A.P. Sahi, President

The dispute arises out of a Complaint filed by the Respondent No.-l in respect of a claim of indemnity against a fire insurance coverage, the policy whereof was acquired from Respondent No.-2 Oriental Insurance Company. The loss had occurred on account of a fire that broke out on 30.01.2001 in the premises of the Complainant that was intimated to the Insurance Company who appointed M/s S. Soni & Co. as their Surveyor. When the Surveyor visited the business premises on 30.01.2001. On enquiry of the policy particulars a discovery was made that the policy had already lapsed on 25.11.2000. This fact is not disputed. The Complainant also lodged an FIR where he has admitted this fact of the policy not being in existence.

2. Consumer Complaint No. 338 of 2002 filed by the Complainant was allowed on 17.10.2012 holding the Bank to be responsible.

3. The Bank has come up in this Appeal and the arguments advanced earlier on 03.05.2024 are extracted herein under:

                   "The appeal has been filed by the Bank contending that the impugned order of the Delhi State Consumer Disputes Redressal Commission dated 17.10.2012 in spite of having recorded findings in favour of the Bank as well as the Insurance Company has erroneously shifted the liability and awarded a compensation of Rs.4,50,000/- payable by the Bank which is unjust.

                   Learned counsel for the Bank submits that according to the hypothecation agreement clause 7 (a), it is the responsibility and liability of the borrower to get the goods/ stocks insured. Clause 7 (a) obliges the borrower to get the stocks insured and on his failure and on a demand being made by the Bank an insurance policy can be obtained but the liability will still remain of the borrower in respect of seeking insurance coverage.

                   There is no dispute in this case that the initial policy was taken covering the risk of fire in the year 1992 that was renewed from time to time till 25.11.2000.

                   The dispute has arisen as a fire occurred on 30.01.2001, when a claim was lodged by the respondent and he was intimated that the policy had already lapsed on 25.11.2000. Thus, there being no policy in existence or renewal of the previous policy, the complainant filed this complaint alleging this lapse and deficiency on the part of the Bank. The ground taken was that an authorization was given to the Bank way back on 18.12.1992, which document was exhibited as annexure CW 1/1. The said document is not on record of this appeal but a copy has been shown by the learned counsel from his brief The contention of the learned counsel for the respondent is that it is under the authority of the said letter that the earlier policy was renewed by the Bank itself from time to time till the year 2000 and the premium of the policy was being regularly deducted and debited directly from the account of the complainant. The submission is that there was no intervention or requirement of the complainant to get the policy renewed every year as under the aforesaid arrangement the same was being continued since 1992.

                   The appellant Bank has however come up contending that the document dated 18.12.1992 which is exhibited as annexure CW 1/1 is a manipulated document and averments have been made in paragraph 4 of the evidence affidavit filed before the State Commission, which is an affidavit of Shri Subhash Shander Arora, Deputy Manager, PNB, B. O. Najafgarh, New Delhi. The document also seems to be bearing a stamp of the Bank.

                   Learned counsel for the appellant further submits that the FIR which was lodged after the incident by the complainant itself recites categorically that the shop was not insured. It is further submitted that no amount was debited from account of the respondent/ complainant for renewal of the policy after 25.11.2000. The contention further is that a declaration has been made before the Bank in the stock statement that the complainant has got the goods insured. It is therefore submitted that in the wake of these facts on record, it is evident that there was no request for renewal of the policy by the complainant nor any premium was debited from his account and even before the Bank, the statement was given that the complainant has got the goods insured whereas in fact there was no insurance in existence. Coupled with this the recital in the FIR also indicates that there was a dear statement that there was no insurance of the shop.

                   However, prime facie, what appears is that the case of the complainant was based on the strength of the document dated 18.12.1992 that was exhibited as CW 1/1. This document has been denied in paragraph 4 of the evidence affidavit of the appellant. The evidence affidavit of the complainant is not on record nor is it available. Nonetheless, the policy seems to have been renewed from 1992 to 2000. The Bank is therefore privy to this renewal and facts relating thereto.

                   Learned counsel for the respondent/ complainant may file an affidavit bringing on record the letter dated 18.12.1992 as also the evidence affidavit to indicate as to whether the said document was proved or not. The affidavit may also indicate as to whether there is any denial or acceptance affidavit in respect of the said document or not.

                   Learned counsel for the Bank may also receive his instructions and in case any material is available, they may file it along with an affidavit. The Bank may also clarify as to how was the policy being renewed from 1992 to 2000.

                   In view of the aforesaid submissions that have been advanced, the crucial question that needs to be determined is as to whether the Bank was under any legal or voluntary obligation to get the Insurance renewed, and is liable or not. This may also require a consideration of the facts and the stand taken by the complainant on part renewals as noted above.

                   Let the matter be listed for final hearing on 30.08.2024."

