Madhya Pradesh High Court
M/S Mahakaushal Kshetriya Gramin Bank vs United India Insurance Company Limited ... on 11 October, 2013
1
M/s Mahakaushal Kshetriya Gramin Bank Vs. United India Insurance Co.
A. C. No. 8/12
11/10/13
Smt. Nirmala Nayak, learned counsel for the applicant.
Shri S. K. Rao, learned Sr. Counsel with Shri Sanjeev
Chaturvedi, learned counsel for the respondent.
Seeking constitution of an Arbitral Tribunal and invoking the jurisdiction of this Court under Section 11 of the Arbitration and Conciliation Act, 1996, this application has been filed.
Applicant is a Rural Development Bank constituted under the statute. One Shri Silawat was working as a 'Branch Manager' in the petitioner Bank and it is said that while working as a 'Branch Manager' with effect from 12.01.98 and 24.01.98, he committed various acts of commission and omission and misconduct, embezzlement of money, as a result, the Bank suffered the loss of ` 2,00,000/-. It is said that a blanket policy covering all liabilities has been obtained by the Bank from the respondent Insurance Co. and as the respondent Insurance Co. has refused to indemnify the Bank for the loss caused due to the act of the Branch Manager, invoking Clause 12 of the policy condition, the prayer made is that the dispute be referred to an Arbitral Tribunal.
Learned counsel for the applicant invited my attention to the policy Annexure P-1 and argued that a blanket policy covering all sorts of risks and loss caused to the Bank by any act is covered under this policy and as the respondent is refusing to indemnify the Bank for the loss caused, this application is filed.
Respondents have filed the return and they contend that the loss is caused to the Bank due to fraud and misconduct committed by the employees and referring to the exemption clause as contained in Clause 13 of the agreement, submitted that all the eventualities 2 M/s Mahakaushal Kshetriya Gramin Bank Vs. United India Insurance Co.
contained in the exemption clause are beyond the risk covered and for any of the act contemplated therein, the insurance company is not liable to indemnify the policy holder.
Referring to Clause (h) of the said exemption clause, learned counsel for the respondent emphasized that the dispute and the loss caused to the petitioner Bank due to acts of commission and omission of the employee is not covered under the policy and, therefore, with regard to the present dispute, as no arbitration agreement is available, the application be dismissed.
Having heard learned counsel for the parties at length and on a perusal of the records, it is clear that the exemption clause is applicable in this case i.e. Clause (h) which reads as under :-
(h) Losses due to any acts or omissions committed by the concerned employee(s) after the discover of a loss in which the said employee(s) was involved.
Admittedly, the Insurance Company has refused to indemnify the applicant for the loss caused to the Bank due to the act of misconduct and the acts of commission and omission committed by its Branch Manager. The exemption clause as reproduced hereinabove clearly indicates that the loss caused to the Bank due to the acts of commission and omission by its employee which could have been discovered will not come within the purview of the risk covered in the policy.
In view of the above, the dispute between the parties with regard to the loss caused to the Bank due to the act of its Branch Manager is not covered under the policy and, therefore, it is not the dispute which can be referred for Arbitration.
Accordingly, finding no Arbitration agreement available 3 M/s Mahakaushal Kshetriya Gramin Bank Vs. United India Insurance Co.
between the parties in connection with the dispute in these proceedings, the application is dismissed with liberty to the applicant to take recourse to such remedy as available under law.
The application is accordingly dismissed.
(Rajendra Menon) Judge Vy/-