HON'BLE MR. KAMAL DE PRESIDING MEMBER
Order No. : 07
Date : 08.08.2019
The record is put for order.
Both the Appeals being No. FA/7/2019 and FA/10/2019 emanate from the impugned judgement dated 22.01.2019 passed in CC/62/2019 by the Ld. DCDRF, Birbhum (Suri).
FA/7/2019 and FA/10/2019 are heard analogously in terms of order being No. 6 dated 31.07.2019 in FA/7/2019 and Order No. 6 dated 31.07.2019 in FA/10/2019, passed by this Commission.
Appellant – complainant Narayan Chandra Kundu in filing the Appeal has assailed the impugned judgement dated 22.01.2019 in CC/62/2012. It is agitated by the appellant that the Ld. Forum failed to appreciate the vital documents, namely, project report cum balance sheet of Kundu Mini Rice Mill dated 11.04.2012, insurance policy record of 2003 and passed the impugned judgement perusing solitary document i.e. stock statement of raw materials.
It is also agitated that the Ld. Forum below overlooked the fire service report containing description about the building machines, motor, godown shed, stock of paddy total damaged etc.
It is also stated that there is clear picture regarding machines, furniture and other insured materials in the insurance policy record of 2003 but the Ld. Forum below found only document i.e. stock statement of raw material and passed the impugned decree.
It is stated that the decretal amount is too low and the complainant – appellant has for enhancement of the decretal amount in terms of prayer in the Memo of Appeal.
SBI Kotasur Branch & ors. also preferred an Appeal challenging the judgement dated 22.01.2019 in connection with the complaint case No. CC/62/2012 passed by the Ld. DCDRF, Birbhum, Suri U/S. 15 of C.P. Act in a separate Appeal being No. FA/10/2019.
The grounds of Appeal in FA/10/2019 are as follows :
For that the judgement and order impugned dated 22.01.2019 are crypt i.e. trite and a glaring instance of non-application and non-appreciation of evidence on pleadings on record.
For that the order impugned is bad in law as the same is lacking in judicial discussion.
For that the Ld. Forum below failed to appreciate that the respondent – complainant has to comply with the terms and conditions of the hypothecation agreement.
For that the Ld. Forum below failed to appreciate that the respondent – complainant is defaulter in respect of the loan.
It is also agitated that the appellant is not an agent of Insurance Company and is not connected with Insurance Company.
It is agitated that as per Clause 5 of the hypothecation agreement the godown shall be kept at borrower’s risk and fully insured loss and danger as may be required by the Bank and the borrower is responsible for taking insurance policy.
It is agitated that the borrower – complainant was very irregular in submitting stock statements and usually stock holding in the godown was also very meagre.
It is also stated that the rurally godown was partially damaged and no loss to the godown has been reported by the complainant due to the incident.
It is agitated that the Ld. Forum failed to appreciate that Bank had no deficiency-in-service and the appellant Bank as such cannot be directed to pay the decretal amount.
It is stated that the impugned judgement and order is bad in law and should be set aside.
Before we decide upon the cardinal points involved in the aforesaid Appeals, we think that we should take cursory glance towards the case of the parties in CC/62/2012.
Complainant Narayan Chandra Kundu in CC/62/2012 makes out a case that he is hypothecated consumer under the State Bank of India having his loan account No. 11895224533 (Kundu Mini Rice Mill) and 11895254976 (Rural Godown) in the office Kotasur Branch and as such the complainant is a consumer and the OPs are the service provider of the complainant.
