DISTRICT CONSUMER DISPUTES REDRESSAL FORUM, BATHINDA (PUNJAB)
CC No. 122 of 16-03-2010 Decided on : 31-01-2011
M/s. Mittal Enterprises, Court Road, Bathinda, through its Sole Prop. Sita Ram Mittal R/o Kothi No. 616, Shakti Nagar, Gali No. 2, Bathinda.
... . Complainant Versus UCO Bank, Amrik Singh Road, Opposite Subash Street, Bathinda, through its Branch Manager .... Opposite party
Complaint under Section 12 of the Consumer Protection Act, 1986.
QUORUM Ms. Vikramjit Kaur Soni, President Dr. Phulinder Preet, Member Sh. Amarjeet Paul, Member
For the Complainant : Sh. Naresh Garg, counsel for the complainant For the Opposite parties : Sh. Anil Gupta, counsel for the opposite party
O R D E R
VIKRAMJIT KAUR SONI, PRESIDENT
This complaint has been filed by the complainant under Section 12 of the Consumer Protection Act, 1986 as amended upto date (here-in-after referred to as ’Act’). The complainant firm was having its cash credit limit account of Rs. 25,00,000/- with the opposite party who purchased the insurance for hypothecated stocks from the Insurance Company on every year under their MOU. The opposite party previously issued the limit of Rs. 6.00 Lacs to the complainant in the year 2002-03 and purchased the insurance from the Insurance Company directly by debiting the complainant’s account. The cash credit limit of the complainant was enhanced in financial year 2005-06 from Rs. 6,00,000/- to Rs. 25,00,000/- and at that time the stocks of the complainant were lying in two premises one in godown at village Bibiwala and 2nd at the above said shop of M/s. Mittal Enterprises at Court Road, Bathinda. At that time, the opposite party purchased two Insurance policies one in February of each year for the stocks lying in godown at Village Bibiwala and the 2nd in the month of April of every year against the stocks lying at the shop Court Road, Bathinda. The opposite party purchased the Insurance for Fire and Burglary etc., for the amount of about Rs. 17,00,000/- each from its Insurance Company. An amount of Rs. 3746/- was debited from the account of the complainant on 09-02-2006 and thereafter on 7.2.2007 for hypothecated stocks which was lying at Village Bibiwala godown of the complainant’s firm. The opposite party purchased the insurance of the part of the hypothecated stocks to the tune of Rs. 17,85,000/- on 12-02-2008 upto 11-02-2009 by debiting the complainant’s account on 12-02-2008. The said insurance was purchased vide Insurance Certificate No. 401001/46/08/75/00000738 from National Insurance Co. Ltd., for the stocks lying in the godown at Village Bibiwala, Bathinda and the said insurance was being renewed continuously by the Insurance Company on the asking of the opposite party. The complainant wrote a letter dated 7.1.2008 to the opposite party intimating that now all the stocks were shifted at shop at Court Road, Bathinda but the opposite party and the aforesaid Insurance Company issued the Insurance for the Bibiwala Road, Bathinda. Despite, intimation, the opposite party again purchased and renewed the Insurance on 12-02-2009 with the address of Village Bibiwala Bathinda for the sum Insured Rs. 17,85,000/-. The said insurances were in the custody of the opposite party and no copy was ever issued to the insurer. The above said Insurance of Rs. 17,85,000/- is fire policy only. The opposite party also purchased one insurance for the sum insured of Rs. 17,00,000/- of the complainant firm from the same Insurance company on the same date i.e. 12-02-2009 under burglary insurance vide Insurance Certificate No. 4010001/46/06/7500000/738 w.e.f. 12-02-2009 to 11-02-2010 in the name of M/s Mittal Enterprises Court Complex, Bathinda. It is settled law and rule of the Insurance Companies that the burglary insurance was not issued alone without the fire insurance of the same place. The National Insurance Company Ltd., also issued one insurance certificate No. 401001/11/08/3100001309 for the stocks of Rs. 17,85,000/- under Fire Insurance of the same firm on the same date i.e. 12-02-2009. The opposite party also purchased the insurance of the part stocks which were lying previously in the shop at Court Road, Bathinda and kept on renewing the said policy and finally the same was again renewed w.e.f. 26-04-2008 to 25-04-2009 for the sum of Rs. 9,23,000/- whereas all the stocks were shifted at M/s Mittal Enterprises, Court Road, Bathinda on 07-01-2008 but the insurance was purchased in two parts i.e. 17,85,000/- and Rs. 9,23,000/- against the total stocks of about Rs. 27,00,000/-. The last insurance of Rs. 9,23,000/- was expired on 24-04-2009 and after that the opposite party never intimated to the complainant regarding