLE MR. DEBASIS BHATTACHARYA PRESIDING MEMBER HON'BLE MR. JAGANNATH BAG MEMBER For the Complainant: Mr. Aloke Mukhopadhyay.Mr.Asim Kr. Ghatak., Advocate For the Opp. Party: Mr.S.K.Sengupta. Mr. S.N. Dutta, Advocate Dated : 09 Jan 2017 Final Order / Judgement Sri Debasis Bhattacharya, Member
Brief facts of the complaint case are that on the intervening night of 04/05-06-2006, a devastating fire broke out at the insured premises causing grave damage to the said property. Necessary GD in this regard was made before the local Police Station on 05-06-2006 being GDE No. 134. Complainants also informed the matter to the bank authorities and lodged claim with the OP Insurance Company on 30-06-2006. On the basis of such information, one Surveyor and some officials of the Insurance Company visited the spot on 09-06-2006 and also on other subsequent dates. Complainants submitted necessary documents to the Surveyor as per demand. However, the OP Insurance Company, despite receipt of survey report in the year 2007 itself, sat tight over the claim of the Complainants for long. Meanwhile, the OP Bank authorities, without appreciating the predicaments of the Complainants, in a high handed manner took possession of the landed property of the Complainants. Hence, the case.
OP Nos. 1 to 3 contested the case by filing W.V., wherein they denied all the material allegations of the complaint. Further case of these OPs is that M/s Amrit Flour Mill, M/s Sankar Enterprise, M/s Shib Shankar Oil Mill and M/s Sumitra Enterprise availed of loans and advances from the OP No. 3 against hypothecation of stock, machinery, movable assets, as also immovable properties. The landed property lying and situated at Rupnarayanpur measuring 7 Cottahs 13 Chittacks stands in the names of Sumitra Agarwal, Shankar Agarwal and Phuli Devi by means of 3 separate Title Deeds. Residential building, shop room and factory were constructed/installed on the aforesaid landed properties. Equitable mortgage of the land and building, along with other landed properties in the names of Shankar Agarwal, Sumitra Agarwal, Pinki Agarwal and Amrit Agarwal was created pertaining to their own land to secure loans and advances granted to the above named 4 borrowers. Sri Shankar Agarwal, by submitting an affidavit stated that his mother Phuli Devi was dead and he inherited the property from his mother. Accordingly, Shankar Agarwal created mortgage of the above immovable property purchased by Phuli Devi by depositing original Title Deed in the name of his mother (Phuli Devi) including Record of Right and original affidavit dated 11-05-2004 declaring himself as the owner of the said property. It is the further case of these OPs that the Complainants committed default in payment of dues and violated the terms and conditions on the basis of which loans and advances were sanctioned. Thus the said loan became highly irregular and the OP classified the said account as Non Performing Assets as per guidelines of the Reserve Bank of India. To save deterioration in the value and quality of the said hypothecated and mortgaged securities, the borrowers were served notices under the provisions of Sec. 13(2) and 13(4) of the SARFAESI Act and symbolic possession of the aforesaid movable and immovable properties was taken over by the OP Bank on 22-11-2007. These OPs, on 27-03-2008, took physical possession of mortgaged properties with the help of DM, Burdwan and in presence of Executive Magistrate, OC, Rupnarayanpur, empanelled Advocate of the Bank, registered Amin and authorized Officer of the Bank under the SARFAESI Act and Officers from Asset Recovery Department. It is claimed that there was no deficiency in service on their part.
OP Nos. 4 to 6 also contested the case by filing W.V. In their defence, it is stated by these OPs that after being informed of the incident, they deputed a Surveyor, who caused due inspection in this regard. However, due to non-cooperation from the side of the Complainants, the said survey remained inconclusive.
Points for consideration Whether there is any deficiency in service on the part of the OP Nos. 1 to 3?
Whether there is any deficiency in service on the part of the OP Nos. 4 to 6?
Whether the Complainants are entitled to any relief?
Decision with reasons Point No. 1:
Refuting the allegation of arbitrariness, as alleged by the Complainants, it is claimed by the OP Nos. 1 to 3 that as the Complainants defaulted making timely repayment of loans and advances, in order to arrest further corrosion of the value and quality of the concerned hypothecated and mortgaged securities, as per the guidelines of the Reserve Bank India, they were constrained to take physical possession of the properties in question following due procedure of law.
