BEFORE THE MANDYA DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, MANDYA PRESENT: 1. SIDDEGOWDA, B.Sc., LLB., President, 2. M.N.MANOHARA, B.A., LLB., Member, 3. A.P.MAHADEVAMMA, B.Sc., LLB., Member, ORDER Complaint No.MDF/C.C.No.125/2009 Order dated this the 5th day of March 2010 COMPLAINANT/S Sri.K.Chikkanna S/o Channegowda, R/o Kalenahalli Village, Mandya Taluk. (By Sri.C.L.Shivakumar., Advocate) -Vs- OPPOSITE PARTY/S The Branch Manager, Canara Bank, Nagamangala Branch, Nagamangala, Mandya District. (By Sri.Thimmegowda., Advocate) Date of complaint 28.10.2009 Date of service of notice to Opposite party 11.11.2009 Date of order 05.03.2010 Total Period 3 Months 22 Days Result The complaint is dismissed. However, there is no order as to costs. Sri.Siddegowda, President 1.This complaint is filed under section 12 of the Consumer Protection Act, 1986 by the Complainant against the Opposite party to pay compensation with interest awarded by the Honble Principal Civil Judge (Sr. Dn.), Mandya and to pay penalty of Rs.10,000/- alleging deficiency in service. 2.The case of the Complainants is that the Complainant has purchased the tractor bearing No.KA-11-TR-988/05-06, under the loan facility from Opposite party on hypothecation agreement. After registration, the said tractor and trailer bearing No.KA-11/T-6544 and T-6545 was insured by the Opposite party bank by remitting premium on 21.07.2005 as per the terms and conditions of the loan agreement and the policy was valid up to 20.07.2006. But, the Opposite party has not paid the insurance premium and renewed the policy on or before 20.07.2006. But the Opposite party has paid the policy amount on 03.08.2006, after lapse of 14 days. The Complainant, being an agriculturist and innocent, mistakenly has paid Rs.7085/- towards insurance premium to the Oriental Insurance Company Limited, Mandya Branch, Mandya. But, actually the policy was in force. As per that premium the policy of the tractor was valid up to 07.07.2006 to 06.07.2007 and that amount was also wasted. The Complainant visited the Opposite party after 07.08.2006 and showed insurance to the Opposite party. At that time, the Opposite party advised the Complainant that he has to pay only monthly installments in respect of the loan amount and should not pay the insurance policy amount and the bank would take care of the insurance policy amount annually and further told the Complainant that the Opposite party has paid the insurance premium on 03.08.2006 and the original policy valid from 03.08.2006 to 02.08.2007. It clearly shows that the negligence of the Opposite party. Further, the Opposite party has not renewed the said vehicle insurance on or before 02.08.2007. But, unfortunately the said tractor met with an accident on 06.08.2007 and in this regard, the Mandya Rural Police have registered Crime No.325/2007 and in that accident, two persons have sustained injuries. The Complainant has issued a legal notice to the Opposite party on 13.09.2007. But, the Opposite party has sent untenable reply. Now, both the injured persons have filed MVC case against the Complainant for compensation with interest before the Honble Principal Civil Judge (Sr. Dn.) and M.A.C.T., Mandya in MVC No.371/2008 and 372/2008 respectively. The Opposite party is liable to pay the compensation claimed by the injured persons and damages caused to the tractor and trailer and also cost imposed by the Honble Principal Civil Judge (Sr. Dn.) and M.A.C.T., Mandya. The non payment of insurance premium to insurance company on or before 02.08.2007 as per the terms of the loan agreement is a clear act of deficiency in service on the part of Opposite party. The Opposite party is liable to pay damages of amount that may be awarded as compensation to the petitioners in MVC cases. In addition to the damages caused to the tractor and trailer in the accident and also damaged to the Complainant. 3.The Opposite party has filed version admitting the loan borrowed by the Complainant for purchase of the tractor and trailer. But, there is no agreement or contract between the Complainant and Insurance Company. It is the statutory duty imposed on the Complainant to pay the insurance premium under IMV Act and the Complainant should take maximum care and caution to keep the vehicle and see whether the policy of insurance is in force or not before flying the vehicle. The statutory duty cannot shift on this Opposite party. The Opposite party has never undertaken to pay the insurance premium under the loan agreement. There is absolutely no such mandatory on the part of the Opposite party to pay the premium. The non-payment of premium in time is the clear lapse on the part of the Complainant and not Opposite party. The Complainant in order to escape from his liability, but to his negligence in not making payment of insurance within time, has filed the above complaint to gain illegally. It is denied that the Opposite party has undertaken to remit the insurance premium every year and as per the terms and conditions of the loan agreement, Opposite party has paid insurance premium on 21.07.2005. The Opposite party has paid the premium on 03.08.2006 on the request of the Complainant. Denying other allegations, the Opposite party has sought for dismissal of the Complaint. 4.During trial, the Complainant is examined and has produced Ex.C.1 the reply notice. The Opposite party is examined and produced document Ex.R.1 the copy of the loan agreement. 5.We have heard both the sides. 6.Now the points that arise for our considerations are:- 1.Whether the Opposite party has committed deficiency in service in not paying the insurance premium on 02.08.2007 for the tractor and trailer purchased by the Complainant on loan basis from the Opposite party? 