1.      Heard Mr. Aman Nagdrajog, Advocate, for the complainant and Mr. Anand Sharma, Advocate, for the opposite party.

2.      M/s. Kayakalp Agencies has filed above complaint, for directing Syndicate Bank (now Canara Bank) to pay (i) Rs.3.50 crores with interest @18% per annum from 01.01.2018 till the date of payment, towards loss of stock due to fire; (ii) Rs.5000000/-, towards business loss; (iii) Rs.2500000/-, as compensation for mental agony and harassment; (iv) Rs.250000/-, as litigation costs; and (v) any other relief which is deemed fit and proper in the facts and circumstance of the case.

3.      The facts as stated in the complaint and emerged from the documents attached with it are that M/s. Kayakalp Agencies (the complainant) was a proprietorship concern and doing wholesale business of supplying of Dog-vaccines, Dog-foods, Dog-sweaters and Veterinary medicines, from its shop-cum-godown at Shop No.3, Geetanjali Apartment, 12/5, Jawar Compound, Ushaganj, Indore, since 2011, for earning livelihood by way of self-employment of its proprietor Vipin Jain. The complainant obtained Shopkeepers Insurance Policy No.190401/48/14/34/00000349, for the period of 13.10.2014 to 12.10.2015, for sum insured of Rs.1500000/-, for the perils fire and allied perils and Rs.1500000/-, for burglary and house breaking and Rs.100000/-, for loss in transit, from United India Insurance Company Limited. The complainant applied for ‘Credit Facilities’ of Rs.200/- lacs, from Syndicate Bank (now merged with Canara Bank), on 06.11.2015. Syndicate Bank sanctioned ‘Secured Over-Draft’ limit of Rs.200/- lacs on 21.12.2015 for the period up to 30.11.2017, on hypothecation of stock, book debts and other current assets both present and future and collateral security by way of equitable mortgage of commercial plot situated at Sanwer, district Indore. The complainant completed the formalities and Syndicate Bank opened Current Account No.78001400000448 in the name of the complainant at Main Branch, Indore, in order to avail the credit facility. Syndicate Bank kept all the documents relating to sanction of credit facility with it. The complainant inquired from the official of the bank regarding insurance policy then they assured that the stock was insured under the policy. On 01.01.2018 at about 2:00 hours, fire was boke up due to electric short circuit in the shop-cum-godown of the complainant at Shop No.3, above. The residents of Geetanjali Apartments noticed smoke emanating from the shop and informed the proprietor and Fire Service Station at 3:44 hours. Three fire tenders were deputed on the spot at 3:57 hours, which doused the fire within 30 minutes. Entire stock stored in the shop was burnt/damaged in the fire. The complainant moved an application before Syndicate Bank on 01.01.2018, informing about the fire incident, requesting to lodge a first information report to the police and set up insurance claim. The complainant also informed about the fire incident in its shop to Police Station Sanyogitaganj, Indore on 01.01.2018. After receiving information of fire incident, the bank applied for renewal of insurance policy on 01.01.2018 and deducted premium amount from the account of the complainant, of which, he had received SMS, without informing the complainant in this respect. The complainant again gave a letter dated 02.01.2018, to the Branch Manager of the bank, for appointment of the surveyor for assessment of the loss. When the complainant did not receive any response from the bank, he moved an application under Right to Information Act, 2005, seeking (i) Monthly report of Branch Manager, for last six months, (ii) Quarterly Audit Report, (iii) Video footage of the branch for the whole day of 01.01.2018, (iii) Copy of Inspection Register of Kayakalp, for last two years and (iv) All the papers, obtained for sanction of credit facility. The complainant again wrote a letters dated 09.01.2017, 25.01.2017 and 12.03.2018, seeking information in respect of step taken for insurance claim of the loss and permission for removal of the damaged medicines from the shop. The bank gave some vague reply through letter dated 04.05.2018, which was replied by the complainant on 16.05.2018. The bank supplied papers relating to credit facility on 17.05.2018, in response to application under Right to Information Act, 2005. The bank wrote a letter dated 02.06.2018, to the complainant, requiring to submit stock statement from December, 2017 to May, 2018 and clear overdue. The bank has initiated proceeding for recovery of loan before Debt Recovery Tribunal. It was incumbent upon the bank to take insurance policy of the stock under hypothecation of the bank. The bank has committed gross deficiency in service in not taking insurance of the stock as such the bank is liable to pay the damages caused to the complainant due to fire incident. Then this complaint was filed on 19.11.2018, alleging deficiency in service.

