KERALA STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

VAZHUTHACAUD, THIRUVANANTHAPURAM

C.C. No. 95/2016

JUDGMENT DATED: 30.01.2024

PRESENT:

HON’BLE JUSTICE SRI. K. SURENDRA MOHAN     : PRESIDENT

SRI. AJITH KUMAR D.                                                    : JUDICIAL MEMBER

SRI. RADHAKRISHNAN K.R.                                        : MEMBER

COMPLAINANT:

S. Suresh Kumar, Proprietor, M/s Mentone Clothings, Thiruvananthapuram.

                 (By Adv. S. Reghukumar)

                                                Vs.

OPPOSITE PARTIES:

1. The Authorized Officer, Oriental Bank of Commerce, Opp: Ayurveda College, M.G. Road, Thiruvananthapuram.

2. The Oriental Bank of Commerce represented by its Authorized Officer, M.G. Road, Thiruvananthapuram.

                    (By Adv. Kazhakkuttom K.S. Narayanan Nair for OPs 1 & 2)

3. Divisional Manager, Oriental Insurance Company Ltd., Thiruvananthapuram.

(By Adv. V. Manikantan Nair)

JUDGMENT

SRI. AJITH KUMAR D.: JUDICIAL MEMBER

This is a complaint filed under Sec. 17 of the Consumer Protection Act, 1986.  The averments contained in the complaint in short are as follows:

The complainant is the proprietor of M/s Mentone Clothings which is engaged in the manufacture and sales of readymade shirts and other garments. The complainant had availed loan from the 1^st opposite party.  The 2^nd opposite party is the authorized officer of the 1^st opposite party.  The 3^rd opposite party is the Divisional Manager, Oriental Insurance Company Ltd.  The complainant has been conducting the firm solely for his livelihood.   He had availed a loan of Rs. 5,00,000/- under the cash credit facility and  term loans of Rs. 5,00,000/- and Rs. 3,00,000/- respectively from the 1^st opposite party.  The valuable machineries purchased by him were kept in the business premises.  The business “Mentone Clothing” had started functioning at ‘Sooryadeepam’, Manacaud which was subsequently shifted to T.C. 38/1434, Central Theatre Road, Pazhavangadi, thereafter to SWRA-45, Sreekanteswaram, Fort, later to Sreeba, Koopakaramadam Road, Thiruvananthapuram and finally to T.C. 28/2282, Near Vanchi Poor Fund, Thiruvananthapuram.  While effecting the changes of address of the unit necessary intimations were issued to the Bank authorities and the last change of address was intimated to the 1^st and 2^nd opposite parties as per letter dated 15.03.2010. 

2.  On 23.03.2010 at about 2.30 am an unexpected fire occurred at the premises and all the machineries, stock in trade and valuable records were destroyed.  From the investigation conducted by the Fire and Rescue Station it was revealed that fire occurred due to short circuit.  When the loan was taken the 2^nd opposite party had insured the business of the complainant with the 3^rd opposite party and it was the duty and responsibility of the 1^st opposite party to renew the insurance policy periodically.  The complainant was made to believe that the 2^nd opposite party was renewing the policy from time to time.  So the complainant had approached the Bank and the 3^rd opposite party and informed about the fire occurrence.  But the 3^rd opposite party informed the complainant that the insurance policy was not renewed and the renewal was effected only on 23.03.2010 midnight after the Bank authorities came to know about the fire occurrence.  There was no valid insurance for the period from 19.03.2010 to 23.03.2010.  The complainant, on 17.04.2010 issued a letter to the opposite party requesting them to do the needful.  But the Bank informed the complainant that the policy was already renewed.  The complainant has nothing to do with the renewal of the policy.  If the 1^st and 2^nd opposite parties had renewed the policy promptly the 3^rd opposite party would have assessed the loss and damages and awarded compensation.  The loan was availed in the year 2004 and thereafter the 1^st and 2^nd opposite parties were continuously renewing the policy by paying the requisite premium.  The complainant had sustained a loss of more than Rs. 15,00,000/- as his entire stock in trade and the articles stored in the premises were destroyed. On 30.04.2011 the opposite parties had sent a notice by resorting to the provisions of Sec. 13(2) of the Securitization Act.  The wife of the complainant was also implicated by the opposite parties.  On 14.06.2011 complainant had sent a letter to the opposite parties requesting to finalize the insurance claim as there was culpable negligence, omission and deficiency in service on the part of the opposite parties.  But with a view to evade from their liability, the opposite parties started taking hasty steps to proceed against the property of the complainant.  Hence the complainant had filed a writ petition before the Hon’ble High Court as WP(C) No. 17423 of 2011.  The Bank has not taken steps to honour the legitimate claim of the complainant.  Hence the complainant would seek for an order directing the opposite parties to pay Rs. 25,00,000/- as insurance claim, Rs. 15,00,000/- as compensation for deficiency of service and Rs. 25,000/- as costs. 