It appears, the bank authorities took physical possession of the properties in question armed with the provisions of the SARFAESI Act and given that this Act has been accorded overriding effect vis-à-vis other Acts in force, we are not inclined to dwell on the issue as to whether or not there was any procedural lapses/arbitrariness/legal infirmity in taking possession of the mortgaged property of the Complainants by the OP Nos. 1 to 3. The Complainants are at liberty to agitate this issue before the Debts Recovery Tribunal. They may seek relief for excluding the period spent in prosecuting the proceedings under the Consumer Protection Act, while computing the period of limitation prescribed for such a suit in terms of the principle laid down by the Hon'ble Supreme Court in the matter of Laxmi Engineering Works vs. P.S.G. Industrial Institute, reported in 1995 AIR 1428, 1995 SCC (3) 583.
Point No. 2:
Pointing out that the Complainants have filed two other complaint cases besides the present case, it is argued by the Ld. Advocate for the OP Nos. 4 to 6 that the sum total of claims, as made in respect of these cases, has exceeded the pecuniary jurisdiction of this Commission. As such, the present case is not maintainable.
There would, however, be few takers to such contention of the OP Nos. 4 to 6 for the simple reason that separate claims have been made in respect of three different insurance policies. Further, it appears that, (1) Policy No. 150502/11/05/3100000327 covered the Plant & Machinery and Stock of Raw Materials and finished goods of M/s Amrit Flour Mill; (2) Policy No. 150501/11/05/3100000150, covered products of Hindustan Lever India Ltd., Index Port Ltd. and Gujarat Co-operative Milk Federation Ltd. of M/s Sumitra Enterprise; and (3) Policy No. 150502/11/05/3100000390, covered the residential building of Mr. Shankar Lal Agarwal and Mrs. Sumitra Agarwal. The nature and extent of risk coverage being altogether different, the same cannot be clubbed together and objection of the OP Insurance Company in this regard is accordingly not at all tenable.
It is further argued by the Ld. Advocate that due to non-cooperation from the side of the Complainants, survey could not be completed. However, on going through the photocopy of survey report, we have not come across mentioning of any such fact in the said report. Rather, it is candidly admitted by the Surveyor that after necessary inspection, it asked the Complainants to submit quotations for repairing/renovation of the damaged building and accordingly, the Complainants submitted an estimate, prepared by one Mr. Ganesh Kumar - Chartered Engineer/Govt. Valuer/Civil Engineer/Surveyor and based on such report vis-à-vis his findings, the Surveyor deputed by the Insurance Company assessed the loss and prepared necessary report on 30-07-2007.
Further, picking a thread from the survey report, Ld. Advocate for the OP Nos. 4 to 6 argued that occupancy remains a material fact to be disclosed as acceptance and rating of any risk depend on this factor. Stretching further his argument, he averred that even if extremely liberal view is taken, there would not be any two opinions as to the fact that only the residential part of the building was proposed to be covered as dwellings and the ground floor being used purely for commercial purpose, it was beyond the scope of the insurance coverage.
It appears from the Survey report that the Complainants submitted an estimate prepared by a Chartered Engineer/Govt. Valuer/Civil Engineer/Surveyor, who assessed the cost of repairing/renovation as Rs. 18,00,000/-. According to the Surveyor deployed by the Insurance Company, this was very much on the higher side due to improvement in the building and higher estimate of repairing on the part of the electric and stationary items. Therefore, he deducted 10% towards cost of improvement and arrived at the figure of Rs. 16,20,000/-. However, even after such deduction, the value derived at appeared very high to him and so the Surveyor embarked on hard negotiations with the Insured and made them (Insured) agreeable for Rs. 12,00,000/- towards the cost of repairs (net of salvage). For some obscure reasons, no cogent documentary proof in this regard is advanced from the side of the OP Insurance Company.
Be that as it may, we find it indeed perplexing that although the concerned Surveyor deputed by the Insurance Company felt that the estimate prepared by Mr. Ganesh Kumar (Chartered Engineer/Govt. Valuer/Surveyor, etc.) was on the higher side, he did not identify a single item in his survey report nor adduced counter estimate to drive home such a point.
