State Consumer Disputes Redressal Commission
National Insurance Company Limited vs H.P. State Cooperative Bank. on 24 May, 2010
H H.P. STATE CONSUMER DISPUTES REDRESSAL COMMISSION, SHIMLA-9. FIRST APPEAL No.135/2009. DECIDED ON 24.05.2010. In the matter of: National Insurance Company Limited, Divisional Office, Himland Hotel, Circular Road, Shimla, through its Assistant Manager. ... ... Appellant. Versus H.P. State Cooperative Bank , Head Office, The Mall, Shimla, through its Managing Director. ... ... Respondent. . Hon'ble Mr. Justice Arun Kumar Goel (Retd.), President. Honble Mrs. Saroj Sharma, Member.
Honble Mr. Chander Shekher Sharma, Member.
....
Whether approved for reporting? Yes.
For the Appellant: Mr. Jagdish Thakur, Advocate.
For the Respondent : Mr. Ratish Sharma, Advocate vice Mr. Gulzar Singh Rathour, Advocate.
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O R D E R:
Justice Arun Kumar Goel (Retd.), President.
Appellant has filed this appeal against order of District Forum, Shimla in Consumer Complaint No.45/2003, dated 17.02.2009. While allowing this complaint, District Forum below has directed the appellant to pay Rs.7,55,233/- alongwith interest @ 9 % per annum from 10.01.2003, i.e. the date of filing of the complaint, till full payment was made, alongwith Rs.2,000/- as cost of litigation. Appellant has been directed to comply with this order within 45 days of receipt of copy of same.
2. Appellant having been issued blanket insurance policy (Bankers Indemnity Policy) in favour of respondent bank in the sum of Rs.50 lacs per year on payment of requisite premium covering various risks like shortage in transit, on premises, forgery or alteration, dishonestly, hypothecated goods, registered postal sending, appraisers and Janta agents etc. is admitted between the parties.
3. Record of complaint file reveals that one Shri M.L. Negi, the then Branch Manager of branches of respondent at Moorang and Nichar embezzled Rs.6,57,533/- and Rs.1,91,700/-, respectively at these branches is also established. When these facts came to light, appellant was apprised of those and was called upon by the respondent to indemnify it. After examination of matter, appellant paid a sum of Rs.94,000/- only against total embezzled sum of Rs.8,49,233/-. Therefore, feeling aggrieved from this act of admission, complaint was filed by respondent against the appellant alleging deficiency in service.
4. Stand of appellant while contesting the complaint was that Managing Director of respondent was not authorized and competent to file and maintain the complaint, policies having been purchased for commercial purposes, respondent could not invoke the provisions of Consumer Protection Act, 1986 for maintaining the complaint. Complaint involved fraud and other disputed questions of fact which required leading of evidence, and those cannot adjudicated upon in summary proceedings by the Fora under Consumer Protection Act, 1986. It is also case of appellant, that there was no deficiency on its part as amount for the payment whereof it was liable, stands paid by it to the respondent.
After its receipt, respondent was precluded from filing this complaint. While admitting issuance of insurance cover by the respondent further defence set out by it was that the respondent was to bear 25% on each loss under items-A to E or 2% of the basic sum insured whichever is higher, but not exceeding Rs.50,000 per loss. Each loss in respect of each dishonest or criminal act has to be treated as a separate loss. This clause will however not apply for loss or damage arising out of fire, riot, strike, burglary and house breaking risks. In respect of items-F, G and H of policy ( i.e. registered postal sendings, appraisers and Janta agent etc.) the deductible applicable was to be 25% of the claim amount.
5. Finally District Forum below has allowed the complaint as aforesaid.
Hence this appeal by the appellant.
6. Mr. Jagdish Thakur, learned counsel for the appellant submitted that the respondent bank was not a consumer, who can maintain the complaint within the meaning of Section 2 (1) (d) of Consumer Protection Act, 1986, nor his client as service provider, therefore, the complaint was liable to be dismissed on this ground. In addition to this each fraudulent act constituted a separate act and as per excess clause insured had to bear 25% of each loss as per terms of policy conditions.
Complaint was time barred per Mr. Thakur. Mr. Jagdish Thakur also by referring to the statement of account copy whereof is at page-125 of complaint file and policy conditions submitted that the amount paid was as per the terms of insurance, subject to which risk was covered by his client, as such District Forum below felled into error. Therefore, according to him this appeal deserves to be allowed and he prayed for accordingly.
7. All these pleas were resisted by Mr. Ratish Sharma appearing on behalf of Mr. Gulzar Singh Rathour for the respondent. Per him, if the submissions of Mr. Thakur are taken to their logical end, it will lead to a very absurd situation. Reason being that if each transaction is to be treated as a separate act of fraud, then the purpose of getting insurance by respondent-bank would be defeated.
