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4. According to the plaintiff, the General Manager of the defendant no.2 informed the plaintiff that on 14 th May 2023 a fire had broken out in the warehouse where the plaintiff's goods were stored, which destroyed the entire stock of the plaintiff's agricultural goods (cotton bales) which were pledged with the defendant no.1 Bank and stored in the said warehouse, in furtherance of which the police complaint was lodged with the Panvel Police Station. Thereafter the Insurance Company appointed a Surveyor to ascertain the claim and the incident. As the Insurance Company was processing the file of the plaintiff, the defendant no.1 Bank raised the margin cost to the plaintiff and also demanded to serve the margin call of Rs.49,94,528/-.

7(xii) The plaintiff in support of the above has placed reliance on the case of Lallan Prasad v. Rahmat Ali, 1966 SCC OnLine SC 266, wherein the Apex Court inter alia has held that if a Pawnee seeks to recover its dues, then it should be in a position to re-deliver the goods. 7(xiii) The plaintiff asserts that respondent no. 1 has been repeatedly issuing margin calls against the plaintiff. It is important to highlight that the very concept of margin calls necessitates that the quantity of commodities pledged must be commensurate with the credit facilities utilized. However, it is crucial to emphasize that the pledged commodities were rendered completely non-existent or valueless as a result of the fire incident, which effectively destroyed the collateral goods. This fact is not only pertinent but central to the matter at hand, and any demand for margin calls under such KVM COMAO 9 OF 2024.doc circumstances is unfounded and legally unsustainable. 7(xiv) The argument put forth by respondent no. 1 Bank, suggesting that the plaintiff must settle the credit loan facility before being entitled to the insurance money, is without merit. The fire occurred in respondent no.2's warehouse while the goods were under the custody and control of the bank, secured by the pledge. As the goods were pledged and the insurance policy listed the commodities as insured, the bank is the beneficiary of the policy. The provision in the insurance policy must be interpreted in the context of the pledge, not independently. Since the credit facility was obtained after the goods were pledged, and the fire occurred during the existence of the credit facility, the appellant should not be required to pay the alleged dues unless the respondent no. 1 Bank is in position to handover the goods simultaneously with recovering the dues. 7(xv) The plaintiff has not waived off its claim for the negligent acts of respondent no.1 and respondent no.2, that has caused damage to the goods under sanction letter dated 14th September 2023. 7(xvi) The plaintiff categorically denies the alleged case of the respondents that the plaintiff has waived its rights to claim negligence or claims for the damage suffered due to the destruction of goods KVM COMAO 9 OF 2024.doc caused by fire.

10. The said Sanction Letter, executed pursuant to the fire incident and pursuant to the Bank issuing margin calls upon the plaintiff, records the plaintiff's categorical admission of the existence of an outstanding debt and the plaintiff's liability to meet the margin calls without making any claim for set-off against a purported claim for damages for loss of pledged goods.

11. Further, the plaintiffs/appellant's email dated 25 July 2023 to KVM COMAO 9 OF 2024.doc defendant no.1/Bank categorically admits that the fire incident was an "unforeseen event"; and does not claim negligence as against the Bank and/or make any claim to set off damages against the repayment of the outstanding dues.

Insurance - Borrower to provide copy of the master insurance car marking bank as beneficiary to the extent of the value of stocks lying in their warehouse. Insurance should cover for theft, burglary, fire, floods and other standard perils. Insurance policy to be taken and marked in favour of bank.

Designated Warehouse - Warehouse where the goods are to be stored will require to be approved by the bank and collateral Manager after due inspections.

Margin Call - Prices will be marked to market on weekly basis. When the available margin fall by 5%, the bank shall intimate the company to top up the margins either by providing additional stocks under pledge or by reducing the outstanding exposure for maintaining stipulated margin. Delay in servicing margin call will attract penal interest @ 2% per month on the entire balance outstanding in the account.