JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

I.A. Nos. 2100 & 3699/2014

        For the reasons stated in the application, the delay in filing the revision petition is condoned.

R.P. Nos. 1597 & 2371 OF 2014

        The complainant/petitioner in revision petition no. 2371/2014 took a loan of RS. 4,75,000/- from Union Bank of India, which is the petitioner in revision petition no. 1597/2014, under the PMEGP scheme, for the purpose of starting a furniture business.  The government also contributed a margin money of Rs. 25,000/-, to enable the complainant to start the said business.  Clause 10 (1&2) of the Hypothecation Agreement executed between the parties reads as under:-

“10 (i) The Borrower shall at all times during the continuance of this security and from time to time insure the said goods and kept them insured against loss or damage by fire, lightening, riot, civil commotion, strikes or any other risks as may be required by the Bank or by law in the joint names of the Borrower and the Bank with insurance companies previously approved of in writing by the Bank to the extent of at least 10% in excess of full marketable value of the said goods as determined by the Bank in its sole discretion and punctually pay the premia due for such insurance and that the cover note/s, insurance policy/policies or certificate/s shall be delivered to the Bank.

(ii)     If the Borrower fails to effect such insurance the Bank may, but without being bound to do so, insure the said goods against any one or more of the aforesaid risks as may be deemed necessary by the Bank in its absolute discretion either in its sole name or in the joint names of the Borrower and the Bank and debit the premia and other charges to such account or accounts as aforesaid.”

(2)     However, the complainant did not himself get the hypothecated goods insured against the loss or damage by fire etc. and admittedly, it was the bank which got the said goods insured and debited the insurance premium to the account of the complainant.  The goods hypothecated with the bank were got insured by it for the year 2009-2010 and 2010-2011, but for the year 2011-2012, the goods were not got insured either by the bank or the complainant.

(3)     The case of the complainant is that the fire broke out in his shop in the night intervening 06/07.11.2012 and he suffered loss of Rs. 15,00,000/- in the said fire.  Since, the Insurance policy was not got renewed for the year 2011-2012, no complaint could have been made with the Insurance Company.  Therefore, alleging deficiency in providing service on behalf of the bank, the complainant approached the District Forum, seeking several reliefs.

(4)     The complaint was resisted by the bank, inter-alia, on the ground that it was for the borrower and not for the bank to keep the goods insured in terms of clause 10 of the Hypothecation Agreement.  It was further stated that in the reply that the intimation with respect to the alleged fire was received by the bank only on 19.11.2012, though the fire broke out in the night intervening 06/07.11.2012.  It was also pointed out in the reply that in connection with the subsidy of Rs. 25,000/-, which the Government had granted to the complainant, the unit of the complainant was inspected by the officials of Directorate of Industries, Madhya Pradesh and during inspection, they did not find any goods lying in the premise.

(5)     The District Forum, vide its order dated 07.03.2013, dismissed the complaint.  Being aggrieved from the dismissal of his complaint, the consumer approached the Madhya Pradesh State Consumer Disputes Redressal Commission, by way of an appeal.  Vide impugned order dated 03.02.2014, the said Commission partly allowed the appeal filed by the complainant and directed the bank to pay a sum of Rs. 25,000/- to him as compensation for the deficiency in service provided by the bank to the complainant.  Being aggrieved from the view taken by the State Commission, the bank as well as the complainant are before us by way of two separate revision petitions.

(6)     The grievance of the bank is against awarding of compensation against it, whereas the grievance of the complainant is that though he suffered loss of Rs. 15 lakhs, even the amount of Rs. 5 lakhs for which the goods were got insured for the previous year was not paid to him.

