ALLAHABAD BANK, KURUKSHETRA vs ASHOK KUMAR KALRA

THIS appeal is directed against the order dated 18.9.2003 passed by the District Consumer Disputes Redressal Forum, Kurukshetra whereby while accepting the complaint of the respondent-complainant direction has been given to the opposite party to pay Rs. 69,000 to the complainant with interest @ 10% per annum from the date of filing the complaint till its realization.

PUT shortly, the facts of the case as set up in the complaint are that in the year 1995 the complainant took loan of Rs. 1,50,000 for the purchase of a tractor. He had mortgaged his land measuring 74 Kanals situated in Village Masana as per registered mortgage-deed dated 3.1.1995 with the opposite party. For the tractor the complainant was allotted Registration No. 07B-4574. According to the complainant it was envisaged in hypothecation agreement that the opposite party would pay the premium of the insurance in respect of the said tractor and the premium amount would be debited to the account of the complainant. On 5.9.1997 at 10.00 a.m. the aforesaid tractor met with an accident in which one Abudal Gani son of Shri Mishri Lal had died. The father of the deceased preferred claim petition before the Motor Accident Claims Tribunal which awarded a sum of Rs. 69,000 as compensation to him. The compensation so awarded was to be paid by the complainant as it transpired that he had not got the tractor insured nor paid the premium and for that reason there was no insurance cover on the date of the accident. Thereafter, the complainant invoked the jurisdiction of the District Forum seeking direction against the opposite party for payment of Rs. 69,000, the amount which was paid by him as compensation. In addition Rs. 50,000 as damages on account of mental agony and harassment suffered by him has been claimed. The claim was contested by the opposite party. In the written statement filed, they pleaded that they had advanced loan of Rs. 1,50,000 for the purchase of tractor to the complainant. The complainant was liable to pay interest @ 14% on the advanced amount. It was further pleaded by them that the tractor in question and the agricultural land measuring 74 Kanals situated in Village Masana was mortgaged in its favour and the same was registered in the office of the Sub-Registrar, Thanesar on 3.1.1996. It was further maintained that as per Para No. 9 of the agreement of the hypothecation dated 7.1.1996, it was the duty of the complainant to get the tractor insured and thus they denied the liability to pay the amount claimed in the complaint. On scrutiny of the pleadings of the parties and evidence adduced on record, the District Forum accepted the complaint and issued direction noticed earlier as per order dated 18.9.2003. It is against this order the present appeal has been filed. Learned Counsel representing the parties have been heard at length.

There is no factual dispute between the parties. It is spelt out from the record that a sum of Rs. 1,50,000 was advanced as loan for the purchase of tractor for which the agreement of hypothecation dated 7.1.1996 was executed in favour of the opposite party. Clause 10 of the agreement reads as under: "IX. That the Borrower(s) shall at all times keep such items of security as are of insurable nature, insured against loss or damage by fire and other risks as may be required by the Bank and shall deliver to the Bank all such policies. It shall also be lawful for but not obligatory upon the Bank to insure and keep insured by debit to the Borrower(s) accounts(s) the security as are of insurable nature. The proceeds of such insurance shall at the option of the Bank either be applied towards replacement of the security or towards the satisfaction of the Bank''s dues hereunder."

