RESERVED
STATE CONSUMER DISPUTES REDRESSAL COMMISSION,
UTTAR PRADESH, LUCKNOW
COMPLAINT NO. 170 OF 2016
Allahabad Bank, a body constituted under the Banking
Companies (Acquisition & Transfer of Undertakings)
Act, 1970 and having its Head Office at, 2, Neta Ji
Subhash Road, Kolkata-700001 and one of its Zonal
Office amongst other places at Swarup Nagar, Kanpur
And a branch amongst other places known as Kanpur
Main Branch situated at Bada Chauraha, Mall Road
Kanpur-208001
...Complainant
Vs.
- The United India Insurance Co. Ltd.
Having its Registered Office at 24
Whites Road, Chennai-600014
Through its Chairman
- The United India Insurance Co. Ltd.
Having its Regional Office at 17/13
The Mall, Kanpur-208001
Through its Regional Manager
- M/s. Quba Agro
A Sole Proprietorship Firm having its office
And plae of business at Flat No.802,
Urvarshi Apartment, 7/29 A, Tilak Nagar
Kanpur
Through its Sole Proprietor Sheikh
Mohammad Kasef
...Opposite Parties
BEFORE:
HON'BLE MR. JUSTICE AKHTER HUSAIN KHAN, PRESIDENT
For the Complainant : Sri Kush Saxena, Advocate.
For the Opposite Party : Sri V P Sharma, Advocate.
Dated : 17-08-2017
JUDGMENT
MR. JUSTICE AKHTER HUSAIN KHAN, PRESIDENT(ORAL)
This is a complaint filed under Section-17 of the Consumer Protection Act 1986 by complainant Allahabad Bank against three opposite parties namely The United India Insurance Company Limited, through its
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Chairman, The United India Insurance Company Limited, through its Regional Manager and M/s. Quba Agro with following prayers:-
- To pass an order directing the opposite parties to make the payment of Rs.70,09,987/- to the complainant bank which is to be adjusted in the account of opposite party no.3 maintained with the complainant bank.
- To pass an order awarding interest on the aforesaid amount of claim/compensation @ 18% p.a. with monthly rest with effect from the date of settlement of claim till the date of actual payment.
- Any other relief which this Hon’ble State Commission may deem fit and proper in the circumstances of the case.
In brief facts stated in complaint are that the opposite party no.3 is a sole proprietor firm and is carrying business of manufacturing dog feed etc. The complainant bank has granted Packing Credit Limit of Rs.70,00,000/- and Term Loan of Rs.50,00,000/- to the opposite party no.3 for its above business vide sanctioned letter dated 04-03-2014 and agreement cum letter of hypothecation dated 08-03-2014 has been executed accordingly whereby opposite party no.3 has hypothecated all the stocks in favour of complainant bank creating first charge in favour of complainant bank.
In complaint it has been further stated that in pursuance of conditions of grant of above credit facilities to opposite party no.3 the complainant bank alongwith opposite party no.3 got insured hypothecated stocks, plants and machineries of opposite party no.3 with insurance company of opposite parties no.1 and 2.
It has been further stated that during validity period of insurance policy there happened a fire incident on 14-01-2014 in the factory of opposite party no.3 causing substantial damage to stocks which were hypothecated to the complainant bank by opposite party no.3. Thereafter the complainant bank requested Insurance Company to route the insurance claim through the complainant bank in terms of insurance policy but the Insurance Company has paid insurance amount of Rs.70,09,987/- to the opposite party no.3 directly against agreed bank clause of policy whereby
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the complainant bank was prevented from recovery of outstanding dues of opposite party no.3.
It has been further stated by the complainant bank that opposite parties no. 1 and 2 have committed deficiency in service by avoiding payment of insurance amount to the complainant bank. Consequently the bank has filed this complaint under the Consumer Protection Act 1986.
Learned Counsel for the opposite parties no. 1 and 2 has raised preliminary issue of pecuniary jurisdiction of State Commission to entertain complaint.
Learned Counsel for the opposite parties no. 1 and 2 has placed reliance on judgment of Hon’ble National Commission rendered in the case of Ambrish Kumar Shukla and others V/s Ferrous Infrastructure Private Limited and reported in 2016(4) CPR 83 (NC).
Learned Counsel for the complainant bank has contended that complainant has prayed for payment of Rs.70,09,987/- only. As such, complaint is within pecuniary jurisdiction of State Commission.