discontinue of the insurance of the part stocks of Rs. 9,23,000/-. On the intervening night of 17/18-1-2010 all of sudden the shop of the complainant’s firm caught fire and intimation was given to the Police Station and Fire Brigade immediately and a DDR No. 20 dated 19-01-2010 was recorded and Fire Brigade issued a report 05-23 and charged Rs. 11,500/- vide receipt No. 0502/25 in this regard. The intimation of fire was given to the opposite party in the early morning on 18-01-2010. The Insurance Company did not send any surveyor and as such, the complainant gave a written intimation to the Insurance Company i.e. National Insurance Co. Ltd., on 19-01-2010. The complainant also demanded the copies of the insurance policy from the opposite party but the opposite party only gave the number of the insurance policy dated 12-02-2009 and not gave any number of insurance policy of April, 2009. Thereafter, the Insurance Company appointed Mr. Parmod Mittal as a surveyor but after checking the Insurance dated 12-02-2009 from the bank, he and the Insurance Company, refused to survey the shop on the pretext that the shop was not insured with them and said that the bank has not renewed the insurance dated 26-04-2008 to 25-04-2009. In the above said fire all the total stocks of about Rs. 27,35,881/- were totally burnt and all the sale purchase bills and stocks were also destroyed in the said fire. The complainant received a letter dated 19-02-2010 from the office of Insurer i.e. National Insurance Company in which they declared that MOU with the opposite party was expired in March, 2009 and as such, they have not renewed the policy expired on 25-04-2009 for the sum of Rs. 9,23,000/-. The complainant alleged that it is settled rules and law and mandatory for the opposite party to purchase the insurance of the hypothecated stocks minimum upto the payment released to their customers but in this case the opposite party neither purchased the insurance in April, 2009 nor renewed the insurance dated 25-04-2009 nor intimated to the complainant regarding the discontinuation of the insurance nor added the stocks in February, 2009 nor intimated to the insurer regarding the change of the place of stocks from Bibiwala to Court Road, Bathinda and as such, there is deficiency in service on the part of the opposite party. The fire took place on 17/18-01-2010 and the claim is still pending with the opposite party. Hence, this complaint seeking directions of this Forum to the opposite party to pay Rs. 9,23,000/- with interest alongwith cost and compensation. The opposite party filed its written version by taking legal objection that as per clause No. 6 of Hypothecation of Goods to secure a Demand Cash Credit executed by the complainant in favour of the opposite party, the hypothecated goods shall be insured against fire risk by the borrowers (in the present case the complainant) in some Insurance office or offices approved by the Bank and in the name and for the sole benefit of the bank for their full market value. On merits, it was denied that opposite party ever purchase the insurance policy from any insurance company at any time. It was also denied that hypothecated stocks of the complainant were lying at two places i.e. in the Godown at Village Bibiwala and in his shop. It has been pleaded that complainant himself had been purchasing insurance from the company approved by the opposite party and the opposite party had been paying the premium to the said insurance company and debiting the amount in the account of the complainant. The complainant has been keeping all his stocks in the Godown situated in Village Bibiwala as per intimation and documents executed by him and he has never intimated the storage of stocks in his shop at any time or stage. It was denied that letter dated 07-01-2008 was ever sent to the opposite party or the Insurance policies are in the custody of the opposite party. The hypothecated stocks were always got insured by the complainant and the same were got insured on 12-02-2009 again by him and on the instructions of the complainant, the premium amount was paid to the Insurance company by the opposite party and was debited in his loan account. The complainant has concocted a story just to escape his liability to pay the debit to the opposite party which it is legally entitled to recover from the complainant. As per Insurance law the stocks are insured by the officials of the Insurance companies after physical inspection and not at the whims of any person or bank official. Parties have led their evidence in support of their respective pleadings. Arguments heard and written submissions submitted by the parties perused. The