FROM the above stated terms of the agreement it is clearly brought on record that option has been given to bank to insure and keep the insured by debit to the borrowers security as are of insurable nature. Meaning thereby, the tractor in question could have been insured by the Bank. At the same time this clause cannot be construed to say that it was imperative for the opposite party to get the vehicle insured. In case D.Y. Akoob v. Nilgiris District Central Co-operative Bank Ltd., III (2003) CPJ 96, the facts were that as per Clause 5 of the terms and conditions of the loan agreement the complainant was required to take a policy of insurance in his name as well as in the name of the opposite party against risk of floods, fire, etc. This part of the condition was also incorporated in the hypothecation agreement wherein it was specifically stated that in case the complainant fails to pay the premium actually due in respect of the policy taken by it against the risk of floods or fire, etc., it shall be lawful for the opposite party Bank to pay the premium for and on behalf of the complainant and recover the same with interest pursuant to the terms and conditions contained in the hypothecation agreement. A security loan of Rs. 5,00,000 was obtained from the Bank for the purchase of a costly electronic equipment in connection with his business of photography by the complainant and the said instrument was hypothecated with the Bank. Due to the floods on the night of 25.4.1999 the electronics equipment suffered irreparable loss and damage, for which the complainant put up the claim taking into consideration the terms of the policy as it was incumbent on the part of the complainant to take policy of the insurance in his name as well as that of Bank and premium was to be paid by the complainant. As the policy was not taken by the complainant, it was held that there was no deficiency on the part of the Bank and the claim preferred by the complainant was rejected. In other case Pradeep Kumar Jain v. Citibank and Another, II (1999) CPJ 7 (SC)=VI (1999) SLT 550=AIR 1999 SC 3119, the complainant had borrowed money for the purchase of car from the Bank and also executed hire purchase agreement. The policy cover was obtained from the Insurance Company commencing from 21.1.1989 to 20.1.1990. There was endorsement in the policy to indicate that the subject of the hire purchase would be payable by the Bank. The appellant had issued 36 cheques in favour of the Bank, each of them for a sum of Rs. 2,316 towards the monthly instalment to pay the entire loan. He had also issued two cheques in favour of the Insurance Company towards insurance premium for two years beyond January 20, 1990. The case of the complainant was that in view of the assurance given by the Bank that they would take policies for subsequent two years beyond 21.1 1990, the two cheques had been issued by him and the policy was to be automatically renewed in the name of the appellant with hire purchase endorsement in favour of the Bank. The delivery of the car was taken on 8.3.1999. On 15.8.1990 the car met with an accident on Delhi-Jaipur National Highway. The car was extensively damaged and the occupants of the car also suffered injuries and later on succumbed to injuries. The complainant sought particulars of the Insurance Company from the Bank but found no response from it. Thereafter, he invoked the jurisdiction of the National Consumer Disputes Redressal Commission alleging neglected duty on the part of the Bank insuring the vehicle and preferred the claim for the loss of the car as well as occupants of the car who had died in the accident, alleging deficiency in service on the part of the opposite parties. They also, claimed loss to the extent of Rs. 1,55,000 being market value of the car on the date of the accident as he was likely to be fastened with the liability of the third party claims to the tune of Rs. 18 lakh filed by the legal representative of the deceased occupants of the car before the Motor Accident Claims Tribunal, Rewari and to keep the appellant indemnified against all such claims. In addition he also demanded Rs. one lakh for mental agony and suffering caused to him due to negligence on the part of the opposite parties to discharge their services. The Hon''ble National Commission did not determine the compensation claim arising out of the fatal accident as it fell within the ambit of Section 165 of the Motor Vehicles Act, 1988 (hereinafter referred to as the Act). With regard to the liability for the damage to the car, the loss payable by the Insurance Company arising out of the accident was assessed Rs. 76,990 on the basis of the sum assured for the first year less 10% depreciation for one year and ordered accordingly. On the concessional plea taken by the Bank the order of the District Forum was challenged before the Hon''ble Supreme Court primarily on the ground that liability of the Bank for the damages payable by the appellant for want of insurance of the vehicle, as determined by the Motor Accident Claims Tribunal. As the insurance policy had not been taken, this prayer was not accepted taking into consideration the provisions of Section 146 of the Act, 1988 and the nature of the policy, which had been obtained earlier by the appellant when the vehicle was purchased and thereafter insurance cover was renewed from time-to-time. As the necessary material on record was not available, the claim of the appellant was not accepted and it was held that merely he has based the case on the cheques, the entire liability to pay all damages, cannot be laid on the respondent-opposite party.

THE ratio of the above mentioned cases would indicate that the liability has to be determined in terms and conditions of the hypothecated agreement. In this case Clause 1 of the agreement noted above clearly provides that it was not obligatory for the Bank to have taken the insurance cover of the tractor for the period in question. That being so equally, it was the responsibility of the claimant to have insured that the vehicle in question be insured. Even otherwise, plying of the vehicle without insurance cover would tantamount to commit the violation of Section 146 of the Act, 1988. It is also the requirement of the law that the driver of the tractor must carry the insurance policy with him at the time he was plying the tractor. All these circumstances have not been given due consideration by the District Forum and for that reason it is to be held that the complainant has failed to establish deficiency in service on the part of the opposite party. For the reasons recorded above, the appeal is accepted and while setting aside the impugned order, the complaint is dismissed. Appeal allowed.