BEFORE THE TELANGANA STATE CONSUMER DISPUTES REDRESSAL COMMISSION : HYDERABAD.
C.C.No.95/2016
Between :
M/s. Uday Timber Mart,
Rep. by its Managing Partner Sri Jagdish Patel,
S/o. Ranmal Bhai Patel, aged about 44 years,
R/o. H.No.11-15-18 & 19, Sirinagar,
Opp: NTR Nagar, L.B. Nagar,
Hyderabad. ….Complainant
AND
The Manager,
Karur Vysya Bank Ltd., L.B. Nagar Branch,
3-12-76/1, Madhura Arcade, Big Bazar Lane,
Main Road L.B. Nagar, Hyderabad – 500074.
Bajaj Allianz,
North Eas Plaza,
4th floor, Beside BMW Showroom,
Erramanzil, ‘X’ Road,
Hyderabad – 500082. …..Opposite parties
Counsel for the Complainant : M/s. D.Srinivas Rao & Associates
Counsel for the Opposite party No.1 : Sri G.Ramesh Babu
Counsel for the Opposite party No.2 : Sri M.V.Suresh
Hon’ble Sri Justice B.N.Rao Nalla … President
&
Sri Patil Vithal Rao … Member
,
Friday, the Thirteenth day of October
Two thousand Seventeen
Oral Order : (Per Hon’ble Sri. Patil Vithal Rao, Member).
***
The Complainant is a business entity. The present case has been filed through it’s Managing Partner, Mr. Jagdish Patel under Section-17(1)(a) of the Consumer Protection Act, 1986(for short, ‘the Act’) on the grounds, in brief, that it has obtained a loan from the Opposite Party no.1 Bank to run the business by hypothecating it’s stock, machinery and property documents in the year 2013 and also availed Insurance of the said property from the Opposite Party no.2 Company which was valid for the period from 28.02.2014 to 27.02.2015. The said Insurance was routed through the Opposite Party no.1 Bank. As per the Agreement the Complainant has executed a Letter of Authority on 07.09.2013 authorizing the Opposite Party no.1 Bank to pay insurance premium to the Opposite Party no.2 Company and further agreed to renew the policy from time to time and that the said amount of premium was to be deducted from the Complainant’s account by the Opposite Party no.1 Bank. When the things stood thus, on 05.01.2016 at 3-30 hours a fire broke out in the Timber Mart of the Complainant resulting in extensive damage to the tune of Rs.31,00,000/-. On the complaint of the Complainant, the Police, Saroor Nagar, P.S. investigated into the matter in crime no.9/2016. The further case of the Complainant is that when it submitted the claim to the Opposite Party no.2 Company, it was repudiated on the ground that the premium was not paid for the relevant period of the fire accident. As per the Complainant, despite a renewal notice from the Opposite Party no.2 Company, the Opposite Party no.1 Bank has neither renewed the policy nor informed the same to the Complainant though it has provided credit facility to the limit of Rs.20,00,000/- vide letter dated 08.12.2015. Infact, the Complainant was under the impression that the Opposite Party no.1 Bank must have renewed the policy by making payment of the premium in a routine manner. By terming this attitude on the part of both the Opposite Parties as deficiency in service, the Complainant got issued a Legal Notice to them on 18.04.2016 and after receipt of a reply on 17.05.2016 from the Opposite Party no.1 Bank, has filed the present complaint against both of them seeking a compensation of Rs.31,00,000/- with interest @ 18% p.a., and damages of Rs.5,00,000/- with costs of Rs.10,000/-.
- As the Opposite Party no.1 Bank failed to file written version within the statutory period provided under the Act, 1986, it’s right to file the same was forfeited. Thereafter, though the Opposite Party no.1 Bank filed the petition in CCIA no.90/2012 to set aside the said order, it was dismissed by this Commission on 22.03.2017.
- The Opposite Party no.2 Insurance Company resisted the claim on the grounds, firstly, that the Complainant was not a ‘consumer’ within the meaning of the Act, 1986 since the loan was obtained from Opposite Party no.1 Bank for a commercial purpose by hypothecating the insured goods and secondly, the policy was lapsed by 27.02.2015 and thereafter it was not renewed further covering the period of the fire accident, as such the claim was not maintainable and therefore the complaint deserves to be dismissed with costs.
