IMPORTANT POINT
Bank cannot be held liable for deficiency in service in view of undertaking given by complainant.

V.K. Jain, Presiding Member—The complainant obtained a cash credit facility to the extent of Rs.2,00,000/- from Himachal Gramin Bank, petitioner in Revision Petition No.3655 of 2014 executing the requisite documents with the bank for this purpose. As per the terms of the agreement, the complainant/borrower was required to keep the stock which he had hypothecated with the bank insured against fire risk with an insurance company approved by the bank. The insurance policy was to be taken out either in the name of the bank or in the joint name of the bank and the borrower. The said policy along with the receipt of payment of premium was to be delivered to the bank. In the event of the borrower failing of demand being made by the bank to insure or deliver the policy, or receipt of premium, the bank was at liberty, though not bound to get the said stock insured at the risk, responsibility and cost of the borrower. The agreement further stipulated that in the event of the claim being not admitted by the insurance company for omission to insure or deficiency of insurance, the bank shall not be responsible and the ultimate liability of the borrower shall continue notwithstanding such non-admission.

2. A fire allegedly broke out in the shop of the complainant on 14.1.2007. The complainant informed the bank in this regard and requested them to approach the insurance company with which the stock was supposed to have been got insured by it and pay the claim. It however, transpired that the said stock had not been got insured after 29.12.2006. Consequently, no claim became payable by the insurance company. A complaint was then filed before the District Forum, seeking a direction to the bank to compensate the complainant.

3. The complaint was resisted by the bank on the ground that as per the agreement it was the obligation of the complainant to get the stock insured and the bank was not under an obligation to take an insurance cover in respect of the said stock. It was also stated in the reply that the complainant had not submitted the stock statement undertaking the value of the stock after December, 2005 and therefore the policy could not be got renewed.

4. The District Forum vide its order dated 18.02.2014 dismissed the complaint. Being aggrieved from the dismissal of the complaint, the complainant firm approached the concerned State Commission by way of an appeal. Vide impugned order dated 27.6.2014, the State Commission partly allowed the appeal and directed the bank to pay a sum of Rs.2,00,000/- to the complainant, alongwith interest @ 9% per annum from the date of filing of the complaint and compensation quantified at Rs.10,000/-. A sum of Rs.10,000/- was awarded to the complainant towards the cost of litigation. Being aggrieved, the complainant is before us by way of Revision Petition No.3895 of 2014. Since the complainant is dissatisfied with the quantum of compensation awarded to him, his case being that the value of the stock destroyed in the fire amounted to Rs.8,58,173.39, he has also filed a separate petition, challenging the order of the State Commission.

5. Clause 8 of the Hypothecation Agreement executed by the complainant with the bank reads as under:

“The Borrowers shall submit daily stock report the Bank verified by them as correct. The Bank acts on the daily stock reports in determining the amount to be advanced or left outstanding against the Borrowers should the daily stock reports as aforesaid contain any mis-statement(of which Bank shall be the sole judge) or other be any shortage of security the Borrowers shall render themselves liable to legal action and the Bank shall be entitled to terminate this agreement and take possession of the security and sell the same without any notice to the Borrowers and realizes its dues and recover the balance of its claim from them”.

The case of the petitioner bank is that the complainant having not submitted any stock statement in time after 2005, the bank could not have got the