4.      The opposite party filed its written reply on 20.02.2019 and contested the complaint. The opposite party stated that the complainant applied for ‘Credit Facilities’ of Rs.200/- lacs, from Syndicate Bank on 06.11.2015. Syndicate Bank sanctioned ‘Secured Over-Draft’ limit of Rs.200/- lacs on 21.12.2015 for the period up to 30.11.2017, on hypothecation of stock, book debts and other current assets both present and future and collateral security by way of equitable mortgage of commercial plot situated at Sanwer, district Indore. The complainant completed the formalities. Syndicate Bank opened Current Account No.78001400000448 in the name of the complainant at Main Branch, Indore, in order to avail the credit facility. Jitendra Jain, the brother of the complainant, was guarantor of the loan granted to the complainant. In compliance of the circular of Reserve bank of India, hypothecated goods were insured during the period till 30.11.2017. The complainant utilized credit facility up to Rs.19781422/-. Term of the facility expired on 30.11.2017. Then the bank temporarily extended the term up to 30.12.2017 and wrote a letter dated 30.11.2017, to the complainant to submit Insurance Policy of the stock as per terms of the sanction letter. The complainant gave a letter dated 01.01.2018 to the bank to extend the facility limit for a period of 3 months and he would submit the documents for renewal in the meantime, concealing incident of fire. On the request of the complainant, term was temporarily extended and an overdraft of Rs.500000/- was sanctioned on 01.01.2018. Debiting an amount of Rs.61427/-, towards premium, the bank took Burglary Floater Insurance Policy No.1903001217P114176934, for the period of 01.01.2018 to 31.12.2018, for a sum of Rs.24100000/- and Standard Fire and Special Perils Policy No. 1903001117P114175930 for the period of 01.01.2018 to 31.12.2018, for a sum of Rs.24100000/- for two locations i.e. (i) Shop No.G-1, G-2, Amit Chambers and (ii) Shop No.3, Geetanjali Apartment were taken. The bank received letter dated 01.01.2018 through post on 03.01.2018 that fire took place in Shop No.3 in intervening night of 31.12.2017 and 01.01.2018, in which entire stock was damaged. On 31.12.2017 and 01.01.2018, the stock at Shop No.3 was not insured; the bank could not set up any insurance claim. Under Clause-12 of Facility Sanction Letter dated 21.12.2015 and Clause-8 of Hypothecation Agreement dated 22.12.2015, the complainant was under obligation to take insurance policy of the stock. The complainant stopped clearing overdue amount in his account and submitting monthly stock statement. The bank, therefore, wrote a letter dated 02.06.2018, to the complainant, requiring to submit stock statement from December, 2017 to May, 2018 and clear overdue. The officials of the bank inquired in the locality of Shop No.3 on 14.11.2018 and found that the complainant was doing its business in the name of Bhagwan Mahavir Medical Store from adjoining shop, using Cash Book of M/s. Kayakalp Agencies. The bank has initiated proceeding for recovery of its dues under Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 before Debt Recovery Tribunal, which is competent to investigate the series of conspiracy hatched by the complainant. The complaint has been malafide filed to overreach the recovery proceeding and is not maintainable. The complainant availed overdraft facility from the bank for extending his business, which was for commercial purpose and the complainant is not a consumer. The complaint is liable to be dismissed.     

5.      The complainant filed Rejoinder Reply Affidavit of Evidence of Vipin Jain and various documentary evidence. The opposite party filed Affidavit of Evidence, Affidavit of Admission/Denial of Hemant Sethi, Assistant General Manager and documentary evidence. The complainant filed a copy of letter dated 07.12.2017, asking the bank to provide Insurance Policy, through IA/7689/2022. Both the parties have filed their written synopsis.