2.Whether the Complainant is entitled to the relief sought for? 7.Our findings and reasons are as here under:- 8.POINT NO.1:- The undisputed facts borne out from the materials on record are that the Complainant is an agriculturist and he borrowed loan from Opposite party bank to purchase the tractor and driver bearing No.KA-11/T-6544 and T6545 and the Complainant has executed a loan agreement Ex.R.1. It is also admitted that the said tractor was insured with United Insurance Company on 21.07.2005 valid up to 20.07.2006. According to the Opposite party, the Opposite party has paid the premium on 03.08.2006 on the request of the Complainant and further, according to the Complainant, mistakenly he paid insurance premium and obtained the policy from Oriental Insurance Company Ltd., valid from 07.07.2006 to 06.07.2007 and visiting the Opposite party Office on 07.08.2006 showed the insurance policy to Opposite party and the Opposite party advised the Complainant to pay only loan installments and not pay the insurance and then, the bank would take care of payment of the insurance premium annually and further, told the Complainant that the Opposite party has paid the insurance policy amount on 03.08.2006 and showed the insurance policy valid up to 02.08.2007. 9.According to the Complainant, the policy was in force up to 02.08.2007 and on 06.08.2007, the tractor met with an accident and two persons namely Y.K.Shivakumar and U.S.Basavaraju have sustained injuries and they have filed MVC case for compensation. But, according to the Opposite party, the Opposite party is not aware of those facts. 10.The Complainant has not produced any documents to show that the tractor was involved in the accident and Crime No.325/07 was registered and injured persons have filed M.V.C.371/08 and 372/08 for compensation. 11.The contention of the Complainant is that as per the loan agreement undertaking by the Opposite party, the duty was castled on the Opposite party to pay the insurance premium every year and get the insurance for the tractor and the Opposite party has failed to do that duty and thus, it is responsible for compensation that may be awarded by the MVC Court. But, the contention of the Opposite party is that it had not undertaken to pay the premium or obtained the insurance and there is no agreement at all to that effect and it is the duty of the Complainant being the owner of the tractor and trailer to obtain the policy under the IMV Act to fly the vehicle. The learned counsel for the Opposite party has relied upon the decision reported in 2008(3) CPR page 53 in the case of Ram Saran Vs- Allahabad Bank rendered by the Honble National Commission. In that case, the Complainant case was that insurance cover had expired on 19.05.1998 and it was responsibility of bank to renew insurance cover and bank not having done was a clear case of deficiency in service, allowed by the District Forum directing the bank to pay Rs.15,000/- with interest (amount awarded by the Tribunal), Appeal was dismissed by the State Commission. In Revision Petition, the Honble National Commission has held that it is established fact that the bank with a view to ensure repayment of the loan amount, take up the insurance, if the loanee has not taken insurance cover, but the primary responsibility of taking the insurance cover is that of the person who has taken the loan. The petitioner could not absolve himself from the responsibility of not taking the insurance cover as per the agreement between the parties, primarily responsibility rested on the petitioner to take insurance cover and complaint was dismissed by the Honble National Commission setting aside the order of the District Forum and State Commission. 12.Now, let us examine the conditions of the loan agreement entered into between the Complainant and the Opposite party Bank. Ex.R.1 is the copy of the agreement for Agriculture loan. As per condition No.8 of the agreement the borrower shall take out and keep in force all permits and licences required to be effected by any law for the time being in force for the purpose of maintaining and continuing the plying of the vehicle prescribed. Condition No.23(a & b) reads as follows;- a) The borrower hereby expressly undertake and declare that he shall take insurance cover against the risk of in respect of the with Bank Clause appended thereto at his cost and in case, this cover against risk is not taken, hereby authorise Bank to take such insurance cover at borrower risk and cost and to debit the premium on the policy renewed from time to time to his account with the Bank which he hereby undertake to repay on demand made on borrower. b) The Bank is at liberty and is not bound to effect such insurance at the risk, responsibility and expense of the borrower with any Insurance Company only to the extent of the value of the security as estimated by the Bank and that in the event of insuring the security, the Bank shall not be considered or deemed to be responsible or liable for non-admission or rejection of the claim wholly or in part, whether the claim is made by the bank or the borrower. Now, in the light of the above conditions of the loan agreement, the contention of the Complainant is that the Opposite party has obtained the policy of the tractor purchased by the Complainant on loan basis on 21.07.2005 and though the policy valid up to 20.07.2006, but instead of 20.07.2006, the Opposite party has paid the insurance policy on 03.08.2006, though the Complainant mistakenly paid the premium and obtained the insurance from Oriental Insurance Company on 07.07.2006 valid up to 06.07.2007 and it was informed to the Opposite party on 07.08.2006 and showed the insurance policy to the Opposite