learned counsel for the complainant has submitted that the stocks of the complainant were lying in two premises one in godown at village Bibiwala and 2nd at the shop of M/s. Mittal Enterprises at Court Road, Bathinda. The opposite party issued cash credit limit of Rs. 6.00 Lacs to the complainant in the year 2002-2003. The opposite party purchased the insurance from the Insurance company directly by debiting the complainant’s account. The cash credit limit of the complainant was enhanced from Rs. 6,00,000/- to Rs. 25,00,000/- in the year 2005-2006. At that time, the opposite party purchased two insurances one in February of every year for the stocks lying in the godown at Village Bibiwala and the 2nd in the month of April of every year against stocks lying at the shop Court Road, Bathinda. The opposite party purchased the Insurance for Fire and Burglary etc., for the amount of about Rs. 17,00,000/-each from its Insurance Company. An amount of Rs. 3746/- was debited in the account of the complainant on 09-02-2006 and thereafter on 7-2-2007 being insurance premium for hypothecated stocks which were lying at Bibiwala Godown. The opposite party further purchased the insurance of the part of the hypothecated stocks to the tune of Rs. 17,85,000/- on 12-02-2008 upto 11-02-2009 by debiting the complainant’s account on 12-02-2008. The said Insurance was purchased vide Insurance Certificate No. 401001/46/08/75/00000738 from National Insurance Co. Ltd., for the stocks lying in the godown at Village Bibiwala, Bathinda and the said insurance was being renewed continuously by the Insurance company on the asking of the opposite party. The complainant wrote a letter dated 7-1-2008 to the opposite party intimating that now all the stocks were shifted at shop at Court Road, Bathinda, but the opposite party and the aforesaid Insurance company issued the insurance for the Bibiwala Road, Bathinda. Despite intimation, the opposite party again purchased and renewed the insurance on 12-02-2009 with the address of Village Bibiwala Bathinda for the sum Insured of Rs. 17,85,000/-. The said insurances were in the custody of the opposite and no copy was ever issued to the insurer. The opposite party purchased one insurance for the sum insured of Rs. 17,00,000/- of the complainant’s firm from the same Insurance company on the same day i.e. 12-02-2009 under burglary insurance vide Insurance Certificate No. 4010001/46/06/7500000/738 w.e.f. 12-02-2009 to 11-02-2010 in the name of M/s. Mittal Enterprises, Court Complex, Bathinda. The National Insurance Company Ltd., issued one Insurance Certificate No. 401001/11/08/3100001309 for the stocks of Rs. 17,85,000/- under Fire Insurance of the same firm on the same date i.e. 12-02-2009. The opposite party also purchased insurance of the part of the stocks which were lying previously in the shop at Court Road, Bathinda and kept renewing the said policy and finally the same was again renewed w.e.f 26-04-2009 to 25-04-2009 for the sum of Rs. 9,23,000/- whereas all the stocks were shifted at M/s. Mittal Enterprises, Court Road, Bathinda on 07-01-2008 but the insurance was purchased in two parts i.e. 17,85,000/- and Rs. 9,23,000/- against the total stocks of about Rs. 27,00,000/-. The last insurance of Rs. 9,23,000/- was expired on 23-04-2009 and after that the opposite party never intimated to the complainant regarding discontinue of the insurance of the part stocks of Rs. 9,23,000/-. The learned counsel for the complainant submitted that on the intervening night of 17/18-01-2010 all of a sudden the shop of the complainant’s firm caught fire and intimation was given to the Police Station and Fire Brigade immediately and a DDR No. 20 dated 19-01-2010 was recorded and the Fire Brigade issued a report 5-23 and charged Rs. 11,500/- vide receipt No. 0502/25 in this regard. The Insurance Company did not send any surveyor and as such, the complainant gave written intimation to the Insurance Company on 19-01-2010. The complainant demanded the copies of the insurance from the opposite party but it only gave number of the insurance dated 12-02-2009 and had not given any number of insurance of April, 2009. The Insurance company appointed Mr. Parmod Mittal as a surveyor but after checking the Insurance dated 12-02-2009 from the bank, he and the Insurance Company refused to survey the shop on the pretext that the shop was not insured with them and said that the bank has not renewed the insurance dated 26-04-2008 to 25-04-2009. In the above said fire, all the stocks of about Rs. 27,35,881/- were totally burnt and all the sale purchase bills and stocks were also destroyed in the said fire. The complainant