Remanded

Premananda Patra v. Andhra Bank

Orissa HC11 May 2017WP(C)/12594/2003

Case brief

AI extract

What is this about?

The High Court set aside the Banking Ombudsman's order denying compensation. The Court observed that while the Ombudsman found deficiency of service and inappropriate loan adjustments, he failed to compute compensation under the Scheme. The matter is remitted for afresh computation. (Para 9)

What did the court decide?

Impugned order set aside; matter remitted to Banking Ombudsman to compute compensation under clause-20 of the Scheme within one month.

2. Learned counsel for the petitioner submits that the Banking Ombudsman has committed er ror by not granting any compensation to the petitioner although he has come to a finding that there is deficiency of service by the opp. Party-Bank and also found loss accrued to the petit ioner due to super cyclone.

3. She further submits that the Bank has not returned the original documents even if the loan has been cleared. On that ground also the learned Ombudsman found truth in it, but did no t pay the compensation. She also drew the attention of the Court to the Banking Ombudsman Sche me, 1995 and under clause-20, the learned Ombudsman has got power to pas award after consideri ng the facts and circumstances of the case. So, she submits to direct the learned Ombudsman to compute the compensation in accordance with the finding already he has arrived at and make aw ard afresh.

Ombudsman and the Bank is ready with the documents to return the same, if the petitioner appro ach the Bank to get back the documents. So, he supports the impugned order passed by the learn ed Ombudsman.

5. Considered the submissions of learned counsel for both the parties and perused the ord er dated 5.11.2003 passed by the learned Ombudsman in BO(BHU) No.544/03.03.01/2003-04. The ope rative portion of the order of the learned Ombudsman is placed below for reference:-

xxx Keeping in view the favourable dispensation shown by the bank in accepti ng a generous on-time settlement, no further compensation in respect of facts mentioned under (I) A and (1) B above have not been awarded since these are more technicalities and opportunit y cost, if any, suffered by the complainant have well been covered by the sacrifice owned by t he Bank under RBIs O.T.S. scheme. Therefore no further concession need be granted in favour of the complainant, and complaint may be treated as closed. 6. In view of the aforesaid finding, para (I) A and I (B) have to be travelled, which are reproduced below:- OBSERVATIONS: (1)(A) Aspect of Insurance: As per terms of the clause No.3,7 & 8 of the Hypothecation-cum-guarantee Agreement, Te rm Loan Agreement and Refinance Agreement respectively, signed by the Bank and the complainant in connection with the loan availed by the complainant from the Bank, the primary responsibil ity rested upon the

borrower (complainant) to secure Comprehensive Insurance of the loan assets hypothecated to th e Bank and maintain its continuity by ensuring timely renewal of the concerned policy. On his failure to do so, the Bank may discharge the said responsibility but it is not obligatory on t he part of the bank to do so. In the instant case the Bank as a matter of practice had been in suring the stock continuously from the beginning which might have led the complainant to have the impression that the onus of insuring lied with the Bank. It sounds logical that the bank s hould have kept the complainant informed when it decided to discontinue the practice of insuri ng the stock in 1999. The Bank has attributed the reason of discontinuance to the fact that th ey were prohibited to debit the A/c with Insurance premium in keeping with the RBI guidelines as the A/c as identified as Non-performing asset. This plea of the Bank is not tenable as it i s revealed from the record that though the A/c was declared NPA in 1995, the insurance premium was continued to be paid by debiting the loan A/c in 1996, 1997 and 1998. Therefore, disconti nuance of Insurance by the Bank without intimating the complainant (borrower) is treated as a service deficiency. (B) The insurance cover was not available to the assets of the Poultry Farm from 26.8.99 o nwards due to discontinuance of the renewal of the concerned Policy. The Super Cyclone ravaged the area in October 1999. Claim of the complainant regarding loss in the super cyclone was tu rned down by the Insurance Company and there was no existence of a valid insurance on the day of super cyclone. The complainant did not get assessed of the loss of his Poultry Farm though any recognized/approved assessor/ surveyor but used his own estimation which is not acceptable . On 01.11.99 he brought forward a fresh Insurance cover of his Poultry Farm at his own cost. It was revealed

from the complainants letter dated 04.12.99 written to the Bank that he had Poultry stock of o nly 500 birds on that day as the rest were damaged by heavy rain and flood on several occasion s since 1995 and though the related insurance claims were settled Bank had adjusted all the am ounts against loan outstanding without allowing to restore the loss. On the other hand it is a lso observed that the value of assets of the Poultry Farm which he got insured pm 02.11.99 was Rs.4 lakhs which was exactly same value for which the assets of the Farm were insured in the year 1998 before the super cyclone. The above data indicate that the loss due to super cyclone as claimed by the complainant was not clearly ascertainable. However, the action of the Bank for adjusting the insurance claim against the loan outstanding without allowing for restoring the loss assets was not also appropriate.

7. From the aforesaid finding at I(A), it appears that the learned Ombudsman found defici ency of service of Bank as there is discontinuance of Insurance by the Bank without any intima tion to the complainant. Similarly, in clause (I) B the learned Ombudsman found that the loss due to super cyclone as claimed by the complainant was not clearly ascertainable, but the act ion of the Bank for adjusting the insurance claim against the loan outstanding without allowin g for restoring the loss assets was also not appropriate. When these findings are in favour of the petitioner, the conclusion arrived at by the learned Ombudsman suffers from infirmity bec ause having regard to

such finding he found the same has been covered by the RBIs O.T.S. scheme. He has not discusse d the O.T.S. scheme arrived at between the parties, but on the other hand refused to give any compensation in the shape of concession and closed the case. Moreover, the opposite party-Bank has not challenged the observation of the learned Ombudsman. 8. In terms of the above discussions, this Court is of the view that the order of the lea rned Ombudsman passed closing the case of the complainant is not appropriate while he arrived his finding at I(A) and I(B) against the Bank. Moreover, he has not made it clear how the O.T. S. scheme has covered the loss suffered by the complainant. 9. Having regard to the facts and circumstances of the case and the order of the learned Ombudsman being found not in accordance with law, the impugned order of the learned Ombudsman is set aside and the matter is remitted back to the learned Ombudsman to compute the compensat ion as per clause-20 of the Scheme basing on unassailed finding of his observation at I(A) and (B) after affording reasonable opportunity of hearing to both parties afresh and the same sho uld be disposed of within a period of one month on production of a certified copy of this orde r to be produced by the petitioner before him.

Premananda Patra v. Andhra Bank

Case brief

What is this about?

What did the court decide?

Premananda Patra v. Andhra Bank

Case brief

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What did the court decide?

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