3. On admitting the complaint, notices were issued to the opposite parties.  The 1^st and 2^nd opposite parties had entered appearance and filed a joint written version with the following contentions:

The complaint is not maintainable either in law or on facts.  The complainant had availed cash credit facility of Rs. 3,00,000/- on 07.06.2001 which was extended to Rs. 3,50,000/- on 25.03.2003 and further enhanced to Rs. 4,00,000/- on 11.03.2004 and again enhanced to Rs. 5,00,000/- on 19.04.2005.  Housing loan facility of Rs. 2,00,000/- on 20.04.2004 and a Term loan facility of Rs. 5,00,000/- on 09.07.2005 and Rs. 3,00,000/- on 31.12.2008 also were availed.TOD facilities of Rs. 2,00,000/- each on 18.07.2005 and 28.08.2008 was also availed and the total amount claimed is Rs. 26,24,984.70 i.e; Rs. 6,31,291.70 with future monthly compounded interest at 13.25% per annum in the Cash Credit account bearing No. 03004010000210, Rs. 4,20,111/- with future monthly compounded interest at 13.25% per annum in the Term loan account bearing No. 03007011000019, Rs. 3,89,741/- with future monthly compounded interest at 15% per annum in the Housing Loan account bearing No. 03007011000392, Rs. 10,02,542/- with future monthly compounded interest at 12.25% per annum in the housing loan account bearing No. 033006010001520 and 12.25% per annum in the housing loan future monthly compounded interest at 12.25% per annum in the Housing Loan Account bearing No. 03006010001570.Since the complainant failed to repay the balance amount outstanding in the above said accounts, opposite parties 1 & 2 initiated proceedings under the SARFAESI Act, 2002 and filed an original application for  recovery of the balance outstanding in the above said accounts.

4.  The pleadings in the complaint that the stock in trade, other articles and records were completely destroyed are denied by the opposite parties.  The articles were not kept in the premise disclosed to the opposite parties.  The business premises as alleged by the complainant in all the communications sent by the complainant and during inspection was not known to the opposite parties.  So the complainant is not entitled to get any compensation in respect of the fire occurred.  As per the hypothecation agreement dated 07.06.2001 the business place is shown as T.C. 60/3509, Sooryodayam, GHS Lane, Manacaud P.O., Thiruvananthapuram.  In the hypothecation supplemental agreement dated 10.03.2004, the address where the stock was kept is shown as T.C. 38/1434, Central Theatre Road, Pazhavangadi, Thiruvananthapuram.  As per the Supplemental agreement dated 19.04.2005 the address where the stock was kept is shown as SWARA-45, Sreekanteswaram, Thiruvananthapuram.  As per the document executed by the complainant the above addresses were shown.  The complainant never informed about the shifting of business premises to T.C. 28/2282, Near Vanchi Poor Fund, where the alleged fire accident took place on 23.03.2010.  The opposite parties had never recognized the above premises as the business premises of the complainant.  In the insurance policy the address is noted as Shreeba, Opposite Ananthancaud Temple, Poovakara Madam Lane, Fort P.O., Thiruvananthapuram.  As per the terms and conditions of the contract the complainant had agreed that in case of failure to insure or to deliver policies and premium, the Bank shall be at liberty to recover dues from the complainant and it also contains a provision that in the event of rejection of any claim the opposite parties shall not be held responsible.  Therefore there is no deficiency of service.

