For the Complainants : Mr. Arvind Nayyar, Sr. Advocate with Mr. Sabarish Subramanian, Advocate For the Insurance Co. : Mr. Vineet Malhotra, Advocate Mr. Shubhendu Kaushik, Advocate Mr. Vishal Gohri, Advocate For the Canara Bank : Mr. Rajesh Kumar, Advocate Mr. V. GovindaRamanan, Advocate For Cold Storage : Mr. Basava Prabhu S. Patil, Sr. Advocate with Mr. B. Timma Reddy, Partner of Cold Storage ORDER MRS. M. SHREESHA, MEMBER 1. Aggrieved by the order dated 28.04.2017 in CC Nos. 508 to 597 and 660 of 2015 passed by the Karnataka State Consumer Disputes Redressal Commission at Bangalore (for short “the State Commission”) the Insurance Company preferred F.A. Nos. 73, 74, 85, 86, 87, 111-122, 129-139, 149-155, 163-165, 171-178, 186-198, 215-229, 532-547 of 2018; the Complainants preferred F.A. Nos. 1995, 1998-2007, 2017-2026, 2035-2044, 2057-2066, 2069-2073, 2087-2100, 2112-2115, 2119-2124, 2155-2164, 2175-2184 and 2294 of 2017; and the Canara Bank preferred First Appeal No. 2327 of 2017, under Section 19 of the Consumer Protection Act, 1986 (in short “the Act”). By the impugned order, the State Commission has partly allowed the Complaints directing the first Opposite Party (hereinafter referred to as “the Cold Storage”) and the second Opposite Party (hereinafter referred to as “the Insurance Company”) jointly and severally to pay to the Complainants the respective amounts declared in the Bank Receipt as on the date of the Tripartite Agreement together with interest @ 14% p.a. payable from six months from the date of the incident till the date of realization. The third Opposite Party (hereinafter referred to as “the Bank”), the Cold Storage and the Insurance Company were jointly and severally made liable to pay costs of ₹10,000/- to each of the Complainants. The State Commission has further directed the Insurance Company to indemnify the Cold Storage. 2. Since all these Appeals arise out of a common impugned order, they are being disposed of by way of a common order. However, for the sake of convenience, First Appeal No. 73 of 2018 preferred by the Insurance Company, First Appeal No. 1995 of 2017 preferred by the Complainant and First Appeal No. 2327 of 2017 preferred by the Bank are being taken as the lead cases. 3. Briefly put, the facts in the instant case are that the Complainant is an agriculturist and has grown Byadgi Chilli Crop during the year 2012-13 and stored his produce in the Cold Storage for some period of time expecting that his produce would fetch a better price. It was averred that the Bank advanced loan to the Complainant on the security of his agricultural produce stored in the Cold Storage and that it is a normal practice for the farmer to avail loans from the Banks by hypothecating the said produce. As per the procedure adopted, the Complainant deposited his Byadgi Chilli Crop in the Cold Storage, for which a Goods Receipt Note (GRN) was issued, detailed as hereunder: GR No. | Date | Nature of Produce | No. of Bags | No. of Kgs per Bag | Quantity (KGs) | 147 | 14/03/2013 | Byadgi Chilli | 245 | 30 | 7,350 | 159 | 15/03/2013 | Byadgi Chilli | 250 | 30 | 7,500 |
4. It was pleaded that the Cold Storage levied rental charges towards storage of the agricultural produce and also towards the farmer’s proportionate share in the insurance premium. The Cold Storage takes the Insurance Policy to insure the entire stock stored and acts as a custodian of the agricultural produce. It was stated that a Standard & Special Perils Policy was taken on 23.03.2012 and the same was renewed from year to year till 2013-14 for a total sum insured of ₹30 crores. It was averred that the Complainant availed a loan of ₹10,00,000/- from the Bank by hypothecating the agricultural produce and entered into a Tripartite Agreement dated 23.03.2003 involving himself, the Cold Storage and the Bank. At the time of availing the loan, a warehouse receipt was issued by the Cold Storage giving the particulars of the Chilli Crop stored and also the details of the Insurance Policy taken from the Insurance Company. This original warehouse receipt was retained with the Bank and the copy thereof was kept by the Complainant. The Bank had free access to inspect the Cold Storage and assess the stock situation. It was stated that the Cold Storage was running the said unit from the year 2007 and had been taking Insurance Policies right from the inception, to ensure that the entire stock stored in the unit, including the building, plant and machinery was secured. It was averred that the Policies were obtained from National Insurance Company for the initial two years and later on, at the instance of the Bank, from whom the Cold Storage had taken financial assistance, the policies were taken from United India Insurance Company Ltd., one of the Appellants’ herein. A separate Policy for ₹5 crores was taken for the plant and machinery and the subject Policy for ₹30 crores was for the entire stored stock. 5. While so, in the intervening night between 13thand 14th of January, 2014, a fire broke out in the Cold Storage. Despite best efforts of the fire brigade, the building and the entire stock was destroyed. On a Complaint lodged with Bellary Rural Police Station on the same day, the Police conducted an investigation and recorded the statement of 33 witnesses. Subsequent to receiving the reports from the Regional Fire Brigade, the Deputy Electrical Inspector Bellary, the Forensic Science Laboratory, Bangalore and the Police gave a final report that the fire was caused by electric short circuit. It was averred that the Forensic Science Laboratory noted that the walls and pillars of the Cold Storage building were made of Thermocol and Tar in order to maintain the requisite temperature and facilitate proper cooling. The Laboratory report also stated that the debris was examined layer by layer at various places and it was found that there was no smell of any accelerants like kerosene, diesel, petrol etc; the presence of combustible materials like Thermocol may have propelled the spread of the fire; it was not possible to locate the exact place of the origin of fire as the complete building was gutted and finally opined that the fire may have been caused by an electric short circuit. 6. It was pleaded that because the Cold Storage had taken a comprehensive Insurance Policy, covering the entire stock, the Complainant did not take any additional Insurance Policy in his capacity. Despite several requests, as his claim was not settled, the Complainant was constrained to issue a legal notice on 18.07.2015 both to the Cold Storage and the Insurance Company. The Insurance Company repudiated the claim on the ground that the Complainant did not have locus standi to make the claim as the Insured was the Cold Storage and not the farmers and that condition No. 8 was violated. It was further pleaded that the Complainant was a small farmer and the loss suffered affected his means of livelihood and he was unable to discharge the loan taken from the Bank. In view of the clauses of the Tripartite Agreement the Bank was also made a party as it was the Bank which had advanced the loan to the Complainant on security of the agricultural produce in the Cold Storage. Despite repeated requests, when there was no response from the Insurance Company or the Cold Storage, the Complainant, namely, Prathap Reddy preferred the Complaint before the State Commission seeking a direction against the Opposite Parties to pay the following amounts: Value of 495 bags of Byadgi Chilli stored in the opposite party No.1 cold storage (Each Bag Contains 30 Kgs) Therefore, Byadgi : 495 Bags X 30 Kgs= Rate/KG as per the price fixed by the Agricultural Produce Marketing Committee for the month of January 2014 (produced at Annexures XI and XII) Total Value of Byadgi Chilli : | Total 14,850 Kgs Rs.160/-= per Kg. Rs.23,76,000/- | Interest at rate of 18% from 14/01/2014 to 30/09/2015 | Rs. 7,32,328/- | Damages for mental torture, agony and harassment suffered | Rs. 1,00,000/- | Total Claim: | Rs.32,08,328/- |
7. For the sake of ready reference, the details of the number of bags of Chillies/other agricultural produce; the weight; the total value of the produce; the interest claimed; the damages prayed for by all the Complainants are given at this juncture itself. These are: Sl. No. | Complaint Nos. | Name of the Complainant Sri/Smt | Nature of Produce | No. of Bags | Qty. (Kgs) | Rate Per Kg | Amount Claimed | Interest Claimed | Damages Claimed | 01 | 508/2015 | Thippa Reddy | DabbiByadgi Chilli | 440 | 15400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 02 | 509/2015 | Pompana Gowda K | Dhaniya, Bengal Gram | 462 250 | 18,480 15,000 | 130/ 40/- | 30,02,400/- | 9,25,397/- | 1,00,000/- | 03 | 510/2015 | Prathap Reddy | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 04 | 511/2015 | Thimma Reddy | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 05 | 512/2015 | Krishna Reddy | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 06 | 513/2015 | Vasantha Reddy | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 07 | 514/2015 | Purushotham Reddy B | Byadgi Chilli | 415 | 14,525 | 160/- | 23,24,000/- | 7,16,301/- | 1,00,000/- | 08 | 515/2015 | Ramesh P | Byadgi Chilli | 655 | 16,375 | 160/- | 26,20,000/- | 8,07,534/- | 1,00,000/- | 09 | 516/2015 | Vijaya Kumar J.E. | Byadgi Chilli | 479 | 16.765 | 160/- | 26,82,400/- | 8,26,767/- | 1,00,000/- | 10 | 517/2015 | Srinivas | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 11 | 518/2015 | Ramakrishna | Byadgi Chilli | 441 | 15,435 | 160/- | 24,69,600/- | 7,61,178/- | 1,00,000/- | 12 | 519/2015 | Basappa | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 13 | 520/2015 | Shivalingappa | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 14 | 521/2015 | Shankar Reddy | Byadgi Chilli | 519 | 18,165 | 160/- | 29,06,400/- | 8,95,808/- | 1,00,000/- | 15 | 522/2015 | Kantha Reddy | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 16 | 523/2015 | Lakshmikanth | Byadgi Chilli | 441 | 15,435 | 220/- | 33,95,700/- | 10,46,620/- | 1,00,000/- | 17 | 524/2015 | Lokesh | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 18 | 525/2015 | Nagi Reddy | Byadgi Chilli | 500 | 15,000 | 160/- | 24,00,000/- | 7,39,726/- | 1,00,000/- | 19 | 526/2015 | Mallikarjuna | Byadgi Chilli | 502 | 17,570 | 160/- | 28,11,200/- | 8,66,465/- | 1,00,000/- | 20 | 527/2015 | Chindananda | Byadgi Chilli | 581 | 20,335 | 220/- | 44,73,700/- | 13,78,880/- | 1,00,000/- | 21 | 528/2015 | Madhar Sab | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 22 | 529/2015 | Hanumantha B | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 23 | 530/2015 | Harikesh | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 24 | 531/2015 | Channappa | Byadgi Chilli | 445 | 15,575 | 220/- | 34,26,500/- | 10,56,113/- | 1,00,000/- | 25 | 532/2015 | MakandarHusmansab | Byadgi Chilli | 485 | 14,550 | 160/- | 23,28,000/- | 7,17,534/- | 1,00,000/- | 26 | 533/2015 | Nagaraj B | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 27 | 534/2015 | Marichanna Reddy | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 28 | 535/2015 | Satyanarayana Reddy | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 29 | 536/2015 | Anjinappa | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 30 | 537/2015 | Hanumanthappa Reddy Y | Byadgi Chilli | 466 | 16,310 | 160/- | 26,09,600/- | 8,04,328/- | 1,00,000/- | 31 | 538/2015 | Koma Reddy | Byadgi Chilli | 500 | 17,500 | 160/- | 28,00,000/- | 8,63,013/- | 1,00,000/- | 32 | 539/2015 | Satya Narayana | Byadgi Chilli | 591 | 17,730 | 160/- | 28,36,800/- | 8,74,356/- | 1,00,000/- | 33 | 540/2015 | Pakeer Sab | Byadgi Chilli | 540 | 18,900 | 160/- | 30,24,000/- | 9,32,054/- | 1,00,000/- | 34 | 541/2015 | Karthik Reddy | Byadgi Chilli | 500 | 17,500 | 160/- | 28,00,000/- | 8,63,013/- | 1,00,000/- | 35 | 542/2015 | Thimma Reddy N | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 36 | 543/2015 | Sambashiva Reddy G | Dabbi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 37 | 544/2015 | Veerareddy | Byadgi Chilli | 409 | 14,315 | 160/- | 22,90,400/- | 07,05,945/- | 1,00,000/- | 38 | 545/2015 | Yerriswamy | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 39 | 546/2015 | Shaik Nazeer R | Byadgi Chilli | 581 | 20,335 | 160/- | 32,53,600/- | 10,02,821/- | 1,00,000/- | 40 | 547/2015 | Prabhakar A | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 41 | 548/2015 | Yerriswami Reddy R | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 42 | 549/2015 | Srinivasalu Shetty B. | Byadgi Chilli | 409 | 14,315 | 160/- | 22,90,400/- | 7,05,945/- | 1,00,000/- | 43 | 550/2015 | Nagi Reddy | Byadgi Chilli | 440 | 15,400 | 160/- | 26,64,000/- | 7,59,452/- | 1,00,000/- | 44 | 551/2015 | V. Gandhi Lingappa | Byadgi Chilli | 409 | 14,315 | 160/- | 22,90,400/- | 7,05,945/- | 1,00,000/- | 45 | 552/2015 | Mainuddin Jamadar | Byadgi Chilli Guntur Chilli | 463 82 | 16205 2870 | 160/- 89/- | 25,92,800/- 2,55,430/- | 8,77,879/- | 1,00,000/- | 46 | 553/2015 | Vannurappa | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 47 | 554/2015 | Narayana Reddy | Byadgi Chilli | 623 | 18,690 | 160/- | 29,90,400/- | 9,21,698/- | 1,00,000/- | 48 | 555/2015 | Umakantha Reddy | Byadgi Chilli | 500 | 17,500 | 160/- | 28,00,000/- | 8,63,013/- | 1,00,000/- | 49 | 556/2015 | Linga Reddy | Byadgi Chilli | 441 | 15,435 | 220/- | 33,95,700/- | 10,46,620/- | 1,00,000/- | 50 | 557/2015 | G.Hanuman- thappa | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 51 | 558/2015 | Hanumath Reddy | Byadgi Chilli | 442 | 15,470 | 220/- | 34,03,400/- | 10,48,993/- | 1,00,000/- | 52 | 559/2015 | Venkateshwara Rao | Byadgi Chilli | 441 | 15,435 | 220/- | 33,95,700/- | 10,46,620/- | 1,00,000/- | 53 | 560/2015 | Veerana Gouda | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 54 | 561/2015 | Shambashiva Reddy | Byadgi Chilli | 449 | 15,715 | 160/- | 25,14,400/- | 7,74,986/- | 1,00,000/- | 55 | 562/2015 | Vasu | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 56 | 563/2015 | Sannaveera Reddy R | Byadgi Chilli | 461 | 16,135 | 160/- | 25,81,600/- | 7,95,698/- | 1,00,000/- | 57 | 564/2015 | ThippeSwamy K | Byadgi Chilli | 559 | 19,565 | 160/- | 31,30,400/- | 9,64,849/- | 1,00,000/- | 58 | 565/2015 | Veera Reddy | Byadgi Chilli | 500 | 17,500 | 160/- | 28,00,000/- | 8,63,013/- | 1,00,000/- | 59 | 566/2015 | Ramalakshmi Reddy M | Byadgi Chilli | 421 | 14,735 | 160/- | 23,57,600/- | 7,26,657/- | 1,00,000/- | 60 | 567/2015 | Honurappa D | Byadgi Chilli | 500 | 17,500 | 160/- | 28,00,000/- | 8,63,013/- | 1,00,000/- | 61 | 568/2015 | Janardhana A | Byadgi Chilli | 441 | 15,435 | 220/- | 33,95,700/- | 10,46,620/- | 1,00,000/- | 62 | 569/2015 | Nagendra | Byadgi Chilli | 440 | 15,400 | 220/- | 33,88,000/- | 10,44,246/- | 1,00,000/- | 63 | 570/2015 | Manjunatha | Byadgi Chilli | 552 | 19,320 | 160/- | 30,91,200/- | 9,52,767/- | 1,00,000/- | 64 | 571/2015 | Govinda Reddy B | Daniya (Corriender) | 721 | 18,233 | 130/- | 42,17,850/- | 13,00,022/- | 1,00,000/- | 65 | 572/2015 | Y Shivaiah | | | | | | | 1,00,000/- | 66 | 573/2015 | Gopal Reddy H | Byadgi Chilli | 451 | 15,785 | 160/- | 25,25,600/- | 7,78,438/- | 1,00,000/- | 67 | 574/2015 | Venkatesh Reddy | Byadgi Chilli | 503 | 15,090 | 160/- | 24,14,400/- | 7,44,164/- | 1,00,000/- | 68 | 575/2015 | Panduranga Reddy C | Byadgi Chilli | 429 | 15,015 | 160/- | 24,02,400/- | 7,40,465/- | 1,00,000/- | 69 | 576/2015 | Ramanjaneyulu A. | Byadgi Chilli | 445 | 15,575 | 160/- | 24,92,000/- | 7,68,082/- | 1,00,000/- | 70 | 577/2015 | Veeresh V | Byadgi Chilli | 575 | 17,250 | 160/- | 27,60,000/- | 8,50,685/- | 1,00,000/- | 71 | 578/2015 | DoddaBasappa | Daniya (Corriander) | 478 | 19,120 | 130/- | 24,85,600/- | 7,66,109/- | 1,00,000/- | 72 | 579/2015 | Umamaheshwara J | Byadgi Chilli | 495 | 14,850 | 160/- | 23,76,000/- | 7,32,328/- | 1,00,000/- | 73 | 580/2015 | Sattar Sab | Byadgi Chilli Byadgi Chilli | 495 167 | 14,850 5,010 | 220/- 160/- | 40,68,600/- | 12,54,020/- | 1,00,000/- | 74 | 581/2015 | Ravi Kumar Reddy | Byadgi Chilli | 502 | 17,570 | 160/- | 28,11,200/- | 8,66,465/- | 1,00,000/- | 75 | 582/2015 | Nagendra Prasad V | Dal Gram Halsandi Gram | 858 382 | 42,900 19100 | 75/- 52/- | 42,10,700/- | 12,97,818/- | 1,00,000/- | 76 | 583/2015 | Shivappa | Byadgi Chilli | 358 | 12,530 | 160/- | 27,56,600/- | 8,49,636/- | 1,00,000/- | 77 | 584/2015 | Kari Basava Reddy | Guntur Chilli Byadgi Chilli Daniya Bengal Gram | 275 92 10 53 | 9,625 2,760 450 2,650 | 89/- 160/- 130/- 40/- | 14,62,725/- | 4,50,840/- | 1,00,000/- | 78 | 585/2015 | Srinivasa Reddy | Byadgi Chilli | 423 | 14,805 | 160/- | 23,68,800/- | 7,30,109/- | 1,00,000/- | 79 | 586/2015 | Vijaya Reddy | Byadgi Chilli | 483 | 16,905 | 220/- | 37,19,100/- | 11,46,298/- | 1,00,000/- | 80 | 587/2015 | Kareppa | Byadgi Chilli | 453 | 15,855 | 160/- | 25,36,800/- | 7,81,890/- | 1,00,000/- | 81 | 588/2015 | Yogananda H.N. | Daniya Toor Dal | 462 235 | 18,480 14,100 | 130/- 75/- | 34,59,900/- | 10,66,407/- | 1,00,000/- | 82 | 589/2015 | DoddaThippaiah G.K. | Byadgi Chilli | 445 | 13,350 | 160/- | 21,36,000/- | 6,58,356/- | 1,00,000/- | 83 | 590/2015 | Dana Reddy A | Byadgi Chilli | 460 | 16,100 | 160/- | 25,76,000/- | 7,93,972/- | 1,00,000/- | 84 | 591/2015 | Srinivasa Reddy | Byadgi Chilli | 424 | 14,840 | 160/- | 23,74,400/- | 7,31,835/- | 1,00,000/- | 85 | 592/2015 | Yerrappa | Byadgi Chilli | 460 | 16,275 | 160/- | 26,04,000/- | 8,02,602/- | 1,00,000/- | 86 | 593/2015 | Basava Reddy K | Byadgi Chilli | 445 | 13,350 | 160/- | 21,36,000/- | 6,58,356/- | 1,00,000/- | 87 | 594/2015 | Hanumantha Reddy P. | Dabbi Chilli | 354 | 12,390 | 220/- | 27,25,800/- | 8,40,143/- | 1,00,000/- | 88 | 595/2015 | Sanjeeva Reddy A. | Byadgi Chilli Bengal Gram Daniya | 556 32 17 | 15,780 1,920 765 | 160/- 40/- 130/- | 27,01,050/- | 8,32,515/- | 1,00,000/- | 89 | 596/2015 | Lakshmaiah B | Byadgi Chilli | 440 | 15,400 | 160/- | 24,64,000/- | 7,59,452/- | 1,00,000/- | 90 | 597/2015 | Honnur Swami- Loan Not availed | Guntur Chilli Jowar | 247 572 | 8,645 34,320 | 89/- 28/- | 17,30,365/- | 5,33,331/- | 1,00,000/- | 91 | 660/2015 | Mallaiah Swami S.M. | Byadgi Chilli | 522 | 15,660 | 160/- | 25,05,600/- | 7,72,273/- | 1,00,000/- |
8. Reverting to the facts of the lead case, the Cold Storage filed its Written Version, admitting the storage of produce of the Complainant in the Cold Storage, the issuance of GRN and the entire destruction of the agricultural produce in the fire accident which took place on the intervening night of 13-14.01.2014. The Police was informed on the same day, i.e. on 14.01.2014. The Cold Storage furnished all the desired information and the documents demanded by the Police and the Insurance Company. It was pleaded that the Cold Storage co-operated with the Police; the Fire Department; the Forensic Science Laboratory as also the Surveyor and therefore, the Insurance Company has unjustly repudiated the genuine claim. 9. The Insurance Company resisted the Complaint stating that the Complainant was not a “Consumer” as there was no privity of contract between the Complainant and the Insurance Company because the Policy was taken by the Cold Storage and not by the farmers. It was pleaded that the Complaint was filed by the Cold Storage through the Complainant by creating a false GRN; the Complainant was a defaulting borrower with the Bank and has availed loan on the basis of the fabricated GRN; since the Bank is to recover their loans, is supporting the false claims of the Complainant; the Complainant is not a farmer and that there is no evidence to prove that he had grown Byadgi Chilli weighing 14850 kgs; the alleged storage of agricultural produce by an agriculturist for almost one year in the Cold Storage, anticipating a better market price, was unthinkable; the agricultural produce like Chilli, Coriander, Bengal Gram and other Pulses cannot be stored in a Cold Storage for such a long period because they would deteriorate; the interest rate @ 15.75% with quarterly rests is very high and no farmer can think of keeping the hypothecated produce for such a long period expecting high market price; the alleged loan transaction was only for a period of one year and no Bank would wait 24 months after default, in discharge of loan, without filing a suit for recovery of dues from the borrower; the Bank was deficient in not taking steps against the defaulted borrower; the Bank has joined hands with the Cold Storage and fabricated the GRN and also created the alleged fire incident; the Tripartite Agreement was not a genuine Agreement as the same was not signed or stamped with the seal of the Canara Bank and does not also bear the signatures of any witness; the agreed 12 months ended in March, 2014 itself and it was wholly unviable for anybody to store such a perishable commodity for such a long period. It was also pleaded that the fire accident itself was not genuine; there was no spontaneous combustion on account of electric short circuit, stated in the expert opinion of M/s Truth Labs; the fire was on account of extraneous ignitable acceleration such as kerosene which was deliberately used for the burning of the stocks; the report of the Rank Surveyors Pvt. Ltd. states that the fire was caused by human intervention; IIT Chennai appointed for submitting a report on the structural stability of the fire-affected building conducted a detailed inspection and reported that the structure should have either deflected outwardly on all sides or should have collapsed leading to the conclusion that combustible material inside the cold storage was much less than what has been stated by them; that M/s Rank Surveyors Pvt. Ltd., after thorough investigation of the stock, verification of the accounts books and physical inventory of the stocks in the presence of the management of the Cold Storage stated that their conduct was dubious and that they did not take any steps to salvage the items or mitigate the loss despite repeated advice by the Surveyor. It was further pleaded that the produce which was fully burnt or half burnt was of low quality; that fresh red Chilli was strewn on 18.01.2014 to show that good quality Chilli was stored. The ledgers and documents were made available to the Surveyor belatedly on 10.02.2014 after manipulating them only with the malafide intention to show excessive quantity of stock. It was stated that the Bank, which had lent money against the alleged GRN, had allowed many farmers to take delivery of the pledged items without its approval. Hence, the claim was not payable as per general condition No. 8 of the terms of the Policy, which reads as follows: “If the claim be in any respect fraudulent, or if any false declaration be made or used in support thereof or if any fraudulent means or device are used by the insured or anyone acting on his behalf to obtain any benefit under the policy or if the loss or damage be occasioned by the willful act, or with the connivance of the insured all benefits under this policy shall stand forfeited”. 10. It was also pleaded that the investigation report of the Police; the report of the Regional Fire Brigade Officer; of the Deputy Electrical Inspector and of the Forensic Science Laboratory were obtained to create a false liability against the Insurance Company by manipulated the evidence and hence the repudiation of the claim was fully justified. 11. On appreciation of the evidence on record, the State Commission has partly allowed the Complaint with the following observations:- 43. Hence, considering the report given by the electrical Inspector and also report given by Police investigation that the cause of fire was due to electrical short circuit and the contrary contention of Opposite Party No. 2 that it was on account of human intervention by the use of kerosene such thing was happened cannot be accepted much less Opposite Party No. 2 has proved. Thus the complainants in all these cases have consistently proved that the incident occurred only on account of electrical short circuit and not by human intervention and he use of kerosene. 44. Dr. Nageshwar Rao speaks about the structural stability and the same is not relevant to find out the cause of fire, besides he inspected the premises after about more than one year. 52. On perusal of the Triparte agreement which is marked as exhibits in the respective complaint it is seen that there is a clause which makes it mandatory on the part of OP No.1 to insure the goods so hypothecated by the complainants to the bank. 53. OP No.1 taking the policy of insurance to cover the goods in its storage is not in dispute. On perusal of the policy of the insurance bearing No.241100/11/12/0000/1384 it is seen that the same is styled as ‘Standard Fire Special Perils Policy” and the same was in force from 23.03.2013 to midnight of 23.04.2014 and sum insured was Rs.30.00 Crores and OP No.1 paid premium of Rs.1,50,000/-. 54.Further on perusal of the general exclusions mentioned in the said policy the claim like one made by the Complainants is not listed under the exclusive clause of the policy. Hence, prima-facie it cannot be said that the insurance company is exonerated from its liability to pay the value of the goods destroyed in the cold storage of OP No.1 in the fire accident. Only question is whether the Complainants who are alleged to have not contributed to the premium are entitled for such coverage. In other words whether the coverage given under the policy extends to the claimants is to be considered. 55.OP No.3 has filed documents in each case namely copies of application filed by the Complainants seeking loan, warehouse receipts, receipt/s and lien certificate under Triparte agreement marked as Ex-R1 to R4. With regard to obtaining the policy of insurance by OP No.1 even in the said Triparte agreement, there is a clause making him mandatory on the part of OP No.1 to secure loan issued by OP No. 3 by obtaining the required policy of insurance. 56. The relevant clause in the said agreement reads as hereunder: Whereas the Third Party has agreed to insure the produce/goods stored in the said storage to indemnify the produce in case of any causality or accident by any means to cover the risk and also to cover the loan amount to avoid loss at the cost of the Second Party till the release order or repayment of the loan amount. 57.Thus it is contended by the OP No. 1 in pursuance of such clauses they obtained the policy of insurance regularly during the relevant period the present policy was in force. Further it is contended that it cannot be said that the goods which caught in the fire and burnt were not covered under the insurance. 61.On perusal of the each of the complaint it is seen that all the Complainants have calculated the relief sought by them by giving the value of the goods as per the price fixed by the Agricultural Produce Marking Committee during January 2014. They also produced commodity wise periodical report issued for the period from 14.12.2014 to 14.01.2015 by the Market at Bangalore. However, prima-facie it is seen that the said rate supplied to the fresh stock available as on the date and not to the old stock. Hence, the same cannot be accepted to be applicable to the goods stored in the cold storage of OP No.1. 62.According to the documents filed the goods stored by each of the Complainant/borrower of the loan in the Cold Storage of OP No.1 are pledged for availing loan, and thus bank has lien over the said goods so stored. Further the relevant clauses of the Tripartite Agreement reads as hereunder: Whereas the Second Party (Complainant) has agreed and empowered the First Party (Bank) to possess the assignment receipt till the date of repayment of the loan amount in full or part if is Second Party paid full loan amount with interest and other expenses the First Party has to release the entire produce receipt, or the consignment receipt. 