State Consumer Disputes Redressal Commission
M/S. Shankar Enterprise & Another vs The Chairman, Bank Of India & Others on 26 May, 2010
State Consumer Disputes Redressal Commission State Consumer Disputes Redressal Commission West Bengal BHABANI BHAVAN (GROUND FLOOR) 31, BELVEDERE ROAD, ALIPORE KOLKATA 700 027 S.C. CASE NO. : FA/238/2009 DATE OF FILING : 03.07.2009 DATE OF FINAL ORDER: 26.05.2010 APPELLANTS 1. M/s. Shankar Enterprise A proprietorship firm carrying on its business from H.C.L. Road, Rangamatia (East) P.O. Rupnarayanpur Bazar P.S. Salanpur, Dist. Burdwan. 2. Mr. Shankar Agarwal (Proprietor) P.O. Rupnarayanpur Bazar P.S. Salanpur, Dist. Burdwan. RESPONDENTS 1. The Chairman Bank of India C-5 NG Block, Bandra East Star House, Mumbai-51. 2. The Zonal Manager Bank of India Madhusudan Apartment P-18, Dobson Lane Howrah-711 101. 3. The Branch Manager Bank of India Chittaranjan Branch P.O. Chittaranjan Dist. Burdwan. 4. The Chief Regional Manager National Insurance Company Limited Kolkata Regional Office No. II 8, India Exchange Place Kolkata-700 071. 5. The Chairman-cum-Managing Director National Insurance Company 3, Middleton Street Kolkata-17. BEFORE : MEMBER : MR. P.K.CHATTOPADHYAY MEMBER : MR. S.COARI FOR THE APPELLANTS : Mr. Asim Kr. Ghatak, Ld. Advocate FOR THE RESPONDENTS : Mr. S.K.Sengupta, Ld. Advocate (Res. 1,2&3) Mr. S.N.Dutta, Ld. Advocate (Res. 4&5) : O R D E R :
MR.
P.K.CHATTOPADHYAY, LD. MEMBER This Appeal is directed against the judgement and order dt. 5.6.09 in DCDRF, Burdwan, Case No. 58 of 2008 where the complainants, (1) M/s. Shankar enterprise and (2) Mr. Shankar Agarwal (Proprietor), filed the complaint case alleging unfair trade practice and deficiency of service on the Ops namely (1) The Chairman, Bank of India, (2) The Zonal Manager, Bank of India, (3) The Branch Manager, Bank of India, Chittaranjan Branch, (4) The Chief Regional Manager, National Insurance Company Limited, Kolkata Regional Office No. II, and (5) The Chairman-cum-Managing Director, National Insurance Company. The complainants case, in brief, was that it was running a business and to such purpose had a current account with the OP No. 3 namely Bank of India, Chittaranjan Branch, which was since converted to a cash credit account with borrowing of given amounts for business transactions, when on 4/5 June, 2006 night a devastating fire took place at the business premises resulting in huge destruction of stock and assets.
The complainants took one insurance policy with National Insurance Co. Ltd. that covered all risks/perils against stocks/materials/machineries etc. and complainants claim was preferred in due time followed by engagement of surveyor and other process, but neither the claim was repudiated nor the same was settled. Meanwhile, the OPs/Bank resorted to pressurizing the complainant for paying back the loans and encashed security money of about Rs. 9.00 10.00 lakhs pledged with it. Later the OPs/Bank proceeded with further adverse steps including trespass on its property and taking away complainants valuable goods. Referring to proceedings under SARFAESI Act, 2002 as was resorted to by the OP No. 1, the complainants pointed out to its wrongful application and resultant suffering, affecting gravely Complainant No. 2s health and other business interests and consequent financial loss and pecuniary hardship.
Thus, the complainants prayed for compensation towards business loss, proportionate 1/4th charges of the hospital and other medical charges, damages due to loss in fire with interest and monthly charges till delivery of the company premises totalling Rs. 19,26,750/-.
The OP No. 1 namely the Chairman, Bank of India, entered appearance and filed an application challenging maintainability of the case on the plea that the possession of the charged assets/land & building thereto was taken through proceedings as per provisions of SARFAESI Act, 2002 and thus the Ld. District Forum had no jurisdiction to adjudicate upon the case. It was further contended that the Ld. District Forum below had neither pecuniary jurisdiction to try the case, nor the given loan having been taken by the complainants being for commercial purposes the complainants could not be deemed to be Consumers for the purposes of Consumer Protection Act, 1986, as amended and thus the complaint was not maintainable.
The OP No. 1 also drew attention to the fact that when there were two special statutes like Consumer Protection Act, 1986, as amended and SARFAESI Act, 2002, interpretation of Section 3 of Consumer Protection Act, 1986 and Section 35 of SARFAESI Act, 2002, both being non-obstinate clauses, the latter would prevail and accordingly, the complaint was sought to be dismissed being not maintainable.