OP 1 at the time of disbursing the loan amount debited an insurance of Rs. 4320/- for the year 2003 and OP 1 continued to debit such premium of the insurance policy each year without delivery of any policy to the complainant. On 22.04.2012 at dead night, the establishment of the complainant as such Mini Rice Mill and Rural Godown was gutted in fire and in consequence all the machineries, furniture, finished goods, furniture and fixtures and other valuable goods were severely damaged and also Rural Godown construction was damaged. The complainant immediately informed to the fire bridge and fire bridge came and extinguished the fire and issued report in respect of loss due to fire. The complainant also informed OP 1 about the aforesaid incident. The complainant also asked for insurance policy for which the premium has been deposited in the loan account of the complainant. But OP 1 did not deliver the same. Complainant filed an application on 03.05.2012 under RTI Act, 2005 before OP 1 and OP 1 in reply stated that there is no insurance till 2008 to its letter. But surprisingly OP Bank debited insurance premium amount till 2011.
It is also alleged that the Bank did not debit insurance premium in the loan account of the complainant in the year 2012, although it was duty of Bank to insure hypothecated property.
It is also alleged that the Bank Authority did not disburse the entire subsidy amount to the complainant and Bank deposited part of the subsidy amount.
It is stated that the entire establishment of Kundu Mini Rice Mill was hypothecated to OP 1 and OP 1 is bound to insure hypothecated property. OP Bank failed to release the insurance claim and such act is amounting to deficiency in service.
It is stated that fire accident caused damage to the tune of Rs. 17 Lakh and complainant is entitled to get compensation worth of the said amount along with other reliefs as enumerated in the petition of complaint.
Appellant Bank contested the case in filing written version contending, inter alia, that the complainant has neither any cause of action nor jurisdiction to file the case against the present OP and the same is false, frivolous and fabricated, mis conceived and is not maintainable in law.
It is stated that the complainant is not a consumer under the present OPs within the meaning of Section 2 (1) (d) of C.P. Act and as such the petitioner is not entitled to get any relief. The statements in Paragraphs 2, 3, 5, 6, 9 and 10 are denied.
It is stated that there were four accounts maintained mentioned with SBI Kotasur Branch. One Cash Credit Account No. 11895224533 for rice mill with a limit of Rs. 2 Lakh and one Term Loan Account No. 11895254976 for rural godown for Rs. 6 lakh and other two accounts lying in Kundu Mini Rice Mill and Jaba Muri Mill. All these accounts are NPA before long time of the alleged accident on 22.04.2012.
No deposit of cash was made to reduce NPA or repay this loan. As per rural godown norms godown will be in a separate building and will be free from any outside hazards like any fire equipment. But such rules were not followed by Narayan Chandra Kundu before inspection of the Bank. It was found that there is rice mill project with that electrification which is attached with godown. It is a severe irregularity and lapes of rural godown norms.
It is stated that the Bank has not deducted premium from his account for insurance for the year 2011-2012.
It is also stated that before the accident the Bank visited the unit of Mr. Kundu and found every stock of material and informed vide letter dated 07.05.2012 about his non-insurance of his unit and also informed about non-submission of stock statements sale-proceed etc. There was also an objection from NABARD that the godown was not constructed with specified norms. The Bank authority did not disburse to the subsidy amount for the complainant for such reason.
It is alleged that the complainant to get rid of the Bank dues and to foil recovery procedure by the Bank, has filed this case. The question of negligence and deficiency in service by the OPs does not arise at all.
The OPs have prayed for dismissal of the case.
The complaint case CC/62/2012 before the Ld. DCDRF, Birbhum has a chequered history. On browsing over the record, it appears that after exhaustion of all formalities, Ld. Forum below on 28th August 2013 was pleased to dispose the case CC/62/2012 by directing the appellant to pay a sum of Rs. 4,82,000/- as compensation + Rs. 8539/- as fire service charge + Rs. 10,000/- for harassment and Rs. 5,000/- as litigation cost, in all total Rs. 505531/-.
Being aggrieved by and dissatisfied with the said judgement, both the complainant and the OPs preferred the Appeals before the Hon’ble State Consumer Dispute Redressal Commission at Kolkata being FA/107/2013 and FA/1096/2013 and the Hon’ble Commission directed the appellant to pay Rs. 8 Lakh being insurance coverage, Rs. 5 Lakh and as compensation and harassment and litigation cost of Rs. 50,000/- to the complainant – respondent within 45 days.
