National Consumer Disputes Redressal
Rajkot Commercial Co-Operative Bank ... vs United India Insurance Co. Ltd. & Anr. on 7 September, 2015
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI CONSUMER CASE NO. 149 OF 2010 1. RAJKOT COMMERCIAL CO-OPERATIVE BANK LTD. General Manager (Incharge),
Suvidha,
Chandulal Buch Marg Rajkot - 360 001 ...........Complainant(s) Versus 1. UNITED INDIA INSURANCE CO. LTD. & ANR. Regional Manager,
Union Co-operative Building,
4th Floor,
Ashram Road Ahmedabad - 380 014 2. The United India Insurance Co Ltd. Divisional Manager, D.O 1, Sugar House, Near Trikone Baug,Dhebar Road Rajkot- 360001 3. The United India Insurance Co Ltd. Divisional Manager, D.O 1, Sugar House, Near Trikone Baug,Dhebar Road Rajkot- 360001 ...........Opp.Party(s)
BEFORE: HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER HON'BLE DR. B.C. GUPTA, MEMBER
For the Complainant : Mr. K.P. Toms, Advocate
Mr. Saurabh Singh, Advocate For the Opp.Party : Mr. Ravi Bakshi, Advocate
Mr. S.C. Giri, Regional Manager
Mr. Rakesh Kumar, Asstt. Manager
Dated : 07 Sep 2015 ORDER
HON'BLE MR. JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)
1.The complainant Rajkot Commercial Co-operative Bank Ltd. obtained a Bankers Indemnity Policy from the opposite party for the period from 01.04.2007 to 31.03.2008, paying a premium amounting to Rs. 291825/-. The case of the complainant is that M/s. M.N. Manvar & Co., Chartered Accountants appointed by the State Government as its Auditors, brought it to the notice of the bank that there was a short fall to the extent of Rs. 5,31,00,131/- in the cash balance of the bank. An FIR in this regard was lodged with the concerned police station and intimation was also given to the insurance company. Mr. Upendra R. Shah was appointed as the surveyor to assess the loss to the complainant, covered under the policy. The complainant bank made efforts to recover the loss pointed out by the Auditors and was able to recover as much as Rs. 4,49,34,939/-, thereby leaving the short-fall of Rs. 81,65,192/-, by the time this complaint was filed. The insurance company, however, offered a sum of Rs. 29,46,356/- to the complainant bank which the said bank wanted to accept under protest. However, since the said offer was not unconditionally acceptable to the complainant bank, the aforesaid amount remained unpaid. The complainant then approached this Commission by way of this complaint, seeking the aforesaid principal amount of Rs. 81,65,192/- alongwith interest amounting to Rs. 83,90,476/-, thereby making a total sum of Rs. 1,65,55,668/-.
2. The complaint has been resisted by the insurance company primarily on the ground that the amount which they had decided to pay to the complainant, was declined by the complainant and therefore, there was no deficiency on their part in rendering the services.
3. The policy issued to the complainant, to the extent it is relevant, reads as under:
Cover Sum Insured (Rs.)
1. Basic Sum Insured (Item A to H) 30,00,000.00
2. Additional Sum Insured on Premises 8,00,00,000.00
3. Additional Sum Insured on Transit 1,00,00,000.00 .............. the insured shall discover any direct loss of money 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 are, upon their premises lost, destroyed or otherwise made away with by fire, riot and strike, burglary, theft, robbery or hold-up, and whether by the employees of the insured or any other person or persons whosoever.
B. IN TRANSIT: By reason of any money and/or securities being lost, stolen, mislaid, misappropriated or made away with other due to the fraud of the employees of the insured or other fortuitous cause, whilst in transit in the hands of such employees, such risk of transit to commerce from the moment the same is received by 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 cheques and/or drafts and or genuine cheques and/or travelers cheques and/or gift cheques and/or drafts and/or fixed deposit receipts (excluding bills of discount and other credit facilities) issued by the insured bearing forged endorsement or providing of any credit to any customer on the faith of such documents whether received over the counter or through the clearing house or by mail.
D. DISHONEST: By reason of dishonest or criminal act of the employee(s) of the insured with respect to the loss of money and/securities wherever committed and whether committed singly or in connivance with others.
E. PLEDGED GOODS: By reason of fraud and/or dishonesty by the employee(s) of the insured in respect of any goods and/or commodities pledged to the insured and under the insured's control.
F. REGISTERED POSTAL SENDING: By reason of loss by robbery, theft, or by other cause not herein excepted whilst in direct transit by registered insured post to the consignee.
Provided always that the company's liability for any one consignment and/or loss shall be limited to 10% (ten percent) of the basic sum insured under this policy or Rs. 1,00,000/- (Rs. One Lac) whichever is less.
G. APPRAISERS: 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 procided that the insured shall exercise reasonable precautions and safeguards 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 appraiers shall be limited to 5%(five percent) of the basic sum insured and this policy or Rs. 20,000/- (Fifty thousand only) whichever is less.
