Date : 21.10.2014

MR. J.BAG, LD. MEMBER

            This complaint has been filed under Section 12 read with Section 13 of the Consumer Protection Act, 1986, as amended up to date.

            The Complainant, being a proprietorship firm, availed of a Cash Credit facility from OP No.2 vide Sanction Letter No NBKP/ADV/SM/2007/08/750 dated 09.02.08 . At the time of sanction of that facility, OP No.2 secured all stocks of raw materials (WIP), finished goods , book debts, all other current assets, all fixed assets, movable assets of the firm as primary security  and personal guarantee of the proprietor worth , as on 31.07.2007, Rs. 10.23 lakh  and the credit facility was covered under the guarantee scheme of CGTSE which was sanctioned for a period of 1 year, due date for next review being fixed on 09.02.09. The business of the Complainant was insured with National Insurance Company Ltd by OP No.2 Bank and insurance premium was debited by the Bank directly to the account of the Complainant.  The Cash Credit (Hypothecation) limit was extended to Rs. 14.50 lakh vide Sanction Letter dated 30.10.2009 in the second year by OP Bank who changed from National Insurance Company to Universal Sompo General Insurance Company Ltd., for taking the coverage of risk in respect of the goods of the Complainant , without knowledge and consent of the Complainant. In both cases, policies were not handed over to the Complainant. On 09.03.2011 the factory of the Complainant caught fire at about 2 p.m causing destruction of all machineries , equipment, stock etc. The incident of fire was reported to the Police Station, Noapara , which was recorded under G.D. No. 1160 dated 10.03.2011 . The  Fire Brigade services being utilized, Govt. fees were paid . The incident of fire was also reported to the Branch Manager of OP No.2 Bank for taking immediate steps for insurance claim of about Rs.28,00,000/- which was subsequently revised to Rs.41,00,000/-  . OP No.2 Bank was found reluctant to take any steps towards raising of  insurance claim. The Complainant not being equipped with documents, such as , Insurance Policy and other related papers, requested OP No.2 Bank to hand over such documents , Xerox copies of which were received on 18.03.2011. The Banking Ombudsman  , Kolkata, was approached under Banking Ombudsman Scheme 2006 whereupon  the office of the Banking Ombudsman , Kolkata, intimated that they had no power to adjudicate the matter as the claimed  amount  exceeded Rs. 10/11 lakh.  The Complainant then sent a complaint to the Banking Ombudsman, Mumbai , but to no effect. On the contrary, the Complainant  received a Lawyer’s notice dated 03.06.2011 from OP No. 2  intimating the proprietor of the Complainant that as per record of the Bank , the insurance policy expired on 26.05.2010 and in the absence of any letter of authority or any order for payment of the premium of the insurance policy, OP Bank could  not renew the policy within time. Allegedly, though the OP Bank handled the insurance matter directly with the Insurance Company , they did nothing in regard to settlement of the claim. The OP Bank is solely responsible for non-settlement of the claim and OP No.3 also failed to do their duty . The Complainant had no role in the matter of taking policy in respect of their goods  as well as in the matter of settlement of claim. The OP Bank is liable either to settle the claim with the Insurance Company or to pay the entire insured money along with compensation for damages and losses suffered by the Complainant for the incident of fire. The OP Bank failed to discharge their duties and accordingly, they are found to be negligent and deficient in the matter of rendering service towards the Complainant . As the OP Bank did nothing inspite of repeated request /complaint and sending of legal notice , the Complainant has come up with prayer for direction upon OP No.1, 2 and 3 to pay jointly or severally, the insured sum of Rs. 13,00,000/- to the Complainant and to pay another sum of Rs. 41,00,000/- on account of loss of building,  machineries , materials and finished goods by fire and also for non-operation of the Mill from 09.03.2011 to 03.08.2011.

            The complaint has been challenged by the OP Nos.1 and 2 on the ground of maintainability . The petition of the OP No. 1 and 2 challenging the maintainability of the compliant petition has been heard and disposed of on 11.09.2012 . The OP Nos. 1 and 2 filed W.V. dated 23.07.2012 with copy to the Complainant and OP No.3.

            In their W.V. OP Nos. 1 & 2 contended, inter alia , that they did not issue Insurance Policy and  that there is no agreement between the defendant Bank and the Complainant about insurance  of the factory and other assets of the Complainant which is but a commercial unit. It is also stated that they debited the insurance premium to the account of the Complainant and changed the insurer with the consent of the Complainant . They have nothing to do in the matter of insurance claim . They were never given any letter of authority to get the property of the Complainant insured with any Insurance Company. They are not responsible for the loss sustained by the Complainant and as such their claim for compensation by the OP Bank does not stand .

