1. The appellant South Indian Bank Filed OA against the defendants for the claim amount. The PO, DRT, Ernakulam, by Order dated 13.8.2001 disallowed the claim of the Bank as against D10 the Oriental Insurance Company Ltd., holding that the claim is not maintainable. The appeal is directed as against the Order passed by the PO, DRT, Ernakulam, disallowing the claim of the Bank as against D10 and also the rate of interest awarded by the Tribunal.
2. Counsel for the appellant Bank submits that D10 the Oriental Insurance Company Ltd., is also liable to pay the amount as claimed by the Bank with future interest at rate of 18.5% per annum. The appellant has also prayed for realisation of interest at 18.5% p.a. as claimed in the plaint from the date of Suit till realisation on the decree amount of Rs. 24,33,519.48 p. As against the Insurance Company, the Bank claimed a sum of Rs. 17,71,581.73 p. Counsel for the appellant Bank argued that the Insurance Company is liable for that amount as insurance Policy has been taken and as per the Insurance policy, D10 the Insurance Company is liable for non-delivery of the goods by the Carriers D7 to D9 and admittedly there is non-delivery of goods by the Carriers.
3. It is the case of the appellant plaintiff Bank that the plaintiff Bank allowed various credit facilities to the Ist defendant Firm wherein D2 to D5 were partners. D1 to D5 also executed Demand Promissory Note. The defendants enjoyed all the Bills purchase facility. The defendants 1 to 5 also executed Agreement regarding the Bills Purchase facility. The defendants 1 to 5 also executed Agreement regarding the Bills Purchase in favour of the applicant Bank and had availed credit facilities. The 1st defendant had sold 9 loads of Copra to M/s. Nandiram Oil Mills Bombay, and the consignment of the goods were booked through the Carriers D8 to D9 and of that of three loads was booked to D7 through D6 and the plaintiff Bank was shown as the consignee in the lorry receipt and the documentary bills were endorsed by D1 and the bills and invoices and the lorry receipts were delivered to the plaintiff by the 1st defendant and the Insurance policy covering the consignments also was assigned in favour of the plaintiff by 1st defendant by endorsement and delivery. The bills drawn by the 1st defendant were negotiated in the account of the 1st defendant Firm at the plaintiff Bank and the amounts were paid to the 1st defendant. The bills negotiated were worth 10,18,791/-. According to the plaintiff Bank, nine bills were sent by the plaintiff Bank to its Bombay branch and three bills to the Bank of India for collection and the plaintiff Bank contracted D9's Office at Bombay for delivery of the consignments under the 9 bills duly presenting the consignee copy of the lorry receipts and also demanded D7's office for delivery of the transactions regarding the three bills duly presenting the consignee copy of the lorry receipts and D7 and D9 did not deliver the goods as directed by the plaintiff Bank and the plaintiff Bank also issued notice to D6 to D9 and the Carriers D7 and D9 failed to deliver the consignment to the plaintiff and as Insurance policy has been taken for nondelivery of the goods, the Insurance Company D10 is liable and D10 is also liable for the claim made under the OA and the amounts due to the plaintiff Bank is to be realised from the Carriers and D10.
4. Counsel appearing for the Insurance Company submitted that the Insurance Company is not liable for this claim and the Insurance Company also sent a letter to that effect to the plaintiff Bank and the plaintiff Bank also did not issue notice to the Carriers within time with regard to the non-delivery of the goods and so the Insurance Company is not liable. The PO, DRT, has found that the Insurance Company is not liable on the ground that the Bank did not prefer the claim within the permitted time and no survey as required under the policy was made even though the Policy covers the risk of non-delivery of goods. Admittedly, the Insurance policies covers the risk of non-delivery of the goods. Ex. A21 series are the Insurance policies in respect of the consignments covered under Exs. A8 to A19. The Insurance policies evidenced by Ex. A21 series were admittedly assigned in favour of the Bank along with the originals of Exs. A8 to A16 lorry receipts and Exs. A17 to A19. The PO, DRT has found that the Insurance Company is not liable since the Bank did not make the claim within the permitted time. Counsel for D10 the Insurance Company relies upon the letter of the Insurance Company dated 15.1.1986 and submits that the Insurance Company has already replied that M/s. A. Abdul Hameed have not taken any legal action against the Carrier for non-delivery of the consignments within six months from the date of despatch of each consignment. The Insurance Company has written letter to the Branch Manager of the plaintiff Bank stating that non-clearance of bill do not come under the purview of the policy and no notice was preferred within six months from the date of despatch of each consignment.
