ALLAHABAD BANK, GHAZIABAD vs METAL PACK INDUSTRIES

TWO appeals under Section 15 of the Consumer Protection Act, 1986 (hereinafter called the ''Act'') i.e., one Appeal No. 3057/2001 and another 3092/2001 were preferred respectively by Allahabad Bank and Oriental Insurance Company Limited against the judgment and order dated 3.11.2001 passed by District Consumer Forum, Ghaziabad in Complaint Case No. 595/1994.

THE brief facts of the case are that the complainant took an insurance policy for one year from 24.11.1990 to 23.11.1991 from Oriental Insurance Company Limited (hereinafter called the ''Insurance Company'') and that during the currency thereof a major theft was committed in the premises of the complainant''s factory between 26th and 27th April, 1991. A report was lodged with the police and intimation about it was also sent to the Insurance Company which appointed a Surveyor to make a report about the claim. The opposite party-Insurance Company contested the case before the learned District Forum and filed their written statement. The case further is that the Insurance Company took the stand that it was not liable to make good the loss under the Insurance policy because it had not received the payment of the amount of the premium which had been remitted by the complainant through cheque No. 290121 dated 24.11.1990 for a sum of Rs. 1,663. The cheque was presented for payment to the drawee Bank (Allahabad Bank) which refused to make the payment as there was difference in the amount mentioned in figures and as mentioned in words. The Insurance Company also says that it intimated the complainant about dishonouring of the cheque through a letter dated 7.1.1991 in spite whereof the amount of premium was not paid to it.

The learned District Forum after considering the material available on record and after hearing the learned Counsel for the parties, decreed the claim of the complainant and ordered for payment of Rs. 3,00,000/- along with 8% interest by the Allahabad Bank. It also directed the Insurance Company to pay a sum of Rs. 1,00,000/- to the complainant. It also awarded Rs. 800/- each to be paid by both the opposite parties.

AGGRIEVED against the impugned order, the present appeals have been preferred. We have heard the learned Counsel for the Allahabad Bank Mr. T.J.S. Makkar as well as Miss. Alka Saxena, Counsel for Insurance Company and Mr. Nilish Anand for complainant and perused the impugned order. The entire record has been examined carefully.

THE finding of the learned District Forum was criticized in Appeal A/3057/2001 on the ground that the finding that cheque ought to have been produced by the appellant as it was the duty and onus of the appellant-Bank, is wrong and the dishonour of the cheque was within the domain and there being the difference of the amount mentioned in the cheque in words and figure, and the appellant-Bank was within its jurisdiction to dishonest the same and thus the liability which was fastened on the appellant by the learned District Forum was not justified. While in another Appeal No. A/3092/2001, it was observed that the District Forum erred in law and in fact in making the appellant liable for the compensation. It was argued that the Insurance policy which was applied by Allahabad Bank in the name of the opposite party No. 1 and the premium amount was never paid and as such the liability of indemnification does not arise and as such the impugned judgment and order was liable to be set aside as was against the appellant for awarding the compensation is concerned. In the instant case it is clear that the complainant''s goods were hypothecated with Allahabad Bank who in turn applied for the Insurance policy in the name of the complainant. It is also a fact that towards the premium payment a cheque was issued but the cheque was dishonoured by the Bank on the ground that the amount shown in the figure and in words in the cheque in question were different. The liability of indemnification comes only when there is a payment of premium amount. In this case, the money noted in the cheque which was the premium amount was never sent by Allahabad Bank to the Insurance Company and obviously thus the argument of Miss. Alka Saxena, Advocate that since policy contract was not complete and the premium was not paid, the articles in the factory premises were not covered under the insurance policy. Obviously, thus, the finding holding the Insurance Company liable for payment of compensation is not justified. As regards the argument of Mr. T.J.S. Makkar is concerned, it is clear that the goods whose theft was committed in the night between 26/27.4.1991 were hypothecated with the appellant-Allahabad Bank. It was a case of major theft and the stock worth Rs. 3,06,667/- was stolen. The account of the complainant was with Allahabad Bank. The cheque was issued in the name of Oriental Insurance Company Limited and was put up for encashment. The appellant-Allahabad Bank did not honour the cheque and did not encash the same on the ground of variance of amount in figure and words. The reliance was placed that in view of the instructions issued from time to time by the Reserve Bank of India, the instructions were binding on the Nationalised Bank and as there was variance in figure and in words in the amount of the cheque, the appellant-Bank was justified in dishonouring the same. This argument obviously has no credence.

SECTION 13(1) of the Negotiable Instruments Act makes it clear that a cheque payable either to order or to the bearer is a negotiable instrument. In SECTION 18 of the Negotiable Instrument Act if the amount undertaken or ordered to be paid as stated differently in figures and in words shall be the amount undertaken or ordered to be paid. SECTION 31 of the Negotiable Instruments Act further provides that drawee of a cheque having sufficient funds in his account properly applicable to the payment of such cheque must pay the payment when duly required so to do, and in default of such payment, must compensate the drawer for any loss or damage caused by such default. Obligations as contained in SECTIONs 13 and 18 of the Negotiable Instruments Act are binding on figures.

IN the instant case rather a vigilant approach should have been adopted by the appellant-Bank as the stock which was stolen was hypothecated by the appellant-Bank and it was the Bank who offered the INsurance Company for insurance. The only liability of the complainant was to make payment of the premium and that he did by issuing a cheque to the INsurance Company which to the utter dismay and surprise was dishonoured on the ground that the amount stated in figures and words in cheque was different. There was sufficient funds of the complainant with the Bank. Section 18 of the Negotiable INstruments Act, enjoins a liability on Bank that in case of different in figures and words, the amount stated in words shall be the amount undertaken or ordered to be paid. Section 31 of the Negotiable INstruments Act further provides that the payment of such cheque must be made which has not been done. Section 31 further in such contingencies fastening the liability and it provides "in default of such payment, must compensate the drawer for any loss or damage caused by the such default" (emphasis our own), so that facts which emerge are that in a very arbitrary ways the appellant, Allahabad Bank, dishonoured the cheque which was meant towards the payment of the premium to the INsurance Company. Thus, liability to pay the total loss on account of the theft of the goods which were hypothecated with the bank and were placed in factory of the complainant was of the appellant, Allahabad Bank. The findings so recorded by the learned District Forum thus does not need any interference on merits. The rate of interest was subject matter of criticism. It was argued that rate of interest awarded should have been 6% and not 8%. We have considered this aspect of the matter too in view of the fact that the reasonable claim of the complainant has been denied for no plausible reason or fault and consequently the complainant was put to troublesome position. The rate of interest awarded by the learned District Forum in our considered view was just appropriate and proper and thus no interference too on this score was needed. Consequently, appeal No. 3092/SC/2001 filed by the Oriental Insurance Company Limited deserves to be allowed and the liability fastened in the impugned judgment on the Oriental Insurance Company is liable to be wiped off. However, there being no substance in Appeal No. 3057/SC/2001 filed by Allahabad Bank, Ghaziabad, the same deserves to be dismissed. ORDER Appeal No. 3092/SC/2001 filed by Oriental Insurance Company Limited is allowed and the liability fastened in the impugned judgment on the appellant is wiped off. Appeal No. 3057/SC/2001 filed by Allahabd Bank, Ghaziabad is dismissed. There will be no order as to costs. Let original copy of this order be kept in the Appeal file No. A/3057/SC/2001 and a certified copy of this order be placed in the records of Appeal No. A/3092/SC/2001 which shall also be governed by this order. Let copy of this order be made available to the parties as per rules. Ordered accordingly.