The Ops/Insurance Company entered appearance and contended that firstly the proposal of the complainants suffered considerable number of gaps and non-disclosures and contained incorrect descriptions of property and/or locations thereof. Subsequent to filing of the claim by the complainants the Ops/Insurance Company took prompt measures in engaging surveyor, but the complainants did not care to file documents in totality as were necessary and/or sought and thus the Ops/Insurance Company could not take a final decision within possible time-frame. In spite of all the odds the OPs/Insurance Company settled the claim for an amount of Rs. 49,400/- and called upon the complainants to accept the settled claim amount subject of course to fulfillment of policy conditions of unqualified acceptance without raising dispute thereon, but the same having not been done the given amount could not be disbursed. Thus, the Ops/Insurance Co. argued that it had no deficiency of service on its part on the complainants and, therefore, the complaint case was not maintainable against them.
The Ld. District Forum after hearing respective sides passed its judgement and order as under :-
..the case is not maintainable.
Being aggrieved and dissatisfied with the impugned judgement and order the complainants in the Forum below namely (1) M/s. Shankar enterprise and (2) Mr. Shankar Agarwal (Proprietor), filed this Appeal stating inter alia that the Ld. District Forum failed to appreciate the case made out by the complainants within the purview of Consumer Protection Act inasmuch as there was direct deficiency in service and that it also failed to appreciate that under SARFAESI Act, 2002 the Ops/Bank had right or jurisdiction or interest only on the properties/assets kept as security, but in the given case it laid hands beyond the said securities. Stating that instead of pursuing the insurance claim the Bank wrongfully encashed the security money amounting to Rs. 9.00 lakhs to Rs. 10.00 lakhs and it was argued that the Bank wrongfully treated the account of the complainants as Non Performing one thereby inviting uncalled for proceedings and posse of sufferings when the OP No. 1 had no authority to seize or take possession of said non-mortgaged properties. Arguing that the ruling relied upon in 2001 (III) SCC 71 had no application whatsoever in the given facts and circumstances of the case the impugned judgement and order of the Ld. Forum below was sought to be set aside and the Appeal allowed with any other order or relief as may be granted.
Respondents/Bank of India entered appearance and contended inter alia that the Ld. Forum below passed the order very rightly as the Forum had no pecuniary jurisdiction on the given complaint and also that the subject matter being dealt with by the appropriate forum under SARFAESI Act, 2002 the Ld. Forum below had indeed no jurisdiction.
Referring to insurance claim preferred by the Appellants/Complainants the Respondents/Bank stated that in spite of various shortcomings the Respondents/Insurance Company offered settlement of claims for Rs. 49,400/- which, however, was not accepted by the Appellants/Complainants on their own volition and for their own reasons and thus the Respondent No. 1s liability having clearly not been established by the Appellants/Complainants the onus of supposed suffering of the Appellants/Complainants continued to be their own and the Respondent No. 1 could not be faulted in any way. Supreme Court judgement referred to in 2001 (3) SCC 71 was also cited to buttress its arguments.
The Respondents/Insurance Company countered the Appeal and stated inter alia that the Appeal was not maintainable in fact or law as the complainants were not covered as consumers by the provisions of Consumer Protection Act, 1986, as amended when three other complaint cases namely CC/08/27, CC/08/28 and CC/08/37 were filed on the same cause of action. Stating that the Respondents/Insurance Company offered Rs. 49,400/- to the Appellants in full unqualified and final settlement of the claim not accepted by the Appellants/Complainants, it pointed out that the surveyor, appointed by Respondents/Insurance Co., could not complete his business and submit proper report as records called for and necessary to such purpose could not be had due to non-cooperation/non-compliance of the Appellants/Complainants. It was also argued that the Appellants/Complainants obtained four insurance policies suppressing material fact that the insured premises in respect of those policies were under same roof and all rooms were inter-communicable. Accordingly, the Respondents/Insurance Co. prayed for dismissal of the Appeal and for further orders, if any.
The matter was heard from respective sides with filing of WNA. In its WNA the Appellants namely 1) M/s. Shankar enterprise and (2) Mr. Shankar Agarwal (Proprietor), contended inter alia that in the instant Appeal it was to be considered that none of the Ops in the Forum below filed any written objection and the total claim amount was for Rs. 18,00,000 + Rs. 33,125 + Rs. 93,655 i.e. Rs. 19,26,750 and thus the complaint was well within financial jurisdiction. Stating that Section 3 of Consumer Protection Act, 1986 and Section 35 of SARFAESI Act 2002 have no apparent contradiction as both were special and independent acts and there is no scope of overlapping of power or jurisdiction between the two and in that view it was argued that the Consumer Forum has every right to decide over issue of insurance claim and defects and deficiency of service/bad trade practice by the Bank. Stating that an appeal was pending before Debts Recovery Appellate Tribunal over order of dismissal dt. 17.8.09 of Debts Recovery Tribunal and the said order was also stayed by Honble High Court, Kolkata, it was submitted that the Appeal was on very cogent legal and valid grounds, when even the surveyor of Insurance Company had failed to consider actual damages.