(7)     The question which comes up for our consideration in this case is whether there was any deficiency on the part of the Union Bank of India in providing the services to the complainant.  Though, in view of clause 10 of the Hypothecation Agreement, it was for the complainant to keep the hypothecated goods insured against loss of damage by fire, lighting etc. with an Insurance Company to be approved by the bank to the extent of atleast 10% in excess of the full market value of such goods and the bank would insure the hypothecated goods only in the event of the failure of the borrower to effect such an insurance, it is not in dispute for the year 2009-2010, as well as for the year 2010-2011, it was the Insurance Company which had got the hypothecated goods insured.  It is also an admitted case that the Insurance policies for the year 2009-2010 and for the year 2010-2011 remained with the bank and even a copy of the said policy was not sent to the complainant.  In our view, since the bank, despite being under no such obligation, took it upon itself to insure the hypothecated goods, the least expected from the bank was to send a copy of the Insurance policy to the borrower, so that he could be in a position to know the period and amount of insurance as well as the name and address of the Insurance Company with which the policy was taken by the bank.  Since, the bank did not at any point of time send a copy of the insurance policy to the complainant, he was not in a position to get the said policy renewed.  For the purpose of getting the policy renewed, he would have required not only the name and address of the Insurance Company, but also the number of the previous policy as well as the date on which the said policy was going to expire.  It is not as if the bank, otherwise sent some communication to the complainant informing him of the Insurance cover taken by it and conveying the particulars such as the name and address of the Insurance Company, the period of insurance and the number of the policy.  Admittedly, at no point of time, the bank asked the complainant to get the policy renewed, though it had debited the insurance premium to his account.  In the absence of such particulars the complainant could not have known when the policy taken by the bank was going to expire.  Thereafter, he had no occasion to get the said policy renewed, before its expiry.

(8)     In our view, considering that the bank had been getting the policy insured, had been keeping the insurance policy with it and not been sending the copy of such policy to the complainant nor had it been otherwise intimating the details of the policy such as the date of insurance, number of policy and name and address of the Insurance Company to him, the bank was certainly deficient in providing the services to the complainant.  The State Commission has, therefore, rightly awarded compensation in favour of the complainant.

(9)     The learned counsel for the petitioner bank relied upon the decision of this Commission in Rahul Electricals vs. State Bank of India & Anr. in Revision Petition No. 2945/2012, decided on 05.07.2013.  We have perused the judgment.  A perusal of the judgment does not indicate that in the case of Rahul Electricals (supra), the bank had been keeping the policy with it.  There is no indication in the judgment that the bank had failed not only to send the copy of the policy to the borrower, but also other intimate the particulars of the Insurance to him so as to enable him to get the said policy renewed.  Therefore, on facts, the above referred decision is clearly distinguishable.

(10)   Coming to the quantum of compensation, the learned counsel for the complainant vehemently urges that the compensation awarded to the complainant is too meagre, considering the huge loss suffered by him, on account of the value of the furniture which got burnt or damaged in the fire.  As noted earlier by us and also noted by the District Forum, E.D.I.I.A. had inspected those units to whom margin money had been provided by the Government.  At the time of inspection of the premises of the complainant, it was found that only a sign board had been fixed there and there was no furniture inside the premises.  The aforesaid report prepared by a public servant in discharge of their duty clearly belies the case of the complainant alleging loss to the extent of Rs. 15 lakhs or so.  Moreover, the fire is alleged to have been broken out in the night intervening 06/07.11.2012, but the bank was informed in this regard vide notice dated 16.11.2012, which the bank received only on 19.11.2012.  There is no plausible explanation as to why he did not intimate the incident of fire to the bank immediately after the fire had broken out.  Considering that the goods, alleged to have been gutted in fire had been hypothecated to the bank.  It was obligatory for the complainant to inform the bank in this regard on 07.11.2012 itself.  Had the complainant done so, that would have enabled the bank officials to inspect his unit and verify the damage, if any caused to the goods which according to the complainant were lying inside his unit at the time the fire broke out.  The abnormal delay in intimating the incident of fire and the alleged damage of the hypothecated goods in the said fire to the bank, clearly renders the claim of the complainant highly suspicious.  The aforesaid conduct on the part of the complainant coupled with the report of E.D.I.I.A., in our opinion was sufficient for the District Forum to take a view that in fact no worthwhile loss of the hypothecated goods was sustained by the complainant in the alleged incident of fire.

(11)   For the reasons stated hereinabove, we find no good ground to interfere with the orders passed by the State Commission and both the revision petitions are dismissed.