received a letter dated 19-02-2010 from the office of the Insurer i.e. National Insurance Company vide which they declared that MOU with the opposite party was expired in March, 2009 and as such, they have not renewed the policy expired on 25-04-2009 for the sum of Rs. 9,23,000/-. The learned counsel for the complainant has submitted that it was mandatory for the opposite party to purchase the insurance of the hypothecated stocks but in the present case, the opposite party neither purchased the insurance in April, 2009 nor renewed the insurance dated 25-04-2009 nor intimated to the complainant regarding the discontinuation of the insurance nor added the stocks in February, 2009 nor intimated the insurer regarding the change of the place of stocks from Bibiwala godown to shop at court road, Bathinda. The fire took place on 17/18/01/2010 and the claim is still pending with the opposite party. On the other hand, the learned counsel for the opposite party submitted that as per Clause No, 6 of Hypothecation of Goods to secure a Demand Cash Credit executed by the complainant in favour of the opposite party, the hypothecated goods should have been insured against fire risk by the borrowers (in the present case the complainant) in some Insurance office or offices approved by the Bank and in the name and for the sole benefit of the bank for their full market value. The opposite party has denied that it has ever purchased the insurance policy from the Insurance company at any time and also denied that hypothecated stocks of the complainant were lying at two places i.e. in the Godown at Village Bibwala and in his shop. The learned counsel for the opposite party further submitted that complainant himself had been purchasing the insurance from the company approved by the opposite party and the opposite party had been paying the premium to the said insurance company and debiting the amount in the account of the complainant. The complainant has been keeping all his stocks in the Godown situated in Village Bibiwala as per intimation and documents executed by him and he has never intimated the storage of stocks in his shop at any time or stage. The opposite party has also denied that letter dated 07-01-2009 was ever sent to it or the insurance was in the custody of the opposite party. The hypothecated stocks were always got insured by the complainant and the same were got insured on 12-02-2009 again by him and on the instructions of the complainant, the premium amount was paid to the Insurance company by the opposite party and was debited in his loan account. The main allegation of the complainant in the present case is that UCO Bank i.e. the opposite party has been purchasing the insurance from National Insurance Company for the last three years itself continuously i.e. since the year 2006 directly by paying premium and thereafter debiting the premium amount in the account of the complainant’s firm as per their interse MOU vide Ex. C-116 between UCO Bank and National Insurance Company. The opposite party purchased the insurance from National Insurance Company for the stocks of the complainant’s firm by two insurance policies as prior to 2008 the complainant’s firm was having Godown at Bibiwala Road, Bathinda and shop at Court Road, Bathinda as such the bank purchased insurance for about Rs. 17,00,000/- for the stocks lying at Godown and the balance amount of about Rs. 8,00,000/- on account of stocks lying at shop. The insurance of the godown was purchased in continuation in the month of February of every year and the insurance of the shop was purchased in the month of April of every year. All the insurance policies are in the possession of opposite party and the National Insurance Company and they never supplied the same to the complainant. The opposite party also inspected the shop and godown quarterly and checked the stocks in routine and after checking the stocks, they purchased the above said insurances. In the month of January, 2008 the complainant intimated the opposite party No. 2 vide Ex. C-2 dated 7-1-2008 that the godown of complainant was vacated and all the stocks were shifted to their shop at Court Road, Bathinda and the bank officials duly inspected the stocks at the shop of the complainant. The opposite party also charged inspection charges from the complainant which were duly mentioned in the account statement Ex. C-99 at page No. 10 entry No. 6 and 8 dated 11-09-2008 and 15-09-2009, page No. 15 entry No. 10 dated 22-1-2009, at page No. 29 at entry dated 11-08-2009, page No. 32 entry dated 29-09-2009 and page No. 41 entry No. 11 etc., The complainant’s firm was continuously insured with National Insurance