Being aggrieved by and dissatisfied with the impugned order, the appellant Bank preferred revision petition being No. 1201/2016 before the Hon’ble National Consumer Disputes Redressal Commission, New Delhi and Hon’ble National Consumer Disputes Redressal Commission, New Delhi was pleased to allow the revision petition by setting aside the impugned order and remanded back the complaint before the D.C.D.R.F., Birbhum, Suri for disposal in accordance with Law and the complainant was permitted to file amended detailing all the facts constituting the cause of action. Complainant – respondent filed an application for amendment of the complaint and OP Bank contested the case by filing written objection. Fresh evidences were taken from the end of both sides. After contested hearing Ld. Forum below was pleased to allow the CC/62/2012 against OPs 1, 2 and 3. OP 3 were directed to pay Rs. 48200/- as compensation and Rs. 8531/- as fire service charge with compensation of Rs. 2 Lakh for harassment and Rs. 50,000/- as litigation cost totalling Rs. 740531/- within one month from the date of the order.
Being aggrieved by and dissatisfied with the order and judgement dated 22.01.2019 in CC/62/2012passed by the Ld. D.C.D.R.F., Birbhum Suri, both sides have preferred the Appeals. Both sides have filed BNA during hearing of both the Appeals which have been heard analogously.
The first point of argument on behalf of OP Bank is that the complainant is not a consumer U/S. 2 (1) (d) of C.P. Act as he took loan for commercial purpose. Ld. Lawyer for the OPs urged that the case is not maintainable as the purpose of loan was commercial.
It is true that the complainant has not stated anywhere in the petition of complaint that he took the loan for maintaining his livelihood. Bur from the materials on record and rejoinder it appears that the complainant is a farmer and he took the loan for his Small-scale industry i.e. Kundu Rice Mill with Rural godown.
It also appears that the complainant took term loan amounting to Rs. 6 Lakh for rural godown and cash credit loan amounting to Rs. 2 Lakh for running his business. So, it can be inferred quite safely that the complainant is not a big business man and that he took the loan for his livelihood and not for commercial purpose. Commercial purpose does not include use by a person of goods bought and used by him or her and service availed by him or her exclusively for the purpose for earning his or her livelihood by means of self-employment.
OP Bank failed to establish that the complainant engaged massive man power in the mill for commercial purpose. So, we can safely say that the complainant did not take the loan or avail the services from the Bank for any commercial purpose. The complainant is a borrower under the OP and as such the complainant is a consumer and OPs are the service provider of the complainant.
The second point of argument as canvased by the Ld. Counsel of the OP Bank is that the complainant had no valid insurance policy at the time of the incident i.e. on 22.04.2012.
It is also urged that the Bank does not issue any insurance policy. Moreover, at the time of the alleged incident on 22.04.2012, no premium was deducted as against insurance from the account of the complainant.
We find from materials on record at the time of disbursing the loan amount, OP 1 debited the insurance premium of Rs. 4320/- and OP also continued to debit the sum from the loan account of the complainant as premium of the insurance policy but the Bank did not deliver any policy to the complainant. Admittedly, OP 1 used to debit insurance premium of Rs. 4320/- from year to year till 2011. Bank statements reveal that OP Bank debited insurance premium amount till 2011. For reason best known to the OP Bank, the premium for insurance was not deducted for the year 2011-2012.
We find that the complainant is an ignorant farmer. He fully trusted upon the OP Bank and even did not collect the insurance policy from the insurance company either through Bank or otherwise. Bank is a service provider. When the Bank debited a certain amount from the loan account of the complainant on the score of premiums for insurance, onus shifts upon OP Bank to procure insurance policy and safeguard the interest of the loanee.