 5.  In the FIR, the address is shown as T.C. 28/2282, Near Vanchi Poor Fund as the premises from where the alleged fire occurred.  The hypothecated stocks were kept at the premises at SWRA-45, Sreekanteswaram, Fort P.O., Thiruvananthapuram.  The opposite parties have renewed the policies from time to time and there is valid insurance from 23.03.2010 onwards.  The complainant himself has admitted that he had omitted to inform about the change of premises from where the fire accident had allegedly taken place.  If he had given the correct details renewed policy would have been taken by showing the change of venue of the business premises.  As the opposite parties never recognized this business place the complainant is not entitled to get any amount from the opposite parties.  There is no agreement between the complainant and opposite parties 1 & 2.  There was no omission, negligence, deficiency in service, dereliction of duty or unfair trade practice on the part of the opposite parties.  Hence they would seek for dismissal of the complaint. 

6.  The 3^rd opposite party filed version raising the following contentions:  The 3^rd opposite party had issued an insurance policy valid from 31.07.2007 to 30.07.2008 in the name of the complainant in the location as Aji Bhavan, T.C 28/986, SWRA-45, Sreekanteswaram, Thiruvananthapuram.  The above policy was not renewed from its expiry date, but only renewed on 20.03.2009 to 19.03.2010.  As per the policy, the location of risk is Shreeba, Opp: Ananthancaud Temple, Poovakkara Madam Lane, Fort P.O., Thiruvananthapuram.  This policy was also not renewed from its expiry date but renewed only on 23.03.2010 to 22.03.2011 vide policy No. 442301/11/2010/510 and the location of risk as per this policy is Shreeba, Opp: Ananthancaud Temple, Poovakkara Madam Lane, Fort P.O., Thiruvananthapuram.  All the above policies were renewed by the 2^nd opposite party.  The 3^rd opposite party has not issued a policy to the location of risk at T.C. 28/2282, Near Vanchi Poor Fund in the name of the complainant and hence the 3^rd opposite party is not liable to pay any amount for the loss caused due to fire. Moreover, the 2^nd opposite party, without disclosing the fire happened to T.C. 28/2282, Near Vanchi Poor Fund at about 2.30 am on 23.03.2010 renewed the policy after the lapse of 4 days for the location of risk at Shreeba, Opp: Ananthancaud Temple, Poovakkara Madam Lane, Fort P.O., Thiruvananthapuram on 23.03.2010.  No change of address was communicated to the 3^rd opposite party either by the complainant or the 1^st and 2^nd opposite parties and thereby they have committed violation of policy conditions.  So the fire accident which took place in the premises T.C. 28/2282, Near Vanchi Poor Fund is in no way related to the risk covered under the insurance policy.

 7.  The 3^rd opposite party came to know about the fire accident only after receiving the notice in I.A. 623/2016 from this Commission for condonation of a delay of 1160 days in filing the complaint.

8.  The 3^rd opposite party has denied the entire pleadings in the complaint and states that the claim made against this opposite party is not maintainable.  The 3^rd opposite party also seeks for dismissal of the complaint. 

9.  On the side of the complainant, PW1 was examined and Exts. A1 to A9 were marked subject to proof as the opposite parties 1 & 2 had opposed marking of those documents on the reason that none of the documents are original. But certified copies of Exts. A1 and A4 were filed by the complainant.  Other documents are not proved.  No oral evidence was let in by the opposite parties 1 to 3.  Notes of argument were filed by the counsel for the complainant and the 3^rd opposite party.

10.  Heard both sides.  Perused the case records. 

11.  The points that arise for determination are:-

1. Whether there is any deficiency of service on the part of the opposite parties as alleged? 
2. Whether the complainant is entitled to get an order directing the opposite parties to pay him a sum of Rs. 25,00,000/- as insurance claim?
3. Whether the prayer for compensation of Rs. 15,00,000/- is allowable?
4. Reliefs and costs?

