JUDGMENT - Justice G.G. LONEY, President:---This complaint is as regards the deficiency in the service of the opposite party. The complainant alleged that he has been carrying out the business of civil, structural, mechanical and electrical consultant under the style of "M/s Supreme Constructor". The Opposite Party No. 1 is a Insurance Company and Opposite Party No. 2 is a Co-operative Bank. The complainant alleged that he had hired the service of the opposite party. According to complainant he obtained the loan from Opposite Party No. 2 and hypothecated his stocks with Opposite Party No. 2 by way of security for the loan, advanced to him. The complainant further alleged that he was asked to obtain insurance cover for the stock hypothecated to Opposite Party No. 2. It is further alleged that the goods are hypothecated with Opposite Party No. 2 in July, 1989 after observing all the formalities and after execution of necessary documents. The complainant further alleged that as per the stipulation it was the responsibility of Opposite Party No. 2 to obtain the insurance policy to cover the risk of hypothecated stock. According to complainant, the Opposite Party No. 2 failed to take prompt action to pay the premium to Opposite Party No. 2 on 23/24-7-1989 due to unprecedented floods in Raigad Dist., as a result of which the complainant stock was damaged. The complainant therefore, lodged his claim with opposite party No. 1, claiming Rs. 83,963/-, but opposite party No. 1 refused to settle the claim, for want of receipts of premium amount. The complainant is not in a position to claim loss on account of floods. The complainant therefore, filed this complaint, claiming Rs. 4,38,637.94 for the loss suffered by him. 2. The opposite party No. 1 filed written version and opposed the complainant' claim on various grounds. Inter alia it is contended by the Opposite Party No. 1 that the complainant has no remedy against it due to non-acceptance of the fire/shopkeeper insurance proposal for want of premium. It is further contended that the complaints proposal for the shopkeepers policy was received by Opposite party No. 1 on 27-7-1989 with pay order. Therefore, the loss caused to the complainant on 23/24-7-1989 cannot be compensated. In short, according to Opposite Party No. 1 they are not liable to settle the complainant's claim for the aforesaid reason. It is further contended that the complaints proposal for the shopkeepers policy was received by Opposite party No. 1 on 27-7-1989 with pay order. Therefore, the loss caused to the complainant on 23/24-7-1989 cannot be compensated. In short, according to Opposite Party No. 1 they are not liable to settle the complainant's claim for the aforesaid reason. According to Opposite Party No. 1, the Opposite Party No. 2 is liable to compensate the complainants' loss because of their failure to pay the premium in time. We have heard Shri Jayawant Advocate for complainant and Shri Limaye Advocate for Opposite Party No. 1 and Shri Ramdas Advocate for the Opposite Party No. 2. We have carefully considered the allegations made in the complaint and the written version filed by the Opposite Party No. 1. The points that arise for our consideration are :- i) Whether this complaint is maintainable? ii) Whether the complainant has suffered the loss due to negligence in the service of the opposite parties? iii) Who is liable to compensate the loss of complainant? 3. As regards the first point, we find that the complainant had hired the service of both the opposite parties viz. the insurance company and the Co-operative Bank. The O.P. No. 1 was to provide insurance policy to the complainant on payment of consideration whereas the Opposite Party No. 2 provided the loan facility to the complainant. Thus, we find that the complainant is a consumer of the services of both the opposite parties and hence, this complaint is maintainable. 4. The chronological events are useful to understand this consumer dispute. The complainant hypothecated his goods with O.P. No. 2 in the month of May, 1989. The necessary requirements including the proposal form to obtain insurance policy from O.P. No. 1. The amount of premium was to be paid from complainants loan account directly to the O.P. No. 1 by O.P. No. 2 by pay order. The complainant therefore, did not directly pay the amount of insurance to O.P. No. 2. The O.P. No. 2 wanted the security for the loan advanced to the complainant and, therefore, in order to secure the repayment of the loan the O.P. No. 1 wanted to insure the stock. The complainant therefore, did not directly pay the amount of insurance to O.P. No. 2. The O.P. No. 2 wanted the security for the loan advanced to the complainant and, therefore, in order to secure the repayment of the loan the O.P. No. 1 wanted to insure the stock. It has been the practice in this region that the Bank who advances the loan against hypothecation itself arranges to obtain the insurance policy directly from the insurance company on payment of premium directly to the insurance company from consumer's loan account. The premium amount and the proposal is directly processed by the Bank with the insurance company. The premium amount is directly paid by the Bank to the insurance company and the same amount is then discounted from the loan account of the consumer. This arrangement has been in vogue with a view to ensure the recovery of the loan amount in case the customer suffers a loss of hypothecated stock due to flood or fire. Under the aforesaid arrangement and practice in this region, the Opposite Party No. 2 was to issue pay order in favour of O.P. No. 1 immediately towards premium to cover the risk of the stock. It is the case of the complainant that the O.P. No. 2 delayed the payment of premium amount in the form of pay order which was issued by O.P. No. 2 in favour of the O.P. No. 1 on 22-7-89 towards the premium amount for the required insurance policy to cover the risk of complainant's stock. It is also the case of complainant that his pay order along with the other pay order was issued by O.P. No. 2 on 22nd July, 1989 which were collected by one Smt. Pramodini Salvi who is the agent of O.P. No. 1 at Roha. The floods occurred between 23rd and 24th July, 1989 in which the complainants' workshop and godowns were completely destroyed. The assessment of the destruction was made by the Tahsildar Roha which is on record. All these are admitted facts. The