National Consumer Disputes Redressal
United India Insurance Co. Ltd. vs Vikas Sahakari Bank Ltd. on 28 July, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI REVISION PETITION NO. 3497 OF 2012 (Against the Order dated 10/02/2012 in Appeal No. 753/2007 of the State Commission Maharastra) 1. UNITED INDIA INSURANCE CO. LTD. Jain Board Complex 13 Budhawar Peth, Balives Solapur Maharastra ...........Petitioner(s) Versus 1. VIKAS SAHAKARI BANK LTD. Balives Jaju Chowk Solapur - 413002 Maharastra ...........Respondent(s)
BEFORE: HON'BLE MR. JUSTICE AJIT BHARIHOKE, PRESIDING MEMBER HON'BLE MRS. REKHA GUPTA, MEMBER For the Petitioner : Mr. Manu Bakshi, Advocate, Proxy Counsel For Ms. Tajinder Virdi, Advocate For the Respondent : Mr. Anand M. Sanjay Nuli, Advocate Dated : 28 Jul 2015 ORDER This revision is directed against the order of the Maharashtra State Consumer Disputes Redressal Commission, Mumbai (in short, "the State Commission) dated 10.2.2012 whereby the State Commission partly allowed the appeal and directed the petitioner insurance company to pay to the respondent/complainant a sum of Rs.14,41,273/- together with 9% interest w.e.f. 17th September, 2004.
2. Briefly stated, facts relevant for the disposal of the revision petition are that the respondent Bank filed a consumer complaint in District Forum, Solapur alleging that the respondent bank had obtained bankers indemnity policy from the petitioner with insurance cover of Rs.2,51,00,000/-. The insurance policy was valid from 1.4.2002 to 31.3.2003. One Sanjay Daga at the relevant time was working as Head Cashier in the bank. On 21st September, 2002 a shortage of cash to the extent of Rs.14,41,273/- was noticed. Case of the complainant is that Sanjay Daga had taken away the cash and proceeded on leave. An FIR in this regard was lodged with the police. The complainant bank filed an insurance claim for reimbursement of Rs.14,41,273/- misappropriated by Sanjay Daga. The insurance company, however, offered to pay the complainant bank a sum of Rs.72,000/- as full and final settlement of the claim on the complainant signing the settlement voucher. The complainant bank was ready to accept the amount offered under protest but the petitioner company refused to pay. Being aggrieved of the petitioner company to settle the insurance claim, the respondent bank raised consumer dispute in the District Forum, Solapur.
3. The petitioner on being served with the notice filed written statement alleging that the respondent bank had taken the bankers indemnity insurance with basic sum insured Rs.1,00,000/- and additional sums insured regarding loss in premises and loss in transit for Rs.2,51,00,000/-. It was pleaded that as per the information received from the bank Manager the sum of Rs.14,41,273/- was misappropriated by the employee Sanjay Daga while said amount was in his custody. Thus, as per the terms and conditions of the insurance policy the claim was settled at Rs.72,000/- and the said amount was offered to the complainant but the complainant did not accept the same. It is, thus, alleged that there is no deficiency in service on the part of the petitioner/opposite party. It was also pleaded that petitioner is not a consumer.
4. The District Forum, Solapur on consideration of the pleadings and the evidence came to the conclusion that the sum of Rs.72,000/- was rightly offered by the petitioner to the complainant in accordance with the terms and conditions of the insurance policy. Accordingly, petitioner was directed to pay to the respondent a sum of Rs.72,000/- with the observation that the order shall be implemented within 30 days from the date of receipt of the copy of the order failing which above mentioned amount shall be payable with 18% interest thereon.
5. Being aggrieved of the order of the District Forum the respondent bank preferred an appeal. The State Commission was of the view that the District Forum has wrongly interpreted the terms and conditions of the insurance policy. Thus, the appeal was allowed and the petitioner company was directed to pay a sum of Rs.14,41,273 with 9% interest w.e.f. 17th September, 2012 to the respondent bank. This has led to filing of the revision petition.