            OP No. 3 in their W.V. submitted, inter alia, that in the complaint no deficiency in service or unfair trade practice against the insurer has been alleged. They , being an unnecessary party, are not in any manner liable to make payment towards the insurance claim of the Complainant. In fact, they had no knowledge about the loss sustained by the Complainant on account of the incident of fire . The Standard Fire and Special Perils Policy which was valid  up to 26.05.2010 was not renewed by the Complainant and, therefore, the insurer OP is not liable  for payment of any  claim that arose  subsequent to the expiry of the Policy.

            The Complainant submitted affidavit on evidence followed by questionnaires by OP No. 1 , 2 and 3 separately. Replies are found to have been given by the Complainant . OP Nos. 1 and 2 also filed evidence on affidavit and questionnaires raised by the Complainant were replied to by the Complainant. OP No.3 also filed evidence on affidavit and questionnaires being raised by the Complainant, replies were submitted . Both the Complainant on the one hand and OP Nos. 1and 2, on the other, have filed BNAs .

            Ld. Advocate appearing for the Complainant submitted that it was the responsibility of the OP Bank to get the insurance policy renewed from time to time as per terms of sanction of loan . The OP Bank vide Clause 15(c) of their Sanction Letter dated 30.10.2009 stated that the entire assets will be insured for full value under comprehensive risk insurance policy with any approved insurance company in joint names with the bank at the borrower’s costs and endeavour should be made to get the insurance done through their bank assurance wing . It is, therefore, evident that the bank had the responsibility to get the insurance renewed after expiry of the policy. By citing the order passed by the Hon’ble National Consumer Disputes Redressal Commission in Indian Bank and Anr. –vs- Consumer Protection Council, Tamil Nadu and Anr. reported in 2013 (1) CPJ 428 (NC) , Ld. Advocate argued that the Hon’ble National Commission has observed that failure to get house ( as in the relevant case ) insured  by the Bank after advancement of loan, is deficiency in service and the aggrieved party is entitled to get compensation. In the present case  the Bank did not advise the Complainant to get the stock  insured. As such,  it is established that Bank was liable to ensure insurance of the stocks of the Complainant and failure to do so  amounts to deficiency in service . Ld. Advocate also referred to the observation of the National Commission in Shree  Kalyan Ayurvedic Pharmacy , Gujarat –vs- Commercial Co-operative Bank Ltd. reported in IV (2007) CPJ 127 (NC), wherein it has clearly stated that when a change in the scope of insurance policy was made by the Bank unilaterally without the consent /approval of the Complainant , specially when the premium is being debited to the Complainant, the conduct of the Bank amounts to deficiency in service. Further, Ld. Advocate referred  to the judgment of the Hon’ble State Commission  in the State Bank of India and Ors –vs- M/s Shiva Trading Co. and Ors. as reported in 2012 (1) CLT 447 and in that case it was held that making payment of the premium without giving a notice to the insured amounts to deficiency in service on the part of the Bank.

            Ld. Advocate appearing for the OP No.1 and OP No.2 submitted that it is true that the Bank provided the cash credit loan as per banking norms but the Bank was never authorized by the Complainant for taking Insurance Policy and paying premium for such policy. It was the responsibility of the Complainant that they would renew the insurance policy, there being no agreement between the Bank and the Complainant that the Bank will obtain insurance policy. Accordingly, the OP Bank can not be held responsible for failure on the part of the Complainant to get the Insurance Policy renewed with payment of premium. The question of any reimbursement for the loss suffered by the Complainant as alleged does not arise . The Bank can not take the role of an insurance company which the Complainant is hammering about. In that situation the OP bank is not liable for the payment of compensation or other relief as prayed for.

            Ld. Advocate appearing for the OP No.3 submitted that there is no case against them in the complaint and the question of making any payment towards reimbursement of the loss suffered by the Complainant does not arise at all. They are an unnecessary party . There is no valid insurance covering the goods or other articles which have been damaged by the alleged incident of fire. The Insurance Policy that was taken for the year 2009 -2010 expired on 26.05.2010 , whereas the incident of fire took place on 09.03.2011. The complaint does not stand against them.