- The Managing Partner of the Complainant Company has filed his evidence affidavit and relied on the documents under Exs.A1 to A11 to substantiate the claim. The Opposite Party no.1 Bank has filed evidence affidavit of it’s Manager and the documents under Ex.B1 to B7 in defence. The Opposite Party no.2 Insurance Company has filed evidence affidavit of it’s Senior Executive along with the document under Ex.B8 to refute the claim.
- The parties to the case have filed their respective written arguments. Heard their learned counsel.
- Now the point for consideration is that:-
Whether there is any deficiency in service on the part of the Opposite Parties, if so, to what relief?
- Point:- It is not in dispute that the Complainant Company has availed a loan of Rs.20,00,000/- from the Opposite Party no.1 Bank to carryout it’s business by hypothecating it’s stock and machinery with property documents and also took an Insurance Policy from the Opposite Party no.2 Company for the period from 28.02.2014 to 27.02.2015. Ex.A1 is a copy of hypothecation deed. This document contains an Insurance clause which mandates the insured to avail an Insurance under “Standard Fire Special Perils Policy” to safe-guard the hypothecated / mortgaged assets. Further, the insured / borrower shall pay the premium of the said policy and inform to the Opposite party no.1 Bank. Accordingly, in the present case the Complainant has availed the Insurance Policy at the time of borrowing of the loan, stated above.
- As per the Complainant, the Opposite Party no.1 Bank was to pay the premium of the policy to the Opposite Party no.2 Insurance Company every year after due renewal and deduct the same from it’s account being maintained with the Bank. Both the Opposite Parties have denied and disputed this claim of the Complainant. But the Complainant didn’t file any piece of evidence to substantiate his contention. In this regard it is just, necessary and expedient to refer to the material part of the Insurance clause in the deed of hypothecation Ex.A1, which is extracted as under:
xxx xxx xxx xxx xxx xxx
If the borrower/s make/s any default in effecting such insurance as aforesaid or in renewing any policy or in payment of such premia, it shall be lawful but not obligatory for the Bank to effect such insurance or to renew or to pay such premia and to keep the hypothecated properties insured to their full value and to debit the expenses incurred by the Bank for the purpose to the borrowers’ said loan / cash credit / overdraft/current account with the bank and the same shall be treated as advances secured by this agreement. In such an event, the Bank will, at its discretion, take a suitable policy appropriate to the nature of securities. In case the Borrower wishes to cover additional risks, they may do so by paying the additional premia and get the endorsements.
It is specifically agreed that the non-obtention or non-renewal of insurance policy by the bank due to any reason shall not be questioned by the borrower since it is the primary obligation of the borrower to ensure that the hypothecated movables and other securities are sufficiently insured at all times. It is also specifically agreed that the non inclusion of any specific risks in the policy, if the policy is taken by the bank, shall not be questioned by the borrower.
xxx xxx xxx xxx xxx xxx
Thus it is clear that it was not obligatory on the part of the Opposite Party no.1 Bank to renew or to pay premium of the policy on behalf of the Complainant company. It is further to be noted that the policy was expired on 27.02.2015 and was not renewed further. Therefore, the Opposite Party no.2 Company had addressed a letter to the Complainant on 06.01.2016 informing the said fact with a request to renew the Policy. Ex.A2 is a copy of the said Renewal Notice. In view of this fact the allegation of the Complainant that it was not aware about lapse of the policy but under the impression that the Opposite Party no.1 Bank might have renewed the same for further period of one year, holds no water. It also pertinent to note that the Complainant has clearly averred in Para no.1 at Page no.2 of the Complaint that it had executed a Letter of Authority authorizing the Opposite Party no.1 Bank for paying the Insurance premium vide it’s letter dated 07.09.2013. But, after lapse of the policy on 27.02.2015 no further such letter of authority was issued by the Complainant to the Opposite Party no.1 Bank to get the policy renewed. No doubt, in the policy schedule - Ex.A4, the Opposite Party no.1 Bank has been shown as an Agency for the policy but in the absence of an authorization letter from the insured / complainant, it can not act to get the policy renewed irrespective of availability of funds in the Complainant’s account. Because the Bank plays an advisory role seeking insurance coverage of fire and allied perils and that the same cannot be interpreted as it’s accountability. Therefore, the Complainant cannot attribute any deficiency in service on the part of the Opposite Party no.1 Bank simply because it has renewed the credit facility on 08.12.2015 vide Ex.A11 without there being renewal of the policy. At the cost of the repeatition, it is to be stated that it was not obligatory on the part of the Opposite Party no.1 Bank to renew the policy inview of the Insurance clause in the hypothecation deed, Ex.A1 noted supra. Infact, the Opposite Party no.1 Bank by it’s letters dt.21.01.2016 and 04.03.2016 vide Exs.B3 & B5 respectively has clearly informed the Complainant about his obligation to renew the policy.