5. Counsel for the appellant Bank relies upon the internal communication of the Insurance Company dated 3.2.1986 sent from one Branch to the other branch. In that internal communication it is stated that the Insurance Company received copy of the letter dated 15.1.1986 addressed to the applicant Bank and on studying the file it is felt that the claim is well within the scope of the policy and as such the undersigned called on the Bank and discussed the matter with the Branch Manager to ascertain the real position and now it is felt that it is rule so far as the South Indian Bank Ltd. is concerned to discount only those bills the lorry receipts of which are taken in the joint names with the Bank i.e. the Bank as the consignee and in the disputed cases also the Bank is the consignee and the lorry receipts are with them and they have taken all possible steps well in time to safeguard the interest and even the consumers initiated police complaints and necessary inquiries also carried out well in time and in view of this they are of the opinion that they should call for necessary claim papers without further delay and, therefore, asked the other branch to do the needful and on hearing from the Bank they shall negotiate all the claims separately and send the preliminary claim intimation.
6. Much reliance is placed upon by the Counsel for the appellant Bank on this letter dated 3.2.1986 and the Counsel for the appellant Bank vehemently argued that even the Insurance Company has accepted for this claim and the Bank is the consignee and the Insurance Company has asked the other branch to do the needful for this claim but D10 is Insurance Company has miserably failed to do so in spite of such requests and the Insurance Company is liable for the Suit claim. The significant factor is that this latter dated 3.2.1986 from the Insurance Company to its Branch Office was not marked as document before the DRT. So, no reliance can be placed upon this letter. Counsel for the appellant Bank submits that this letter was filed even before the Civil Court and that was available with the file. It may be that the letter would have been filed before the Civil Court but to place reliance on that letter, that letter must be marked as document before the DRT. The letter was not marked as document and that letter was also not brought to the notice of the PO, DRT. Admittedly, there is non-delivery of the goods. Even though the non-delivery of goods is covered under the Insurance Policy, the point to be considered in this case is whether the Insurance claim is covered under the provisions of the RDDB & FI Act and the DRT has got jurisdiction to decide this issue.
7. Counsel for the Insurance Company submitted that the DRT cannot exercise jurisdiction over the Insurance Company since it is only a claim and it is not a debt under Section-2(g) of the RDDB & FI Act.
Counsel for the appellant Bank submitted that this Insurance liability case comes under the definition of debt under Section 2(g) of the Act.
The explanation given by the Counsel for the appellant Bank is that this Insurance claim is based on the discounting of bills which comes in the course of business activity undertaken by the Bank and it comes under the definition of debt under Section 2(g) of the Act. Section 2(g) reads as follows: "Debt" means any liability (inclusive of interest) which is claimed as due from any person by a Bank or a financial institution or by a consortium of Banks or financial institutions during the course of any business activity undertaken by the Bank or the financial institution or the consortium under any law for the time being in force, in cash or otherwise, whether secured or unsecured, or assigned, or whether payable under a decree or order of any Civil Court or any arbitration award or otherwise or under a mortgage and subsisting on, and legally recoverable on the date of the application.