63.Thusit is seen that unless the borrower/Complainant discharges the loan, receipt issued for having stored the goods in the Cold Storage of OP No. 1, will remain with the bank and unless the said receipt is produced, the OP No.1 will not release the goods. Hence, if at all if the Complainants have stored their agricultural produces over a period of one year it only goes to show that as the Complainants are unable to repay the loan and as such they are unable to obtain the receipt from the bank so as to get the goods released. 64.Further in the very same agreement there is another clause which reads as hereunder: If the Second Party made part payment towards the loan, the First Party has to issue release order or delivery order for the part of the produce to an extent of the repayment of the loan amount to the Third Party to release or deliver the goods stored in the cold storage. Whereas the Third Party (cold storage) shall not release the produce stored by the Second party without the production of receipt or the written permission or the First Party banker to the Second Party. The Third Party (Cold Storage) shall release only on the written permission or order of the First Party according to the release order either in full or in part and as per the specification of the release order of the First Party. 65.Thus in the said clause it is seen that if the Complainants/borrower pays part of amount borrowed in proportion to the said repayment of the loan, the First Party will issue release order or will release the goods in part in proportionate the amount repaid. 66.Thus the contention of the Learned Counsel for OP No.2 that nobody will keep perishable goods like chilly/pulses etc., in the cold storage for years expecting higher price though seems to be reasonable submission in the normal course, in view of those conditions discussed supra enumerated in the Tripartite Agreement in reality it is seen that as the Complainants have not discharged their loan, the goods were kept in cold storage out of compulsion and it cannot be said that excepting higher price alone the same were allowed to lay in the Cold Storage, irrespective of the pleadings in that regard. 67.As discussed supra, Complainants in all these cases have availed loan by hypothecating their goods in the cold storage of OP No.1. It is the case of OP No. 2 that none of the Complainants produced RTC extract to prove that their agricultural produces have been deposited by them in the cold storage. Further it is contended that documents filed by OP No.1 and OP No. 3 with regard to availment of loan are concocted. In that regard basically it is to be seen that while obtaining policy of insurance for Rs.30.00 crores by paying huge premium, unless the goods are valued which are deposited in the cold storage of OP No. 1, it was not possible to value the same at Rs.30.00 crores. Further, as discussed supra, it is seen that the 3rd OP bank are under obligation to auction the goods so hypothecated to it after lapse of one year in case borrower failed to discharge the loan. The relevant clause in the agreement is excerpted herein for ready reference. WHEREAS the Second party agreed and empowered the First party to take delivery of the total produce stored in the Third party cold-storage to recover the loan amount by way of sale in case the Second party failed to repay the loan amount within stipulated time and also in case of any perishment without giving any further notice or intimation and to sell produce to recover the loan amount and the Third party has also agreed to deliver or release the goods/produce stored in the cold-storage the First party without any delay or letter or any authority to what-so-ever from the Second party, who failed to repay the loan amount. 68.Thus in this case, the bank has miserably failed to act upon the terms and conditions of the agreement and further on account of such hypothecation the complainants were also not in a position to take out the goods hypothecated from the cold storage and sell it on their own unless the loan was discharged. Hence, there is deficiency on the part of the bank also in not acting upon the terms and conditions of the agreement of hypothecation. (Emphasis supplied) 12. Hence, the present Appeals. 13. Mr. Vineet Malhotra, Learned Counsel appearing for the Insurance Company vehemently submitted that: the Complainants are not “Consumers”; the Tripartite Agreement was of no relevance as the Insurance Company was not a party to it; the Bank was also deficient in not taking any steps against the Complainants although for recovery of the loans granted to them 24 months had elapsed; the Cold Storage had never revealed at the time of filling up of the Proposal Form that the stock was that of the farmers and therefore, ‘Goods Held in Trust’ is not a Peril covered by the Policy; the stock statements did not tally with the GRN as some of the farmers had removed their stocks from the Cold Storage; the Cold Storage first issued a receipt and thereafter the Bank took the Application for Loan Agreement; there was no evidence to show that any amount had been paid by the farmers to the Cold Storage as storage charges; the alleged Tripartite Agreement was valid only for a period of 12 months and are all dated 2011 whereas the incident was in the year 2014 and as the Loan Agreements were not renewed, it cannot be relied upon; the fire was man-made with active connivance of the management of the Cold Storage; the reports of Truth Labs and M/s Rank Surveyors Pvt. Ltd. clearly indicate the presence of the trace of kerosene, which perpetuated the fire accident; fresh chillies were strewn around as an attempt to establish that the chillies were of premium quality; Electric Short Circuiting was never established either by the Electrical Inspector or by the Forensic Science Laboratory and that the cause of fire was never conclusively proved by either of these Departments. 14. To start with, we first address ourselves to the first contention of the Learned Counsel that the Complainants are not “Consumers” and that the Tripartite Agreements were of no relevance. Learned Senior Counsel appearing for the Complainants contended that the Complainants, being farmers, kept their produce in the Cold Storage and paid rentals not only towards storage of the said produce but also towards their proportionate share in the payment of the premium of the Insurance Policy, and are hence beneficiaries of the said Policy. Though we agree with the Learned Counsel for the Insurance Company that the analogy drawn in para 58 of the Impugned order with regard to a Hospital obtaining policy of Insurance to cover the claim is perhaps not an appropriate comparison with the facts at hand, yet we note that there is no rebuttal in the Written Version to the specific pleading of the Complainants that the rental receipts included a proportionate share of the Insurance Premium. Further, read together with the Tripartite Agreement, the question whether the Cold Storage had insured the stock on behalf of the farmers or not, is answered. A brief perusal of the Tripartite Agreement dated 20.03.2013, entered into between the Complainant, in the lead case, namely, Pratap Reddy, the Cold Storage and the Bank is reproduced hereunder for better understanding of the case:- “TRIPARTITE AGREEMENT TO BE OBTAINED IN RESPECT OF WAREHOUSE LOANS This Tripartite Agreement entered on this day of 20/3/2013 at Bellary, Between: Canara Bank, Branch, Bellary, Manager is the principal officer of the Branch and is authorized and empowered to execute and sign the document – agreement as per the order of the chairman and the Board of Directors, which shall mean and include its successors, assigns, Legal representatives, administrators, etc., and all such other persons claiming interest through them, hereinafter called as the BANKER- The First party; And Sri/Smt. Pratap Reddy S/o /W/o Kamal Reddy aged______ years____Resident of Yerrangalgi ,Distt. Bellary Hereinafter called as the “BORROWER- Second Party” which term repugnant shall mean and include, his/her men, agents, servants, assigns, successors in interest and all such other persons claiming interest through him/her on the OTHER PART. And SREE DEVI COLD STORAGE, REPRESENTED BY ITS Manager/Managing Director, the Company registered under the Companies Act 1956 having its principal office at Plot No. 108 & 191, KIADB Industrial Estate, III Stage, Mundrigi, Bellary. Hereinafter called as the COLD STORAGER –Third Party, which term shall repugnant mean ad include, successors, assigns, administrators, and all such other persons claiming interest through them; have entered in the agreement on the following terms and conditions: WHEREAS the First Party- Banker shall grant a loan of Rs.10,00,000/- (In words Rupees Ten Lakhs onlyto the second party against the production of the pledge of Agriculture/Horticulture produce stored in the cold storage of the third party viz: SREE DEVI COLD STORAGE, and the third party issued consignment receipt for having the second party has stored the Horticulture produce in the Cold storage and on receipt of the acknowledgment the loan is disbursed to the second party. WHEREAS the Second party has agreed to repay the loan amount borrowed by pledging the consignment receipt issued by the Third party, to the First party immediately after selling of the produce or within 4 months whichever is earlier. WHEREAS the Second party has agreed and empowered the First party to possess the assignment receipt till the date of repayment of the loan amount in full or part. It the Second party paid full loan amount with interest and other expenses the First party has to release the entire produce receipt, or the consignment receipt. If the Second party made part payment towards the loan, the first party has to issue release order or delivery order for the part of the produce to an extent of the repayment of the loan amount to the third party to release or deliver the goods stored in the cold storage. WHEREAS the Third party cold storage shall not release the produce stored by the Second party without the production of the receipt or the written permission of the First party banker to the Second party. The Third party shall release only the written permission of order of the First party according to the release order either in full or in part and as per the specification of the release order of the First party. WHEREAS the Second party agreed and empowered the First party to take delivery of the total produce stored in the Third party cold-storage to recover the loan amount by way of sale in case the Second party failed to repay the loan amount within stipulated time and also in case of any perishment without giving any further notice or intimation and to sell produce to recover the loan amount and the Third party has also agreed to deliver or release the goods/produce stored in the cold-storage the First party without any delay or letter or any authority to what-so-ever from the Second party, who failed to repay the loan amount. WHEREAS the Third party has agreed to insure the produce/goods stored in the cold storage to indemnify the produce in case of any casualty or accident by any means to cover the risk and also to cover the loan amount to avoid loss at the cost of the Second party till the release order or repayment of the loan amount. IN WITNESS WHEREOF the Banker, Borrower and the Cold storager have hereunto affixed their hands on the 20thday of March 2013 at Bellary, 15. The afore-noted clauses provide that the Complainant had to repay the loan amounts, borrowed by pledging the consignment receipt issued for the Cold Storage, immediately after selling the produce or within four months thereof, whichever was earlier. The Agreement also shows that the Third Party, namely, the Cold Storage had agreed to indemnify the produce stored in the unit, in case of any casualty or accident by any means and to cover the loan amount to avoid any loss that may be caused to the Second Party, namely, the farmer, till the loan amount is repaid. The afore-noted clauses establish that the Cold Storage was taking the Insurance Policy to indemnify the entire stored stock on behalf of the farmers who are the loanees. Hence, the contention of the Learned Counsel for the Insurance Company that the Complainants being farmers did not have the locus standi to file the Complaints is unsustainable and we are of the considered view that they are beneficiaries under the policy and fall within the ambit of “Consumer” as defined in Section 2(1) (d) of the Act. 16. Further, the Policy for the assured sum of ₹30 crores and the Proposal Form evidence that the risk covered included Byadgi Chillies, Guntur Chillies, Dhaniya, Turmeric, Bengal Gram etc. The contention of the Learned Counsel that ‘Goods Held in Trust’ are not included is totally untenable as the entire Policy was taken only on the principle of ‘Goods Held in Trust’ and hypothecated with the Bank. On a pointed query as to how the Policy was issued for such a huge sum of ₹30 crores without ascertaining the nature of the stock and without conducting any inspection, Learned Counsel stated that it was done on the basis of ‘total faith’ and that Insurance Company was not in the knowledge that the ‘Goods were Held in Trust’. This explanation is unacceptable as firstly, the Proposal Form specifies that the risk covered included all the stocks, secondly it is improbable that before issuing a Policy covering ‘Stock’ which is worth ₹30 crores, the Insurance Company did not bother to ascertain its quality, quantity and type of the Stock it was insuring. Moreover, a perusal of the Policy clearly establishes that the Insurance Company was in the knowledge that the stock was hypothecated with the Bank as the name of the Bank/financier in the main Policy Copy is shown to be ‘Canara Bank.’ Therefore, we are of the considered opinion that the Complainants are “Consumers” as defined in Section 2(1)(d) of the Act and we held that the argument that ‘Goods Held in Trust’ is excluded in the Policy and that the Tripartite Agreement is of no relevance is untenable as the very genesis on which basis the Policy was issued, was on the Stock which was hypothecated to the Bank and the said fact was clearly reflected in the main Policy. 17. Now we come to the second contention of the Learned Counsel for the Insurance Company that the quantum of stock itself is suspect as large volumes of it had already been removed from time to time by different farmers. Contesting the submission, Learned Senior Counsel appearing for the Complainants, submitted that whatever stock was removed from the Cold Storage, it was clearly reflected in the ledgers maintained by the Cold Storage. The said stand was duly endorsed by Learned Counsel appearing for the Bank. We glanced through the ledger accounts and compared the statements shown by the Learned Counsel for the Insurance Company with the statement of actual stock, which was removed and the balance stock which was still available in the Cold Storage and found no irregularities. Additionally, Learned Counsel appearing for the Bank also stated that no stock could be removed from the Cold Storage without due intimation to the Bank and that whatever produce was removed and sold, the farmers had discharged the proportionate loan amounts. Ledgers show maintenance of the accounts of the farmers in alphabetical order, with the bag numbers, the type of stock, the dates and the quantity of the stock. Therefore, as far as the quantum of stock is concerned, we are convinced that the Complainants have successfully established that no stock was removed clandestinely and that whatever stock had been removed, it was in the knowledge of the Cold Storage and the Bank. As far as the contention of the Learned Counsel that the Cold Storage first issued the receipt and then the Bank entered into an Agreement with the Complainants and therefore, there was collusion between them, cannot be sustained, as the material on record proves that the loan was sanctioned on the basis of the stocks kept in the Cold Storage. The procedure involved the farmer going to the Cold Storage; depositing his goods; obtaining a GRN Receipt and then approaching the Bank, which after inspection, would sanction the loan on hypothecation of these goods. This fact further gets substantiated from the observation of the Surveyor, noted in his report at Page 21, under the heading “Procedure followed by the Insured in maintenance of records”. For sake of ready reference the same is reproduced hereunder: “Procedure followed by the Insured in maintenance of records We give below our observation (as reported by the Insured) on the procedure adopted by the Insured based on the scrutiny of records maintained by them. - The Insured receives the stocks from the party at their Cold Storage. These stocks are stored inside the Cold Storage chamber and the location of storage is entered in the GRN prepared by the Insured with all the necessary details.
- Simultaneously each and every bag is marked with physical identification of the GRN No., total no. of bags receives in the lot and the special code relating to the party, for easy identification.
- GRN is handed over to the party, which is the main document issued by the Insured for storage of goods at the Insured’s Cold Storage.
- The details of stocks received made in GRN are also made in the Inward Register.
- Insured’s starts the GRN nos. from 1 year for every calendar year as per their convenience. The details culled out from the GRN books are tabulated below.
Year | Starting | Ending | | GRN NO. | Date | GRN NO. | Date | 2011 | 1 | 14-01-11 | 438 | 16-07-11 | 2012 | 1 | 11-01-12 | 523 | 24-04-12 | 2013 | 1 | 10-01-13 | 319 | 06-06-13 |
- If the party intends to avail loans from the Bank by pledging the stocks stored at the Insured’s Cold Storage, Warehouse Receipt is provided to the party by the Insured.
The Insured reported that they make sure that GRN No. &Warehouse Receipt No. remains same for each of the consignment received by them. If Bank loans are not availed by the party, then the Warehouse Receipt No. relating to the GRN No. is retained and not used by the Insured. - At the time of delivery, based on the GRN & Warehouse Receipt produced by the party, the Gate pass is prepared by the, Rental receipt and collection of rent is made for the storage based on the duration of storage. However, entries relating to delivery are not made on the GRN or the Warehouse or the Inward Register, maintained by the Insured.
- Entries relating to the receipt or delivery of the stocks are maintained in the Party Ledger for stocks and cumulatively maintained the Stock Register.
- Accounting entries are made in TALLY by the Insured.”
Hence, the Insurance Company was well aware of the procedure adopted for the deposit of stock; the sanction, disbursement and discharge of the loan and therefore the submission on behalf of the Insurance Company that they had no knowledge about the ownership of the Stock and that ‘Goods held in Trust’ is excluded, is rejected. 18. Now we advert to the issue of maintenance and production of records by the Cold Storage. Learned Counsel appearing for the Insurance Company submitted that the outward registers and the corresponding ledgers were never maintained or furnished to the Surveyor. Learned Senior Counsel appearing for the Cold Storage drew our attention to page 29 of the Survey Report and also the letter dated 14.01.2014, which bears the actual date of the incident when the stock record, the inward registers, the GRN and the Gate Passes were handed over to the Surveyor and duly acknowledged. The Surveyor himself acknowledges the receipt of the documents, which is reflected in Page 29 of his report and reads as follows: “DELAY IN SUBMITTING THE DOCUMENTS & REGISTERES MAINTAINED In any Cold Storage, certain documents/registers are normally maintained relating to their day to day activities to monitor their business. The details of delay made by the Insured for submitting such documents relating to the claim are discussed below. - The following documents/registers/records maintained by the Insured were handed over to the Insurers, M/s UIIC., DO., Bellary, on 14.01.14.
- Stock record from 01.04.13 to 13.01.14.
- Inward register from 10.01.13 to 06.06.13.
- Farmer wise ledger for stocks with index from page nos. 1 to 457.
- Goods receipt note from nos. 1, dated 10.01.13 to 319, dated 06.06.13.
- Gate Pass from nos. 501, dated 01.04.13 to 719 dated 04.01.14”.
19. It is further relevant to mention that the Surveyor himself noted on 18.01.2014, i.e. four days after the incident that the following documents/registers were provided to him: - .............. Finally at 5.00 pm on 18.01.14, we were provided with
the following documents/registers/records only. - Bonds relating to FY 2011-12 with book nos. 1,2,3,4, & 5.
- Bonds relating to FY 2012-13 with book nos. 1,2,3,4 & 5.
- Bonds relating to FY 2013-14 with book nos. 1,2& 3.
(All the above Bonds were handed over to M/s UIIC, DO., Bellary) - Farmer rental ledger/register for FY 2013-14.
- Annual Income Tax returns for FY 2011-12 & FY 2012-13.
- The Insured had promised to submit the following pending documents/registers/records to the Insurers M/s UIIC., DO., Bellary by 20.01.14 (Monday).
For FY 2012-13 & FY 2013-14 - Cash Book
- Ledger
- Rental receipt book.
- Outward register.
For FY 2012-13 - Stock record.
- Former wise ledger for stocks.
- Inward register.
- Goods receipt note.
- Gate pass”.
20. Learned Counsel for the Insurance Company vehemently argued that the rental receipts, the cash books and the ledgers for the year 2012 were not produced. This submission is factually incorrect as the letter dated 10.02.2014 (exhibited as R-9 in the State Commission) shows the following books were handed over to the Surveyor. Ref. No.: Date:10/2/2014 To The Rank Surveyor Pvt. Ltd. 1, 9th Lane, Indira Nagar Adyar, CHENNAI. Respected Sir, We are handing over the following files all are original Books into your custody as per your demand, are as follows:- - Inward Register for the year 2011 and 2012 (1 Book)
- Partywise Ledger for the year 2011 (1 Book)
3) Partywise Ledger for the year 2012 (1 Book) - Goods receipt Book for the year 2011 (5 Books)
- Goods receipt Book for the year 2012 (6 Books)
- Gate pass for the year 2011 (2 Books)
- Gate pass for the year 2012 (2 Books)
- Rental Income Receipts for the year 2011 (2 Books)
- Rental Income Receipts for the year 2012 (3 Books)
- Day Book, Cash book, Ledger Book for the year 2011
(3 books) - Day Book, Cash Book, Ledger Book for the year 2012
(3 books) Outward Register details are mentioned in the individual Party with ledger books. Yours faithfully Sd/- Received the original documents subject to verification Sd/- 12/02/14” 21. It is pertinent to note that the same has been acknowledged and also stamped by the Surveyor and therefore, the contention of the Insurance Company that the relevant books and ledgers were not maintained/produced to the Surveyor is unsustainable. 22. The next bone of contention raised by the Insurance Company is that the State Commission has erred in taking into consideration the report given by the Electrical Inspector, the Police Investigation and the Forensic Science Laboratory in arriving at a conclusion in paragraph 43 of the impugned order that the Complainants in all these cases have consistently proved that the incident occurred on account of electrical short circuit. He vehemently argued that the Police report was no report in the eyes of law; the report was merely a letter written by the Police authorities to the Tehsildar, Bellary; that the statement of the witnesses shows that the Cold Storage owner had made up his mind and set up a case of accidental fire by electrical short circuit; that M/s. Truth Labs and the findings of the IIT note that the derived temperature raised did not support the physical condition of the structure and the volumetric analysis; that there is no co-relation between the physical debris after the fire and the quantity of stock available before the fire; that the claim was not genuine and clearly contradicts condition No. 8 of the Policy. He argued that report of the Fire Brigade, without any investigation being done, concluded that the “fire occurred due to electrical short circuiting.” He further contended that the ‘details of property involved and lost in the fire accident’ was also recorded by the Fire Brigade and it is not understood from where the Fire Brigade obtained the specific details. We note that the Fire Brigade has given this information based on its initial observation and this report alone does not conclude the cause of fire and hence the observation made in the Report is to be read together with the findings given by the other investigation agencies and Authorities. 23. It is the case of the Insurance Company that the report given by the Electrical Inspectorate, Government of Karnataka on 26.02.2014 is based on surmises and conjectures and does not really conclude that the cause of fire was due to electrical short circuit. Learned Counsel for the Insurance Company drew our attention to the final opinion given in the report which reads as follows: Opinion and violation of rules: The electrification of lighting circuits are not in proper form. There are more chances of damaging the electrical wires as the mice and rat are more in numbers can bite the wires and insulations. So the phase and neutral wires may come into contact each other and which may result into this Electrical Short Circuit. These are the reasons and also our opinion for electrical short circuit”. 24. It was contended that as per the English translation which has been provided by the Cold Storage it is stated that electric short circuit may have initiated the fire. Learned Senior Counsel appearing for the Cold Storage submitted that the actual translation of the report specifies that the said fire accident occurred due to electrical short circuit. The translation that was submitted to the Bench during the time of final arguments with a copy to the Insurance Company is reproduced as hereunder: “Opinion and contravention of rules: It is opined that the electric facility of the lighting circuit not being proper and there is a possibility that the rats and mice being present in large numbers, that the insulations of wirte being bitten by them, and the insulations of the electric supply have been damaged, the metal wires have come into contact with each other and has caused short circuit and caused this accident”. The issue raised by the learned counsel for the Insurance Company is that the usage of word ‘may’ conveys that the report was not conclusive and hence, it could not be relied upon. Even if we take into consideration the argument of the Insurance Company that the second translation is not true and correct, it is observed that the report of the Electrical Inspectorate cannot be read in isolation and should be read together with the findings given by the Forensic Science Laboratory and the Police Report. 25. It is pertinent to note that the Surveyor in his reply to the interrogatory question 10(f) has replied that he was in agreement with the opinion of the Electrical Inspector, Bellary. The Surveyor’s reply to the interrogation relevant to the cause of fire is reproduced as follows: “7. You have stated at para 5 of the affidavit that, “I submit that, the Insured has stated in the claim form that the cause of fire as ‘electrical short circuit’. However, the main panel board located in the compressor room and fuses of the transformer supplying power to the cold storage were found intact. Hence short circuit being the cause of fire is ruled out. Questions: - Whether you noticed or not noticed tripping of 5 MCBs in the panel board.