- Inview of the aforesaid facts and circumstances it is clear that as on the date of the fire accident i.e., 05.01.2016, the Insurance Policy was not inforce. Therefore, the Opposite Party no.2 Insurance Company, in our opinion, has rightly repudiated the Complainant’s claim of Rs.31,00,000/- towards compensation. Even otherwise there is no any base by way of an evidence to claim such a huge quantum of compensation. Thus, it is clear that on the date of the fire accident there was no privity of contract between the Complainant and the Opposite Party no.2 Insurance Company. Therefore, the Complainant cannot be termed as a ‘consumer’ within the meaning of the Act, 1986. In this view of the matter, there cannot be any negligence or deficiency in service on the part of both the Opposite Parties. For these reasons, we hold that, the claim of the Complainant is devoid of any merits and as such must fail.
- The point is thus answered against the complainant.
- In the result, the complaint is dismissed but in the circumstances without costs.
PRESIDENT MEMBER
Dt.13.09.2017
KPS*
APPENDIX OF EVIDENCE
WITNESSES EXAMINED
For Complainant : For Opposite parties :
Affidavit evidence of Affidavit evidence of
Sri Jagdish Patel, Sri P.H.V. Gopal, Manager
/Authorized person of Opposite Party no.1.
Affidavit evidence of
Sri D.A.S. Naidu, Senior Executive of
Opposite Party no.2.
EXHIBITS MARKED
For Complainant :
Ex.A1 is the copy Hypothecation Deed, dt.07.09.2013.
Ex.A2 is the copy of copy of Renewal Notice, dt.06.01.2016 of the policy No.OG-14-1801-4001-00003835.
Ex.A3 is the copy FIR No.9/2016 along with complaint dt.05.01.2016.
Ex.A4 is the copy of Policy Schedule.
Ex.A5 is the copy Legal notice, dt.18.04.2016.
Ex.A6 are the Postal receipts and Acknowledgement cards.
Ex.A7 is the Letter issued by Opposite Party No.1 dt.26.04.2016.
Ex.A8 is the Reply notice through counsel by the Opposite Party No.1 dt. 17.05.2016.
Ex.A9 is the Statement of account of the complainant.
Ex.A10 is the copy of letter of Partnership, dt.07.09.2013.
Ex.A11 is the copy of Sanction / Renewal of credit facility by the Opposite Party no.1 dt.08.12.2015.
For Opposite party No.1 :
Ex.B1 is the copy of letter of the Complainant to the Opposite Party no.1, dt.11.01.2016.
Ex.B2 is the copy of letter of the Complainant to the Opposite Party no.1, dt.11.01.2016.
Ex.B3 is the copy of letter of the O.P.No.1 to the Complainant dt.21.01.2016.
Ex.B4 is the copy of letter of the Complainant to the Opposite Party no.1, dt.29.02.2016.
Ex.B5 is the letter of the O.P.No.1 to the Complainant dt.04.03.2016.
Ex.B6 is the letter of the Complainant to the Opposite Party no.1, dt.22.03.2016.
Ex.B7 is the letter of the O.P.No.1 to the Complainant dt.24.03.2016.
For Opposite party No.2 :
Ex.B8 is the copy of Policy Schedule dt.28.02.2014.
PRESIDENT MEMBER
Dt.13.10.2017