O.P. No. 1 Insurance Company declined to settle complainant's claim on the ground that under section 64-VB of the Insurance Act, unless the proposal of insurance was backed by payment of premium amount to the Insurance Company no insurance policy is issued. All these are admitted facts. The O.P. No. 1 Insurance Company declined to settle complainant's claim on the ground that under section 64-VB of the Insurance Act, unless the proposal of insurance was backed by payment of premium amount to the Insurance Company no insurance policy is issued. According to O.P. No. 2, the contract was not complete since the premium was not received by O.P. No. 1 before the occurrence of floods i.e. on 23rd and 24th July, 1989. The explanation given by O.P. No. 1 is not convincing and correct. We find that under the existing practice the premium amount was withdrawn from complainant's account by way of pay order and it was handed over to the local agent of O.P. No. 1 who has been entrusted with the job of collecting such pay orders from Bank. Delivery of pay order containing the amount of premium to the agent of O.P. No. 1 amounts to payment of premium. It was delivered before the date of occurance of flood. Therefore, it is not fair on the part of O.P. No. 1 to deny the liability on technical ground. It is clearly found that the delay in transmission of pay order to the appropriate table does not mean that the proposal in question was not backed by premium. The view taken by O.P. No. 1 is atrocious, dishonest and detrimental to the interest of the consumers and requires to be rejected. As discussed above on the basis of the facts it is proved that the premium amount for the policy in question was discounted from the complainant's account on 22-7-1989 by O.P. No. 1 and the pay order was handed over to the agent of O.P. No. 1 viz. Mrs. Pramodini P. Salvi on the same day. It is, therefore, very clear that the complainant's proposal was backed by payment of premium but since due to the negligence on the part of the authorised agent O.P. No. 1 the amount of premium could not reach the proper authority of O.P. No. 1 for which the complainant cannot be made liable for the negligence committed by the agent of the O.P. No. 1. The O.P. No. 1 had agreed to grant the insurance policy under the system of hypothecation. We, therefore, find that the complainant's claim has been wrongly rejected by O.P. No. 1. The O.P. No. 1 had agreed to grant the insurance policy under the system of hypothecation. We, therefore, find that the complainant's claim has been wrongly rejected by O.P. No. 1. The negligence has been clearly on the part of the O.P. No. 1 when its authorised agent failed to deliver the pay order of premium to the appropriate authority of O.P. No. 1 though the pay order was collected on behalf of O.P. No. 1 on 22-7-1989. It is well known and settled view that the principal is liable for the acts of its agent. In this case, it is an admitted fact that Mrs. Salvi was the authorised agent of O.P. No. 1 and, therefore, the payment of the premium in the form of pay order was handed over to Mrs. Salvi on 22-7-1989. Thus, there is apparent negligence in the service of the O.P. No. 1. Similarly, although the goods were hypothecated in the month of May, 1989, the O.P. No. 2 belatedly prepared the pay orders on 22-7-1989 is also an act of negligence in the service of O.P. No. 2. Hence, we find that the services of O.P. No. 2 are also deficient in not arranging the payment of premium well in time and immediately after hypothecation. Thus, we hold that the complainant was having valid insurance on 22-7-1989 when premium amount was delivered in the form of pay order to the agent of O.P. No. 1. The insurance policy was, therefore, subsisting on 23rd and 24th July, 1989, when the complainant sustained heavy losses. The O.P. No. 2 contended that the primary responsibility was with the complainant to make the payment of the premium and the bank had no duty to make the payment of premium. This submission of the Bank is not correct in view of the practice in that region and in view of the pay order prepared by the O.P. No. 2 and handed over to the agent of O.P. No. 1. Had it not been the system O.P. No. 1 would have informed the complainant to make the payment directly. There is no demand of premium either from complainant or O.P. No. 2. Under these circumstances, we find that there has been failure on the part of O.P. No. 2. Had it not been the system O.P. No. 1 would have informed the complainant to make the payment directly. There is no demand of premium either from complainant or O.P. No. 2. Under these circumstances, we find that there has been failure on the part of O.P. No. 2. in preparing the pay order earlier for payment towards the policy in question and therefore, the complainant cannot be made to suffer loss on account of negligence in the service of the opposite parties. Hence, we find that the deficiency in the service of the O.P. No. 2 has been established. Similarly, there has been deficiency in the service of O.P. No. 1 in not settling the complainant's claim in view of the receipt of premium amount of premium in the form of pay order on 22-7-1989. The complainant's policy was for the amount of Rs. 2,58,750/-. The complainant alleged that he has suffered a loss of Rs. 1,83,963/- on account of floods. The complainant also claimed Rs. 1,04,674.94 towards the interest at the rate of 18% per annum and Rs. 1,00,000 towards his business loss and Rs. 50,000/- towards the compensation for the harassment. Thus, the complainant claimed total Rs., 4,38,637.94. The survey as regards the complainant's loss was conducted by the revenue authority on 31-7-1989. During the panchanama, the complainant's statement was recorded in which the complainant has claimed the loss of Rs. 2,67,200/- (surveyor calculated the loss of complainant). In our view, since the complainant has proved his allegations, he is entitled to receive Rs. 1,83,963/- towards the loss caused due to floods. Under the similar circumstance, in Complaint No. 569 of 1992 we have also granted the claim of complainant Mr. Nisar U. Yerunkar. Hence, we pass the following order : ORDER The opposite Party No. 1 and 2 are jointly and severally liable to settle the complainant's claim for Rs. 1,83,963/- within 30 days from the receipt of this order failing which amount shall carry interest at the rate of 18% p.a. Order accordingly. *****