Further according to Mr. Sharma, there is no question of complaint being time barred as it was only during the course of audit, facts came to light regarding fraud etc. having been committed by Shri M.L. Negi Branch Manager at the time of his posting at Moorang and Nichar branches. Audit is not an over-night process. It takes sufficiently long period to unearth something, therefore, according to him there is no infirmity in the impugned order passed by District Forum below, which may call for interference.
8. Record of the complaint file shows that Shri S.K. Soni, Chartered Accountant had found the amount as claimed by respondent in this appeal to have been embezzled by Shri M.L. Negi, Branch Manager at Moorang and Nichar branches of the bank, while posted there. That being the position and risk being covered under policy conditions, compels us to reject the submission to the contrary urged on behalf of appellant.
Ordered accordingly. In this behalf in our opinion, the very object with which the insurance policy had been obtained year after year, would be defeated in case the pleas of the respondents are upheld. Substantial amount of premium was being charged by the appellant, every year from the Bank.
9. In this behalf stand of respondent bank is that regular policy was not provided to it by the appellant insurance company. Only cover notes were being provided, these are annexures C-1 to C-4.
Annexure C-1 pertains to the period 01.04.1996 to 31.03.1997, C-2 pertains to 01.04.1997 to 31.03.1998, C-3 pertains to 01.04.1998 to 31.03.1999 and annexure C-4 pertains to the period 01.04.1999 to 31.03.2000. So far as non-supply of regular policy by the appellant to the respondent-bank is concerned, annexure C-11 dated 20.07.1999 supports its claim. Nothing has been said by appellant in response to this letter dated 20.07.1999, whether regular policy was provided or not ? Similarly, there is no material placed on record by it showing delivery of regular policy to the respondent-bank. As such no benefit can be taken by policy conditions to which detailed reference was made by Mr. Thakur on behalf of appellant.
10. Branch Manager of the appellant at Shimla vide annexure C-13 had admitted that it had deputed Shri S.K. Soni Chartered Accountant to carry out preliminary survey who had reported regarding loss to the tune of Rs.8,49,233/-. This amount is not disputed by the Branch Manager. However what is mentioned in annexure C-13 is, that because of quantum of loss is beyond the financial authority of the Divisional Office, the final Loss Assessor has yet to be deputed by its Regional Office.
11. In the light of the fact that we have held that copy of regular policy was not supplied to the respondent-bank by the appellant, and as per the appellant amount worked out in annexure R-6 was based on policy conditions, defence of the appellant based on policy conditions cannot be accepted as worked out by Shri Avnish Sharma, Surveyor and Loss Assessor. Appellant has also not disputed that loss suffered on account or the sum embezzled, as detailed in preceding paras of this order, by Shri Negi while he was posted in Moorang and Nichar branches of the bank. What is being disputed by the appellant is, that based on policy conditions of insurance, it was not liable to pay anything over and above Rs.94,000/-, that has already been paid by it to the respondent. This amount was received under protest, as is clear from annexures C-20 and C-21.
12. So far as the plea of complaint being barred by time is concerned, it is without substance. Acts of embezzlement could not have been detected in an institutional matter like respondent immediately after those were committed. As and when the embezzlement came to light, it was immediately brought to the notice of the appellant by the respondent-bank. Even according to appellant, preliminary Surveyor reported the loss as claimed by the appellant, but because of financial powers being not with Divisional Office, matter was referred to higher authorities, who got the final survey done. From the date when embezzlement was detected, respondent-bank entered into correspondence with the appellant and finally instead of paying total embezzled amount, on 20.09.2002, sum of Rs.94,000/- was offered by the appellant to the respondent in full and final settlement of its claim, prior to this it was never refuted and or repudiated by the appellant. As such cause of action for maintaining the complaint claiming difference of Rs.8,49,233/- as claimed and payment of Rs.94,000/-, arose for the first time on 20.09.2002. This sum was accepted under protest, as was reiterated to Shimla branch of appellant vide annexure C-21 on 30.09.2002. As such we hold that the complaint is within time.
13. Respondent being not a consumer and or appellant not service provider, is a plea that has been raised to be rejected. Reason being that by making payment of Rs.94,000/- against embezzled sum of Rs.8,49,233/- by Shri Negi, appellant admitted it to be service provider and respondent its consumer. In case that was not a situation, there was no occasion for this amount having been paid. Appellant could have straightway asked the respondent to go to Civil Court and get its claim adjudicated upon, that is admittedly is not a stand of respondent. To the contrary it has justified the payment of Rs.94,000/- in respect of the sum as claimed by the respondent.
14. No other points were urged.
15. In view of aforesaid discussion, this appeal is dismissed while upholding the order passed by District Forum, Shimla in Consumer Complaint No.45/2003, dated 17.02.2009, leaving the parties to bear their own costs.
16. All the interim orders passed in this appeal from time to time shall stand vacated.
17. Learned counsel for the parties have undertaken to collect copy of this order from the Court Secretary, free of cost as per rules.
SHIMLA 24.05.2010.
( Justice Arun Kumar Goel ) (Retd.) President.
(Saroj Sharma) Member.
(Chander Shekher Sharma) Member.
/dinesh/