-
- The Deputy Chief Electrical Inspector, Bellary has categorically stated in the report that, totally 5 MCBs were tripped in the panel board. Whether your team noticed the said tripping or not.
- Do you agree that, when the MCBs are tripped, the question of blacking, melting etc., does not arise as the very purpose of installing the MCBs is to get tripped , when the electrical wiring running from that MCB line is affected in any manner, such as on account of short circuit,
- Do you agree that, when once it is tripped, the electricity becomes dead at that point and avoid any damage like blackening, melting etc. and there is no question of anything happening to the transformer as the transformer is at a distance from the accident building.
- Why your Expert Team has not discussed with the Deputy Chief Electrical Inspector, Bellary, when the Deputy Chief Electrical Inspector in his report dated 26.02.2014 submitted to the government categorically stated at para 20 that, wearing out of installation has taken placed on account of biting by the rats, and on account of said wearing out of installation, two neutral wires happened to come in contact, resulting in emergence of fire sparks are evident for short circuit.
10 (f) Answers: We are in agreement with the opinion of the Electrical Inspector Bellary. The presence of rodents such as rats & mice in great numbers gnawing the electrical wires resulting in frequent short circuit and instantaneous tripping of MCB, cutting of power supply. The Insured’s cold storage has been functioning from the year 2007. In the 7 years service many short circuits due to presence of mice and rats in good number gnawing the electrical wiring would have happened. But no incident of fire has ever been reported. We also do not discount the occurrence of a short circuit in the subject case especially the MCBs have been found in tripped condition by the Electrical Inspector of Electrical inspectorate of Government of Karnataka. Our observations is that such a short circuit alone could not have resulted in the colossal fire accident. This proves the fire has been set by human intervention using fire accelerant. (Emphasis supplied) 26. Having gone through the Report and opinion given by the Electrical Inspectorate of Karnataka, we are of the considered view that the Report concluding that the fire could be due to Electric Short Circuit is based on an elaborate co-relation of the pieces of evidence available at the site after the incident and there is reason to doubt its veracity. On the contrary, at the cost of repetition, it may be noted that the Surveyor has not addressed himself to the reasons as to why the aforenoted reports given by Competent Authorities could not be relied upon. Pertinently, it can also be deciphered from his replies to the interrogatories that he seemed to be in agreement with the opinion of the Electrical Inspector regarding the presence of rodents such as rats and mice in great numbers, gnawing the electrical wires resulting in frequent short circuiting. As a matter of fact, the said replies lay to rest the submission that there was no physical evidence of dead rodents in the debris. It is also pertinent to mention here that the Insurance Company did not choose to challenge any of these reports. 27. It is trite that ordinarily the burden of proving the fact rests on the party who asserts the affirmative issues and not on the party who denies it. Nevertheless, there is distinction between the phrase ‘burden of proof’ and ‘onus of proof’. Explaining the said fine distinction in A. Raghavamma and Anr. Vs. A. Chenchamma and Anr. AIR 1964 SC 136, a three Judge Bench of the Hon’ble Supreme Court held that “there is essential distinction between burden of proof and onus of proof. Burden of proof lies on the person who has to prove a fact and it never shifts, but the onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence.” 28. Bearing in mind the aforenoted fundamental principle, in our view, on production of the Report of the Fire Brigade Department, authenticated by the Police Department and the Forensic Science Laboratory, the Complainants had substantiated their stand that the cause of fire was electric short circuit. In our view, the general observations in the Surveyor’s report, contesting the claim of the Complainants; relied upon by the Insurance Company fall short of proving the actual cause of the fire, according to their understanding. In that view of the matter, we do not find any illegality in the decision of the State Commission in placing reliance on the aforenoted reports for arriving at the conclusion that the cause of fire was electric short circuit. Hence, the said finding is affirmed. 29. Learned Counsel for the Insurance Company, justifying the repudiation on the ground of breach of condition 8 in the Policy, argued that the presence of combustible materials, like Thermocol, wooden partitions and the grain stored inside could have acted as a catalyst in spreading of fire. It is a well known fact that in order to maintain the temperature at a certain level, for preservation of the stored agricultural produce, the Cold Storage has to be insulated with materials like Thermocol, Bitumen etc. It is also not in dispute that such materials being combustible, do tend to enhance the fire. But it is nobody’s case that such materials were deliberately brought to the premises and used for putting the godown to fire in contravention with what was actually meant to be used for running a Cold Storage unit, as is sought to be made out. During the course of hearing, on a pointed query on the usage of these materials in the Cold Storages, Learned Senior Counsel for the Cold Storage submitted that the Cold Storage has six floors and due care is taken to ensure that there was no chemical reaction which affects the safety and quality of goods. It was stated that a buffer zone has to be created by sandwiching Tar between two Thermocol sheets, in addition to use of other preventive scientific and technical measures. Temperature, air and light is always controlled to suit the parameters of maintaining the produce at the required temperature. Electricity is the only source of ‘driving’ power to provide facilitation of control of temperature in the Cold Storage and internal supply lines to each floor by using ISI approved quality material, which was certified by both the Bank and the Insurer. 30. It is relevant to note that the preliminary Surveyor Mr. K. Srinivas has stated in his report that the fire was due to electrical short circuit. In his reply to the interrogatories, filed before the State Commission, he stated that: the Fire Brigade Force was in operation right from the first day; when he visited the site at 10.00 a.m. on 14.01.2014, there was dense smoke in the first floor, which was also spreading to the other floors; the Police Officials and Fire Brigade Officials did not permit any body going near the fire-affected area in the building and that he had not seen the report dated 19.09.2014, submitted by the Police Department. To reiterate, the Insurance Company has not challenged either the report of the Fire Brigade or the Police Department or that of the Electricity Engineer and have subsequently raised all aforesaid objections, which were obviously after thought. 31. The Counsel for the Insurance Company vehemently urged that the report given by the Forensic Laboratory cannot be relied upon as it was based on assumptions and presumptions to the effect that the electrical short circuit ‘may’ have occurred due to biting of wire by rats and mice, when there was no evidence that any remains of rats and mice were found in the debris at the incident site. This issue has already been addressed in Para 28 of this order. Learned Counsel submitted that the Forensic Team had visited the scene on 25.02.2014 and on 26.02.2014, i.e., after more than five weeks of the date of incident, and therefore, their observation that debris was found scattered on the ground floor and it was examined layer by layer and there was no smell of accelerants such as kerosene, diesel and petrol, is without any basis. 32. We deem it necessary to reproduce the report issued by the Forensic Science Laboratory, Bangalore, a Government Authority, for better understanding of the case: “ Brief Facts of the case: It was reported by the police that Sree Devi cold storage. Ind. Pvt. Ltd. Located at plot No. 108/191, Mundaragi, Industrial area was completely gutted in fire. The red chillies, ground nuts, jowar, coriander seeds, tamarind and maize etc., storage godown were completely destroyed due to fire accident. Examination of the Crime Scene: The fire accident had taken place at Sree Devi Cold Storage Ind. Pvt. Ltd., Plot No. 108/191, Mundaragi, Industrial Area, KIADB second Phase, Bangalore Road, Bellary, which comes under jurisdiction of Bellary Rural PS. ON examination of the said building, it was noted that, - It was reported that fire was first seen at 12.45 am at 6th floor in the cold storage and spread to the remaining part of the building.
- The building is facing towards north direction. The front and the side walls of the building were found collapsed by the fire force in order to enter into the building.
- The cold storage was constructed with six floors. Out of which the ground floor, and the top floor are provided with concrete ceiling and remaining floors were partitioned with wooden ceiling. The walls and pillars of the building were said to be made up of sandwiching the thermocol and tar in between the concrete in order to maintain the cooling effect.
- The right side and left side walls were stained with soot and blackened up to ceiling level.
- There was an “U” pattern of smoke was seen on the outer aspect of the front right of the 6th floor. Presence of U type of smoke pattern indicating that the fire appears to have originated at the front right side top floor of the building.
- The ground floor was completely filled with debris, ash and burnt coolant materials. The pillars were found burnt and skeletonized. The spalling effect is observed on the pillars.
- The wooden partition floors provided at first, second, third, fourth and fifth floor were completely burnt and collapsed.
- On examination of the firing spot, it is noted that the inner side of the cold storage was completely burnt and charred.
- The skeletonized pillars were found bent and decolorized due to extreme heat.
- The debris found scattered on the ground floor was examined layer by layer at various places and noted that no smell of accelerants such as kerosene, diesel and petrol.
- On examination of the ground floor pillars and out side of the building, it was noted that no symptoms of explosion all around the building.
- Ramanents of explosives were not detected during search of the ground floor.
- The study of photographs taken at the time of incident in this case, the color of flame is brick red which not only suggestive of the temperature appears to have raised upto 2000oC but also presence of flash over fire in the building.
- The smoke on the right side wall of the building and on the front side of the building indicates that the fire might have originated inside the building.
- The emanating of smoke from the building (photo -10) indicates the presence of smoldering fire inside the building which might have further accelerated by the inlet of oxygen after breaking open the lower parts of the side walls.
From the above examination, the following observations have been made - Presence of combustible materials like thermocol (which are used to insulate the walls) pillars, wooden partitions and the grains stored inside the building could have enhanced the spread of fire.
- The congested space in the building might have accelerated the smoldering fire.
- The fire might have originated at the sixth floor front side of the building. But it was not possible to locate the exact place of origin of fire since the complete building was involved in fire.
- An electrical short circuit may have initiated the fire”. (Emphasis supplied)
33. It is pertinent to note that this Laboratory report was also not specifically challenged by the Insurance Company. 34. Learned Counsel also relied on the findings given by the Truth Labs and also the Affidavit of Mr. B. Nageshwar Rao, Professor in Department of Civil Engineering, IIT Madras and the observations made by Rank Surveyors Pvt. Ltd. in support of his contentions. The final opinion of Truth Labs and that of the Rank Surveyors Pvt. Ltd. relied upon by the Insurance Company is detailed as under: Conclusions: Based on a thorough and in-depth inspection of the incident site, forensic examinations, field investigations, documentary evidence analysis and personal evidence obtained, it is concluded that the fire occurred in M/s. Sree Devi Cold Storage, Billary on the intervening night of 13/14th January 2014. - Was not due to spontaneous combustion on account of bacterial/chemical fires.
- Was not due to electrical failure caused by short circuit.
- And was on account of extraneous ignitable fire accelerants such as kerosene used deliberately for ignition, initiation, propagation and burning of stocks in the cold storage through human intervention.
- Based on the motive, means and opportunity to carry out such malicious acts the possibility of the involvement of management in such a nefarious act cannot be ruled out.