4. In response to the observations made therein the learned Counsel for Respondent No.-l / Complainant has filed an affidavit on 30.05.2024 vide diary No. 20699. The contents of the affidavit are extracted herein under:

                   AFFIDAVIT

                   I SHRI SOMVIR SINGH, PROPRIETOR M/S Bhop Singh and Sons 12-Main Market Najafgarh, New Delhi-110043, do hereby solemnly affirm and declare as under:-

                   1. That I am the Respondent No.1 in the above noted appeal and well conversant with the fact of the same and competent to swear the present affidavit.

                   2. That the deponent had after the arguments addressed on the last date of hearing and in compliance of the said order, applied for certified copy of the documents Exhibited in the Affidavit of Evidence of the complainant/ respondent vide his application dated 17.5.2024. The reports given by the record clerk of the Id. State Commission shows that the file of the complaint case no. 338/2002 titled as "Somvir Singh V/s Punjab National Bank' decided on 17.10.2012 has not been received to the record as per the available record, the derk of the counsel thereafter approached the Staff of the Bench who decided the matter, even the said staff was unable to give a positive response. Hence the certified copies could not be obtained and this affidavit is being filed on the true copies annexed with the complaint and exhibited in the affidavit of evidence of the complainant/ respondent herein. Copy of the report is annexed herewith.

                   3. That the deponent seeks the permission of this Hon'ble Commission to place on record his affidavit of evidence filed before the Id. State Commission in which the letter dated 18.12.1992 has been exhibited as Ex. CW-1/1.

                   4. That the deponent says that appellant after coming to know their folly of not getting the insurance renewed on the basis of the aforesaid authorization letter dated 18.12.1992 have thereafter denied the said document.

                   5. That the deponent further relies upon the letter dated 23.03.2001 Ex.CW-1/7 and letter dated 4.4.2001 Ex.CW-1/6 copy of which are also being placed on record before this Hon'bie Commission.

                   6. That the deponent further seeks permission to place on record the copy of statement of A/c Ex.CW-1/2 whereby it is shown that the appellant bank had been debiting the account of the deponent's firm for renovation of insurance policy of their own.

                   7. That the deponent had placed on record the written submissions before the Id. State Commission, copy of which are also being place on record."

5. The affidavit is accompanied by the evidence affidavit of the Complainant that was filed before the State Commission and Paragraph No. 5, 6, 10, 11 and 12 thereof are extracted herein under:

                   "5. That after the commencement of the C/C(H limit, accepted and admitted practice of followed by the deponent and the Respondent no.1 was, that the hypothecated goods lying in the stock of the deponent would be insured with one of the Insurance subsidiaries of the General Insurance Company, in the present case it was the Respondent no. 2. The Respondent no.1 got letter issued from the deponent dated 18.12.1992 seeking authority to insure the goods against perils for the mutual benefits of the deponent as well as the Respondent no.1. The Respondent no.1 thereafter, from time to time used to get the hypothecated goods insured from Respondent no.2. The letter dated 18.12.1992 is Ex.CW-1/1.

                   6. That the deponent says that the above practice was being carried put by the Respondent no.1 regularly and the amount deposited with the Respondent no. 2 was being debited to the account of the deponent on regular basis. The statement of account of the Respondent no.1 showing debit in the account of the deponent towards the Insurance for the period 1998-99 & 1999-2000 is Ex.CW-1/2 (Colly).

                   10. That the deponent received a letter dated 23.3.2001 from the Respondent no.1 wherein the Respondent no.1 admitted that they had informed the Respondent no. 2 with respect to the Fire which had broke out at the shop of the deponent and also requested that the report of the Surveyor be also deposited with them. In view of the this letter it is parent that the Respondent No.1 as per the practice carried out by it for getting the stock of the deponent insured had known that the goods were insured but changed their Une on finding that they had not extended the insurance after 25.11.2000. the letter dated23.3.2001 is Ex.CW-1/7.

                   11. That the changed Une of thought of the Respondent No.-l is apparent from its letter dated 25.4.2001. The said letter is Ex. CW-1/8. The aforesaid fact was also apparent from the letter dated 23.6.2001, wherein the Respondent no.1 called upon the deponent to deposit the outstanding amount + interest and also threatened legal action against the deponent. This Une of action is contrary to the document dated 18.12.1992, in accordance with which the Respondent no.1 had been debiting the account of the deponent towards the insurance of the stock and goods. The letter dated 23.6.2001 is Ex. CW-1/9.

                   12. That the deponent looking to the changed attitude of the Respondent no.1 got a legal notice sent through his counsel dated 8.7.2001. The legal notice is Ex. CW-1/10 and the AD Card is Ex.CW-1/11. The Postal Receipt and UPC is collectively Ex. CW-1/12. The reply of Respondent no. 1 dated 1.9.2001 is Ex. CW-1/13. The rejoinder to the reply dated 20.9.2001 is Ex. CW-1/14. The AD Card, Postal Receipt & UPC is Ex.CW-1/15 & CW-1/16."

