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Judgment
THIS is an appeal by the LIC Housing Finance Ltd., against the order of the District Forum, Balasore directing the Corporation to pay a sum of Rs. 80,833/- as compensation to the complainant for damage caused to her building by lightning on 18.5.1996.
ADMITTEDLY the Insurance Coverage in respect of the building was valid in between the dates 19.8.1994 to 18.8.1995. The defence of the O.P. No. 1 New India Assurance Company Ltd., was that on 18.5.1996 there was no policy in force since the earlier policy had lapsed long since on 18.8.1995. O.P. No. 2 (the present appellant) who had financed the loan of Rs. 60,000/- took the stand that the complainant at no point of time informed them that she was unable to deposit the premium for the insurance of the building, the responsibility of keeping the property insured lay primarily on the complainant. Heard the learned Counsels for both sides. Perused the impugned order and materials on record.
The present appellant was the financier for the loan of Rs. 60,000/-. The amount was advanced and admittedly building was constructed with the assistance of that loan. There was certain terms and conditions in the loan offer letter. The District Forum held that the appellant was liable for deficiency of service for not doing for insurance of the building when the insurance in between the dates 19.8.1994 to 18.8.1995 expired. The Forum gave the reasoning relying on the usual practice followed by the Financing Bank certain guidelines that is quoted in Para 7 of the judgment. The Forum held that it was the primary obligation on the part of the financier to remit the premium amount to cover the risk under the Fire Insurance Policy. So much so the District Forum also quoted Clause 12(b) of the loan agreement. We quote it for our consideration. 12 (a) ........ 12 (b) the loanee will be required to renew the fire insurance policy insuring the risk referred in Clause 12(a) above every year and on your failure to do so, the company may advance the premiums to keep the property insured in which case the premium so advanced will also become payable by you to the company together with interest thereon at the rate mentioned in condition No. 2 of the loan offer letter.
THE District Forum has given two reasons in holding the appellant liable for deficient in service. Firstly, it held that in a mercantile transaction between a customer of a bank, the Bank acts as the agent of the customer and is liable to safeguard the interest of the customer as well as that of the Bank. In the present case the LIC Housing Finance Ltd. has advanced the loan and it was part of its obligation not only to protect the interest of the customer but also their interest since they had advanced the loan. This view cannot be said to be incorrect. Secondly reading Clause 12(b) it held that it was obligatory on the part of the Financing Authority that on the failure of the loanee, financier may advance the premium to keep the property insured and realised the premium alongwith interest thereon from the borrower. The language used is on your failure to do so the company may advance.... so on and so forth. Therefore, in the present case when the complainant failed to insurer the property it was an obligation under the agreement for the LIC Housing Corporation-appellant to renew the policy, by paying the premiums which was ultimately paid by the complainant.
HAVING heard the Counsels for both sides, we do not find there is any infirmity in the order. The appeal is dismissed. No cost. Appeal dismissed.