VIJAYA BANK vs CHIKKAPPAIAH

THIS revision petition has been filed by the petitioner against the order dated 10.11.2009 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore (in short, ''the State Commission'') in Appeal No. 3025/2009 Vijaya Bank Vs. Chikkappaiah by which, while dismissing appeal, order of District Forum allowing complaint was upheld.

BRIEF facts of the case are that Complainant/respondent borrowed loan of Rs.3,10,000/ - on 14.9.2004 for purchase of tractor and opened two loan accounts in OP''s bank. Complainant deposited R.C. Book of his tractor KA -44 -T -210 and OP was to pay tractor insurance premium regularly in August month of the year. It was further submitted that OP paid premium on 29.8.2004 and in August, 2005, 2006 and 2007. Tractor was damaged in an accident on 27.9.2008 and FIR was registered. Complainant incurred expenses of Rs.53,000/ - in repair of tractor. Complainant intimated to OP and submitted claim, but OP replied that no insurance premium for the year 2008 has been paid. Complainant approached OP who did not give any answer. Alleging deficiency on the part of OP, complainant filed complaint before District Forum. OP was proceeded ex -parte before District forum. District Forum after hearing complainant allowed complaint and directed OP to pay Rs.58,000/ - with 10% p.a. interest and further directed to pay Rs.5,000/ - to the complainant as damages and Rs.500/ - as cost of litigation and further directed OP to deposit Rs.5,000/ - with Consumer Legal Aid Account. Appeal filed by OP was dismissed by learned State Commission at admission stage vide impugned order against which, this revision petition has been filed.

NONE appeared for respondent even after service and he was proceeded ex -parte. Heard learned Counsel for the petitioner and perused record.

LEARNED Counsel for the petitioner submitted that inspite of no deficiency on the part of petitioner in not taking insurance coverage for the year 2008, learned District Forum committed error in allowing complaint and learned State Commission further committed error in dismissing appeal; hence, revision petition be allowed and impugned order be set aside.

DISTRICT Forum observed that OP paid premium for the year 2005, 2006 and 2007 in August month and has not paid premium for the year 2008 in August month, OP was deficient in service. Learned State Commission while dismissing appeal observed that premium amount for the year 2008 was debited by OP, but not paid to the insurance company and not obtained policy.

COMPLAINANT has nowhere mentioned in the complaint that premium amount for the years August, 2008 to August, 2009 was debited in the account of complainant. District Forum has also not observed that premium amount was debited. Learned Counsel for the petitioner has drawn my attention towards bank statement of complainant which makes it clear that premium amount was transferred to Insurance Company only on 29.8.2005, 23.8.06 and 9.8.2007 and no premium in August, 2008 has been debited in complainant''s account. Thus, observation of learned State Commission regarding debiting premium amount in complainant''s account is contrary to record.

LEARNED District Forum observed in its order that as OP has not remitted insurance premium to the insurance company for obtaining insurance policy, OP derelicted in discharge of duty. In the complaint itself it has nowhere been mentioned that complainant had instructed OP to remit payment of premium to the Insurance Company and obtain insurance policy. Clause 7 of Hypothecation Agreement executed between petitioner and respondent runs as under: 7. The Borrower shall insure and at all times keep insured, the securities, in the joint names of the Borrower and the Bank, with insurers approved by the latter in such sums and against such risks as the Bank may require from time to time AND if the Bank shall not specify the sums in which or the risk against which the securities should be insured the Borrower shall insure them against all risks for the full market / invoice value whichever shall be higher. On failure by the Borrower so to insure securities or to keep the insurance alive, the Bank shall be at liberty to effect and keep alive such insurance as long as the Bank''s charges over the security subsists, at the expenses of the Borrower and to recover by debiting the same to any of the account covering the loans. Amounts so debited shall form part of the principal amount due by the Borrower in respect of the loans.

Perusal of aforesaid Clause makes it clear that it was obligatory on the part of borrower (complainant) to get tractor insured, but petitioner was given liberty to keep alive such insurance till loan is re -paid and was further allowed to recover premium amount by debiting the same to the account of loan which could form part of principal amount due from the borrower. Petitioner was not under an obligation to get tractor of complainant insured, but for securing this loan it had power to get the tractor insured. Merely because for previous three years, premium amount has been debited in complainant''s account, it does not mean that petitioner was under an obligation to remit payment to the insurance company for securing insurance from August, 2008 to August 2009 and no deficiency can be imputed on the part of petitioner.

LEARNED District Forum committed error in allowing complaint and learned State Commission further committed error in dismissing appeal on the assumption that premium amount had already been debited in the account of complainant, but not remitted to insurance company and revision petition is to be allowed.

CONSEQUENTLY , revision petition filed by the petitioner is allowed and impugned order dated 10.11.2009 passed by the Karnataka State Consumer Disputes Redressal Commission, Bangalore in Appeal No. 3025/2009 Vijaya Bank Vs. Chikkappaiah and order of District Forum dated 30.03.2009 in CC No. 19/2009 Chikkappaiah Vs. Manager, Vijaya Bank is set aside and complaint stands dismissed with no order as to costs.