D.YAKOOB vs NILGIRIS DISTRICT CENTRAL CO-OPERATIVE BANK LTD.

THE appeal is directed against the order dated 6.9.1999 on the file of the District Consumer Disputes Redressal Forum, Nilgiris District at Udhagamandalam.

THE appellant is the complainant while the respondent is the opposite party. Short facts may be related in order to understand the crux of the issue arising for consideration in this action.

The complainant is the owner of a photo house located at Charing Cross, Udhagamandalam. The opposite party is the Nilgiris District Central Co-operative Bank Ltd., also located at Charing Cross, Udhagamandalam.

THE complainant raised a security loan of Rs. 5,00,000/- from the opposite party for the purchase of a costly electronic equipment in connection with his business of photography. He hypothecated the said instrument with the opposite party. One of the terms and conditions of the grant of loan was to the effect that the equipment purchased should be insured in the joint name of the borrower and the opposite party Bank. THE insurance premium has to be paid by the complainant. In the hypothecation agreement, there is also a clause namely, Clause No. 7. According to the said clause, if default shall be made in payment of such premia or in keeping the securities so insured, then and in such case it shall be lawful for but not obligatory upon the Bank to pay such premia and to keep the securities so insured and the expenses incurred by the Bank for such purpose shall be charged to and payable by the borrowers with interest as provided for in the 11th Clause hereof. The loan was sanctioned by the opposite party Bank. The complainant however did not at all take up the policy of insurance pursuant to the terms and conditions for sanctioning of loan and the clause contained in the hypothecation agreement. There were floods which actually took place on the night of 25.4.1999 and in the floods so happened, the electronic equipment became incapable of performance occasioned irreparable loss and damage to the complainant.

IT is the positive case of the complainant that the opposite party failed to prevail upon the complainant to take a policy of insurance with regard to the equipment purchased by him and such sort of an act on the part of the opposite party would tantamount to deficiency in service on their part. In such a backdrop and setting, the complainant knocked at the doors of the Forum below for certain reliefs as prayed for in the complaint. The opposite party in pith and substance would contend that there was no deficiency in service on their part. What is further contended is that it is incumbent on the part of the complainant to take a policy of insurance in his name as well as in the name of the opposite party and the premium has to be paid by the complainant to keep the policy alive and in case the premium is not paid, it shall be lawful for the Bank to pay the premium due by the complainant in taking the insurance policy and recover the amount of premium with interest as stipulated in the relevant clause contained in the hypothecation agreement. Despite pursuasion, the complainant did not take up the policy of insurance for quite long subsequent to the sanctioning of the loan and the purchase of the equipment. If the equipment got damaged in floods, the complainant alone has to bear the brunt of the damage caused to the equipment for his failure to take up the effective policy of insurance covering the risk by floods to the electronic equipment purchased by him. The complaint as such is liable to be dismissed.

THE Forum below after taking into consideration the materials placed on record, recorded a finding that there was no deficiency in service on the part of the opposite party Bank and consequently dismissed the complaint without cost.

AGGRIEVED by the order as above, the complainant resorted to the present action by engaging a Counsel of his choice namely, learned Counsel M/s. K. Sridhar, L. Kishore and D. Latha. On service of process, the respondent/opposite party entered appearance through a Counsel of their choice namely, learned Counsel M/s. M. Sriram and T. Ravikumar. When the matter came up for hearing before us today, learned Counsel appearing for the appellant/complainant was called absent and no representation was made on his behalf. We are however inclined to dispose of the appeal on merits of course after hearing the arguments of learned Counsel M/s. T. Ravikumar appearing for the respondent/opposite party and on perusal of the materials placed on record.

Even at the outset, we may point out that there are absolutely no merits in the appeal. The terms and conditions of the loan agreement had been marked as an exhibit viz., Ex. B2. Clause 5 of Ex. B2 specifically states that the complainant is 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 apart, a condition is also had been incorporated in the hypothecation agreement marked as Ex. B3 wherein it is 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. In the case on hand, the complainant did not take any policy of insurance at all. Despite reminders having been sent on two occasions namely, one on 9.1.1999 and the other on 18.5.1999 and the reminders so sent had been marked as Exs. B4 and B5. If the policy of insurance had not been taken by the complainant as required by Clause 5 of Ex. B2, the complainant alone has to be blamed for such a colossal failure in not taking a policy of insurance and the opposite party cannot at all be found fault with for his failure to take a policy of insurance to cover against the risk of flood, fire etc. The Forum below rightly took into consideration Clause No. 5 of Ex. B2 and Clause No. 7 of Ex. B3 in coming to the conclusion that there was no deficiency in service on the part of the opposite party Bank and consequently dismissed the complaint without cost.

IN fine, the appeal fails and the same is dismissed. We however make no order as to costs on the facts and in the circumstances of the case. Appeal dismissed.