Respondents/Bank in its WNA pointed out that the pecuniary jurisdiction of the Fora is to be considered on the date of filing the case and not on the date of passing the order and it was then submitted that taken together with interest claimed/accrued the claim exceeded Rs. 20.00 lakhs and hence, hit by the pecuniary jurisdiction. Refuting that Respondents/Bank illegally took possession of both mortgaged and non-mortgaged property, it was pointed out that District Magistrate, Burdwan, had never passed any order of taking possession of property by breaking lock and the claim with the Insurance Company had hardly any connection with the Bank or SARFAESI Act, which dealt only with secured assets and not for any other property.
Accordingly, the Respondents/Bank sought dismissal of the Appeal and supported the impugned judgement and order of the Ld. Forum below.
Respondents/Insurance Company in its WNA contended that the Appeal was not maintainable as the Appellants/Complainants were not consumers and placed citations in support. It also stated that the matter of insurance being based on utmost good faith and the Appellant/Complainant having suppressed material facts have grossly violated said principles. Referring to two non-obstinate clauses in Consumer Protection Act and SARFAESI Act, it pointed out that the latter would prevail as per settled principles of interpretation of statutes and the Ld. Forum below having done that the impugned judgement and order was perfectly in order and thus the Appeal was liable to be dismissed.
Citations relied by Appellants are as under :-
APPELLANTS :-
1.
2008 (3) CPR 22 (NC) Champalal Verma Vs. The Oriental Insurance Co. Ltd.
2. 2008 (3) CPR 24 (NC) Somnath Punja Nerkar Vs. Ramesh Hiralal Kadam RESPONDENTS/BANK
1. Kolkata Debts Recovery Tribunal No. 2 Amrit Flour Mill & Another Vs. Bank of India and 2 others (SA/74/2008).
2. (2001) 3 Supreme Court Cases 71 Solidaire India Ltd. Vs. Fairgrowth Financial Services Ltd.
3. First Appeal No. 84 of 2008 B.S.E.S. Rajdhani Power Ltd. Vs. M/s. Saraf Project Pvt. Ltd.
4. (2009) 2 CPJ 402 Meera Industries Vs. Modern Constructions
5. Misc. Case No. M.A.-263/09 arisen out of this Commissions Case No. CC/56/2009 DISCUSSION A. Having gone carefully through records filed upon by respective parties, we find that the complainants had no clinching proof whatsoever that the services availed by themselves from Respondents/OPs/Bank or Respondents/OPs/Insurance Co. were so availed exclusively for the purpose of earning livelihood by means of self-employment. In I (2005) CPJ 27 (NC) Harsolia Motors Vs. National Insurance Co. Ltd., the Honble National Commission inter alia decided as under-
Consumer Protection Act, 1986 Sections 2(1)(d), 2(1)(o) Consumer Service Commercial purpose Insurance policy taken by commercial units whether excluded from purview of C.P.Act Complainants availed service of insurance company for commercial purpose Complaint dismissed by State Commission as not maintainable Hence appeal Hiring of services of Insurance company by complainants who are carrying on commercial activities cannot be held to be a commercial purpose Policy is taken for reimbursement or indemnity for loss which may be suffered due to various perils No question of trading or carrying on commerce in insurance policy Contract of insurance generally belongs to general category of contract of indemnity Services may be for any connected commercial activity, yet it would be within purview of Act Commercial purpose means goods purchased or services hired should be used in activity directly intended to generate profit which is the main aim of commercial purpose Where goods purchased or services hired in activity which is directly not intended to generate profit, it would not be commercial purpose Person who takes insurance policy to cover envisaged risk not takes policy for commercial purpose Policy is only for indemnification of actual loss, not intended to generate profit Appeals allowed - Order of State Commission set aside Matter remitted back for being decided on merit.
This position underwent revisit in judgement in case of First Appeal No. 84 of 2008 B.S.E.S. Rajdhani Power Ltd. Vs. M/s. Saraf Project Pvt. Ltd. decided on 7.8.09 and Meera Industries Vs. Modern Constructions reported in (2009) 2 CPJ 402 where consequent upon amendment of Consumer Protection Act, 1986 in 2003 it was held as under :-
A person who avails of such services for any commercial purpose is excluded .. .Therefore, even the service availed for commercial purpose is excluded from the scope and ambit of consumer.
