PER MRS. M. SHREESHA, MEMBER

          Challenge in this Revision Petition, under Section 21(b) of the Consumer Protection Act, 1986 (in short “the Act”), is to the order dated 08.07.2015, passed by the State Consumer Disputes Redressal Commission, Haryana, Panchkula (in short “the State Commission”), in First Appeal No. 152 of 2014.  By the  impugned order, the State Commission has allowed the Appeal preferred by the Opposite Party and has set aside the order passed by the District Consumer Disputes Redressal Forum, Panipat (in short “ the District Forum”) directing the Opposite Party to pay the amount as assessed by the Surveyor.

 2.      The facts material to the case, are that the Complainants, running a firm under the name and style of M/s. Paramhans Loomtex, obtained a Cash Credit limit of ₹10,00,000/- from  the Opposite Party (hereinafter referred to as “the Bank”) and got it enhanced  in the financial year 2010-2011 to ₹15,00,000/-. It was averred by the Complainants that they had been taking insurance policy through the Bank for the machinery, building and stock for the last 12 to 13 years, and the premium was regularly being deducted from their Account and the same was also reflected in the Register retained in the custody of the Bank.  It was pleaded by the Complainants that they had checked the entry register,  wherein, the expiry date of the insurance policy was stated to be 12.10.2012 and hence were under the impression that the Bank had taken the policy in the same fashion as it did in the previous years.

3.       Unfortunately, in the intervening night  dated 13/14.02.2012, at around     2:30 p.m., a fire broke out in the Complainants’ premises, damaging the building, the machinery and the stock.  The fire brigade extinguished the fire and gave a report dated 14.02.2012 assessing the extent of loss. The fire was also reported in Danik Bhaskar and Punjab Kesri newspapers.

4.       After the said incident, the Complainants enquired from the Bank about the particulars of the insurance policy, which were required for lodging the claim with the insurance company. They were shocked to learn that the Bank had inadvertently forgotten to take the insurance policy for that year. The Complainants submitted the claim of ₹19.81 lakhs, based on the valuation of loss, assessed by Ashish Bahl Surveyor and Loss Assessor, Panipat. It was pleaded that the said surveyor had estimated the loss qua the stock to the tune of ₹12,84,676/-, which amount,  the Bank was liable to pay as they were negligent in not taking the insurance policy for that particular year.

5.       The Bank filed their Written Statement admitting  that the Complainants’ cash credit limit of ₹10,00,000/- was enhanced to ₹15,00,000/- and as per the terms and conditions of the Hypothecation Agreement, the Complainants were bound to keep their stocks and goods insured jointly, that is, in the name  of Complainants and that of  the Bank. It was averred that the policy was due to lapse on 12.10.2011 and the same was informed to the Complainants vide letter dated 01.10.2011, which receipt was acknowledged by the second Complainant. Despite informing the Complainants prior to the lapse of the policy, the Complainants failed to get their stock and building insured and hence, no deficiency of service can be attributed to the Bank.

6.       The District Forum, based on the evidence adduced, allowed the Complaint, directing the Bank to pay ₹12,84,676/- as assessed by the surveyor with interest @ 9% p.a. from the date of filing of the Complaint till the date of realization together with compensation of ₹10,000/- and costs of ₹2,200/-.

7.       The District Forum observed that there was no rebuttal by the Bank to the surveyor’s report filed by the Complainants. Aggrieved by the said order, the Bank preferred an Appeal before the State Commission, which has allowed the same observing as follows:

“ Further more as per clause 10 of hypothecation agreement Ex. R-2 it is clear that the complainants were  supposed to get stock etc. insured. In case they fail to do so then the bank was having discretion to get the same insured, but, was not bound to do so. Said Provision is reproduced 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 keep them insured against loss or damage by fire, lightening, riot, civil commotion, strike of 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 lease 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 of certificate/s shall be delivered  to the Bank.

(ii) If the Borrower falls 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 this 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.” 

From the perusal of this clause, it is clear that complainants were responsible to get the stock insured particularly when the date of expiry was brought to their notice.”

8.       Dissatisfied by the order of the State Commission, the Complainants preferred this Revision Petition on the ground that the Complainants’ firm was taking insurance through Bank for the last 12 to 13 years, for the stock and building and that the entry made in the Bank’s register recorded that the premium was deducted and the expiry date of the said insurance policy was 12.10.2002. On account of the fire which occurred on 13/ 14.2.2012 there was  great damage to the machinery, stock and building which was assessed to the tune of ₹12,84,676.84/-.  The Petitioner firm   was closed for six months on account of the loss incurred. Learned Counsel for the Revision Petitioners vehemently argued that it was only on account of the lapse on the part of the Bank that the Petitioners had suffered  business loss and mental agony and therefore the District forum was right in awarding the amount which the surveyor had assessed.

9.       Learned counsel representing the Bank relied on the letter issued by the Bank on 01.10.2011 which is reproduced as hereunder:

 -----------------------------------------------------------------------------------------------------------------------------------------                                                                                                                   

     To

      M/s. Paramhans Loomtex

          Plot No. 2, Ward No. 7, Opposite

         Old Octroi Head Office, Sanoli Road,

         Panipat.

                  Cash Credit limit of Rs. 15.00 lacs

In reference your cash credit  account of Rs. 15.00 lacs with us we request you as under:

“Please refer to our discussion over the subject matter as informed by you that you shall get the stocks & building insurance renewed which being expired on 12.10.2011 against all risks and submit the copy of same to us for our record.”