6.      We have considered the arguments of the counsel for the parties and examined the record. Clause-12 of Facility Sanction Letter dated 21.12.2015 provides that primary and collateral securities shall be insured for full value and Bank’s interest shall be noted in the insurance policy. The firm should provide adequate insurance cover for all the stock. The insurance policies should be assigned in bank’s favour. Clause-8 of Composite Hypothecation Agreement dated 22.12.2015, provides that all the “said goods” which is subject matter of this agreement, shall be insured and kept insured by the borrower against loss or damage by fire, theft, robbery, lightening, riot, civil commutation, malicious damages, strikes and/or any other risk as the borrower may think necessary or as may be required by the bank in its discretion in the joint name of the borrower and the bank with an Insurance Company/Companies approved by the bank to the actual value of the “said goods” and the borrower shall punctually pay the premium due for such insurance and that the cover note/s and the insurance policy/policies thereof shall be delivered to the bank.

7.      Under Clause-12 of Facility Sanction Letter dated 21.12.2015 and Clause-8 of Composite Hypothecation Agreement dated 22.12.2015, obligation to take insurance policy of hypothecated good was upon the complainant but the complainant did not take insurance policy of hypothecated good as such the bank cannot be held guilty for committing deficiency in service as the bank was not under obligation to take insurance policy. While interpreting similar terms, Supreme Court in Canara Bank Vs. Leatheroid Plastic Private Limited, (2020) 5 SCC 722, held that duty to effect insurance was with the borrower and the bank could not be held responsible, if there was any loss or damage to hypothecated assets which was not adequately covered by insurance taken by the borrower. A Full Bench of this Commission in 114 of 2015 New Tyre Centre vs. Bank of India & Anr. and cross appeal No.123 of 2015 on 20.1.2022 held that if under law or under the agreement, any obligation has to be performed by a party and it was not performed by that party then other party of the agreement cannot be said to have committed deficiency in service.     

8.      The complainant, relying upon paragraph-6(e) of the written reply of the opposite party, submitted that the opposite party had admitted of taking insurance policy of the hypothecated good initially after sanction of overdraft facility in the year 2015. When the complainant informed the bank about fire incident on 01.01.2018, then Burglary Floater Insurance Policy No.1903001217P114176934, for the period of 01.01.2018 to 31.12.2018, for a sum of Rs.24100000/- and Standard Fire and Special Perils Policy No. 1903001117P114175930 for the period of 01.01.2018 to 31.12.2018, for a sum of Rs.24100000/- were taken by the bank. As the bank initially took insurance policy and subsequent to the fire incident, also took insurance policy, therefore the bank has committed negligence in not obtaining renewal of the policy on due date and the bank is responsible for loss. The complainant dispute issue of letter dated 30.11.2017 by the bank and submitted that dispatch of this letter showing as on 30.11.2017 is fabricated by the bank to rebut of his letter dated 07.12.2017, demanding insurance policy.

9.      So far as paragraph-6(e) of the written reply of the opposite party, is concerned, it is inadvertent mistake in drafting. The complainant has filed statement of account of his Current Account No.78001400000448, right from beginning till December, 2017. The complainant could not point out that premium of insurance policy was ever debited in this account prior to 01.01.2018. No bank officer will take insurance policy incurring heavy premium from his own pocket. The complainant gave a letter to the opposite party on 01.01.2018, to extend overdraft limit for a period of three months, concealing about the fire incident in his shop-cum-godown in the night of 31.12.2017 and 01.01.2018. On the request of the complainant, term was temporarily extended and an overdraft of Rs.500000/- was sanctioned on 01.01.2018 again. Debiting an amount of Rs.61427/-, towards premium, the bank took Burglary Floater Insurance Policy and Standard Fire and Special Perils Policy on 01.01.2018. There is nothing on record to prove that the complainant ever demanded insurance policy from 22.12.2015 till 30.11.2017. Term of overdraft facility had already expired on 30.11.2017. There was no occasion for the complainant to demand insurance policy on 07.12.2017. It appears that the concealing the fire incident, the complainant persuaded the bank for obtaining insurance policies on 01.01.2018. The letter dated 01.01.2018, informing fire incident was sent through post which was received in the bank on 03.01.2018. The complainant has not filed the details i.e. date and time of giving information to police station and date and time of registering FIR at police station. In the letter dated 01.01.2018, (giving information of the incident), the complainant requested the bank to lodge FIR. The complainant is trying to take advantage of inadvertent mistake in written reply and its own manoeuvring.  

                                                  O R D E R

In view of the aforesaid discussion, the complaint has no merit and is dismissed.