PER MR SUBHASH CHANDRA, MEMBER

                This complaint has been filed under section 21 of the Consumer Protection Act, 1986 (in short, ‘the Act’) alleging negligence, unfair trade practice and deficiency in service on the part of the opposite parties with regard to a Burglary and House Breaking Insurance policy issued by the opposite party no.2 relating to property belonging to the complainant while it was mortgaged to opposite party no.1.

2.     The facts as stated by the complainant are that it had opened a cash credit account with the opposite party no.1 and obtained a term loan of Rs.1.70 cr and cash credit facility of Rs.2.79 crores in connection with its business of timber and hardware. In lieu of the above facilities, its movable and immovable properties were mortgaged with opposite party No.1. Due to various reasons, the complainant’s company incurred financial losses and proceedings for settlement of outstanding loans with opposite party no.1 did not fructify leading to opposite party no.1 taking physical possession of the entire premises of the complainant along with stock and machinery at Rajbhandh Chatty, Near HPCL, Durgapur under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFEASI Act, 2002). The complainant states that the stock in trade, plant and machinery etc., lying at the premises was valued at Rs.3.10 crores and was insured under a Burglary and House Breaking policy no.1509702911000123 valid from 25.02.2011 to 24.02.2012 issued in the name of M/s Mampee Timbers and Hardware Pvt., Ltd., for which a premium of Rs.6839/- was paid by the complainant. Opposite party no.1 had also insured the premises with opposite parties nos. 2 and 3 for Rs.3.10 crores, vide Reliance Standard Fire and Special Peril Policy no. 1509312111000156, valid from 25.02.2011 to 24.02.2012. During the validity of these policies, the complainant received a letter from opposite party no.2 on 16.05.2012 which stated that “………. we have received queries from surveyor of Reliance General Insurance Co. Ltd., in respect of claim for the alleged theft in your factory. As the queries mostly related to your factory and business, so we require your cooperation regarding the same. We enclose a list of queries for your reference”.

3.     Upon enquiry it was learned by the complainant that the entire movable assets of stocks, plant and machinery worth about Rs.3.10 crores under the possession of opposite party no.1 had been stolen from the said premises. The complainant states that since the stock, plant and machinery belonging to the complainant had been seized by opposite party no.1 pursuant to the recovery proceedings against it, it was the responsibility of opposite party no.1, to have kept the same in safe custody and therefore, the liability should be fastened on opposite party no.1 for the theft. It is also stated that since opposite parties nos.1 and 2 were aware that the insurance was in the name of the complaint, and they did not inform the incident of theft to the complainant, they are both liable for deficiency in service. It is also accordingly averred that the opposite parties nos.1 to 3 were equally deficient in service qua the complainant. The complainant is before this Commission with the following prayer:

1.  Admit the complaint filed by the complainant against the opposite parties;

2. Declare that the opposite party has rendered deficiency service to the complainant;

3. Direct the opposite parties to pay a sum of Rs.3,10,00,000/- namely the loss suffered by the complainant which was under the possession and custody of the opposite party no.1 and was covered under the insurance policy issued by the opposite party nos. 2 and 3;

4. Direct the opposite parties to pay interest @ 21% per annum on the aforesaid principal amount from the period 23.03.2011 to the date of payment;

5. Direct the opposite parties to pay a compensation to the tune of Rs.1,00,00,000/- and towards loss of business and as well as mental agony and harassment faced by the complainant;

6. Cost of and incidental to this complaint; and

7. Further and other reliefs as may be deemed fit and proper by this Hon’ble Commission.

4.     The complaint has been resisted by way of written statement filed by opposite parties. Opposite party no.1 has contended that the complainant is not a consumer under section 2 (d) (1) of the Act, 1986 since the definition of consumer does not include a person “who obtains such goods for re-sale or for any commercial purpose”. It is contended that in view of the matter relating to purely a commercial transaction the complainant needs to pursue the remedy before the Debt Recovery Tribunal (in short, ‘the DRT’) under the Recovery of Debts due to Banks and Financial Institutions Act, 1993 and SARFEASI Act’ 2002. On merits, it is contended that opposite party no.1 had appointed M/s Prime Investigation Bureau for the security of the seized material belonging to the complainant. On 01.04.2011 the proprietor of the said agency filed a complaint before the Kanksa Police Station, Burdwan regarding the theft and informed opposite party no.1. However, it is stated that opposite party no.1 was primarily not responsible and liable to reimburse the complainant for the said loss. The claim of the complainant is stated to be illegal and arbitrary which needs to be dismissed. Opposite party no.1 has also relied upon the proceedings under the SARFEASI Act between the complainant and opposite party no.1 and states that the complainant was a defaulter and had been declared a Non-Performing Asset (NPA).

5.     OP no.2 and 3 have also filed their reply to the complaint and stated that there is no cause of action in respect of them and that the complaint is barred by limitation, since the complainant came to know about the theft in its premises on 16.05.2012 from opposite party no.1, and that the complaint was filed beyond the prescribed period of two years. FIR dated 23.03.2011 was filed by opposite party no.1 was also registered by the police on 16.05.2012. It is contended that neither the security agency nor the FIR allege that the theft was preceded by any forcible and violent entry and, therefore, as per the insurance contract, the complainant is not entitled to be reimbursed under the Burglary and House Breaking Insurance policy. It is contended that the security agency did not have proper instructions and there was no round-the-clock security at the premises which was in violation of the said policy nor did opposite party no.1 undertake any physical verification of stocks after 2008 which was also in violation of the conditions of the policy.

