GODAVARI GRAMMENA BANK vs TEJA POULTRY FARM

THE unsuccessful opposite parties 1 and 2 are the appellants before this Commission.

THE facts in brief are on the application of the complainant, the second opposite party sanctioned a loan of Rs. 11,30,000/- for running a poultry farm of 10,000/- birds and an amount of Rs. 6,00,648.50 ps. was disbursed to the complainant. A comprehensive policy was taken to cover the risk of the sheds in which the poultry farm is to be located and opposite parties 1 and 2 undertook to pay the premium towards the live stock and sheds. Opposite Party No. 1 has deducted Rs. 5,810/- on 7.5.1996 towards premium for the live stock and paid it to opposite party No. 3. On 16.10.1996 a further amount of Rs. 837/- was debited to the account of the complainant towards the premium for the sheds. On 6.11.1996 the sheds were damaged during the cyclone, that occurred on the intervening night of 6th/7th November, 1997, damaging the live stock and the sheds completely. The claim for damage of live stock was settled at Rs. 60,000/- and was paid away. The opposite parties 1 and 2 have estimated the damages to the sheds at Rs. 3,10,000/-.

Opposite parties 1 and 2 filed their written version stating that the responsibility for insuring the assets is solely on the borrower and that the Bank respresented by its Chairman entered into Grameena Package Master Policy Agreement, with the third opposite party represented by its Divisional Manager, on 11.4.1996 and as per the terms of Clause 7 of the said Agreement, the Bank debited the insurance premium of Rs. 848/- to the account of the complainant on 16.10.1996 and filled Annexure-I with various premia of different loan amounts and sent it to opposite party No. 3 on 4.11.1996. On intimating to the third opposite party about the cyclone, a Surveyor was deputed and the liability is on the part of the third opposite party to settle the claim.

OPPOSITE party No. 3 filed its written version stating that the statement dated 31.10.1996 (Clause 7) was received by Dowleswaram Branch on 18.11.1996 after the cyclone and the remittance of the premium was sent in the monthly statement dated 25.11.1996 and the specific conditions in the agreement and under Section 64VB of the Insurance Act are not complied with and, therefore, there is no valid and enforceable contract of insurance and the opposite party is, therefore, not liable to pay any amount. Basing on these pleadings and the evidence adduced, the District Forum found that there was deficiency in service on the part of opposite parties 1 and 2 in not sending the premium amount as per clause in time and directed them to pay Rs. 3,85,015/- with interest at 12 per cent per annum and also compensation of Rs. 10,000/- together with subsequent interest at 12 per cent per annum. It also held that there is no deficiency in service on the part of the third opposite party.

AGGRIEVED by the said finding and order, opposite parties 1 and 2 have preferred this appeal. The point for consideration is, whether there is any deficiency in service on the part of the opposite party Nos. 1 and 2 ? It is not in dispute that opposite party No. 2 has sanctioned a loan amount of Rs. 11,30,000/- to the complainant and advanced a sum of Rs. 6,00,648.50 ps. and obtained a policy covering the sheds, and debited the premium of Rs. 848/- to the account of the complainant on 16.10.1996. Opposite Party No. 2 says that it has sent the statement along with the Banker''s cheque to the third opposite party on 4.11.1996 and opposite party No. 3 is, therefore, liable to pay the insured amount.

OPPOSITE Party No. 3 on the other hand contends that opposite parties 1 and 2 have violated the terms and conditions of Clause 7 of the agreement entered into between their Zonal Manager and the Chairman of the Grameena Bank in that they have received the statement on 25.11.1996 instead of 31.10.1996 and, therefore, they are not bound to pay the amount. Clause 7 of the agreement reads as follows : "(7) Payment of Premium : Upon disbursement of loan, the Bank shall debit loanee/borrower''s account with the premium amount for the period required at the rates given under Para 4 of this agreement and shall send credit advice in respect thereof, to its Head Office. The Company shall open its current account with Head Office of the Bank in which the premium, basing on credit advices received from various branches shall be credited on the same date appearing on credit advice (to avoid violation of provisions of Section 64VB of Insurance Act). On the last working day of each month the Head Office of the Bank shall furnish the statement of account alongwith pay order for the total premium drawn in favour of the Company to Dowleswaram B anch."

Under this Clause, upon disbursement of the loan, the Bank shall debit the premium from the borrower''s account and on the last working day of each month it shall furnish the Statement of Account along with pay order for the total premium ot Dowleswaram Branch.

IN this case, the premium amount of Rs. 848/- was debited to the account of the complainant on 16.10.1996. The Bank claims that it has sent the statement on 4.11.1996, while the INsurance Company says that it received it only on 25.11.1996 after the cyclone. To substantiate their plea, opposite parties 1 and 2 filed a xerox copy of the Despatch Register. The District Forum in its order mentioned that though it directed the Counsel for the first and second opposite parties to produce the original of the Despatch Register, the Counsel has failed to do so. The District Forum after thoroughly examining the Xerox copy of the Despatch Register observed that : "The 1st entry in Ex. B-5 photostat copy reads that the statement of master policy was despatched on 4.11.1996 to the 3rd respondent Insurance Company at Dowleswaram. There is some endorsement in Ex. B-5 to the effect that it was handed over personally. There is no initial of the person below on the said endorsement. It is evident that the date ''4.11.1996'' in the 1st column and the endorsement ''handed over personally'' are in different ink, which can be gathered even from the photostat copy because the said entries which are in dark impression. Further, Ex. B-5 reads that 72 items were sent by registered post and only one item was handed over personally. The total items were 73 in number. Under that figure, there are initials with the description ''vouched on 6.11.1996''. Therefore, it is evident that the 1st entry in Ex. B-5 dated 4.11.1996 is not really of the date 4.11.1996. It was interpolated in the last entries on 6.11.1996. The next entry in Ex. B-5 is dated 8.11.1996. It is not as if there were no despatches between 4.11.1996 and 8.11.1996."

We fully agree with the opinion expressed by the District Forum in this regard.

Further if the statement was despatched by the Local Tappal the acknowledgement should have been obtained and produced before the District Forum. Neither the Tappal Book nor the affidavit of the person who delivered the said cover was filed. In those circumstances the District Forum has rightly held that the entire episode is suspicious. Further Ex. B 18 is the copy of the account of opposite party No. 3 with the second opposite party. It shows that on 14.11.1996 an amount of Rs. 3,000/- from Purushottampalli Branch of the first opposite party was credited to the third opposite party account. The said credit is only after cyclone. These circumstances further falsify Ex. B5 entry in the Despatch Register. Ex. B27 is the statement of account from the second opposite party and it was received by opposite party No. 3 on 25.11.1996 long after the date of the peril. Opposite Party No. 3 has rightly refunded the premium of Rs. 3,000/- mentioned in Ex. B26 which includes the particulars of the premium for the sheds of the complainant. The National Commission in Pradeep Kumar Jain v. Citibank, II (1995) CPJ 219 (NC), held that the complainant has paid the premium for the insurance of the car for two years and gave it in time to the Bank for insuring the car. The car met with an accident and became a total loss. The occupants of the car succumbed to the injuries. In these circumstances, the National Commission held that the Bank is liable to pay the compensation in view of this decision also it must be held that the Bank has committed deficiency in service in not remitting the premium amount as per Clause 7 of the Agreement.

THE District Forum has rightly taken this view and we find no reason to interfere with the order of the District Forum. THE order of the District Forum is confirmed and the appeal is dismissed with costs of Rs. 2,000/-. Time for compliance six weeks. Appeal dismissed.