12.  Points (i) to (iv):- The complainant had sworn an affidavit in lieu of chief examination in tune with the pleadings contained in the complaint.  Ext. A4 is the photocopy of the FIR registered by the Vanchiyoor Police as Crime No. 248/10 alleging occurrence of fire in building No. T.C. 28/2282 in between 2 and 2.30 am on 23.03.2010.  The complainant had subsequently caused production of the certified copy of the FIR.  So the complainant could prove Ext. A4 as an authenticated copy as admissible in evidence.  According to the complainant in Ext. A4 he had clearly narrated the change of his business premises to T.C. 28/2282.  For proving the fire occurrence the complainant had caused production of the copy of the report filed by the Station Officer, Fire and Rescue Station, Thiruvananthapuram dated 23.03.2010.  The admissibility of the above document was also objected, and marked as Ext. A1 but later the complainant had caused production of a certified copy of the said document issued by the Station Officer and hence the said document is proved.  According to the complainant there is convincing evidence that fire occurred in his business place and he had incurred a loss to the tune of Rs. 25,00,000/-.  The case of the complainant is that it was the duty of the 1^st and 2^nd opposite parties to renew the insurance policy as that was the practice resorted to by the 1^st and 2^nd opposite parties.  According to the complainant there was failure on the part of the 1^st and 2^nd opposite parties to renew the policy for 4 days from 19.03.2010 to 23.03.2010 and the Bank officials, after knowing the fire occurrence had immediately renewed the policy on 23.03.2010.  The renewal of policy on 23.03.2010 is a clear evidence regarding the deficiency of service on the part of the opposite parties 1 & 2.  They would place reliance upon paragraph No. 10 of the version of the opposite parties 1 & 2 that they had renewed the policy from time to time and there is valid insurance from 23.03.2010 onwards.  But at the same time the opposite parties had raised another contention in the version that there is no agreement between the complainant and 1^st & 2^nd opposite parties to the effect that the opposite parties should renew the policy. They further incorporated a plea that however the Bank had renewed the insurance policy and at the time of fire there was valid insurance.  But the Bank has got a specific contention that the change of business place was not informed to the Bank whereas the complainant has given evidence that the Bank Manager and officials had inspected his business place and approved the transfer of business place and thereafter on 15.03.2010 a letter written in the letter head of the complainant was submitted to the Bank.

13.  Basing upon the conduct of the opposite party in renewing the policy and debiting the amount so recovered from the account of the complainant the counsel for the complainant would submit that there was grave dereliction on the part of the 1^st and 2^nd opposite parties in availing an insurance policy with respect to the stock in trade.  The learned counsel would place reliance upon the decision of the National Commission in Revision Petition No. 4645 of 2012 in The Chairman, Indian Bank & anr. Vs. Consumer Protection Council, Tamil Nadu & ors. to substantiate the contention.  It was a case where a house construction loan was availed by the complainant and the building got damaged due to floods in November 2005.  The complainant claimed compensation from the Bank on the reason that the Bank had failed to insure the property.  The borrower was not required to send any proposal to Bank on his behalf and the premium was also debited from his account.  The District Commission was inclined to dismiss the complaint on a finding that there was no deficiency of service or unfair trade practice.  But the State Commission had reversed the finding of the District Commission and allowed the complaint.  The finding of the State Commission was challenged before the National Commission by way of revision.  The learned counsel for the complainant had drawn our attention to paragraph 8 of the ruling that in none of the cases, premium was directly paid to the insurance company by the borrower and Clause 13 in the loan agreement needs to be viewed in this background.  Had the OP/Bank acted with promptitude and insured the premises in time, the benefit of insurance would have been available when the floods came and damaged it.  This lapse was further compounded by belated effort on the part of the Bank to insure it at the cost of the complainant.  The State Commission has therefore rightly held it to be a case of deficiency of service.

14.  This decision is not applicable to this case since in the term loan there is a clause in the agreement that if the borrower neglects or defaults, the Bank may without the intervention of the borrower insure the mortgaged security at his cost  and debit premium from time to time to the borrower’s account.  In view of the above clause the National Commission took a view that the failure of the Bank in taking the policy amounts to deficiency of service.  Here the complainant did not raise any contention that there was a clause in the agreement by which the Bank was under the obligation to avail an insurance policy with respect to the stock.