8. The Insurance policy is taken by the borrower for sending the goods through Carrier. The contract of Insurance policy is between the borrower and the Insurance Company. The Bank does not come in the picture at all. Even though the Bills of Lading have been sent to the Bank and all the bills have to be cleared through the Bank, it is a contract between the borrower and the Bank so far as this transaction is concerned and the contract and the Insurance policy is between the borrower and the Insurance Company and that Insurance policy claim will not come under category of in the course of any business activity undertaken by the Bank. For the non-delivery of the goods, the borrower have to make the claim against the Carrier as well as the Insurance Company. The liability of the Carrier and the Insurance Company has to be decided separately and as rightly pointed out by the Counsel for the Insurance Company, it is only a claim against the Insurance Company and the liability of the Insurance Company has to be decided separately whether the Insurance Company is liable for this claim and whether it is covered under the Insurance policy and whether the borrower is actually entitled for the claim against the Insurance Company. That claim cannot be decided in this forum under the RDDB & FI Act by the DRT. The DRT is a separate from which has got exclusive jurisdiction to decide with regard to the debt due to the Banks and financial institutions and the claim against the Insurance Company cannot be decided by the DRT and only the Civil Court has got jurisdiction to decide with regard to the Insurance claim. Whether the Carrier is liable, whether the Insurance Company is liable for non-delivery of the goods, all these things can be decided only in the Civil Court and not under the DRT forum. So the claim against the Insurance Company cannot be decided in this forum.
9. Counsel for the Insurance Company relies upon the decision of the Supreme Court in Hira Lall & Sons Ors. v. Lakshmi Commercial Bank, IV (2003) SLT 647=2002(3) CTC 792, wherein the Apex Court has held that "Suit based on Insurance claim and suit based on letter of credit would come under two different causes of action and jurisdiction of Debt Recovery Tribunal under Recovery of Debt Due to Banks and Financial Institutions Act is exclusive and Section 18 of said Act ousts jurisdiction of other Courts." 10. The Apex Court has further observed that "The settled legal position is that Letter of Credit constitutes a sole contract with the Banker and its authorising the Bank issuing Letter of Credit has no concern with any question that may arise between the seller and the purchaser of the goods in respect of the purchase price ".
11. Since the Bank also seeks relief from the Insurance Company, which is a claim under Insurance policy which DRT has no jurisdiction to decide the claim against the Insurance Company does not arise in this forum and the DRT has no jurisdiction to decide this issue. The liability against the Insurance Company has to be decided only before an appropriate forum and not under the RDDB & FI Act before the DRT.Hence, I hold that the appellant Bank is not entitled to succeed in this appeal in this aspect.
12. The next point raised in this appeal is with regard to the interest. PO, DRT, decreed the applicant's claim plus interest at 16.5% from 21.5.1988 till realisation. The appellant Bank claims interest at 18.5% per annum as claimed in the plaint from the date of Suit till the date of realisation. The PO, DRT, has allowed the interest only at 16-5% from the date of plaint till realisation. The Apex Court in the latest decision of the Supreme Court--Civil appellate Jurisdiction, State Bank of India v. Material Marketing Company and Ors., Special Leave petition No. 9298/2000, has held that even under RDDB & FI Act the Tribunal has got discretionary power to award interest under Section 19, Sub-section 20 of the Act. Section 19(20) reads as follows: "The Tribunal may after giving the applicant and the defendant an opportunity of being heard, pass such interim or final order, including the order for payment of interest from the date on or before which payment of the amount is found due upto the date of realisation or actual payment, on the application as it thinks fit to meet the ends of justice." 13. The PO, DRT, can exercise such discretionary power and award interest from the date of plaint till the date of realisation. In the light of the decision of the Supreme Court, I hold that there is no infirmity in the Order passed by the PO, DRT, Ernakulam, in awarding interest at 16.5% from the date of Plaint till the date of realisation and the PO, DRT, can exercise discretionary power in awarding interest even under the RDDB & FI Act. Hence, I see no ground to interfere in the order passed by the PO, DRT, Ernakulam.