35. Learned Senior Counsel appearing for the Cold Storage and for the Complainants vehemently argued that M/s Truth Labs arrived at these conclusions completely on surmises and conjectures, without any sound basis. It was urged that Truth Labs had admitted that they had no knowledge regarding the construction of Cold Storage and are not aware that the Cold Storage was built and insulated using Tar (Bitumen – a by-product of crude oil), with Thermocol and therefore, when it was burnt, it is but obvious that hydrocarbons, present in Tar and Thermocol, would be found. 36. Interrogatories were served by the Complainant on Mr. G.V.H.V. Prasad, Director of M/s Truth Labs shows that Dr. R. Srinivas, Chief Scientist & Head, National Centre of MASS Spectroscopy, Indian Institute of Chemical Technology, Hyderabad and his team which had done the chemical analysis. When questioned about the mode and manner in which samples were sent, it was replied that the samples were sent in a sealed envelope in which 12 separate polythene covers labelled sample 1 to 12 were kept. It was vehemently argued by Counsel for the Complainants and the Cold Storage that this report of Dr. R. Srinivas was never furnished to the Cold Storage which fact was also not rebutted by the Insurance Company. There is nothing on record which may show that this report was furnished to the Complainants or even filed before the State Commission. On a specific query as to whether ‘kerosene’ requires ‘ignition’ to initiate a fire, Mr. Prasad of M/s Truth Labs answered in the affirmative. It is interesting to note that on a pointed query in the interrogatories, as to whether he was aware that the ground floor, the top floor, the inside portion of the Cold Storage alongwith 169 pillars are installed by sandwiching Tar and Thermocol in between the concrete in order to maintain the temperature inside the entire building, housing the Cold Storage unit on each floor, he replied that ‘he was not aware of how the Cold Storage was built.’ We are of the considered view that the observations of M/s Truth Labs that Tar and Thermocol are combustible materials and contain hydrocarbons and therefore, the fire is man-made is unsustainable, particularly in the light of the fact that there is an admission by Mr. Prasad of M/s Truth Labs that he had no knowledge about the materials used in the construction and maintenance of temperature in the Cold Storage. Further, in paragraph 5(f) of their reply, it is stated by the Laboratory that their observation is based on the chemical analysis report and the hydro-carbons found in the debris sample. 37. There also appear to be some contradiction in the number of samples which were collected and sent for Gas Chromatography – Mass Spectrometry (GCMS) analysis. On page 10 of the Truth Labs report it is stated that 18 samples were collected and on the subsequent page 11, it is stated that during the second visit on 28.02.2014, the expert team collected 12 samples adjacent to the pillars and that the physical evidence collected on both the visits were sent to GCMS for analysis. However, in their reply to the interrogatories, it was stated that it was decided to send only 12 samples collected on the second visit to GCMS for analysis. It was stated by M/s Truth Labs that ‘the controlled sample was collected from a plastic bag containing fresh (unaffected) red chillies found in the burnt stock in the south-east corner of the affected premises.’ Controlled sample did not show any presence of hydro-carbons. If the hydro-carbons found in the 12th sample were because of Tar and Thermocol the controlled sample should have been positive for the presence of hydro-carbons in the other samples too, which was not the case. Admittedly, the 12 samples were collected from the area adjacent to the pillars and it is the specific pleading of the Cold Storage that hydrocarbons would be present in all the 12 samples as Tar and Thermocol was used on the ground floor alongwith 169 pillars. It is not in dispute that these 12 samples were collected from the debris next to the pillars. Be that as it may, at the cost of repetition, no combustible material by itself is ignitable which has also been admitted by M/s Truth Labs. It was construed that extraneous ignitable fire acceleration ‘such as’ kerosene was used. It was submitted that the words ‘such as’ indicate generality which should be kerosene, Tar and Thermocol but there is no conclusive documentary evidence to prove that kerosene was used for putting the godown to fire. We agree with the finding of the State Commission that the Truth Labs speaks about ‘accelerants’ of fire, which are different from the ‘ignition’ of fire. 38. It is also significant to mention that M/s Truth Labs has not given any cogent reasons for discarding the Forensic Science Laboratory report given by the Government of Karnataka. To reiterate the Forensic Science Laboratory has opined that biting of electrical insulations by rodents has resulted in wires coming into contact with one another, thereby causing short circuit. IIT, Madras visited the site for the first time on 22.03.15 which is more than one year two months after date of the incident. It is stated in the report that over-all weight of mass claimed to have combusted ‘needs further examination.’ It was argued by Counsel for the Complainants that: there was huge time gap between the testing and the date of fire accident; the assessment admitted the usage of worn and torn materials; mass combustion and its relationship with the specific calorific values are theoretical and that these calorific values are to be assessed only by a Material and Metallurgical Engineer. The report also specifies that analysis was not carried out to conclude the breaking and binding of the beams which could be due to falling of burnt Bengal Gram, Toor Dal and Halsandi Gram which are all of heavy weight. We observe from the Affidavit that there is no conclusive findings in this report that the fire was man-made which is the main ground on which the Insurance Company had repudiated the claim. Therefore, we concur with the finding of the State Commission that Dr. Nageshwar Rao’s observation about the structural stability was not relevant to determine the cause of fire; besides his having inspected the premises after more than one year of the incident. 39. Now we address ourselves to the contention of Learned Counsel for the Insurance Company that fresh good quality red chillies were sprinkled on the debris and mixed with the burnt stock to show that the stock was of premium quality. This was vehemently denied by the Cold Storage. It was stated that there was no possibility of mixing of some fresh red chillies with the debris as, firstly the fire was controlled only after four long days and consequently the Police had cordoned the building nobody was allowed to enter the premises. An inspection was also conducted by the Bank and further the initial spot Survey Report did not mention any such mixing of fresh red chillies in the debris. Moreover, such mixture would be tangible as the stock was completely burnt and these separate chillies could only be more conspicuous if they were added. We find force in the contention of the Cold Storage that the Statutory Authorities did not permit anybody to enter the site for fear of endangering human life. The preliminary Survey Report dated 13.03.2015 issued by Mr. K. Sriniwas enclosed the Fire Report, the Police Report, the Electrical Inspector Report and the Forensic Science Laboratory Report and opined that several fire tenders were found inside and outside of the compound engaged in fire fighting; that the debris from the ground floor contained stock of mainly chillies, burnt pieces of wooden reaper, crumpled aluminum sheets, Thermocol and Bricks used in wall construction. It was stated that the ground floor was engulfed in smoke and it was not possible to enter the building for the purpose of recovering portions of unaffected stocks as already more than 10 hours had elapsed and the fire was still uncontrolled. It is significant to mention here that the Surveyor admittedly visited the site on 14th,,15th,16th and 17th January, 2014, but did not report about any person entering the premises or attempting to mix some fresh red chillies in the debris. On 17.01.2014, the final Surveyor had inspected the Cold Storage which was still simmering with fire on the ground floor. Admittedly when the Director of M/s Truth Labs was questioned with regard to the approximate quantity in weight of the fresh chillies which were strewn, he answered that the weight of the fresh red chillies was not measured and that ‘small quantity’ was the word used as a comparative term. Keeping in view all the afore-noted submissions and the material on record we are of the considered view that there is no documentary evidence filed by the Insurance Company to conclusively establish that the Cold Storage owner had deliberately mixed some fresh red chillies to impress upon the Surveyor that the Stock was of premium quality. Additionally, the stock is periodically inspected by the Bank and the record in respect of the quality, quantity and rate is maintained by them. Be that as it may, admittedly the Cold Storage did not store only Byadgi Chillies. They stored produce included Bengal Gram, Toor Dal and Halsandi Gram and also Guntur Chillies. Therefore, we are of the considered view that except for some photographs placed on record, there is not an iota of any other evidence which may establish that the Cold Storage owner had mixed fresh red chillies with the debris, which produce in fact, belonged to the farmers. Therefore, we hold that the Cold Storage owner had not indulged in any kind of fraudulent activity in order to unjustly enrich himself. 40. Resultantly, for all the aforenoted reasons, we concur with the finding of the State Commission that the Complainants are “Consumers” as defined in Section 2 (1)(d) of the Act; the Insurance Company was aware of the fact that the goods were held in Trust; the name of the Bank figures in the main policy; all the documents required to be maintained were furnished to the Surveyor; some of the material for building the Cold Storage was combustible, required to maintain the required temperature; M/s Truth Labs and M/s Rank Surveyor did not give cogent reasons for rejecting the Police, Electrical Inspectorate and Forensic Science Laboratory reports; no evidence was led by the Insurance Company to prove the presence of fresh red chillies, and that it was wilfully done by the Cold Storage owner to enrich himself, when the produce belonged to the farmers; and specially in this case, the insured amount, if any, on stock will be paid by the Bank to the farmers and not to the Cold Storage; and that the Insurance Company had failed to discharge the onus of proof that the fire was not by Electric Short Circuit but from some other source. There is no material on record to evidence that the Cold Storage had colluded with the farmers. Under the circumstances, we affirm the conclusion arrived at by the State Commission that the fire was not man-made and was the caused by Electric Short Circuit. For the view we have taken above, we are of the considered opinion that the precedents cited by the Learned Counsel for the parties are clearly distinguished by the facts and hence we do not propose to burden the order by citing all the cases. The point that falls for consideration here is whether the State Commission was justified in awarding interest @14 p.a., when the Hon’ble Apex Court has decided in a catena of judgments that rate of interest should be awarded taking into consideration the lower Bank rates. Therefore, we find that the interest awarded by the State Commission @14% p.a. is excessive and the same is being reduced to @12% p.a. 41. Now, we address ourselves to the Appeals preferred by the Complainants seeking enhancement. On perusal of the documents annexed to the Complaints, it is seen that the goods are valued in each case as detailed in the respective warehouse receipt as hereunder: Sl. No. | Complaint Nos. | Complainant Name | Date of Tripartite Agreement | Nature of commodity pledged | Quantity of goods destroyed KGs | Rate per K.G. as on the date of deposit Rs. | Total value of goods destroyed Rs. | 01 | 508/2015 | Thippa Reddy | 30.08.2011 | Dabbi Chilli | 440x35kgs =15400 | 130-00 | 20,02,000/- | 02 | 509/2015 | Pompana Gowda K | 06.04.2013 | Dhaniya, Bengalgram | 462x40= 18,480-00 250x60= 15,000-00 | 80-00 36-00 | 14,78,400/- 20,18,400/- | 03 | 510/2015 | Prathap Reddy | 20.