Company Limited through UCO bank from 21-04-2006 with the same policies i.e. Standard fire and burglary insurance and in this regard the polices were directly issued to the UCO Bank by the National Insurance Company as per their MOU and in this regard no policy was ever issued or sent to the complainant. The last policy was purchased by the opposite party on 26-04-2008. All the policies Ex. C-126 to Ex. C-131 were purchased by the UCO Bank for the stocks of the complainant from April, 2006 to April, 2008. The fire broke down on the intervening night of 17/18-1-2010 in the shop of the complainant firm and total stocks of about Rs. 27,00,000/- were burnt. The Insurance company refused to pay the claim under insurance and the surveyor did not assess the loss as there was no insurance from 24-04-2009 onwards. Ex. C-132 to Ex. C-140 are the copies of the debit vouchers of account number CC-249 of the complainant’s firm. On 09-02-2006, the opposite party debited the amount of Rs. 3746/- vide Ex. C-133 in the account of complainant’s firm, vide consolidated voucher Ex. C-134 on 21-04-2006 the opposite party debited the account of the complainant’s firm alongwith two other firms i.e. Singla Traders A/c No. 225 and M/s. Mittal Enterprises, Bank Bazar, Bathinda A/c No. 317 for the purpose of Insurance in the month of April, 2006. The details of said three accounts are given on the back of debit voucher. Vide Ex. C-135 on 7-2-2007 the opposite party debited the account of the complainant’s firm for the amount of Rs. 3911/- for insurance. As per consolidated voucher Ex. C-136 on 26-04-2007 again the opposite party debited the account of the complainant’s firm alongwith three other firms i.e. Singla Traders A/c No. 225, Supreme Textile A/c No. 320 and M/s. Mittal Enterprises, Bank Bazar, Bathinda A/c No. No. 317 and the details of the above said three accounts are given at the back of debit vouchers. On 12-02-2008 vide Ex. C-137 the opposite party debited Rs. 3916/- in the account of the complainant’s firm for insurance. On 25-04-2008 vide Ex. C-138 Rs. 3013/- were debited in the account of the complainant’s firm for insurance. On 12-02-2009 Rs. 3855/- were debited in the account of the complainant’s firm vide Ex. C-139. The opposite party is having two accounts under the same name i.e M/s. Mittal Enterprises, Court Road, Bathinda with A/c No. CC 249 and the other M/s. Mittal Enterprises, Bank Street Bathinda and both the firms are different entities having no relevancy with each other. The opposite party admitted the fact vide Ex. C-141 that they inspected the stocks of the complainant’s firm in routine as the stocks were hypothecated with them and they have also charged the complainant account by directly debiting the same and in this regard, they have issued the certificate Ex. C-141. The opposite party has produced the hypothecation document Ex. R-2 which relates to M/s. Mittal Enterprises, Bank Bazar, Bathinda of A/c No. 317 and not the complainant firm’s account. A perusal of documents placed on file shows that the opposite party has been purchasing the Insurance for the complainant’s firm since 2006 in two slabs one in the month of February and other in the month of April. The opposite party has been debiting the amount for the insurance premium directly from the account of the complainant’s firm which shows that every time the insurance was purchased by the opposite party. Further the record placed on file shows that the opposite party has been inspecting the stocks of the complainant’s firm from time to time and has been charging the inspection fee periodically. There is nothing on the record to prove that complainant’s firm has purchased the insurance policy themselves. As per Ex. C-100, the employee of the Insurance Company visited the bank/opposite party for the insurance who in turn informed him that insurance was being taken from Reliance Insurance Company and accordingly the Sr. Branch Manager of the Insurance Company intimated the same fact to the complainant vide letter Ex. C-100. The relevant portion of Ex. C-100 is reproduced as under :- “Further our MOU with UCO Bank was upto March, 2009. After March, 2009, they did not get insurance policies renewed from us. As informed by our development officer, they took further insurances from Reliance Insurance Company under new MOU. We trust the position is clear to you.” Further the complainant’s firm has written a letter dated 7-1-2008 Ex. C-2 to the opposite party regarding vacating of godown which has been duly stamped by the opposite party in token of its receipt. A perusal of Ex. C-139 a voucher dated 12-02-2009 of the opposite party reads as under :- “C/C 