AI Structured Summary
Not yet generated for this judgment
Judgment
APPELLANT Insurance Company which was the Opposite Party before the State Commission has filed this Appeal against the judgment and order dated 1.5.2007 passed by the State Consumer Disputes Redressal Commission, Chhattisgarh (in short, ''the State Commission'') in Complaint No. 06/05 wherein the State Commission allowing the complaint has directed the Appellant to pay a sum of Rs. 65,00,000 to the Respondent/Complainant along with interest @ 9% p.a. from the date of filing of complaint till realization within a period of 45 days from the date of passing of the order failing which the amount shall carry interest @ 12% p.a. from the date of default. Rs. 6,000 were awarded to the Respondent towards costs. Facts:
Complainant/Respondent Bank obtained "Banker''s Indemnity Policy" No. 2001/7700710 for all its branches from the Appellant Insurance Company and paid the premium of Rs. 53,450. The said policy was valid for the period from 30.3.2002 to 29.3.2003.
ON 28.12.2002, the Branch Manager, Shri Krishna Kumar Kurre while carrying a sum of Rs. 65,00,000 for Chhura and Gariaband branches of the Respondent Bank on Tempo Trax bearing No. M.P. 23 -GA -6465, was looted by some dacoits and the entire sum was taken away by them. A report was lodged at Mana Police Station. The incident was reported to the Appellant Insurance Company on 30.12.2002 and subsequently the claim was lodged on 4.1.2003 along with necessary documents. On receiving the intimation, Appellant appointed the Surveyor, Suresh Kumar Kimtee to conduct the survey. The said Surveyor submitted his report dated 7.7.2003 stating that the claim was not payable as no security guard was sent along with cash which was in violation of the terms and conditions of the policy. Vide letter dated 19.3.2003, Appellant asked the Respondent to furnish the Departmental Investigation Report and Final Investigation Report of the Police which could not be submitted by the Respondent despite best efforts prior to 22.11.2004. Appellant asked the Respondent to file fresh claim form which was submitted on 25.7.2005. Claim was not settled. Complainant, being aggrieved, filed the complaint before the State Commission. Appellant Insurance Company, on being served, entered appearance and filed its written statement resisting the complaint, inter alia, on the grounds; that the complaint was premature as the claim filed by the Respondent was yet to be decided by them; that the Head Office of the Appellant was considering to repudiate the claim of the Respondent as there was fundamental breach of policy condition; that the investigation conducted by the Appellant revealed that the cash was robbed in transit without there being any guard for the safe transfer of such a huge amount of cash whereas condition No. 4 of the policy taken by the Respondent stipulated that in case of transit of cash exceeding Rs. 10,00,000 two guards with arms shall escort; that after issuing the policy (Annexure A -1) to the Respondent, the Appellant had subsequently issued regular policy (Annexure OP -1) along with terms and conditions in accordance with the proposal form and letter dated 27.3.2002 written by the Respondent; that as there was breach of condition of the policy, the complaint was liable to be dismissed.
DURING the pendency of the complaint, the claim of the Respondent was repudiated by the Appellant vide letter dated 6.2.2006 on the ground of breach of policy condition No. 4 whereby the Respondent was required to provide two armed guards during cash transit of Rs. 65,00,000.
STATE Commission after taking into consideration the pleadings and the evidence led by the parties came to the conclusion that there were two policies, one produced by the Complainant (Annexure A -1) and the other by the Opposite Party/Appellant herein (Annexure OP -1). That there were lot of differences in the two policies. That the terms and conditions of the policy were not supplied to the Respondent along with the policy. It was further held that the condition of taking armed guards along with cash in transit was not a ''condition'' precedent to liability of the Appellant Insurance Company to indemnify the loss and that there were discrepancies in the terms and conditions of the policy. That the Appellant could not be permitted to take advantage of discrepant terms and conditions. The State Commission allowed the complaint and directed the Appellant to pay a sum of Rs. 65,00,000 to the Respondent/Complainant along with interest @ 9% p.a. from the date of filing of complaint till realization within a period of 45 days from the date of passing of the order failing which the amount shall carry interest @ 12% p.a. from the date of default. Rs. 6,000 were awarded to the Respondent towards costs. State Commission observed as under:
However, as is evident, the condition of taking armed guards is not mentioned under the aforesaid conditions precedent to liability, Subsequent to conditions precedent the next heading is CONDITION and 4(b) of the same relates to ''IN TRANSIT'' and it requires that ''for cash in transit above 10 lacs two guards with the arms shall escort''. Admittedly, in the case in hand armed guards were not accompanying the cash in transit. However, as observed earlier that the condition of taking armed guards is not a condition precedent to liability and the insured has provided insurance cover ''for direct loss of money and/or securities by being lost stolen mislaid misappropriated or made away with whether due to negligence of 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 employees on behalf of the insured and to continue until delivery thereof at destination'' the insurer would not have been permitted to avoid liability even if the terms and conditions were supplied to the insured because not taking guards would amount to negligence of the concerned staff/employees and the insurer had specifically covered the risk resulting due to negligence, etc. of the employees. It is settled law that in case of inconsistency and discrepancy in the terms and conditions the expression that is favourable to the other party than the one who has prepared the said document is to be accepted. Hence, even assuming that the terms and conditions were supplied to the complainant back as has been alleged by the OP , the OP cannot be permitted to take advantage of the discrepant terms and conditions.
Appellant, being aggrieved, has filed the present Appeal.
We have heard the learned Counsel for the parties at length.