15.  The learned counsel for the complainant would also place reliance upon the ruling of the Hon’ble Supreme Court in Civil Appeal No. 979/2020 in Hemiben Ladhabhai Bhanderi Vs. Saurashtra Gramin Bank & Anr. It was in respect of a Group Individual Accident Policy.  Under the terms of agreement between the insurer and the Bank the account holder was required to submit a form to the concerned officer of the Bank in order to avail an insurance cover.  The Bank would deduct an amount of Rs. 100/- as premium from the account holder and forward it to the insurer.  The appellant obtained insurance form from the Bank and submitted it to its Manager, but the Bank was negligent in not forwarding the form to the insurer and in the mean time the spouse of the applicant had met with an accident and it was held that there was negligence on the part of the Bank.  It was a case in which there was failure on the part of the Bank in completing the formalities.  Here the situation is entirely different.  The Bank has got a specific contention that the complainant never informed the change of business place prior to the fire occurrence.  According to the complainant he had submitted an application showing the change of address to the Bank.  His case is that those documents were also destroyed in the fire occurred.  The Bank had raised a contention that on 17.04.2010 the complainant had sent a letter to the Bank wherein there was no whisper that the change of address was informed to the Bank.  When a claim is raised the primary burden is upon the complainant to prove the eligibility.  The complainant has to adduce convincing evidence that he had obtained permission from the Bank authorities to shift the business place.

 16.  The contention of the 1^st and 2^nd opposite parties would show that if the change of business place was duly informed they would have taken an insurance policy in the said address.  But the copy of the policy produced by the complainant bears the address as Shreeba, Opp: Ananthancaud Temple, Poovakkara Madam Lane, Fort P.O., Thiruvananthapuram.  So there is substance in the stand taken by the 1^st and 2^nd opposite parties that the transfer of business place was not intimated to them as alleged in the complaint.  According to the complainant his entire stock and machineries kept in the business place were destroyed.  For substantiating this fact the report filed by the Fire and Rescue Station Officer has been produced.  The certification made by the Station Officer is to the effect that the data furnished to the department will not necessarily be full and accurate on any matter contained therein which can be determined only after due investigation by the appropriate agency.  So the report filed by the Station Officer, Fire and Rescue Station Office, Thiruvananthapuram cannot be accepted as a solid proof regarding the alleged loss incurred by the fire occurrence.  The complainant did not obtain a survey report or investigation report after the completion of investigation for establishing the fact that he had incurred loss for his stock and machineries kept in the premises.  In this regard it is significant to note that the Bank had initiated proceedings by resorting to the provisions of the Securitization Act and this complaint was filed very late, after elapsing a period of 1160 days ie; after more than 3 years.  If the complainant had a genuine ground one would expect himself causing initiation of proceedings at an earlier point of time.  There is no convincing evidence tendered by the complainant that his business place was shifted to the place from where the alleged fire occurred was intimated to the Bank.  There is also no convincing evidence that the complainant had incurred a total loss of his stock in trade and the entire machineries.  Since the complainant could not prove those aspects, the question of conducting an adjudication regarding deficiency of service on the part of the opposite parties does not arise.  As per the admission of the complainant it could be seen that there was no valid policy availed from the 3^rd opposite party existing at the relevant point of time.

17.  On a cumulative consideration of the entire evidence on record it is found that the complainant has miserably failed to establish any deficiency of service or unfair trade practice attributed against the opposite parties.  The complainant is hence not entitled to get any relief. 

In the result, the complaint is dismissed.  Parties shall bear their respective costs.             

JUSTICE K. SURENDRA MOHAN  : PRESIDENT

                                       AJITH KUMAR D.: JUDICIAL MEMBER

                                          RADHAKRISHNAN K.R.  : MEMBER

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APPENDIX

I         COMPLAINANT’S WITNESS :

 II      COMPLAINANT’S DOCUMENTS :

III      OPPOSITE PARTY’S WITNESS :

IV      OPPOSITE PARTY’S DOCUMENTS :

JUSTICE K. SURENDRA MOHAN  : PRESIDENT

                               AJITH KUMAR  D. : JUDICIAL MEMBER

jb                                                                                            RADHAKRISHNAN K.R.  : MEMBER