249 M/s. Mittal Enterprises, Court Road, Bathinda To amount of Insurance Premium paid to NIC Rs. 3855/-” Despite debiting the premium in the account of the complainant’s firm, and completing all the formalities for purchasing the insurance, the opposite party has failed to purchase the Insurance Policy for the stocks of the complainant’s firm. Hence, the opposite party has acted in a negligent manner which amounts to deficiency in service on its part. The support can be sought from the law laid down by the Hon’ble National Commission in the following cases :- The case titled 2009(1) CPJ 34 (NC) Corporation Bank Vs. Sandhya Sehnoy & Another wherein it has been held :- “... Insurance policy lapsed – Claim for loss due to fire accident repudiated – Stock hypothecated to bank – Policy taken by bank for previous year – Not renewed for next year – Having agreed to pay premium and having right to charge expenses on premium, to the account of borrower, bank should not have discontinued it atleast without informing complainant – Deficiency in service on part of bank proved – Relief entitled.” The case titled 2007(IV) CPJ 187 (NC) Union Bank of India Vs. Annu Vastralaya & Another :- “...Banking and Financial Service – Loan – Hypothecation agreement – cloth stock hypothecated against loan – Insurance b eing taken by bank since 1998 – Insurance expired on 16-01-2003 – Theft took place in shop during 17-01-2003 to 14-02-2003 – Claim not settled by Insurance Company – Deficiency in service on part of bank proved – Complaint dismissed by Forum – Allowed in appeal against bank – order upheld in revision.” The case titled 2007(1) CPJ 270 (NC) Allahabad Bank Vs. J.D.S. Electronic Company wherein it has been held :- “.....Banking and Financial Services – Failure of bank to get insured the stocks and equipments hypothecated with it – Same damaged in accidental fire – Under agreement, primary obligation to get stock insured was of Bank – Same not done – Deficiency in service proved – O.P. liable.” In the present case also, the bank has not purchased the Insurance from 25-04-2009 onwards and has also failed to prove that any intimation was ever given to the complainant that it has not purchased the policy. Moreover the stock was hypothecated with the bank, it was duty of the bank to get it insured. The complainant has also informed the opposite party for the change of address and shifting the stock to the shop. This intimation was also not forwarded by the bank to the Insurance Company. The support can be sought from the precedent laid down by the Hon’ble Maharashtra State Commission, Mumbai in the case titled 2008(IV) CPJ 66 Choice Shoe Mart Vs. New India Assurance Co. Ltd., & Another wherein it has been held :- “.... Stock in trade hypothecated with Bank – Insurance policy taken by bank – Complainant’s shop sub-merged into water due to heavy rain – Claim repudiated on ground that insurance policy not taken for shop – residential address given in policy – Duty of bank to give correct address of business premises of shopkeeper to Insurance Company – Bank fully aware of business address of insured, did not give correct address – Bank cannot escape its liability – Complaint dismissed by Forum on hyper-technical ground – Repudiation wrong.” The support can also be sought from the precedent laid down by the Hon’ble Karnataka State Commission, Bangalore in the case titled 2008(II) CPJ 302 Sri Vasavi Enterprises Vs. Royal Sundaram Alliance Insurance Co. Ltd., & Another wherein it has been held :- “..... Repudiation of claim – Loss of stock due to flood - Change of address not intimated to Insurance Company prior to date of loss- Insurance Company not liable under policy – Complainant intimated bank regarding change of address with request to communicate the same to Insurance Company – Intimation regarding change of address to Insurance Company delayed by bank – Deficiency on part of bank proved.” Hence, what has been discussed above and keeping in view the facts, circumstances and the evidence place on file by the parties, this Forum is of the considered view that there is deficiency in service on the part of the opposite party. Hence, this complaint is accepted with Rs. 5.00 Lacs as compensation and cost. The opposite party is directed to pay Rs. 5.00 Lacs to complainant being cost and compensation within a period of 45 days from the date of receipt of copy of this order. A copy of this order be sent to the parties concerned free of cost and the file be consigned to record.
Pronounced 31-01-2011 (Vikramjit Kaur Soni) President
(Dr. Phulinder Preet) Member
(Amarjeet Paul) Member
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