6. Learned Counsel for Respondent No.-l has also during the course of the submissions handed over a copy of the letter dated 23.03.2001 that is already on the record of the State Commission as Ex. CW1 /7 and which has also been referred to in the evidence affidavit quoted herein above. The said letter dated 23.03.2001 is extracted herein under:

                   "M/s Bhoop Singh & Sons

                   12, Main Market, Najafgarh

                   New Delhi-110043

                   Dear Sir,

                   Reg:- Your Cash Credit A/c with us - Fire broke out in your shop.

                   Please refer to your letters dated 3/3/2001 and 21/03/2001. Please also refer to your letter dated 31/1/2001 informing that fire has broke out at your shop on 30/1/2001. In this regard we have to inform you that immediately on receiving the above information vide your above referred letter, we informed to M/s Oriental Insurance Co. Ltd, vide our letter dated 31/1/2001 about the fire which broke out at your shop and requested them to depute their Surveyor to assess the loss and settle the claim at the earliest.

                   Further please refer to your letter dated 21/3/01. In this regard you are requested to please provide us with a copy of letter dated 31/01/01 of Surveyor so that the documents required by him for processing the insurance claim maybe provided.

                   In the meanwhile you are requested to bring down your balance in the a/c by depositing amount as promised by you.

                   Thanking you.

                   Yours faithfully,

                   Punjab National Bank Najafgarh"

7. It is the contention of the learned Counsel for Respondent No.-l that till 23.03.2001 the Bank itself had been promoting the cause of the processing of the insurance claim in support of the Complainant and it nowhere indicated that the policy had lapsed. The relevance of this letter would be explained shortly hereinafter.

8. The Bank for the first time on 25.04.2001 took a U-Turn and intimated the Complainant that it was the Complainant who had to inform the Bank about the renewal of the policy and was entirely his obligation as such the Complainant should satisfy the entire loan account of the Bank.

9. It may be pointed out that the learned Counsel for the Bank Mr. Ajay Shanker has intimated the Commission that the entire loan of the Bank has been paid by the Respondent after recovery proceedings had been initiated against them. Thus the entire loan of the Bank stands repaid.

10. In the said background since the insurance claim could not be indemnified the Complainant seems to have been left with no option but to file the Complaint alleging that the Bank had been undertaking the responsibility of getting the policy and its renewal done on its own voluntarily since 1992. For this the Complainant relied on the authorization given to the Bank on 18.12.1992 which document was exhibited as CW1/1 in the Complaint itself. The bank baldly denied the said document but the State Commission after assessing the evidence allowed the Complainant holding that since the Bank had debited the amount of Rs.4,295/- that has not been paid to the Insurance Company. The Bank was liable to reimburse the said amount but at the same time went on to hold that the grave consequences that followed the Complainant was entitled to a sum of Rs.4,50,000/- as damages with no interest.

11. Mr. Ajay Shanker, learned Counsel for the Bank has urged that the Order of the State Commission suffers from infirmity inasmuch as the premium which had been deducted was of the previous year and therefore it did not relate to any transaction in question. It is further submitted by the learned Counsel for the Bank that the damages had been quantified without any foundation and basis and therefore the awarded claim is not based on any cogent evidence.

12. He has then advance his submissions on behalf of the Bank with the aid of the following judgments to urge that under the terms of hypothecation it is the obligation of the borrower to provide insurance coverage and merely because sometime in the past the Bank had obtained the insurance policy, the onus does not shift on the Bank for taking an insurance coverage. He therefore submits that in view of the legal position as explained in the judgments cited by him no liability could have been fixed on the Bank as there was a clear default on the part of the Respondent No.-l/Complainant in not having got his policy renewed that has already lapsed. He also reiterated Clause 7(a) of the Hypothecation deed to buttress his submission. The judgments relied on by him are as follows:

                   1. Syndicate Bank versus Nagarath Mechanical Works and Anr. in First Appeal No. 166 of 2006.

                   2. HDFC Bank Limited versus Kumari Reshma 2014 SCC Online 1665.

                   3. Central Bank of India versus Jagbir Singh (2015) 14 SCC 788.

                   4. M/s Sam Fine O Chern Limited versus Union Bank of India in Consumer Complaint No. 39 of 2013.

13. Responding to the said submissions Mr. Jaskaran Singh, learned Counsel for Respondent No.-l advanced his arguments. We may point out that since there was no liability fixed on the Insurance Company nor any relief claimed, no one put in appearance on behalf of the Insurance Company and they were proceeded ex-parte vide order dated 13.02.2023.