Ld. Senior appearing on the side of appellant in A/10/2019 draws my attention to clause 5 of the Hypothecation Agreement dated 26.03.2018 wherein it is stated that it shall be lawful for but not obligatory upon the Bank to insure by debit to the borrower account in respect to the security as are of insurable in nature.
In the instant case we find that the Bank debited insurance premium from the loan account of the complainant – OP.
It is not that the complainant himself insured against loss or damages by fire and other risk at his own initiative or delivered to the Bank all such policies.
It is the Bank who debited premium amount from the loan account of the complainant. In spite of deduction of premium OP Bank did not insure mill Bank also did not instruct the complainant to insure the property in question and failure to insure the building by the Bank in spite of debiting the premium amounts to negligence and deficiency in service. OP Bank debited insurance premium since the beginning and even in the month of October – November 2010, giving rise to the insurance coverage for the period of 29.10.2011 to 28.10.2012. There is not proof that the petitioner was ever asked to insure hypothecated property at his cost.
Bank authority issued letter to the petitioner in the month of May 2012 when the mishape had already occurred. The Bank authority did not give proper intimation to the petitioner that they would discontinue to renew the policy nor there is any document at the custody of the OP Bank to prove that the petitioner had received any such intimation beforehand.
We are constrained to hold as such under such circumstances that there was clearly and palpably a deficiency in service on the part of the OP Bank. In the instant case premium was not paid to the insurance company directly by the borrower.
Had the Bank OP acted bonfaide as usual as in the past years and insured the assets of the mini rice mill of the petitioner in time, benefits of insurance would have been available when fire broke out and the properties were damaged.
Reversely, in case of any amount received from insurance company towards the claim lodged by the Bank under the Policy, the same was scheduled to be received and appropriated by the Bank - OP towards dues owing under the term loan.
It is true that the hypothecated property was not under the coverage of a valid insurance policy at the relevant point of time but OP Bank cannot absolve its responsibilities in not procuring the insurance.
It is argued by the Ld. Lawyer for the Bank that the term loan account became NPA on 25.11.2009 as per RBI guidelines i.e. before the time of alleged accident on 22.04.2012. So, the OPs Bank has no liability against the insurance claimed by the complainant. But we are afraid the statements on accounts of the complainant show that on 12.03.2012, an amount of Rs. 550/- was debited for the account of the complainant as account keeping fees, on 16.03.2012, an amount of Rs. 500/- was debited as inspection charge and on 19.05.2012 an amount of Rs. 500/- was deducted as processing fees. Moreover, no scrap of proper like notification or order is forthcoming before us to show that in case of the account of the complainant becoming NPA, every liability or obligation of the Bank would cease to exist. Furthermore, Bank has not also initiated any recovery process against the complainant till the date of the incident. So, it appears that in spite of deduction of premium, OP Bank did not insure the mill and the property. Hon’ble National Commission in 2013 (1) CPR 261 is pleased to observe that failure to insure building by the debiting the premium amount in time amounts to negligence and deficiency in service. In spite of debiting the premium from the account of the complainant, the Bank did not issue the Mill and property of the complainant. In RP No. 4645 of 2012 reported in 2013 (1) CPR 269 (NC) Hon’ble National Consumer Disputes Redressal Commission has held that “it is the duty of Bank to insure hypothecated property”.
Considering all aspects and materials on record we have no other alternative but to hold that premium amount that OP Bank in spite of debiting the premium from the account of the complainant has failed to insure the mini rice mill and godown of the complainant and such gesture and inaction is definitely a deficiency in service it amounts to negligence on the part of the OPs and the Bank is liable to compensate the complainant by paying compensation as such.
It is also argued by the Ld. Lawyer for the Bank that the godown was not built as per the specification laid down by NABARD due to which to each the petitioner – appellant was not found eligible for subsidy as per the scheme. But as per NABARD decision, Rs. 87500/- subsidy amount was credited to petitioner – appellant account. On the other hand, it has also been agitated from the side of the petitioner that he did not receive the entire amount of subsidy and thus Bank was also deficient in service and the Bank as such virtually cheated him.
