IMPORTANT POINT
Bank must be sincere in its commitments.

J. M. Malik, Presiding Member—The facts of this case are these. Kashmir Singh, the complainant purchased a tractor in the year 1994 by raising loan from Punjab National Bank. The tractor was hypothecated with the Bank to secure repayment of the loan amount and was insured by the Bank w.e.f. 24.7.1995 to 24.7.1999 regularly. It was assumed that the vehicle was again insured w.e.f. 29.1.2000 to 28.1.2001. The tractor met with an accident on 28.1.2000 while being driven by one Ram Pal, causing death of Shri Sumer Chand and injuries to Shri Jagir Singh. The MACT held the complainant as well as driver Ram Pal of the tractor liable to pay compensation to the complainant as the tractor in question was not insured at the time of accident.

2. The District Forum came to the conclusion that the Bank was bound to get the vehicle in question insured as the premium was being received by debiting the same in the account of the complainant. The District Forum also held that the Punjab National Bank should pay a sum of Rs.2,78,000/- as awarded by the MACT, Jagadhri vide order dated 7.10.2003 to the complainant as per terms of the award of MACT with interest @9% per annum from the date of institution of the Motor Accident Claims Tribunal petition till realization and to pay a sum of Rs.50,000/- as compensation for deficiency in service and harassment. However, the State Commission placed reliance on clause (10) of the insurance policy which runs as follows:

“10. The hypothecated goods/machinery of market value sufficient to cover the outstanding dues to the Bank shall at all times during the currency of this security, be maintained in good and saleable conditions and insured by and at the expense of the Borrower against Fire and such other risks as may be required by the Bank or be required by law, to the full extent of the value thereof with an insurance Office approved by the Bank in the name of the bank or in the joint name of the Bank and the Borrower and in either case the policies and receipt(s) for premia shall be delivered to the Bank. The Borrower shall duly and punctually pay the premia due on the policies at least one week before the same shall have become due or payable and hand over the receipts to the Bank and the Borrower agrees not to raise at any time and dispute as to the amount of the insurable interest of the Bank. If the Borrower shall make a default in effecting such insurance, as aforesaid, or in renewing any policy or in payment of such premia or in keeping the hypothecated premises so insured or in delivering to the Bank the policies or receipts for the premia it shall be lawful (but not obligatory) for the Bank itself to effect such insurance of to renew of to pay such premia and to keep the hypothecated goods insured and to debit the expenses incurred by the Bank to the Borrower’s account and the same shall be treated as advances secured by this Agreement and recoverable accordingly…..” and accepted the appeal with payment of costs of Rs.25,000/-.

3. We have heard the learned counsel for the parties.

4. The first point raised by learned counsel for the bank was that the case is barred by time.

5. The record reveals that the accident took place on 28.1.2000. The case was filed before the MACT. The learned MACT vide his order dated 10.7.2003 decided the case on merits. Thereafter the matter went to the Hon’ble High Court. The High Court passed the following order on 15.1.2004:

“The learned counsel for the appellant has contended that as the tractor in question had been hypothecated with the Bank, it was the liability of the Bank to have the tractor insured and as the insurance policy was not existence on the date of accident i.e. 28.1.2000, the appellant could not be held liable. We find absolutely no merit in this plea. Admittedly, on the date of the accident, there was no insurance policy covering the tractor in question. In case the appellant feels aggrieved by the neglect on the part of the bank in having the trac