CORPORATION BANK Vs. SANDHYA SHENOY

JUDGEMENT

(1.) This revision petition has been filed by the Corporation Bank aggrieved by the order dt.17.7.2008 passed by State Consumer Disputes Redressal Commission, Karnataka dismissing their Appeal No. 2417 of 2007 and confirming the order dated 31.10.2007 of the District Forum in Complaint No. 225 of 2006. Briefly, the facts of the case are:

(2.) Smt. Sandhya Shenoy availed loan from the petitioner bank for business purposes by hypothecating the stock -in -trade, furniture and material which were required to be insured by the New India Assurance Co. Ltd. Ever since the date of taking the loan, the New India Assurance Co. Ltd. had insured all the stock -in -trade, furniture and material in the business premises. On 11/12.2.2006 at about 3.45 a.m. the said business premises got accidental fire and the entire stock was destroyed resulting in a loss to the tune of Rs.15,00,000. The petitioner herein reported the accidental fire to the Insurance Company. The Insurance Company brought to her notice that the petitioner bank did not renew the insurance policy taken by her. She was not aware of the lapse of the insurance policy because she was not intimated about the same and hence after serving a legal notice to the petitioner bank, she filed a complaint in the District Forum. The District Forum allowed the complaint and directed the Corporation Bank to pay Rs.7,00,000 with interest @ 8% p.a. along with costs of Rs.1,000. The State Commission, on the basis of the affidavits and examination of the surveyor and administrative officer of Insurance Company as well as the Senior Manager of the petitioner bank, arrived at the conclusion that there is deficiency in service on the part of the petitioner bank in not renewing the insurance policy of the complainant. In the course of arguments, Ld. Counsel for the bank admitted that the bank had taken the policy for the previous year on behalf of the complainant on her oral instructions. Thus, they have complied with the oral instructions of the complainant. There was no reason to not comply with it during the next year also. When the entire stock has been hypothecated to the bank, the bank has been protecting themselves by taking insurance in joint names along with the complainant. Sudden discontinuance of the same on their own without informing the complainant is held to be deficiency in service by both the District Forum and the State Commission.

(3.) We agree with the Ld. Counsel who relied on the judgment in Pradeep Kumar Jain v. Citibank and Anr.1 and submitted that the bank cannot be held liable to pay the entire damages.