party. At the time, the Opposite party advised not to pay the insurance premium and he has to pay only monthly installment of the loan and Opposite party has paid insurance amount on 03.08.2006. According to the Complainant, this is also deficiency in service by the Opposite party. When the policy was in force up to 20.07.2006, there was no need for the Complainant to obtain the policy from 07.07.2006. Further, according to his admission in the complaint, he showed the policy on 07.08.2006. But, before that time on 03.08.2006 itself the Opposite party has paid the policy amount on 03.08.2006 though after lapse of 14 days from the previous insurance. But, according to the Opposite party at the instance of the Complainant, the Opposite party has paid the insurance. So, when the Opposite party has paid the insurance on 03.08.2006 and Complainant showed the policy on 07.08.2006, the Opposite party cannot be blamed for the payment of insurance premium on 03.08.2006 to obtain the policy. It is the negligence of the Complainant in obtaining the policy from different Insurance Company much earlier to the expiry of policy period. Admittedly, the insurance cover expires on 02.08.2007, but neither the Complainant nor the Opposite party have paid the insurance premium and obtained the policy from 03.08.2006 and according to the Complainant, the tractor met with an accident on 06.08.2006 and naturally the injured persons will file case before Motor Accident Claims Tribunal, claiming compensation against the owner of the vehicle and the Complainant has furnished MVC numbers which cannot be doubted. The point is whether Opposite party has committed deficiency in service in not renewing the policy before 02.08.2007 or whether it is the duty of the Complainant to obtain the policy. The contention of the Complainant is that if the primary duty of obtaining the policy is on the owner, why the Opposite party has obtained the two other policies and option of the contract was exercised by the Opposite party after information by the Complainant, therefore, the Opposite party is liable and has committed deficiency in service. If we read the conditions with regard to obtaining the insurance cover, the borrower has undertaken to obtain the insurance cover against the vehicle against the risk and if it is not taken, it authorizes the bank to take such insurance and debit the insurance premium to his loan account. Further, the bank is at liberty and is not bound to effect such insurance, at the risk responsibility and expense of the borrower with the insurance company only to the extent of value of the security as estimated by the Bank and in that event of ensuring the security, the bank shall not be held responsible for non-admission or rejection of the claim, whether the claim is made by the bank or the borrower. These conditions clearly established that the legal duty is castled upon the owner that is the Complainant to obtain the insurance cover, because under the MVC Act no Motor Vehicle shall ply on the public road without insurance. So, it is the Complainant who used the vehicle on the road. As per condition, even if the bank insured the vehicle to obtain the insurance at the cost of the Complainant, it is only for the value of the vehicle and even if the claim by the Insurance Company is rejected, the bank is not liable and therefore, the borrower is only liable for any eventuality in respect of the vehicle. When the legal duty of obtaining the insurance is not complied by the Complainant, in order to protect the security of the loan, the bank is entitled to get the insurance for the value estimated by it and obtained the policy. So, the policy obtained by the bank is only for the security of the loan for its value. When the Complainant has not obtained the policy intime. The payment of premium after expiry of policy time cannot be said that Opposite party has opted for payment of premium and liability of Complainant ceases in view of the conditions of agreement and for third party insurance which is mandatory under the Motor Vehicles Act. It should be obtained by the owner of the vehicle, because he runs the vehicle on public road and it is the discretion of the Complainant to obtain the policy for the vehicle or personal risk. 13.The Honble National Commission has clearly held that the primary responsibility to take up the insurance lies on the owner of the vehicle and if the loanee has not taken insurance cover, the bank with a view ensures repayment of the loan amount take up the insurance. 14.So, the Complainant has failed to establish that the loan agreement castled duty on the Opposite party Bank to obtain the policy for the tractor purchased on loan basis and the evidence clearly shows, since the Complainant owner of the tractor has not obtained the policy in time, after 10 days it was obtained at two times by Opposite party. But, the primary responsibility of taking insurance for third party risk is on the Complainant being owner of the tractor, because he uses the vehicle on public road and the MVC Petition is filed under third party insurance risk. Therefore, the Complainant has failed to prove that the Opposite party has committed deficiency in service in not obtaining the policy on 03.08.2007. Therefore, the Opposite party is not liable to pay any compensation that may be awarded by the Motor Vehicles Accident Claim Tribunal and the Complainant is not entitled to the relief sought for. 15.In the result, we proceed to pass the following order; ORDER The complaint is dismissed. However, there is no order as to costs. (Dictated to the Stenographer, transcribed, corrected and then pronounced in the open Forum this the 5th day of March 2010). (PRESIDENT) (MEMBER) (MEMBER)