6. Learned counsel for the petitioner has contended that the impugned order of the State Commission is not sustainable as it is based upon incorrect appreciation of facts as also incorrect interpretation of the terms and conditions of the insurance policy. Expanding on the arguments, learned counsel has contended that the basic sum insured by the respondent bank was Rs.1,00,000/-. However, the respondent bank had taken additional insurance for the loss "On premises" for Rs.2 Crore and for "Loss during transit" for Rs.50,00,000/- for which he had paid additional premium for Rs.2,50,000/-. Learned counsel has contended that the State Commission has failed to appreciate that the information furnished by the concerned branch Manager vide letter dated 23rd September, 2002 the bank had suffered loss of approximately Rs.14.50 Lakhs on account of misappropriation of cash in possession by the head cashier. Thus, there being no theft on premises the petitioner had rightly offered to pay a sum of Rs.72,000/- to the respondent bank against the insurance claim in view of clause "D" of the terms and conditions of the insurance policy read with excess clause "A".
7. Learned counsel for the respondent on the contrary has argued in support of the impugned order and submitted that undisputedly loss of money was caused on the premises of the bank. Therefore, in view of the "On premises" clause of the policy the petitioner has been rightly directed to make good the loss to the complainant bank.
8. We have considered the rival contentions and perused the record. In order to find an answer to the controversy, it would be useful to have a look on the relevant clauses of the insurance policy, which are reproduced as under: -
"THE COMPANY HEREBY AGREES TO INDEMNIFY THE INSURED TO THE EXTENT SPECIFIED HEREINAFTER. IF at any time during the period of insurance stated in the schedule, or any specified period respect of which the insured shall have accepted and/or the insured shall have agreed to pay the premium for the renewal thereof, the insured shall discover any direct loss of money of and/or securities sustained:
A On Premises: by reason of any money and/or securities for which the insured are responsible or interested in or the custody of which they have undertaken and which now are, or are by them supposed to believe to be or at any time during the period of insurance may be in or upon their own premises (including mobile office) or upon the premises of their bankers in any recognized place of safe deposit or lodged or deposited in registration with the issuers thereof, or with any agents of such issuers for with any person employed to procure or manage the exchange, conversation or registration thereof being (while so in are upon such premises or so placed, lodged or deposited as aforesaid) lost, destroyed or otherwise made away with by fire, riot and, strike, burglary or housebreaking, theft, robbery or holdup, whether within or without and whether by the employees of the insured or any other poised or persons whomsoever.
B. In Transit: by reason of any money and/or securities being lost, stolen, mislaid, misappropriated or made away with, whether due to the negligence or fraud of the employees of the insured or otherwise, whilst in transit in the hands of such employees, such risk of transit to commence from the moment the same is received the employee on behalf of the insured and to continue until delivery thereof at destination.
C. Forgery or Alteration: by reason of the payment made in respect of bogus or fictitious or forged or raised cheques and/or genuine cheques and/or drafts and/fixed deposit receipts issued by the insured bearing forged endorsements or the establishment of any credit to any customer on the faith or such documents whether received under the counter or through the clearing house or by mail.
D. Dishonesty: by reason of the dishonest or criminal act of the employee(s) of the insured with respect to the loss of money and/or securities wherever committed and whether committed singly or in connivance with others.
E. Hypothecated Goods by reason of fraud and/or dishonesty by the employee(s) of the insured, in respect of any goods and/or commodities pledged or hypothecated to the insured and under the insured's control.
F. Registered Postal Sendings: by reason of loss by robbery, theft or by other causes not herein expected whilst in direct transit or intended to be dispatched by registered insured post from the office of the insured to the consignee provided that each post parcel shall be insured with the post office.
Provided always that the company's liability for anyone consignment and/or loss is limited to 10% (ten percent) of the basic sum insured or Rs.50,000/- whichever is less.
G. Appraiser: by reason of infidelity or criminal acts on the part of appraisers, provided that such appraisers are on the approved list of appraisers maintained by the insured and further provided that the insured exercise reasonable precaution and safeguard in the selection and appointment of such appraisers.