Keeping in mind the fact that Mr. Ganesh Kumar was a competent person from technical perspective vis-à-vis the Surveyor deputed by the Insurance Company, the estimate prepared by the former, to our mind, cannot be discarded at the whims and fancies of anyone.
That apart, we find that the Surveyor considered depreciation @ 45%. However, no schedule of depreciation is placed from the side of the OP Insurance Company to show that consideration of such depreciation in respect of an 18 years old house was in conformity with the terms and conditions of the policy. Let us not forget that Surveyor cannot arbitrarily fix up the depreciation rate.
Further, we also cannot be oblivious of the fact that the no affidavit has been filed from the side of the concerned Surveyor to prove its contents. Against such backdrop, we deem it fit and proper to reassess the loss assessed by the Surveyor deployed by the Insurance Company as under:-
ASSESSMENT OF LOSS Cost of Repairing as per the estimate of Mr. Ganesh Kumar ... ... Rs. 18,00,000 Less: Depreciation @ 30% ... ... Rs. 5,40,000 Loss Assessed ... ... Rs. 12,60,000 Liability of the Insurance Company under the Policy: Loss Assessed ... ... Rs. 12,60,000 Less: Proportionate loss on account of Ground Floor Occupied for commercial purposes of storage etc. 70% of Rs. 12,60,000/- ... ... Rs. 8,82,000 Loss assessed for dwelling unit (1st floor) ... Rs. 3,78,000 Add: Fire Fighting expenses ... ... Rs. 1,739 Rs. 3,79,739 Less: Excess as per Policy ... ... Rs. 10,000 Net Loss Assessed ... ... Rs. 3,69,739
The OP Insurance Company has accused the Complainant of suppression of material fact contending inter alia that the Complainants did not disclose the fact that the ground floor of the building was used for commercial purposes. By such parity of reasoning, it can reasonably be argued, whether there was any such stipulation in the proposal form/insurance policy whereof it was obligatory on the part of the Complainants to specifically part with such information with the Insurer. Nothing of that sort is forthcoming before us that would have otherwise compelled us to crucify the Complainants. The allegation of the OP Insurer in this regard remains unfounded.
Further, we cannot be oblivious of the fact that the building in question together with business materials was insured, in one form or the other, according to the specific need of the Insured and incidentally, all such policies were issued by the OP Insurer itself.
Therefore, to feign ignorance about commercial activities being carried out in the concerned building appears to be nothing but a ploy on the part of the Insurance Company to shrug off its contractual obligations under the insurance policy in question, which is hardly tenable.
We find that although the Surveyor submitted necessary report in the year 2007 itself, the OP Insurance Company preferred to play fence sitters despite being under obligation to repudiate/allow the claim within 30 days of receipt of survey report as per Clause 9 of the Insurance Regulatory and Development Authority (Protection of Policyholders' Interests) Regulations, 2002. It should come as no surprise that the OP Nos. 4 to 6 has not made any endeavour whatsoever to justify such inaction. If the Complainant indeed did not extend due cooperation, as alleged, they were well within their right to repudiate the claim of the Complainants. However, under any circumstances, total inaction citing non-cooperation from the side of the Insured (of which no tangible proof advanced) cannot be allowed. We find gross deficiency in service on the part of the OP Nos. 4 to 6.
Point No. 3:
In the light of our aforesaid findings, we think, ends of justice would be met if the OP Nos. 4 to 6 is directed to pay a sum of Rs. 3,69,739/- to the Complainants together with interest @ 9% p.a. over the aforesaid amount from the date of filing of this case till full and final payment is made.
Hence, O R D E R E D That CC/37/2008 be and the same is allowed on contest against the OP Nos.4 to 6 and dismissed against the OP Nos. 1 to 3. OP Nos. 4 to 6 are directed to pay, within 40 days hence, a sum of Rs. 3,69,739/- to the Complainants along with interest @ 9% p.a. over this amount from 03-07-2008 till full and final payment is made. [HON'BLE MR. DEBASIS BHATTACHARYA] PRESIDING MEMBER [HON'BLE MR. JAGANNATH BAG] MEMBER