In the facts and circumstances of the complaint case under adjudication we find that the foregoing judgement of the Honble National Commission is aptly applicable and thus the complainants namely M/s. Shankar Enterprise and its proprietor, Mr. Shankar Agarwal, cannot be regarded as Consumers for the purposes of any adjudication under Consumer Protection Act, 1986, as amended.
In this regard our attention has been drawn to this Commissions Case No. CC/56/2009 where in a Misc. Application under number MA-263/09 arising out of the complaint case, this Commission held inter alia, considered the law referred to by the OP/Appellant in the two judgements cited by him. The position in law appears to have been settled by the said two judgements that after the amendment of Section 2(d)(ii) of the Consumer Protection Act, the definition of consumer has undergone a change and in respect of any cause arising after 15.3.03 the complainant is not a consumer if the Service Providers service has been taken for a commercial purpose. In the present case on facts it is apparent that contract was taken by the complainant for construction and maintenance of the road. Therefore, coverage of the policy being in aid of maintenance of the road, the same is a commercial purpose. No case has been made out that the complainant enjoys the benefit of the explanation i.e. the contract was for self-employment and for earning livelihood.
Therefore, the complainant here is not a consumer and the complaint is not maintainable. Considering the facts and circumstances of the present case we hold the same view.
B. The other point agitated by the Ops/Respondents is that the Debts Recovery Tribunal constituted under the provisions of the Recovery of Debts due to Banks & Financial Institutions Act 1993 having exclusive jurisdiction, in the matter the District Fora/ State Commission has no jurisdiction. This was further elaborated as under :-
a) The claim of the complainants as made in the complaint, being a debt as defined in Section 2(y) of the Recovery of Debts due to Banks & Financial Institutions Act, where debts have been defined as under :-
Debt means any liability (inclusive of interest) which is claimed as due from any person by a bank or a financial institution or by a consortium of banks or financial institutions during the course of any business activity undertaken by the bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any civil court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of the application.
b) The claim of the Ops/Insurance Co. being the debt in terms of Section 18 of DRT Act, other than Debts Recovery Tribunal no other court or authority has any jurisdiction to recover the debt.
c) DRT Act was enacted in 1993 while Consumer Protection Act was enacted in 1986. Section 34 of DRT Act has over-riding effect on other Acts.
In this regard reliance was had on the following citations
1) 1999 (4) SCC 69 Para-15
2) AIR 2003 Cal 7
3) AIR 2005 Cal 153 After careful consideration of aforesaid position we accept such interpretation of law as set down by Honble Apex Court and other superior courts.
C. Referring to interpretation of Section 3 of Consumer Protection Act, 1986 and Section 35 of SARFAESI Act, 2002 and reliance on citation of 2001 (3) SCC 71 Solidaire India Ltd. Vs. Fairgrowth Financial Services Ltd. & others, we wholly accept the views of the Ld. Forum below when the Honble Apex Court decided, Special Court (Trial of Offences relating to Transactions in Securities) Act 1992 Provisions of, held, would prevail over those of the earlier Sick Industrial Companies (Special Provisions) Act, 1985 as in case of conflict between two special Acts, the later one prevails Where respondents suit for recovery against appellant (for loan amount of Rs one crore along with interest) had been decreed by Special Court and during pendency of appeal before Supreme Court, appellant Company became sick and proceedings were initiated under Sick Industrial companies (Special Provisions) Act, 1985 held, the Special Court Act would have overriding effect despite contrary provisions in 1985 Act and despite the fact that proceedings were taking place before BIFR special Court rightly concluded the proceedings before it and rightly decreed respondents suit Interpretation of Statues Subsidiary Rules of Interpretation Leges posteriores priores contraries abrogant In case of conflict between two Special Acts, the later one prevails Interpretation of Statutes Internal aids Non obstante clause and no contrary ruling could be provided by the Appellants/Complainants.
D. We, however, find that inspite of incomplete submission of documents by the Appellants/Complainants, as were sought by the Respondent/Insurance Co. and its surveyor(s), the Respondent/Insurance Co. offered Rs. 49,400/- as full and final settlement of the claim of the Appellants/Complainants, subject to their unqualified acceptance of such. In view of above position we are in favour of a meeting between the Appellants and the Insurance Co. subject to Appellants initiative where the details could be worked out to satisfaction and resolution of standing issues.
O R D E R The Appeal is dismissed on contest without cost being not maintainable under law. The impugned judgement and order of the Ld. Forum below is affirmed. The Appellants are, however, in the facts and circumstances of the case, given liberty to seek a meeting with Respondents/Insurance Co. towards resolution of its insurance claim, subject to satisfaction/mutual agreement on the standing issues amongst themselves.
MEMBER MEMBER