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,47,750/- | 04 | 511/2015 | Thimma Reddy | 19.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 05 | 512/2015 | Krishna Reddy Y | 30.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 06 | 513/2015 | Vasantha Reddy B | 04.01.2012 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 07 | 514/2015 | Purusotham Reddy B | 30.03.2012 | Byadgi Chilli | 415x35= 14,525-00 | 140-00 | 20,33,500/- | 08 | 515/2015 | Ramesh P | 08.05.2012 | Byadgi Chilli | 655x25= 16,375-00 | 123-00 | 20,14,125/- | 09 | 516/2015 | Vijaya Kumar | 03.03.2012 | Byadgi Chilli | 479x35= 16,765-00 | 120-00 | 20,11,800/- | 10 | 517/2015 | Srinivas | 20.09.2011 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 11 | 518/2015 | Ramakrishna | 20.09.2011 | Byadgi Chilli | 441x35= 15,435-00 | 130-00 | 20,06,550/- | 12 | 519/2015 | Basappa | 29.09.2011 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 13 | 520/2015 | Shivalingappa | 20.09.2011 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 14 | 521/2015 | Shankar Reddy | 30.03.2012 | Byadgi Chilli | 519x350= 18,165-00 | 112-00 | 20,34,480/- | 15 | 522/2015 | Lokesh | 08.09.2012 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 16 | 523/2015 | Lakshmikanth | 08.09.2011 | Dabbi Chilli | 441x35= 15,435-00 | 130-00 | 20,06,550/- | 17 | 524/2015 | Kantha Reddy S.B. | 18.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 18 | 525/2015 | Nagi Reddy P | 13.03.2013 | Byadgi Chilli | 500x30= 15,000-00 | 135-00 | 20,25,000/- | 19 | 526/2015 | Mallikarjuna | 08.03.2013 | Byadgi Chilli | 502x35= 17,570-00 | 115-00 | 20,20,550/- | 20 | 527/2015 | Chidananda | 06.03.2012 | Byadgi Dabbi Chilli | 581x35= 20,335-00 | 100-00 | 20,33,500/- | 21 | 528/2015 | Madhar Sab T | 22.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 22 | 529/2015 | Hanumantha B | 20.09.2011 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 23 | 530/2015 | Harikesh | 21.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 24 | 531/2015 | Channappa | 19.08.2011 | Byadgi Chilli | 445x35= 15,575-00 | 130-00 | 20,24,750/- | 25 | 532/2015 | Makandar Husmansab | 23.03.2013 | Byadgi Chilli | 485x30= 14,550-00 | 135-00 | 19,64,250/- | 26 | 533/2015 | Nagaraj B | 08.09.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 27 | 534/2015 | Marichanna Reddy | 19.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 28 | 535/2015 | Satyanarayana Reddy | 30.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 29 | 536/2015 | Anjinappa | 27.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 30 | 537/2015 | Hanumanthappa Reddy Y | 30.03.2012 | Byadgi Chilli | 466x35= 16,310-00 | 120-00 | 20,38,750/- | 31 | 538/2015 | Koma Reddy | 04.03.2013 | Byadgi Chilli | 500x35= 17,500-00 | 115-00 | 20,12,500/- | 32 | 539/2015 | Satya Narayana | 23.04.2012 | Byadgi Chilli | 591x35= 17,730-00 | 113-00 | 20,03,490/- | 33 | 540/2015 | Pakeer Sab | 30.03.2012 | Byadgi Chilli | 540x35= 18,900-00 | 106-00 | 20,03,400/- | 34 | 541/2015 | Karthik Reddy | 12.03.2013 | Byadgi Chilli | 500x35= 17,500-00 | 115-00 | 20,12,500/- | 35 | 542/2015 | Thimma Reddy N | 15.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 36 | 543/2015 | Sambashiva Reddy G | 31.01.2012 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 37 | 544/2015 | Veerareddy | 05.03.2013 | Byadgi Chilli | 409x35= 14,315-00 | 140-00 | 20,04,100/- | 38 | 545/2015 | Yerriswamy | 30.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 39 | 546/2015 | Shaik Naseer R | 20.03.2012 | Byadgi Chilli | 581x35= 20,335-00 | 100-00 | 20,33,500/- | 40 | 547/2015 | Prabhakar A | 20.09.2011 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 41 | 548/2015 | Yerriswamy Reddy R | 24.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 42 | 549/2015 | Srinivasalu Shetty | 14.05.2011 | Byadgi Chilli | 409x35= 14,315-00 | 140-00 | 20,04,100/- | 43 | 550/2015 | Nagi Reddy | 04.01.2012 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 44 | 551/2015 | Gadilingappa | 18.04.2011 | Byadgi Chilli | 409x35= 14,315-00 | 140-00 | 20,04,100/- | 45 | 552/2015 | Moinuddin Jamadar | 13.04.2011 | Byadgi Chilli | 545x35= 19,075-00 | 105-00 | 20,02,875/- | 46 | 553/2015 | Vannurappa | 30.03.2012 | Byadgi Chilli | 440x35= 15,400-00 | 130-00 | 20,12,500/- | 47 | 554/2015 | Narayana Reddy | 09.04.2012 | Byadgi Chilli | 632x30= 18,690-00 | 108-00 | 20,18,520/- | 48 | 555/2015 | Umakantha Reddy | 08.03.2013 | Byadgi Chilli | 500x35= 17,500-00 | 115-00 | 20,12,500/- | 49 | 556/2015 | Linga Reddy | 30.08.2011 | Dabbi Chilli | 541x35= 15,435-00 | 130-00 | 20,06,550/- | 50 | 557/2015 | Hanumanthappa G.N. | 24.08.2011 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 51 | 558/2015 | Hanumath Reddy | 30.08.2011 | Dabbi Chilli | 442x35= 15,470-00 | 130-00 | 20,11,100/- | 52 | 559/2015 | Venkateshwara Rao | 24.08.2011 | Dabbi Chilli | 441x35= 15,435-00 | 130-00 | 20,06,500/- | 53 | 560/2015 | Veerana Gouda | 26.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 54 | 561/2015 | Samba Shiva Reddy B | 16.03.2012 | Byadgi Chilli | 449x35= 15,715-00 | 130-00 | 20,42,950/- | 55 | 562/2015 | Vasu | 25.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 56 | 563/2015 | Sannaveera Reddy R | 30.03.2012 | Byadgi Chilli | 461x35= 16,135-00 | 125-00 | 20,16,875/- | 57 | 564/2015 | Thippe Swamy K | 16.03.2012 | Byadgi Chilli | 559x35= 19,565-00 | 103-00 | 20,15,195/- | 58 | 565/2015 | Veera Reddy | 29.05.2011 | Byadgi Chilli | 500x35= 17,500-00 | 115-00 | 20,12,500/- | 59 | 566/2015 | Ramalakshmi Reddy M | 16.03.2012 | Byadgi Chilli | 421x35= 14,735-00 | 130-00 | 19,15,550/- | 60 | 567/2015 | Honurappa D | 30.03.2012 | Dabbi Chilli | 500x35= 17,500-00 | 115-00 | 20,12,500/- | 61 | 568/2015 | Janardhana A | 08.09.2011 | Dabbi Chilli | 441x35= 15,435-00 | 130-00 | 20,06,550/- | 62 | 569/2015 | Nagendra | 04.01.2012 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 63 | 570/2015 | Manjunatha | 13.03.2012 | Byadgi Chilli | 552x35= 19,320-00 | 104-00 | 20,09,280/- | 64 | 571/2015 | Govinda Reddy B | 11.03.2011 | Daniya | 721x45= 32,445-00 | 62-00 | 20,11,590/- | 65 | 572/2015 | Shivaiah Y | 31.01.2012 | Dabbi Chilli | 440x35= 15,400-00 | 130-00 | 20,02,000/- | 66 | 573/2015 | Gopal Reddy H | 15.11.2011 | Byadgi Chilli | 451x35= 15,785-00 | 130-00 | 20,52,050/- | 67 | 574/2015 | Venkatesh Reddy | 15.04.2012 | Byadgi Chilli | 503x30= 15,090-00 | 104-00 | 15,69,360/- | 68 | 575/2015 | Panduranga Reddy C | 20.03.2012 | Byadgi Chilli | 429x35= 15,015-00 | 109-00 | 16,36,635/- | 69 | 576/2015 | Ramanjananyulu | 15.11.2011 | Byadgi Chilli | 445x35= 15,575-00 | 130-00 | 20,24,750/- | 70 | 577/2015 | Veeresh V | 26.05.2012 | Byadgi Chilli | 575x30= 17,250-00 | 116-00 | 20,01,000/- | 71 | 578/2015 | Dodda Basappa | 13.03.2013 | Daniya | 478x40= 19,120-00 | 75-00 | 14,34,000/- | 72 | 579/2015 | Umamaheshwara J | 13.03.2013 | Byadgi Chilli | 495x30= 14,850-00 | 135-00 | 20,04,750/- | 73 | 580/2015 | Sattar Sab | 06.03.2012 | Byadgi Dabba& Byadgi Chilli | 495x30= 14,850-00 167x30= 5,010-00 | 120-00 55-00 | 17,82,000/- 20,57,550/- | 74 | 581/2015 | Ravi Kumar Reddy | 12.03.2013 | Byadgi Chilli | 502x35= 17,570-00 | 115-00 | 20,20,550/- | 75 | 582/2015 | Nagendra Prasad V | 05.05.2011 | Halasandi & Kandulu (Dal Gram) | 382x50= 19,100-00 858x50= 42,900-00 | 30-00 35-00 | 5,73,000/- 20,74,500/- | 76 | 583/2015 | Shivappa | 31.03.2011 | Dabbi Chilli | 358x35= 12,530-00 | 140-00 | 17,54,200/- | 77 | 584/2015 | Kari Basava Reddy | 12.04.2011 | Byadgi Chilli Guntur Chilli Bengal Gram Daniya | 92x50= 2,760-00 275x35= 9,625-00 53x50= 2,650-00 10x45= 450-00 | 100-00 80-00 36-00 75-00 | 2,76,000/- 7,70,000/- 95,400/- 11,75,150/- | 78 | 585/2015 | Srinivasa Reddy | 14.05.2011 | Byadgi Chilli | 423x35= 14,805-00 | 140-00 | 20,72,700/- | 79 | 586/2015 | Vijaya Reddy | 19.08.2011 | Dabbi Chilli | 483x35= 16,905-00 | 130-00 | 21,97,650/- | 80 | 587/2015 | Kareppa | 29.09.2011 | Byadgi Chilli | 453x35= 15,855-00 | 130-00 | 20,61,150/- | 81 | 588/2015 | Yogananda H.N. | 18.03.2013 | Daniya Kandulu (Toor Dal) | 461x40= 18,480-00 235x60= 14,100-00 | 75-00 45-00 | 13,86,000/- 20,20,100/- | 82 | 589/2015 | Dodda Thippaiah G.K. | 14.05.2012 | Byadgi Chilli | 445x30= 13,350-00 | 62-00 | 08,27,700/- | 83 | 590/2015 | Dana Reddy A | 29.09.2011 | Byadgi Chilli | 460x35= 16,100-00 | 130-00 | 20,93,000/- | 84 | 591/2015 | Srinivasa Reddy | 30.03.2012 | Byadgi Chilli | 424x35= 14,840-00 | 140-00 | 20,77,600/- | 85 | 592/2015 | Yerappa | 29.09.2011 | Byadgi Chilli | 465x35= 16,275-00 | 130-00 | 21,15,750/- | 86 | 593/2015 | Basava Reddy K | 16.11.2011 | Byadgi Chilli | 445x35= 15,575-00 | 130-00 | 20,24,750/- | 87 | 594/2015 | Hanumantha Reddy | 30.03.2011 | Dabbi Chilli | 354x35= 12,390-00 | 140-00 | 17,34,600/- | 88 | 595/2015 | Sanjeeva Reddy | 02.05.2012 | Byadgi Chilli Bengal gram Daniya | 526x30= 15,780-00 32x60= 1,920-00 17x45= 765-00 | 127-00 36-00 75-00 | 20,04,060/- 69,120/- 21,30,555/- | 89 | 596/2015 | Lakshmaiah B | 14.05.2011 | Byadgi Chilli | 440x35= 15,400-00 | 140-00 | 21,56,000/- | 90 | 597/2015 | Honnur Swamy- Loan Not availed | | | | | | 91 | 660/2015 | Mallaiah Swami S.M. | 22.05.2012 | Byadgi Chilli | 520x30= 15,660-00 | 128-00 | 20,04,480/- |
The State Commission has awarded in each Complaint, the amount mentioned in the column ‘total value of goods destroyed’, which is based on the value detailed in the respective warehouse receipt, as on the date of the Tripartite Agreement. 42. In support of his contention that the State Commission ought to have awarded the value of the stock as per the prevailing market price as on 20.01.2014, Learned Counsel for the Complainants submitted that as per the first clause in the Standard Fire and Special Perils Policy the Insurer shall pay to the insured the value of the property at the time of the happening of its destruction or the amount of such damage or its part of reinstate or replace said property or any part thereof. For example, in the case of Thippa Reddy, [Consumer Complaint No. 508 of 2015] the total sale value of goods as on 26.08.2011 was valued at ₹20,02,000/- and the State Commission has directed the Insurance Company to pay the same amounts, which was based on the market rate of the produce prevailing as on 26.08.2011. The second copy of the Warehouse Receipt evidences that the awarded the amounts which were valued by the Bank at the time of sanctioning of the loans which was based on the value as on the date of the respective Tripartite Agreements. It was submitted that this has caused gross injustice to the farmers, who have not only lost their produce but also could not get the benefit of the higher market price prevailing as on 20.01.2014. 
