LEATHEROID PLASTICS PVT LTD Vs. CANARA BANK

JUDGEMENT

(1.) The case of the Complainant is that the Company had taken a loan from the Opposite Party/Canara Bank in 1980 with a limit of Rs.5 lakhs. The limits were enhanced from time to time by the Bank at the request of the Complainant. In the year 1997, the limits were enhanced to Rs.15 lakhs Open Cash Credit (OCC) and Rs.5 lakhs Key Shut Cash Credit(KCC).

(2.) In January 1998, the Complainant Company as well as most of the industries/factories operating in and around Delhi were sealed by the Delhi Pollution Control Committee (D.P.C.C.) on court orders.The Hon'ble Supreme Court had also passed an order that no interest would be paid for the period for which unit remained closed on court orders. After the Delhi Pollution Control Committee (D.P.C.C.) granted permission to re-start the factory in December 1999, the Complainant approached the Opposite Bank for re-finance and rehabilitation of the unit. In January 2001, the Opposite Party granted fresh limits and restructured the old limits. The old loan became around Rs.40 lakhs and fresh limits of Open Cash Credit(OCC) of Rs.40 lakhs, B/E 10 lakhs and Working Capital Term Loan (WCTL) of Rs.15.00 lakhs were granted.The Opposite Party mortgaged Land and Building, stocks and machinery towards security. The old limits of Rs.15 lakhs Open Cash Credit plus Rs.5.00 lakhs KCC, along with interest become Rs.40.00 lakhs, which were funded by Interest Term Loan (FITL) and Working Capital Term Loan (WCTL) of Rs.29.99 lakhs plus Rs.10 lakhs. The terms and conditions specifically provided that fixed assets such as Building, Plant & Machinery and the prime securities were to be insured for adequate value as per the Opposite Party's guidelines. On 27th August 2001, at around 12:30 hours after midnight, the night chowkidar Shri Dhal Bahadur heard some cracking noises and noticed flames inside the Complainant's factory with burning smell. He immediately went inside after opening the door and saw huge flames. Fire occurred and spread due to short circuit at the winding table, where lot of raw material was stored.He cut the power supply and called the Fire Brigade, Police etc. and also called the Directors of the Complainant Company. The Fire Brigade, Police and the factory staff tried to control the fire. The fire caused heavy losses to the premises, machinery, raw material, finished goods and stocks etc. The Opposite Party and the Insurance Company were at once intimated about the incident. The Opposite Party Bank had always taken Insurance Policies from the Insurance Company and the accounts of the Complainant were debited with the premium amount.The Bank Statements have been annexed as evidence of regular deduction of Insurance Premium from the account of the Complainant Company.The Directors of the Complainant Company did not know the details of the Insurance Company and the premium etc. The Complainant was regularly requesting the Opposite Party orally and in writing to supply copies of the Insurance Policies, statement and other relevant papers regarding the Insurance Policy, premium amount etc.The Complainant, however, was never supplied the Policy papers and other related information, despite repeated requests. In the year 2001, when fire damaged the factory premises, machinery, stocks and raw material etc. of the Complainant Company, the Opposite Party took the Insurance Policy form New India Assurance Company, Kanta Nagar Branch. The Opposite Party took Insurance Policy on stocks in process and building only for Rs.50 lakhs, Rs.2 lakhs and Rs.28.88 lakhs, but the Opposite Party failed to take Insurance Policy for machinery and accessories etc. which had a replacement value of Rs.1.50 Crores.The Bank, however, valued it at Rs.31.76 lakhs by valuation report. The Complainant Company had also spent Rs.6.53 lakhs on machinery on order and overhaul to re-start the unit, approved and verified by the Opposite Party. The Complainant came to know for the first time from the report of the Surveyors of the Insurance Company about the blunder/mistake and deficiency on the part of the Opposite Party that they had not taken Insurance Policy on machinery and accessories etc. of the Complainant Company. In January 2002, the Complainant Company received an Insurance claim settlement of only Rs.34.96 lakhs, which was given to the Opposite Party.

(3.) Alleging deficiency on the part of Opposite Party, Complainant filed a Complaint before this Commission under Section 21 of the Consumer Protection Act, 1986, praying for relief as under:-