We find that NABARD is not made a party by the complainant in this case. The issue of subsidy cannot be decided in absence of NABARD.
Moreover, it is alleged by the OP Bank that complainant has not constructed godown as per specification of NABARD. So, NABARD stopped subsidy after disbursing an amount of Rs. 87500/-. The said fact is not controverted by the complainant by any documentary evidence. As regards the amount of subsidy and/or levvy of interest thereon there is not material on record to give us clear picture. Moreover, NABARD is not made a party in the case. So, we abstain ourselves from giving any verdict or observation on such score or touching the said aspect.
Let us now switch over to the question of factum of compensation. The complainant as we find has claimed an amount of Rs. 17 lakh as compensation for damages of the rice mill as a consequence of fire and in absence of failure of the Bank to insure the rice mill and the property thereon. The question is why the complainant has claimed such a massive amount?
We find that Bank sanctioned a term loan of Rs. 6 lakh for construction of rural godown being loan account No. 1189525496 and a cash credit loan of Rs. 200000/- for running the business being account No. 11895224533. So the insurable amount and/or interest taken together does not exceed Rs. 8 lakh by any stretch of imagination or mathematics.
We are afraid, complainant cannot claim any amount more than the insurable interest. Moreover, we have gone through the statement of assets of hypothecation dated 18.04.2012 for the month of April 2012 i.e. at relevant time. Valuation of hypothecated property was shown Rs. 824000/- by the complainant himself and OP 1 Bank received the same by putting seal and signature.
We have also perused the fire brigade report, it appears that the report of the office of the Divisional Fire Officer is very much cryptic and not explanatory in nature.
It is stated in the report “rural godown cum mini rice mill along with rice, paddy, tuse, Bran, broken rice, rice processing machineries, electrical meters, godown shed damaged by fire and water”. The report does not appear to be conclusive and it appears to be rather obscured. We have also seen the enquiry report of Block sanitary inspector, he has stated in the report that “paddy, rice, broken rice, Brand in three rooms of the godown are damaged due to fire and water”. There is no whisper that the construction of the godown has been completely damaged due to fire accident, or the godown collapsed completely or it became a heap.
Be that as it may, we have observed that the complainant cannot claim more than the insurable interest. The insurable interest is Rs. 8 lakh. We, however, find that the complainant ran pillar to post and again back to pillar and has suffered mental pain and agony.
The petitioner had also taken down correspondences with various authorities including the OP for his redness before filing this case. The complainant had to pass through hard time and anxiety. There is no objective standard to measure the mental pain and agony undergone by the petitioner. However, to mitigate such pain and suffering, we think that the complainant is also entitled to get compensation for harassment, mental pain and agony.
As a logical corollary of the discussion as made in the earlier paragraphs and having regard to the materials on record, we are of the considered view that since the loan amount was treated to be insured, the complainant is entitled to get insurance coverage of loan to the entire amount of Rs. 8 lakh.
We also of considered view that he should be awarded an amount of Rs. 4 lakh as compensation for harassment, mental pain and agony and litigation cost of Rs. 50,000/- for paper works and typing though he conducted his own case in person.
We, therefore, modify the impugned judgement as hereunder to the said extent as discussed.
Hence,
ordered
Appeal A/7/2019 is allowed on contest.
Appeal A/10/2019 is dismissed on contest.
The appellant OP Bank in A/10/2019 is directed to pay Rs. 8 lakh being insurance coverage, Rs. 4 lakh as compensation for causing mental pain, agony and harassment and litigation cost of Rs. 50,000/- to the complainant – respondent within 45 days from the date of this order failing which the complainant – appellant in A/7/2019 will be entitled to simple interest @ 9 % per annum till realisation from the date of default.
The impugned judgement in CC/6/2012 dated 22.01.2019 passed in DCDRF, Birbhum, Suri is modified to the said extent.
Both the Appeals are thus disposed of.