43. The Variety Wise Periodic Report of farmers’ produce is as follows: Variety Wise Periodic Report MARKET: BENGALURU FROM 14/12/2013 TO 14/01/2014 MARKET | COMMO-DITY | VARIETY | ARRIVALS | UNITS | MIN (Rs.) | MAX (Rs.) | BENGALURU | Alasande Gram | Alasande Gram | 1541 | Quintal | 2750 | 5200 | BENGALURU | Arccanut | other | 742 | Quintal | 10000 | 16000 | BENGALURU | Avare | Avare (Whole) | 118 | Quintal | 6800 | 8700 | BENGALURU | Avaredal | Avare Dal | 750 | Quintal | 7200 | 9000 | BENGALURU | Bajra | Hybrid | 1743 | Quintal | 1100 | 1800 | BENGALURU | Bengal Gramdal | Bengal Gram Dal | 24049 | Quintal | 3500 | 4860 | BENGALURU | Bengal gram | Average (Whole) | 8628 | Quintal | 2600 | 4000 | BENGALURU | Black Gramdal | Black Gram Dal | 25317 | Quintal | 5400 | 7500 | BENGALURU | Black gram | Black Gram (Whole) | 1691 | Quintal | 3800 | 6750 | BENGALURU | Chennangidal | Chennagidal | 9931 | Quintal | 4600 | 5660 | BENGALURU | Coconut (Per 1000) | Coconut | 2299350 | Quintal | 3000 | 14000 | BENGALURU | Copra | Copra | 26 | Quintal | 6000 | 7500 | BENGALURU | Coriander Seed | Coriander Seed | 4221 | Quintal | 4200 | 13000 | BENGALURU | Dry Chillies | Byadgi | 1911 | Quintal | 3200 | 17300 | BENGALURU | Dry Chillies | Guntur | 5858 | Quintal | 2000 | 11100 | BENGALURU | Dry Chillies | Mankattu | 615 | Quintal | 2100 | 11000 | BENGALURU | Dry Grapes | Dry Grapes | 172 | Quintal | 9000 | 15000 | BENGALURU | Garlic | Garlic | 34428 | Quintal | 1800 | 7500 | BENGALURU | Green Ginger | Green Ginger | 6253 | Quintal | 2500 | 6600 | BENGALURU | Green Gramdal | Green Gramdal | 14885 | Quintal | 7000 | 8500 | BENGALURU | Green Peas | Green Peas | 10613 | Quintal | 3800 | 7500 | BENGALURU | Greengram | Green Gram (Whole) | 8411 | Quintal | 5280 | 7600 | BENGALURU | Groundnut | Big (With Sheell) | 2999 | Quintal | 2800 | 4600 | BENGALURU | Groundnut Seed | Ground Nut Seed | 4219 | Quintal | 5800 | 9000 | BENGALURU | Horse Gram | Horse Gram (Whole) | 693 | Quintal | 2500 | 3900 | BENGALURU | Jaggery | Achhu | 2277 | Quintal | 2800 | 3900 | BENGALURU | Jaggery | Mudde | 11818 | Quintal | 2700 | 3900 | BENGALURU | Jowar | Jowar (White) | 3104 | Quintal | 1400 | 2750 | BENGALURU | Maize | Hybrid/ Local | 11299 | Quintal | 1100 | 1560 | BENGALURU | Methi Seeds | Methiseeds | 339 | Quintal | 2200 | 3950 | BENGALURU | Moath | Moath (W) | 1040 | Quintal | 3950 | 5700 | BENGALURU | Mustard | Other | 1418 | Quintal | 3000 | 4500 | BENGALURU | Navane | Other | 1017 | Quintal | 1350 | 1675 | BENGALURU | Onion | Bangalore Small | 42502 | Quintal | 300 | 1200 | BENGALURU | Onion | Local | 233815 | Quintal | 700 | 1500 | BENGALURU | Onion | Onion | 148800 | Quintal | 1000 | 2000 | BENGALURU | Onion | Puna | 287534 | Quintal | 600 | 1900 | BENGALURU | Paddy | Paddy | 10 | Quintal | 1500 | 1900 | BENGALURU | Pepper | Other | 138 | Quintal | 43200 | 54000 | BENGALURU | Potato | Chips | 0 | Quintal | 1400 | 3000 | BENGALURU | Potato | Local | 226007 | Quintal | 1000 | 2200 | BENGALURU | Potato | Potato | 0 | Quintal | 700 | 1850 | BENGALURU | Ragi | Fine | 7179 | Quintal | 1600 | 2200 | BENGALURU | Ragi | Medium | 0 | Quintal | 1600 | 1800 | BENGALURU | Rice | Dappa | 0 | Quintal | 1600 | 5400 | BENGALURU | Rice | Fine | 0 | Quintal | 3600 | 4900 | BENGALURU | Rice | Medium | 572903 | | 3100 | 3800 | BENGALURU | Sesamum | White | 126 | | 8500 | 15050 | BENGALURU | Soyabeen | Soyabeen | 325 | | 3120 | 3580 | BENGALURU | Tamarind Fruit | Tamarind Fruit | 1824 | | 2500 | 7800 | BENGALURU | Tur Dal | Tur Dal | 56134 | | 5200 | 7450 | BENGALURU | Turmeric | Turmeric Stick | 543 | | 5400 | 6800 | BENGALURU | Wheat | Local | 21900 | | 1650 | 2950 | | | | 4101216 | | 215500 | 372785 |
The above report shows that the range between the minimum and maximum prices for Byadgi and Guntur Chillies, Toor Dal etc. is indeed very vast and to arrive at an average price would mean construing that all the Chilli varieties are of a standard quality as on 14.01.2014. This would not only be speculative but would also be based on the assumption that the entire quantity of a specific variety of chillies and/or other produce is of the same class and characteristics. Hence, we do not find any illegality or infirmity, in the order of the State Commission in awarding value of the goods as valued by the Bank as on the date of the Tripartite Agreement. Therefore, the Appeals preferred by the Complainants seeking enhancement of compensation based on the Market Committee Report dated 14.01.2014, fail and are dismissed accordingly. 44. We may now take up the Appeals by the Bank, which is seeking direction for deposit of the amounts, found to be due to each of the Complainants, with them, under the Tripartite Agreement. 45. Learned Counsel appearing for Bank submitted that in accordance with the provisions of the Tripartite Agreement, the Cold Storage shall indemnify the produce/goods against the casualty or accident by any means, to cover the risk and also to cover the loan amount in order to avoid any loss at the cost of the farmers, till the release order/repayment of the loan amount. He drew our attention to the ‘Agreed Bank Clause’ which stipulates that upon any monies becoming payable under this Policy, the same shall be paid by the Insurance Company to the Bank and a part of the monies so paid, as may be related to the interests of other parties insured hereunder shall be received by the Bank as agents for such other parties; that the receipt of the Bank shall be complete discharge of the Company thereof, and shall be binding on all parties insured hereunder. The Clause explains that the Bank shall mean the first named Financial Institution/Bank named in the Policy. 46. It was inter alia submitted that to the extent of the produce stored and given as security, the Insurance Company is bound to pay the said outstanding amounts to the Bank along with interest. Learned Counsel submitted that the State Commission has erred in not taking into consideration the ‘Agreed Bank Clause’ and has misconstrued the terms and conditions of the Tripartite Agreement in giving the finding that the Bank was deficient in its service in not taking any steps after the expiry of 12 months and accordingly, imposed costs of ₹10,000/- to be paid jointly and severally. He vehemently argued that there was no specific clause in the Tripartite Agreement which cast an obligation in law upon the Bank to sell the pledged goods in the event of non-payment of the loan amount within a period of 12 months by the original Complainants. He contended that the said Clause was only an ‘enabling clause’ leaving the option with the Bank to sell the goods, but at the time to ensure that the goods stored were not perishable in nature and that the Bank had not taken any steps to sell the produce as the farmers were paying interest and further to support the loanees who were waiting for the right market price to sell their produce and discharge their loans. 47. He further contended that Section 21A of the Banking Regulations Act, 1949 stipulates that notwithstanding anything contained in the Usurious Loans Act, 1918, or any other law relating to indebtedness in force in any State, the transaction between the Banking Company and its debtor shall not be reopened by any Court on the ground that the rate of interest charged by the Banking Company in respect of such transaction is excessive. He relied on paras 23 and 52 of the judgement of the Hon’ble Apex court in Jayant Verma & Ors. Vs. Union of India & Ors., [2018 SCC Online SC 124], and para 71 wherein the Hon’ble Supreme Court has observed as follows: “We declare Section 21A of the Banking Regulation Act to be valid as it is part of an enactment which, in pith and substance, is relatable to Entry 45, List I of the Seventh Schedule to the Constitution. However, insofar as Section 21A incidentally encroaches upon the field of relief of agricultural indebtedness, set out in Entry 30, List II, it will not operate only in States where there is a State Debt Relief Act which deals with the subject matter of relief of agricultural indebtedness, where the State Debt Relief Act covers debts due to banks, as defined in those Acts. In States where the State Debt Relief Act does not apply to banks at all, or applies only to certain specified banks, Section 21A will, in the former situation, apply in such States, and, in the latter situation, apply only in respect of loans made to agriculturists where such loans are given by banks other than the banks specified or covered by the concerned State Debt Relief Act, as the case may be.” He submitted that Section 21A of the Banking Regulations Act, 1949 will continue to operate in States, where the State Debt Relief Act does not apply to Banks. 48. As against this argument, Learned Counsel appearing for the Complainants submitted that the Bank did not take any steps after the expiry of 12 months, the initial period, to sell the goods or issue a notice to the farmers to get the loan discharged. The goods are pledged and after the fire the goods ceased to be pawned with the cold storage. Learned Counsel vehemently argued that the right which accrued after 12 months was not exercised by the Bank and therefore, it cannot now charge interest as so much time has lapsed. It is submitted that the Pawnee does not have the goods any more and the Bank cannot demand interest after the fire. Further the Bank has not raised all these contentions in its Written Version filed before the State Commission. Learned Sr. Counsel for the Complainants relied on the same judgement and submitted that Section 21A encroaches upon the field of relief of agricultural indebtedness. It stipulates that where the State Debt Relief Act does not apply to Banks at all, or applies only to certain specified Banks, Section 21A will, in the former situation, apply in such States, and, in the latter situation, apply only in respect of loans made to agriculturists where such loans are given by Banks other than the Banks specified or covered by the concerned State Debt Relief Act, as the case may be. 49. The contention of Learned Counsel appearing for the Bank is that with regard to the provisions contained in Section 8 of the Karnataka Debt Relief Act, 1976 and Section 10 of the Karnataka Debt Relief Act, 1980, Section 21A of the Banking Regulations Act 1949 is not applicable to this Bank, as it is not a ‘Banking Company’. At this juncture, it is important to reproduce “Business of Banking Companies” as defined in Part II of the Banking Regulations Act, 1949. “6. Forms of business in which banking companies may engage (1) In addition to the business of banking, a banking company may engage in any one or more of the following forms of business, namely:- (a) the borrowing, raising, or taking up of money; the lending or advancing of money either upon or without security; the drawing, making, accepting, discounting, buying, selling, collecting and dealing in bills of exchange, hundies, promissory notes, coupons, drafts, bills of lading, railway receipts, warrants, debentures, certificates, scrips and other instruments and securities whether transferable or negotiable or not; the granting and issuing of letters of credit, traveller's cheques and circular notes; the buying, selling and dealing in bullion and specie; the buying and selling of foreign exchange including foreign bank notes; the acquiring, holding, issuing on commission, underwriting and dealing in stock, funds, shares, debentures, debenture stock, bonds, obligations, securities and investments of all kinds; the purchasing and selling of bonds, scrips or other forms of securities on behalf of constituents or others, the negotiating of loans and advances; the receiving of all kinds of bonds, scrips or valuables on deposit or for safe custody or otherwise; the providing of safe deposit vaults; the collecting and transmitting of money and securities etc.” 50. In the light of the aforenoted activities and some of the forms of business in which “Banking Companies” may engage, we are of the view that the said Bank does fall within the definition of ‘Banking Company’. 51. Having observed so, we may now examine the issue relating to the quantum of amount payable to the Bank and to the Complainants. According to the ‘Agreed Bank Clause’ any monies payable under the Policy shall be paid by the Insurance Company to the Bank. Prayer of the farmers in these cases, is that had the fire accident not taken place, they would have got a better price for their produce and would have been able to discharge their loans. This submission is supported by the Agricultural Market Committee Price Report filed before us. In the instant case on account of fire accident the farmers not only lost their produce but got incapacitated to discharge their loan which resulted in indebtedness. Debt can become a distress phenomenon when a farmer’s crop fails due to natural calamities or due to unforeseen reasons making it impossible for him to discharge his debt. In the instant cases, the Complainants lost their entire agricultural produce, which was reduced to debris on account of the devastating fire accident, leading to a situation where the interest has become a heavy liability on them as the loan was taken from the Bank at an interest rate of 13.5% p.a. If the Bank insists on payment of interest for this period as well, the accumulated liability of the Complainants towards the principal and the interest would be unbearable as agriculture is stated to be their only means of livelihood, as pleaded by the Complainants. Learned Counsel appearing for the Complainants submitted that to meet the ends of Justice the Principal Amount can be directed to be paid to the Bank towards discharge of the Loan and the balance amount, if any, payable in terms of this order, may be permitted to be retained with the farmer. 52. In our view, having regard to the peculiar facts at hand, where the farmers appear to have suffered substantial losses on account of their entire produce, stored with the Cold Storage with the hope that they may be able to sell it at a better price, having perished in the fire, it is a fit case, where the Bank must consider waiving off the interest element on the loan advanced in respect of the produce in question, particularly in the light of the ratio of the decision of the Hon’ble Supreme Court in Jayant Verma’s case (supra), which appear to be on all fours to the facts at hand. Accordingly, we direct that out of the amount due to be paid by the Insurance Company, to each of the Complainants, the principal amount of loan advanced by the Bank to the Complainants, in respect of the subject stock, shall be remitted by the Insurance Company to the Bank, within four weeks of receipt of information in this regard from the Bank and the balance amount shall be remitted to each of the Complainants within the same time, failing which the amount shall attract interest @ 13% p.a. payable for the same period as directed by the State Commission i.e from six months from the date of the incident till the date of realization.The Bank is hereby directed to communicate to the Insurance Company the details of the principal amount due to it from each of the Complainants, within two weeks of receipt of a copy of this order. Since Cold Storage had not chosen to file an Appeal, we refrain from commenting about their liability. 53. For all the aforenoted reasons, the Appeals preferred by the Insurance Company are allowed in part only to the extent of reduction of the interest payable from 14% p.a. to 12% p.a.; the Appeals preferred by the Complainants seeking enhancement are dismissed; the Appeal preferred by the Bank is partly allowed with the direction to the Insurance Company to deposit the Principal Amount with the Bank and pay the interest amount @12% p.a. to the Complainants. In addition, we do not find any deficiency in the conduct of the Bank and hence the cost imposed qua the Bank is set aside. Order of the State Commission is modified to the extent indicated above. 54. Having regard to the facts and circumstances of the case, and the fact that the statutory amounts deposited by the Appellants in each of the Appeals is a substantial amount, we direct that it would be open to the Appellants to withdraw the amounts so deposited. |