                                                Decision with Reasons

            From the complaint and pleadings of all the parties the following points emerge for consideration:

1. Is the Complainant a Consumer ?
2. Is the complaint maintainable ?
3. Is the Complainant entitled to the relief as prayed for on the ground of deficiency in service on the part of the OPs ?

      It is a fact that  the Complainant has been engaged in transaction with the OP Bank and he (Proprietor of the Complainant firm) has availed of banking service from the OP Bank with some allied facilities including the cash credit loan. There is clearly a service provider and customer relationship between the Bank and the Complainant . The Bank cannot but treat the Complainant otherwise than as a consumer.  

            Now, the other points are being taken up for consideration together for convenience of discussion and order .

            The fact goes that the Complainant and the OP Bank entered into sort of agreement towards sanction of a cash credit loan by the Bank. There were some specific terms and conditions which the Complainant and the OP Bank had to comply as evident from the sanctioned letters dated 09.02.2008 (Annexure 1 to PoC) and 30.10.2009 (Annexure 5 to PoC) .

            The OP bank took initiative for ensuring the entire stock of the Complainant and obtained an insurance policy from National Insurance Company Limited in the first year . That was done without any written instruction from the Complainant. The OP Bank also took another policy for the 2^nd year and for such action no written instruction was waited for from the Complainant. In their W.V. the OP Bank submitted that the Complainant gave consent to obtain insurance policies with deduction of premium amount from their loan account. There is, however, no written evidence confirming the fact of such consent of the Complainant. Hence, it can be presumed that the Bank on both the occasions obtained insurance policies and kept such policies under their custody. The Complainant did not have access to the Insurance Policy except on request for a copy of the Insurance policy for filing a case before the Banking Ombudsman. It is thus established that the OP Bank was fully aware about the validity period of the insurance policy and it was more reasonable for them to go for renewal of the insurance policy, though the Complainant should have been vigilant about the insurance issue relating to their  stock against any untoward incident. Ld. Advocate appearing for the Complainant relied upon the order of the Hon’ble National Consumer Disputes Redressal Commission in the matter of Indian Bank and Anr. –vs- Consumer Protection Council,  Tamil Nadu and Anr. reported in 2013 (1) CPJ 428 NC. In the said case the Bank provided a housing loan to the Complainant and failed to insure the property. The building being damaged in flood,  a claim was raised but the same was repudiated. District Forum dismissed the complaint. State Commission allowed the appeal observing that in all cases of house loan advanced by Bank, Bank itself had insured all houses .In the present case had the OP Bank acted with promptitude and insured the stock of the Complainant in time, the benefit of insurance would have been available.  

            In the present case it is seen that the OP Bank did not take proper step to get the insurance policy renewed in time. On the contrary, they by their letter dated 15.03.2011 blamed the Complainant saying that the Complainant did not approach the Bank on expiry of validity period of the insurance for renewal of comprehensive insurance as a result of which no insurance against the stock had been obtained at their level. This is clear avoidance of the implied responsibility which they shouldered earlier but failed later to perform  without any intimation to the Complainant . Such act has not been clarified anywhere in their evidence or arguments ,though , however , the Chief Manager of the OP Bank vide No. ZO/BST /P and D/ F -79/352 dated 23.07.2011 ( Annexure -21 to BNA filed by the Complainant)  admitted in clear terms saying  ‘it is the joint responsibility of  the Bank and the borrower to renew the said policy before expiry of the validity period to safeguard mutual interest against unforeseen circumstances’.  It is, therefore, clear that the Bank promised to give some service in the matter of obtaining insurance policy which was actually not provided in the 3^rd year of the operation of the service provider-consumer relationship. The complaint thereby appears to be quite maintainable.

            Going by the above discussion we are of the considered view that the Complainant has reasons to claim compensation from the bank for their deficiency in service but the Complainant themselves also were responsible for timely renewal of the insurance policy  which was not carried out.

The complaint, therefore, may be allowed in part only.  Hence,

                                                     Ordered

that the complaint is allowed in part and the OP Bank shall pay a sum of Rs. 3 lakh only  to the Complainant as compensation for the loss suffered by the Complainant. No case stands against OP No.3. There shall be no order as to costs. The entire payment shall be made by OP Nos. 1 and 2 within a period of 45 days from the date of this order , failing which, interest @ 8% p.a. from the date of default shall be payable to the Complainant.

            The M.A. No. 201/2012 finally stands disposed of accordingly.