MANDLA-BALAGHAT KSHETRIYA GRAMIN BANK vs NATIONAL INSURANCE COMPANY LTD.-Opposite party

THIS is a rather unseemly controversy between the two instrumentalities of the State, on one side is Mandla-Balaghat Kshetriya Gramin Bank, a subsidiary of State Bank of India who is complainant before us and on the other is the National Insurance Company Ltd. who has repudiated claim of the complainant-Bank made under a Bankers Indemnity Policy.

THE said policy was taken out by the complainant-Bank from the respondent-Insurance Company on 31.12.1996 for a period of one year ending on 30.12.1997 and providing cover of Rs. 2,00,000/- plus Rs. 5,00,000/- under various items as enumerated at serial numbers A, B and A to E. Item No. B provided for a cover of Rs. 5,00,000/- for loss of money in transit and which reads as follows: "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 employee(s) of the insured or otherwise whilst in transit in the hands of such employee(s) such risk of transit to commence from the moment the same is received by the employee on behalf of the insured and to continue until delivery thereof at destination."

It is not disputed before us that two employees of the complainant-Bank namely, Rakesh Chandra Verma and Vinod Kumar Bandewar had on 5.12.1997 drawn on behalf of the complainant, a sum of Rs. 5,00,000/- from the State Bank of India, Branch Mandla. Both these employees were on a scooter and while returning to the complainant-Bank, stopped over and entered into restaurant for taking tea leaving behind the bag containing the said money on the scooter itself. On return, they found that the bag with money was missing. A report of the incident was promptly lodged with the local police and an intimation was also given to the respondent-company the same day. On 18.12.1997 complainant submitted a formal claim with the respondent and also supplied desired information vide Annexures 2, 3 and 4 dated 24.5.1999, 29.5.1999 and 22.1.2000 respectively. However, the respondent repudiated the claim vide their letter dated 4.8.2000 (Annexure 5) mainly on the ground that the loss suffered by the complainant-Bank was due to the negligence of its own employees in not taking due care of the money in question.

The complainant Bank has filed this complaint claiming from the respondent the sum assured with interest and compensation, attributing deficiency in service on its part. The complaint is resisted by the respondent again on the same ground that the complainant-Bank was guilty of violating terms and conditions of the policy inasmuch as no proper care was taken by the complainant or its employees for safe transit of money from the drawee Bank to the office of the complainant.

WE have heard Mr. A.K. Jain, learned Counsel for the complainant and Mr. Ravindra Tiwari, learned Counsel for respondent. This complaint in our view must succeed. The indemnity provided under item B of the policy in question and as already reproduced hereinbefore made the respondent-Insurance Company absolutely liable to indemnify the insured bank, against any loss suffered by the latter in transit by reason of any money or securities being lost, stolen, mislaid, misappropriated or otherwise done away with, whether due to the negligence or fraud of its employees or otherwise. It is further clear that such risk in transit in respect of the money in question covered by the policy commenced from the moment the same was received by the employee on behalf of the insured and continued until delivery thereof at destination. It is significant to note that extra premium of Rs. 5,000/- was paid by the complainant to the respondent to cover any such loss in transit. Under the circumstance, it was not open for the respondent-Insurance Company to repudiate the claim on the ground that the loss was due to acts and omissions committed by the concerning employees.

IT is true that the complainant-Bank had initiated disciplinary proceedings against the said employees and also awarded punishment to them. But this could hardly be a ground for the respondent-insurer to repudiate the claim contrary to the clear terms of the policy as already stated hereinabove. It is further significant to note that the Divisional Manager, Jabalpur of the respondent-Insurance Company has after a meeting with the Chairman of the complainant-Bank, by his letter dated 20.4.2001 (Annexure A-11) informed the complainant-Bank that the respondent has settled the latter''s Fidelity Guarantee Claim and has also duly informed its branch office at Mandla to make the payment after obtaining necessary letter of subrogation together with an undertaking for the recoverable amount from the concerning employees. It is really unfortunate to see that even after this letter of the Divisional Manager and despite two successive reminders dated 18.5.2001 and 8.6.2001 (Annexures A-12 and A-13) issued by the Chairman of the complainant-Bank no action has been taken by the respondent company who further seems to have advised its Counsel to contest the case and inform this Commission that the letter dated 20.4.2001 (Annexure A-11) pertained to some other claim. However, the learned Counsel for the respondent was simply unable to explain as to which other claim this letter related to. As against it, the Counsel for complainant was emphatic in submitting that this letter related to the claim in question and in fact no other claim whatsoever of the complainant is lying with the respondent. We are constrained to observe that the respondent-Insurance Company has behaved like an unscrupulous private litigant unbecoming of a public undertaking like the respondent. For what we have said above, this complaint succeeds and is allowed. The respondent-insurer is directed to pay to the complainant the sum assured i.e., Rs. 5 lacs, with interest @ 12% p.a. from the date of the claim i.e., 18.12.1997 until payment. Since, we have awarded interest no further compensation as claimed by the complainant need to be awarded. The respondent is however further directed to pay to the complainant Rs. 2,000/- towards cost of this complaint. Complaint allowed.