14. Mr. Singh, learned Counsel for Respondent No.-l I Complainant urged that the quantum of compensation is proportionate to the loss of stock and which was established from the statement of stocks that was provided for and was filed on record in the State Commission. It is therefore urged that the argument that there is no basis for assessment of the damages is absolutely incorrect.

15. However coming to the merits of the matter he submits that it is the Bank which had voluntarily taken over the obligation of getting the policies acquired and renewed which was continuing since 1992. The Bank was on its own getting the policies renewed and debiting the premium from the account of the Complainant automatically which went on unhindered and became a regular practice adopted by the Bank itself. Mr. Singh therefore submits that the Complainant had every reason to believe that the policy had been renewed and had not lapsed but to his utter surprise when the claim was set forth before the Insurance Company, it was discovered that the Bank had failed in its duty and obligation to have got the policy renewed. Mr. Singh therefore submits that this was a clear deficiency and a serious lapse on the part of the Bank as a result whereof the Complainant had to suffer this loss and could not be indemnified in the absence of an insurance cover. Consequently it is the Bank which has been rightly held to be liable.

16. Coming to the facts of the case he submits that the letter dated 18.12.1992 has been baldly denied by the Bank with no cogent evidence to rebut the same. To the contrary the conduct of the Bank in getting the policies renewed right from 1992 onwards unfailingly without the intervention of the Complainant borrower, clearly establishes that the Bank was acting upon the very same instructions and hence once the letter dated 18.12.1992 had been acted upon , the Bank is now estopped from taking a plea contrary to the same. He therefore submits that this contention of the Bank deserves to be rejected and also disbelieved as it is a complete after thought.

17. Mr. Singh submits that this plea was sought to be covered up with the issuance of the letter dated 25.04.2001 and it is a complete somersault contrary to the instructions followed by the Bank itself. He therefore contends that the positive act of the Bank in uninterruptedly continuing to abide by its own instructions as requested by the Complainant since 1992, it was obligatory on the part of the Bank to have got the policy renewed which mistake was sought to be covered up by the letter dated 25.04.2001.

18. He also submits that the continued operation of the insurance negotiations by the Bank and also charging the Complainant with the payment of premium through automatic debiting of the same from his account also adds to this confirmed conduct of the Bank in accepting the practice of discharging the responsibility of taking insurance coverage. In the said background it is the bank which has clearly defaulted in the discharge of its duties and consequently the loss suffered by the Complainant deserves to be indemnified by them.

19. He further points out to the evidence affidavit that was filed before the State Commission and referred to herein above as well as the documents on record to urge that in view of the communication dated 23.03.2001, it is more than evident that the Bank itself seems to have been unaware of its lapse or otherwise also having realized the same wrote the letter to the Complainant for providing the copy of the letter of the Surveyor in order to process the insurance claim. The submission is that this letter itself is a testimony to the acceptance of the fact of responsibility of keeping the insurance papers update by the Bank itself.

20. In this regard we may point out that the Apex Court in the case of Canara Bank versus Leatheroid Plastics Private Limited (2020) 5 SCC 722 examined this issue and after assessing the arguments including the argument of the borrower's responsibility to get the policy renewed, held that if the Bank has exercised its liberty to effect insurance then that would constitute part of the services of the Bank rendering to the borrower.

21. Having considered the submissions raised and having perused the facts on record we find that the arguments of Mr. Singh, learned Counsel for Respondent No.-l/Complainant deserves to be accepted inasmuch as the document dated 18.12.1992 and its execution by the Complainant and receipt by the Bank is clearly established in view of the conduct of the Bank having continuously got the renewal of the policy done on its own and also debited the account of the Petitioner with the premiums charged for the same. The contention of the learned Counsel for the Appellant that the Bank has denied this letter deserves outright rejection inasmuch as the Bank by its own conduct has clearly failed to dispute the fact that it had been discharging this responsibility of getting the policy renewed and even otherwise this was not the stand taken by it in its letter dated 23.03.200 quoted herein above. It is for the first time that on 25.04.2001 that the Bank started shifting its stand by placing the burden on the Complainant stating that it is the Complainant who was obliged to take the insurance coverage. We cannot accept this position and the Bank had acted unfairly by taking this stand.

22. The judgment of the Apex Court in the case of Canara Bank (Supra) referred to above has been followed by this Commission in First Appeal No. 114 of 2015, New Tyre Centre versus Bank of India and First Appeal No. 123 of 2015, Bank of India versus New Tyre Centre decided on 20.01.2025 and once again in First Appeal No. 237 of 2019, Y.N. Press versus Canara Bank and other connected Appeal decided on 16.06.2025. We find the ratio of the said decisions to be squarely applicable on the facts of the present case as discussed herein above. We therefore find no merit in this Appeal and is accordingly rejected.