SYNDICATE BANK Vs. MULLANGIE SPINTEX PVT LTD

JUDGEMENT

(1.) The claim of the petitioner bank to have the exclusive right to appropriate the insurance amount received in respect of the hypothecated stocks and raw materials without making a reference or obtaining prior permission of the Board for Industrial and Financial Reconstruction (for short, "BIFR"), despite a pending reference before the BIFR, has given rise to these proceedings.

(2.) Respondent No. 1 company is engaged in the business of cotton yarn and availed of working capital limit from the petitioner bank from 1996 onwards against hypothecated stocks, raw materials, etc. The petitioner bank had the exclusive first charge as per a Deed of Hypothecation and under the terms of the insurance policy securing the goods read with the Deed of Hypothecation, the petitioner bank was entitled to receive the amount from the insurance company directly.

(3.) A fire took place at the premises of respondent No. 1 on 09.04.1998 which destroyed the raw materials, finished goods, etc. A claim was lodged with the insurance company which settled the claim amount at only Rs.33.15 lakhs. Respondent No. 1 company aggrieved by the same filed a petition before the National Consumer Dispute Redressal Commission (for short, "NCDRC) which gave a favourable verdict for an amount of Rs.1.49 crores with interest @ 12% p.a. from October, 1998 till date of payment as per the judgment dated 23.02.2007. The appeal filed by the insurance company before the Supreme Court was dismissed in limine on 10.07.2007.