We once again request you to submit the same as it is required to be kept is our record.

ManagerTech.”

10.     It is pertinent to note that there was a specific pleading by the Complainants that they did not receive this letter dated 01.10.2011 and that the Bank was silent regarding the mode of dispatch of the said letter. On a pointed query, as to whether, such a reminder letter was issued prior to the current year especially in the light of the fact that the Petitioners’ firm had been taking insurance through Bank for the last 12 to 13 years, the learned counsel replied that he had no knowledge of any such procedure.  Thereafter, vide order dated 27.03.2017, the Bank was directed to file an Affidavit seeking explanation on the following points:

(i)  The dates when the amounts towards the premium, stated to have been paid by the Bank on behalf of the Complainant for renewal of the policies, stated to have expired on 12.10.2011, as reflected in the Insurance Register, were remitted to the Insurance Company and debited to the account of the Complainant;

(ii) As it is claimed that the Complainant had been enjoying the CC limit with the Bank for the last almost ten years, what was the procedure being adopted by the Bank for renewal of the policy from year to year in terms of the Hypothecation Agreement. We have put this query because it is pointed out that vide letter dated 01.10.2011, the Bank had informed the Complainant that the policy in question “which has expired on 12.10.2011 against all risks and submit the copy of same to us for our record” expired on 12.10.2011;

(iii)          Letter(s), if any,  issued by the Bank to the Complainant relating to expiry/ renewal in respect of earlier period prior to the policy for the period 12.10.2011 to 12.10.2012; and,

(iv) Why CC limit in favour of the Complainant was not withdrawn immediately on expiry of the policy and intimation in this regard was not sent to the Complainants.

11.     In compliance with the  direction,  Senior Manager Technical of the Bank filed an Affidavit  stating that the procedure adopted by the Bank was to remind  the borrower for renewal of the policy, whenever the same neared expiry. For better understanding of the procedure followed, paras 5, 6 and 7 of the Affidavit is reproduced hereunder:

“5. However, for all these years till 12.10.2011, the Borrower used to tell the Bank to get the insurance cover on its behalf. However, for the insurance cover for the period after 12.10.2011, the petitioner through Mr. Bharat Lakhina had approached the branch and had asked the bank not to get an insurance cover for the said period of 12.10.2011-12.10.2012 and stated that he would get the same done from the insurance company of his choice, since he felt that insurance premium offered by other insurance  in the market was lower as compared to the premium charged by the New India Assurance Company, from which the bank used to get that done. In furtherance to the said discussion only, I had written a letter dated 01.10.2011 to the petitioner asking to get the policy renewed and the said letter was personally received on the said date under signatures by Mr. Bharat Lakhina, stated to be a proprietor of the Petitioner.

6.  That the Bank’s record of the present case does not contain any such other letter issued by the bank to the complainant relating to expiry/ renewal of the policy prior in time i.e., prior to the policy  for the period 12.10.2011 to 12.10.2012 except the letter dated 01.10.2011 issued by the deponent.

7. That the CC limit could not have been withdrawn immediately after the expiry of the insurance cover as the said limit was given against the hypothecation of book debts as well as stock, equitable mortgage of collateral security and all those securities existed.”

12.     It is evident from the aforenoted Affidavit that there was indeed a procedure which obligated the Bank to communicate to the Complainant the requirement of renewal of the policy, prior to the  expiry of the insurance cover.

13.     In the light of the specific stand taken by the Complainants that the subject letter does not bear the stamp and that  the signature is not that of the proprietor Mr. Bharat Lakhina, the bank did not lead any evidence to substantiate its  stand about the aforenoted communication by producing  the relevant dispatch/ receipt Registers. It is pertinent to note that in the Affidavit filed before us, the bank has affirmed that there is no record maintained by them for the previous policies. When it is their own argument that there is a procedure of communicating to the Complainants prior to the renewal of the policy, there are no substantial reasons given as to why such correspondence, if made, was not documented. Further, it is noteworthy to mention that the Bank  has failed to prove that the Complainant himself approached the Bank and informed them that he did not want insurance coverage for that particular year. It belies our conviction for the simple reason that the policy being renewed regularly from year to year, suddenly the Complainants would decide to discontinue the same.

14.     It is further relevant to mention that the Bank had not stopped the facility of Cash Credit extended to the Complainants though the policy had lapsed, inspite of the fact that it  was mandatory for the stock to be insured in case of extension of Cash Credit limit.

15.     For all the aforenoted reasons, it can be safely construed that the Bank committed an act of deficiency of service in not deducting the insurance premium from the Complainants’ account specially taking into consideration the Bank’s history of having taken the policy on behalf of the Complainants for the last 12 years. As the Bank has not specifically rebutted the Survey report, we are of the considered opinion that the Petitioner firm is entitled to the amount assessed by the  surveyor. Thus, the order of the District Forum regarding the direction to the Bank to pay ₹12,84,676/- with interest @ 9% p.a. from the date of filing of the Complaint till the date of realization together with compensation of ₹10,000/- and costs of ₹2,200/-, deserves to be confirmed and restored. It is ordered accordingly. If the directions contained in the District Forum’s order are  not complied within 30 days from the date of receipt of a copy of this order, the amount shall attract interest at 12% p.a. from the date of filing of this Complaint till the date of realization.

16.     In the result, the Revision Petition is allowed; the order of the State Commission is set aside and that of the District Forum is confirmed. No order as to costs.