Provided always that the company's liability for any one loss or all losses during the period of insurance due to infidelity or criminal acts of each of such appraisers will be limited to 5% (five percent) or the basic sum insured under this policy or Rs.25,000/- whichever is less.
H. Janta Agent/Chhoti Bachat Jojna Agents/Py Me Collectors: by reason of infidelity or criminal act upon the part of the Janta agent/Chhoti Bachat Yojna Agent/Py Me Collectors or premises performing duties of a like nature provided that such agents are regular part time commercial agent of the bank and are appointed after full scrutiny about their credentials guaranteed by two reliable independent persons, subject to the condition that the total liability during the period of insurance in respect of each of such agent will be limited to 5% (five percent) of the basic sum insured under the policy or Rs.10,000/- whichever is lower.
Excess: The insured shall bear the minimum amount of excess stipulated in the schedule, for each and every loss mentioned under item A, B and C of contingencies insured the loss in respect of each of the events referred to in item A and in respect of each of the acts or events referred to in its C being treated as a separate loss and shall repay to the company any such or less amount, if paid by the company in the first instance. The insured shall bear first 25% (twenty five percent) of each and every loss and contingencies insured D to H. Losses under contingencies insured D and/or E are further subject to the minimum amount of excess shown in the schedule and the insured shall repay to the company any such or less amount if paid by the company in the first instance. For the purpose of this clause, each loss in respect of each dishonest or criminal act shall be treated as a separate loss."
9. On conjoint reading of the above provisions, it is evident that so far as the loss caused because of contingency A, B & C the insurance company is liable to make good the entire loss subject to excess clause upto the maximum of Insurance cover taken. However, if the loss is caused to the insured under contingency "D" the insured shall bear first 25% of each and every loss under the contingency.
10. The case of the petitioner is that as per the survey report submitted by Shri S.H. Risbud and the information conveyed by the concerned Branch Manager to the petitioner company the subject loss has been caused because of dishonest misappropriation of the cash by the head casher Sanjay Daga. It is contended that therefore the loss falls under contingency "D" of the insurance cover. As such the petitioner company was justified in offering sum of Rs.72,000/- after deducting 25% of the basic sum insured and adjusting the pro-rata premium for unexpired premium in terms of reinstatement clause "B". Thus, there is no deficiency in service.
11. On the contrary, case of the respondent bank is that the loss of money has occurred within the premises of the bank. Therefore, contingency "A" of the insurance policy is applicable and the insurance company was required to make good the entire insurance claim for the loss caused to the bank.
12. On careful reading of the contingency "A" (on premises) clause reproduced above, it is clear that under this clause the insurance company is obliged to make good the loss on the premises of the bank on account of fire, riot, strike, burglary, housebreaking, theft, robbery and hold up whether by the employees of the insured or by any other person. The act of criminal misappropriation by reason of dishonesty on the part of employee resulting in loss does not fall within the definition of "on premises" clause. The loss due to dishonest or criminal act of employees has been separately covered under clause "D". Therefore, in our opinion clause "A" does not come into operation and the insurance company in view of clause "D" was justified in deducting 25% of basic sum assured Rs.1,00,000/- and offering Rs.72,000/- to the respondent complainant after making deduction of pro-rata premium for unexpired period.
13. Learned State Commission has committed grave error in holding that the bank has suffered loss due to the theft by the dishonest employee in the bank premises. This observation of the bank is against the contents of letter dated 23rd September, 2002 written by the bank to the petitioner insurance company wherein it is clearly mentioned that the Head Casher has dishonestly misappropriated the subject cash. The State Commission has also totally ignored the observations in this regard in the report of surveyor. As this is not the case of theft, contingency "D" of the insurance policy comes into play and the respondent bank, therefore, was entitled to 25% of the basic sum insured after deduction of pro-rate insurance premium. Thus, in our view, the impugned order suffers from infirmity and cannot be sustained.
14. In view of the discussion above, we allow the revision petition, set aside the impugned order and restore the order of the District Forum.
......................J AJIT BHARIHOKE PRESIDING MEMBER ...................... REKHA GUPTA MEMBER