Karnail Singh vs State Bank of India

THIS is an appeal by the complainants against the order dated 8.1.2001 of the District Forum by which their complaint was dismissed.

BRIEF facts giving rise to this appeal may be noticed. The complainants Karnail Singh and Bhag Singh filed a complaint before the District Forum alleging that they had purchased one Massy Ferguson Tractor Mark-1035-D1 bearing Registration No. PB-04 D-9013 by getting the loan from the respondent State Bank of India, Moga. They had been making the regular re-payments of the loan with interest to the Bank. It was the Bank which was getting the tractor insured with Oriental Insurance Company and used to pay the premium of insurance by deducting the same from the account of the complainants. The Bank was getting the tractor comprehensively insured. On 5.3.2000, unfortunately, the tractor met with an accident and the report was lodged regarding the accident with Police Station, Bagapurana vide Daily Report No. 36 dated 6.3.2000. In the accident, the tractor got damaged and the repair of the tractor cost them Rs. 37,980. When the claim was lodged with the Insurance Company, the complainants came to know that during the relevant period, instead of getting comprehensive insurance of the tractor, the Bank had suo motu, without any instructions from the complainant, got the tractor insured only against 3rd party risk. Since the tractor was not comprehensively insured by the Bank, the complainant suffered a loss of Rs. 37,980 as that amount could not be got reimbursed from the Insurance Company. Hence, the complaint before the District Forum claiming Rs. 37,980 as compensation from the respondent-Bank. Further, Rs. 20,000 for the loss in the work during the period the tractor remained under repair and Rs. 10,000 towards mental agony were also claimed. Another Rs. 5,000 towards misc. expenses were also claimed in the complaint. After appreciating the respective contentions of the parties and going through the evidence the complaint was dismissed by the District Forum.

Before we deal with the argument of learned Counsel for the appellant, we may notice a clause in the agreement for hypothecation which was entered into between the complainant and the Bank: "9. 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 be also lawful but not obligatory upon the Bank to insure and keep insured by the debit to the borrower(s) account(s) the security as 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."

LEARNED Counsel for the appellant argued that previous to the insurance in question, the Bank had been getting the tractor insured comprehensively. Without any instructions or directions to the contrary from the complainant, the Bank was under an obligation to keep on getting the insurance renewed as hereinbefore i.e., the tractor should have been got comprehensively insured by the Bank and suo motu the Bank could not change the nature of the policy for the relevant period from ''comprehensive'' to ''third party'' especially when the premium was to be paid by the complainants by deducting the amount from their accounts. This argument need not detain us inasmuch as under exactly similar circumstances in a case ''Appeal No. 913 of 2000, Baljit Singh v. State Bank of Patiala, decided on 10.6.2005'', this Commission while interpreting the aforesaid clause of hypothecation held that there is only a liberty with the Bank to get the vehicle insured but it is not obligatory. The obligation to get the vehicle insured is on the owner i.e., in this case the complainant. The argument was also addressed in that case that since in the previous years, the insurance had been got done by the Bank, therefore, for the relevant period when the accident took place, it was also obligatory on the Bank to get the insurance done as herein-before. We had repelled that argument in view of the judgment of Punjab and Haryana High Court in ''Haryana Pesticides v. Bank of Rajasthan Ltd., reported as 2004 (1) ISJ (Banking) 146''. Another judgment of the Apex Court Pradeep Kumar Jain v. Citibank and Anr., reported as II (1999) CPJ 7 (SC)=AIR 1999 Supreme Court page 3119'' has also been brought to our notice. In that case also, the vehicle had been purchased by getting loan from the Bank. The Bank had got done the first insurance and for the next insurance, the owner of the vehicle had given the cheque representing the premium to the Bank for onward transmission to the Insurance Company. The Bank failed to remit the cheque to the Insurance Company. Resultantly, there was no insurance for the relevant period when the accident took place. The question arose whether under such circumstances, for the damages suffered by the owner of the vehicle due to accident, the Bank was liable to reimburse the same? The Apex Court gave the reply in the negative by holding that the obligation always remained on the owner to get the vehicle insured and since in that case the vehicle was not got insured by the owner, he was liable to pay the damages. We have already noticed the relevant clause in the hypothecation agreement. The obligation, as per that clause, is on the owner to get the vehicle insured. The Bank may do it but it is not obligatory.

IN view of our decision in earlier case, Baljit Singh v. State Bank of Patiala (supra) and observations of Apex Court, we do not find any infirmity in the order of the District Forum. Consequently, this appeal is dismissed with no order as to costs. Appeal dismissed.