I have considered the submissions made by learned Counsel for the parties.
Section-17 of the Consumer Protection Act 1986 provides that the State Commission shall have jurisdiction to entertain complaints where the value of the goods or services and compensation if any claimed exceeds Rupees Twenty Lacs but does not exceed Rupees One Crore.
In the case of Ambrish Kumar Shukla and others V/s Ferrous Infrastructure Private Limited (supra) the full bench of Hon’ble National Commission has considered the provisions of Sections 11, 17 and 21 of the Consumer Protection Act 1986 whereby pecuniary jurisdiction of District Consumer Forum, State Commission and National Commission has been fixed.
After having gone through above provisions of the Consumer Protection Act 1986 the Hon’ble National Commission has laid down principle for valuation of complaint as well as for pecuniary jurisdiction of
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three foras. The relevant part of judgment of Hon’ble National Commission is extracted below:-
“It is evident from a bare perusal of Sections 21, 17 and 11 of the Consumer Protection Act that it’s the value of the goods or services and the compensation, if any, claimed which determines the pecuniary jurisdiction of the Consumer Forum. The Act does not envisage determination of the pecuniary jurisdiction based upon the cost of removing the deficiencies in the goods purchased or the services to be rendered to the consumer. Therefore, the cost of removing the defects or deficiencies in the goods or the services would have no bearing on the determination of the pecuniary jurisdiction. If the aggregate of the value of the goods purchased or the services hired or availed of by a consumer, when added to the compensation, if any, claimed in the complaint by him, exceeds Rs.1.00 crore, it is this Commission alone which would have the pecuniary jurisdiction to entertain the complaint. For instance if a person purchases a machine for more than Rs.1.00 crore, a manufacturing defect is found in the machine and the cost of removing the said defect is Rs.10.00 lacs, it is the aggregate of the sale consideration paid by the consumer for the machine and compensation, if any, claimed in the complaint which would determine the pecuniary jurisdiction of the Consumer Forum. Similarly, if for instance, a house is sold for more than Rs.1.00 crore, certain defects are found in the house, and the cost of removing those defects is Rs.5.00 lacs, the complaint would have to be filed before this Commission, the value of the services itself being more than Rs.1.00 crore.”
In above judgment the Hon’ble National Commission has clarified that if the aggregate of the value of the goods purchased or the services hired or availed of by a consumer when added to the compensation if any claimed in the complaint by him exceeds Rupees One Crore, it is this Commission alone (Hon’ble National Commission) which would have the pecuniary jurisdiction to entertain complaint. The Hon’ble National Commission has further clarified that if, for instance, the house is sold for
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more than one crore and certain defects are found in it the complaint would have to be filed before Hon’ble National Commission even if the cost of removing those defects is Rupees Five lacs as the value of the service itself being more than one crore. Averment made in the complaint in hand itself shows that the complainant bank alongwith opposite party no.3 has got insured hypothecated stocks, plants and machineries of opposite party no.3 with Insurance Company of opposite parties no. 1 and 2. Copy of insurance policy has been annexed at page nos. 42 to 47 of the complaint. The total sum insured by this policy is Rs.2,75,00,000/-. The description of property insured in policy is extracted below:-
- On Building (On Reinstatement Basis) only ... 50,00,000/-
- On Entire Plants and Machinery with ... 75,00,000/-
Accessories and One Generator
- On Stock of all kinds of DOG/PET Foods ... 1,50,00,000/-
And other Raw Materials pertasting to
Insured trade
The claim preferred by bank under the policy is for the loss and damages of plants and machineries alongwith stock. The insured value of plant and machinery including stock is Rs.2,25,00,000/-. Keeping in view the principle laid down by Hon’ble National Commission in the above case of Ambrish Kumar Shukla and others V/s Ferrous Infrastructure Private Limited (supra) the value of service availed by the present insurance policy is above one crore and in view of principle laid down by Hon’ble National Commission this Commission has no jurisdiction to entertain complaint filed by the complainant bank.
In view of above I am of the view that the complaint filed by the complainant bank is beyond pecuniary jurisdiction of this State Commission. Therefore, the complaint is dismissed with liberty to the complainant bank to file it before Hon’ble National Commission in accordance with law.
Let copy of this order be made available to the parties positively within 15 days as per rules.
( JUSTICE A H KHAN )
PRESIDENT
Pnt