6.     Parties led their evidence and filed rejoinder and written submissions. We have heard the learned counsel for the complainant and the opposite party nos. 1 to 3 and have carefully considered the material on record, including the short synopsis filed by both learned counsels.

7.     Learned counsel for the complainant has argued that it is not disputed that his property at Durgapur had been physically possessed by opposite party no.1 on 01.10.2009 in view of the dispute arising from hypothecation in view of the cash and credit/ term loans arrangements with opposite party no.1. It was also argued that opposite party no.1 had admitted in its written statement that it had engaged the services of a security agency to safeguard the seized mortgaged property of the complainant and the fact of theft came to its knowledge only when it was intimated by the security agency engaged  by it. It is averred by complainant that it is an admitted fact that FIR no. 37/12 was lodged by opposite party no.1 with Kanksa Police Station, Burdwan. There was, therefore, admission that the seized property in custody of opposite party was stolen while under its watch. It is, therefore, the case of the complainant he should be indemnified for the loss by opposite party no.1 along with compensation, interest and damages.

8.     Per contra, apart from the preliminary objections taken by opposite party no.1 regarding complaint not being maintainable under the Act since the complainant according to it was not ‘consumer’ under section 2 (d) (1) of the Act and alternative remedies were available under the DRT and SARFEASI Act of 2002, it is argued that opposite party no.1 had been diligent in engaging a security agency viz., M/s Prime Investigation Bureau to protect the mortgaged property and therefore, no liability should be fastened on it. Opposite party nos. 2 and 3 on their part have argued that the complaint is limited between the complainant and opposite party no.1 in which they have no role. The fact of theft on 25.03.2011, lodging of FIR on 16.04.2012 after more than a year and intimation by opposite party no.1 to the insurance company on 17.02.2012 after 11 months of the incident are all admitted facts. Opposite parties nos. 2 and 3 had appointed two surveyors viz.,Kothari Surveyors and Investigators Pvt., Ltd. and M/s Integrated Investigators Service. Their reports dated 27.11.2012 and 25.01.2013 respectively clearly point out several discrepancies and non-adherence to the conditions of the insurance policy and representation of false and concocted facts by the complainant and opposite party no.1. It is argued that the claim of complainant/ opposite party no.1 was repudiated vide letter dated 30.09.2013 and this complaint has been filed on 27.10.2014. Notwithstanding the above, the complaint is filed by the complainant alleging deficiency of service committed by opposite party no.1 and therefore, opposite parties nos.2 and 3 have no role or liability to reimburse the complainant for the loss. The repudiation of the claim is justified as it is based on the report of the surveyor and is based on mis-representation of facts of various lapses on behalf of the opposite party no.1/Bank including violation of the conditions of the policy. The complainant has not challenged the repudiation by opposite parties nos.2 and 3; however, it has accused opposite party no.1 of deficiency of negligence. It is, therefore, the case of opposite parties 2 and 3 that the opposite party no.1 is the concerned party against whom the complainant has to seek his remedy.

9.     From the above, it is evident that opposite party no.1 was primarily responsible for the security of the mortgaged property belonging to the complainant. It is for this reason that opposite party no.1 had engaged the M/s Prime Investigation Bureau as the security agency to safeguard the said property. The property was covered under a Burglary and House Breaking policy obtained by the complainant since the premium of Rs.6839/- was paid by the complainant.  However, it was also covered under Standard Fire and Special Peril Policy obtained by the opposite party no.1.

10.   The FIR regarding the theft was also filed by opposite party no.1. It cannot shy away from its responsibility, for securing the property on the ground that insurance premium was paid by the complainant especially since it was holding it as collateral against outstanding loan to the complainant. The mortgaged property was collateral against the dues to the Bank and therefore, it has responsible for its security. It is for this reason that it obtained Standard Fire and Special Peril Policy for this property. In a matter which has had a fairly chequered history involving proceedings under DRT and SARFEASI Act between the complainant and opposite party no.1, it was necessary for opposite party no.1 to have been more diligent and vigilant in safeguarding the mortgaged property. It is also significant that opposite party no.1 has not bothered to institute a claim against opposite party Nos. 2 and 3 in respect of the Standard Fire and Special Peril Policy. Deficiency of the bank in failing to safeguard the property in its custody for which insurance premium had been paid by the bank to safeguard property the complainant held by its as collateral under mortgage is writ large. The contention of opposite parties 2 and 3 that it was a matter between complainant and opposite party no.1 is valid. The rejection of the claim by them cannot be faulted. However, as it is apparent that complainants claim was delayed due to lack of information from opposite party no.1 and the deficiencies on the part of opposite party no.1 in filing an FIR and intimating the complainant promptly, the liability for this has to be fastened onto opposite party no.1 which was primarily responsible for the security of the mortgaged property

11.   In view of the foregoing, we find merit in the contention of the complainant with regard to its claim against opposite party no.1 who is directed to reimburse the complainant to the extent of Rs.3.10 crores which was the value of the mortgaged property at the time of seizure along with interest @ 6% per annum from the date of seizure till realisation. This order shall be complied within eight weeks failing which the rate of interest shall be 9% per annum.

12.   The complaint is disposed of with the directions above.