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2025 Supreme(Online)(NCDRC) 2521
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
Dr. Inder Jit Singh, CJ, Justice Dr. Sudhir Kumar Jain, J
M/s. Rayarpe Bio Fuels – Appellant
Versus
Union Bank of India – Respondent
Consumer Complaint No. 596 of 2017
For the Appellants/Petitioners: Ms. Divyanshi Singh, Mr. Mohit Singh, Mr. Vivek Sarin
For the Respondents: Mr. Ujjwal Kumar
The bank's failure to timely secure an insurance policy for the complainant's machinery constituted a deficiency in service, resulting in liability for damages incurred.
Headnote:(A) Consumer Protection Act, 2019 - Deficiency in service - The complainant alleged that the bank failed to obtain an insurance policy for machinery as required by the loan agreement, leading to losses from a storm. The court found the bank's failure to secure insurance immediately after loan disbursement constituted a deficiency in service. (Paras 9-10)
(B) Insurance - The insurance policy was obtained after the loss occurred, rendering the claim inadmissible. The court held that the bank's negligence resulted in the complainant's inability to claim insurance, thus awarding compensation. (Paras 11-12)
Facts of the case:
The complainant, seeking to establish a small-scale industry, secured loans from the bank, which included a stipulation for insurance coverage. A storm caused significant damage to the machinery before the bank obtained the insurance policy. The bank later attempted to claim insurance for damages that occurred prior to the policy's effective date.
Findings of Court:
The court ruled that the bank's failure to secure timely insurance coverage constituted a deficiency in service, awarding Rs.7,00,000/- in compensation along with interest.
Issues: The primary issue was whether the bank's failure to secure an insurance policy constituted a deficiency in service.
Ratio Decidendi: The court concluded that the bank's negligence in not obtaining the insurance policy in a timely manner led to the complainant's inability to claim for damages, establishing liability.
Result: The bank was ordered to pay Rs.7,00,000/- as compensation.
| Table of Content |
|---|
| 1. consumer complaint filed against bank for negligence. (Para 1 , 2) |
| 2. details of the loan and insurance policy obligations. (Para 3 , 4 , 5) |
| 3. parties' arguments regarding loan and insurance claims. (Para 6 , 7 , 8) |
| 4. court's analysis of bank's duty to insure. (Para 9 , 10) |
| 5. court's ruling on deficiency of service by the bank. (Para 11 , 12) |
| 6. final orders and compensation awarded. (Para 13 , 14 , 15 , 16) |
ORDER
DR.INDER JIT SINGH. PRESIDING MEMBER
1. The present Consumer Complaint (CC) has been filed by the Complainant against Opposite Parties (OPs) as detailed above, inter alia praying for directions to the OPs:-
(D To withdraw the notice dated 16/06/2016 issued under SERFAESI Act immediately and proceed to claim under CGTMSE Claim/insurance;
(ii) To regularize the CIBIL account of the complainant;
(iii) To pay to the complainant a sum of Rs.1,73,26,111/- invested by complainant towards the establishment of the industry;
(iv) To refund the Fixed/co I lateral deposit of Rs.40,00,000/-;
(v) To refund a sum of Rs.8,96,000/- the amount released towards the sale of the Gold deposited by the complainant or to order for return of 432 grams of gold to the complainant;
(vi) To pay the production profit loss of Rs.50,59,360/- per month from July 2014 i.e., the date of starting operation of complainant’s industry till the date of realization;
(vii) To pay the DIG subsidy of Rs.20,00,000/- supposed to be received by the complainant if the industry was running as per letter dated 22.01.2012;
(viii) To pay 36% subsidy amount supposed to be granted by NABARD on Rs.1,73,26,111/-invested by complainant;
(ix) To refund a sum of Rs.3,22,600/- amount deposited by the Complainant towards the CGTMSE fee;
(X) To pay liquidated damages of Rs.25,00,000/- for the loss incurred because of the negligence on the part of OPs.
(xi) To pay interest @24% per annum on all the above said claim amounts, within thirty days from the day of receipt of notice, till the date of realisation.
2. Notice was issued to the OPs. Parties filed Written Statement/Reply, Rejoinder, Evidence by way of an Affidavit and Written Arguments/Synopsis etc. as per details given in the Table below. OP-3 has filed its written version and written synopsis. OP-3 was deleted from the memo of party vide order dated 14.08.2023.
| Sr No | Particulars | |
| 1. | D/o Filing CC in NCDRC | 01.03.2017 |
| 2. | D/o Issue of Notice to OP(s) | 11.05.2017 |
| 3. | D/o Filing Reply/Written Statement by OP1 & 2 | 08.08.2017 |
| 4. | D/o Filing Reply/Written Statement by OP-3 | 12.09.2017 |
| 5. | D/o filing Rejoinder by the Complainant(s) | 03.02.2020 |
| 6 | D/o Filing Evidence by way of Affidavit by the Complainant(s)_______________________ | 03.02.2020 |
| 7 | D/o Filing Evidence by way of Affidavit by the _______________________ OP-1 & 2 | 08.08.2022 |
| 8 | D/o Filing Evidence by way of Affidavit by the OP-3____________ | 02.12.2019 |
| 9 | D/o filing Written Synopsis the by Complainant(s) | 14.10.2024 |
| 10 | D/o filing Written Synopsis by the OP-1 & 2 | 08.08.2022 & 09.06.2025 |
| 11 | D/o filing Written Synopsis by the OP-3 | 23.01.2023 |
3. It is averred/stated in the Complaint that:
(i) The Complainant intended to set up Small Scale Agricultural based industrial unit which was covered under the Credit
(ii) Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) in which complainant deposited fixed deposit of Rs.40,00,000/- on 29.03.2013 with the OP-1 for getting his loan sanctioned.
(iii) OP-1 sanctioned loan of Rs.20,00,000/- towards working capital and also a term loan of Rs.70,00,000/- towards purchase of plant & machinery for running the above mentioned small scale industry.
(iv) As per point no. 7 of the Annexure annexed with sanction letter all securities charged to the Bank were to be comprehensively insured against all risks for the full value by the bank at the firms cost, the said point is reproduced below:
'7. All securities charged to tthhee bank shall be comprehensively insured against all risks for the full value at the firm’s cost and the policy shall remain in the joint names of the Company and ba