H. JANATA AGENTS/CHOTI BACHANT YOJANA AGENTS/PYGMIE COLLECTORS: By reason of infidelity or criminal acts on the part of Janata Agents/Choti Bachat Yojana Agents/Pygmie Collectors or persons performing duties of a like nature, provided that such agents are regular part-time commercial agents 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 such agent will be limited to 5% (five percent) of the basic sum insured under this policy or Rs. 20,000/- (Twenty thousand only) whichever is lower.
4. The contention of the learned counsel for the complainant is that the misappropriation or criminal breach of trust or theft on the part of its employees was insured to the extent of Rs. 8,30,00,000/- whereas the contention of the learned counsel for the insurance company is that only the loss mentioned in clause A above was insured to the extent of Rs. 8,30,00,000/- whereas the loss falling under clauses B to H was covered only to the extent of Rs. 30 lacs. In order to understand the true import of the above referred policy, we requested the learned counsel for the insurance company to ask some senior officer of the insurance company to appear before us and explain the said policy. Sh. S.C. Giri, Regional Manager of the insurance company is accordingly present and he states that since the basic sum insured (items A to H) was only Rs. 30 lacs and there was an additional sum insured on premises to the extent of Rs. 8 crores, the loss to the complainant bank if covered under clause A, was reimbursable to the extent of Rs. 8.3 crores whereas in case it was not covered under clause A above, it was reimbursable only to the extent of Rs. 30 lacs. We are in agreement with the interpretation given to the policy by the Regional Manager of the insurance company and the learned counsel for the insurance company. It is evident from a perusal of the policy that the basic sum insured was only Rs. 30 lacs and only an additional insurance to the extent of Rs. 8 crores was granted, in case the loss was to occur on the premises of the insured, as defined in the policy. Similarly, an additional insurance cover of Rs. 1 crore was granted in case the loss was to occur on transit. A perusal of clause A extracted hereinabove would show that on premises loss comprises only such loss which occurs due to money and/or securities for which the bank is responsible or interested in or which is in the custody of the bank getting lost destroyed or otherwise made away with by fire, riot, strike, burglary, theft, robbery or hold up, irrespective of whether any such act has been committed by any employee of the bank or by another person. Thus it is not each and every loss occurring on the premises of the bank which would be covered under clause A above. It is only a specified loss which would be covered therein. In the case before us, there was no fire, riot or strike. There was no burglary, theft, robbery or hold up. The learned counsel for the complainant submits that misappropriation by the employees of the bank would be covered under the expression "theft" and therefore, the loss to the bank on account of such misappropriation would be reimbursable up to Rs. 8.3 crores. We however, are unable to accept the contention. The term "theft" is altogether different from misappropriation or criminal breach of trust. Theft is defined in section 378 of IPC and is punishable in section 379 thereof. Theft, as defined in section 378 of IPC involves taking out dishonestly, any moveable property out of the possession of another person. A person cannot, in our opinion, be said to have committed theft of moveable property which is lawfully in his possession. The cash of the bank is lawfully in the possession/custody of the bank employees. Therefore, misappropriation of such cash or using it or disposing it of in terms of section 405 of IPC will not constitute theft as defined in section 378 of IPC. A case of misappropriation of funds of the bank by an employee of the bank, in our opinion, would be criminal breach of trust as defined in section 408 of IPC and punishable under section 409 thereof. Section 408 of IPC provides that whoever, being a clerk or servant or employed as a clerk or servant, and being in any manner entrusted in such capacity with property, or with any dominion over property, commits criminal breach of trust in respect of that property, shall be liable to punishment. Criminal breach of trust is defined in section 405 of IPC. Whoever, being in any manner entrusted with property, or with any dominion over property, dishonestly misappropriates or converts to his own use that property, or dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged, or of any legal contract, express or implied, which he has made touching the discharge of such trust, or willfully suffers any other person so to do, commits "criminal breach of trust". Therefore, the alleged misappropriation of the funds by the employees of the bank would not be covered under clause A of the policy extracted hereinabove. Consequently, irrespective of the quantum of the loss sustained by the complainant bank, it was entitled to reimbursement only to the extent of Rs. 30 lacs subject of course to the deductions prescribed in the insurance policy.
5. In the case before us, the insurance policy provides for deduction of first 25% of each loss under items C to E or 5% of the basic sum insured under this policy or Rs. 50,000/- whichever is less. The insurance company accordingly made deductions of Rs. 50,000/- from the insured amount of Rs. 30 lacs and after making a further deduction of Rs. 3644/- on account of re-instatement of sum insured on prorata basis, it offered Rs. 29,46,356/- which in our opinion, was the right amount to which the complainant bank was entitled as the principal sum.
6. For the reasons stated hereinabove, the opposite party is directed to pay a sum of Rs. 29,46,356/- alongwith interest @ 9% per annum w.e.f. six months from the date on which the claim was lodged, till the date the aforesaid amount is actually paid. In the facts and circumstances of the case, there shall be no order as to cost.
......................J V.K. JAIN PRESIDING MEMBER ...................... DR. B.C. GUPTA MEMBER