KARNATAKA STATE FINANCIAL CORPORATION AND KARNATAKA STATE FINANCIAL CORPORATION, BANGALORE RURAL BRANCH, CHURCH STREET Vs. M/S. ORIGAMI TISSUES

JUDGEMENT

(1.) AGGRIEVED by the Judgment & decree dated 9 -4 -2007 passed by the Senior Civil Judge, Doddaballapur, in O.S. No. 438/2002 decreeing the plaintiff's suit for damages of Rs. 6,77,000/ - with proportionate cost and interest @ 6% p.a. from the date of suit until realization the defendants have filed the present appeal. The case of the plaintiff is that it is a proprietary concern manufacturing Tissue papers and other allied products. For the purpose of expansion of business a loan of Rs. 31,66,000/ - was taken from the 2nd defendant KSFC, under the supervision of their main office 1st defendant KSFC, for plant and machineries. That the plaintiff had insured the building and stock in hand only and the defendants had insured plant and machineries with an understanding that since the 2nd defendant stands in the foot of the mortgager to the plaintiff and the plant and machineries were under their first charge. That for two consecutive years, that is from 21 -01 -1997 to 20 -01 -1998 and 21 -01 -1998 to 20 -01 -1999 the defendants had paid the insurance premium of Rs. 15,166/ -. Consequently, they ought to have insured the plant and machineries for the third consecutive year. However they did not do so. Due to a fire accident on the intervening night of 23rd and 24th November 1999 in the plaintiff's factory the plant and machineries and stock in trade as well as the buildings were damaged causing extensive loss. Thereafter, the matter was reported to the defendants with a request to inspect and assess the damage. They did not respond. Since the plaintiff had insured the building and stock in trade, they claimed insurance. They could not do so in respect of the damaged plant and machineries only due to a bonafide impression and reasonable belief that the defendants would have insured the same. Therefore legal notices dated 11 -6 -2001 and 9 -11 -2001 were issued to them holding them liable to make good the loss suffered due to the fire accident. However, the plaintiff to re -start the unit has spent an amount of Rs. 9,79,731.65 ps/ towards various expenditures for setting up the plaint and machineries and has been regularly repaying the loan dues to the defendants. Hence, it be held that due to the changed position and conduct of the defendants, they are liable to make good the loss suffered by the plaintiff under the provisions of promissory estoppel for the actual amounts of damages sustained by them as well as interest at the rate of 12% p.a. thereon if not @ 18% p.a. Hence, the present suit for claiming damages.

(2.) THE defendants appeared and filed their common written statement admitting the loan facility. They denied the plaintiff's plea that there was an understanding that the defendants were to insure the plant and machinery. It was their case that it was only on an oral request made by the plaintiff that the defendants had insured the mortgaged properties for the first two years. Since there was no request made by the plaintiff for subsequent years, the same was not insured. Hence, it is pleaded that the suit be dismissed.

(3.) THE learned counsel for the appellants contends that the impugned Judgment and decree is bad in law and liable to be set aside. That the trial court failed to consider the evidence and material let in by relying on the registered mortgage deed vide Ex. D.1. He contends that it was the plaintiffs primary obligation to have insured the property. They have failed to do so. On such a failure the defendants cannot be held liable to satisfy the damages. As claimed by the plaintiff in terms of Ex. D -1 itself it is the plaintiff who is responsible for the loss that he has sustained. Hence he pleads that the appeal be allowed by dismissing the suit.