Learned Counsel appearing for the Appellant contends that the State Commission has committed an error in recording the finding that the condition of taking armed guards along with cash -in -transit was not a ''condition'' precedent to liability; that the State Commission has failed to appreciate that condition 4(b) of the policy of insurance specifically provided that for cash -in -transit exceeding Rs. 5 lakh and upto Rs. 10 lakh, one escort with fire arm shall be provided and for cash -in -transit exceeding Rs. 10 lakh, two guards with the fire arm escort shall be provided, out of which one shall sit along with the driver and the other at the rear irrespective of whether the insured''s own vehicle is used or whether a private vehicle is engaged; that Condition No. 13 of the policy of insurance also provided that due observance and fulfillment of terms and conditions of the policy shall be a ''condition'' precedent to any liability for the company to make any payment under the policy; that there was no discrepancy in the terms and conditions of the policy; that the terms and conditions of the policy running into six pages were furnished to the Respondent along with policy; that the Respondent Bank had been taking similar policies from the Appellant for the last several years and every time the terms and conditions of the policy were given to the Respondent along with the policy; that as two policies had come on record, the Appellant on 28.11.2006 filed an application for amendment of the reply to explain the circumstances and reasons which prompted the company to issue two policies; that the said application was allowed and para 5A was incorporated in the reply; that the State Commission has failed to appreciate that the policy of insurance is a contract between the insured and the insurer and the terms and conditions of the policy of insurance are binding upon the parties and the policy of insurance is required to be read with reference to the stipulations contained in the same. In support of this contention, learned Counsel for the Appellant has placed reliance upon the judgments of the Hon''ble Supreme Court in the cases of United India Insurance Co. Ltd. V. Harchand Rai Chandan Lal, : IV (2004) CPJ 15 (SC) : V (2004) SLT 876 : (2004) 8 SCC 644, OIC v. Sony Cheriyan, : VI (1999) SLT 565 : II (1999) CPJ 13 (SC) : (1999) 6 SCC 451, and Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd., : IV (2010) CPJ 38 (SC) : VIII (2010) SLT 375 : 2010 (10) SCC 567.
AS against this, learned Counsel appearing for the Respondent submits that after filing of written version by the Appellant, Respondent had filed affidavit of S.K. Verma, Acting Chief Executive Officer dated 10.4.2006 in rebuttal of the averments made in the written version regarding terms and conditions and it was specifically stated in the affidavit that the insurer had supplied single page policy and no terms and conditions were supplied to them; that the policy was issued without any terms and conditions appended thereto; that there was difference in the format of policy filed by the Respondent and the one filed by the Appellant; that the policy filed by the Appellant was a manufactured document and the same was titled as indemnity (Non -risk Booked) Policy whereas the policy taken by the Respondent was Banker Indemnity Policy; that the condition of taking armed guards was not a condition precedent to liability; that the State Commission has rightly held that there was discrepancy in the terms and conditions of the policy and the Insurance Company could not permitted to take advantage of the discrepant terms and conditions. The facts are not disputed before us.
THE question which falls for our consideration is as to whether the terms and conditions of the policy were supplied to the Respondent Bank and as to whether the condition of taking armed guards was a ''condition'' precedent to the liability of the Insurance Company. According to the Respondent Bank, only single page policy (Annexure A -1) was supplied to it by the Appellant with which no terms and conditions were appended. According to the Appellant, besides issuing policy (Annexure A -1), copy of which was produced by the Respondent, the Appellant had subsequently issued regular policy (Annexure OP -1) in accordance with the proposal form and the letter dated 27.3.2002 written by the Respondent. In the policy (Annexure OP -1) risk of cash covered in transit and in safe in the bank had been separately stated whereas in the policy (Annexure A -1) a consolidated figure was mentioned. That it was necessary to issue the policy (Annexure OP -1) so that the Respondent would know about the risk of the amount of cash covered under different heads.
AS two policies had come on record, Appellant filed an application seeking amendment of the written statement filed by it to explain the circumstances and reasons which prompted the Appellant to issue two policies. The said application was allowed and para 5A was incorporated in the reply which reads as under: 5A. That besides issuing policy, copy of which has been filed by the complainant, the OP also subsequently issued regular policy, copy of which is Annexure OP -1, in accordance with the proposal form and the letter of complainant dated 27.3.2003 filed herewith. In this policy, risk of cash covered in transit and in safe in the Bank have been separately stated, whereas in the policy (copy Annexure A1) a consolidated figure was mentioned. It was necessary to issue the policy (copy Annexure OP -1) so that the complainant would know about the risk of the amount of cash covered under different heads.
Respondent Bank had sent a letter dated 27.3.2002 to the Appellant regarding renewal of the Master Banker''s Indemnity Policy for the period from 30.3.2002 to 29.3.2003 covering the risk as under:
ACCORDINGLY , the Appellant issued a policy (Annexure OP -1) showing the sum insured under different heads as asked for by the Respondent in its letter, dated 27.3.2002, Policy (Annexure A -1) was issued for a consolidated sum of Rs. 1,13,00,000 and the break up under the different heads, i.e. basic amount, cash in transit insurance, cash in safe, number of branches and number of employees were not mentioned. Appellant had filed affidavit dated 25.5.2006 of its Branch Manager stating that the terms and conditions of the policy running into six pages were given to the insured Bank. State Commission has committed an error in recording the finding that there were lot of the differences in the two policies and the terms and conditions of the policy were not supplied to the Respondent. A perusal of the policies (Annexure A -1) and (Annexure OP -1) placed on record by the Respondent and the Appellant respectively reveals that the policy number, amount insured and duration of the validity of the policies are the same. The only difference is that in the policy (Annexure OP -1) terms and conditions of the policy had been attached whereas in the policy (Annexure A -1), terms and conditions were not attached. Policy (Annexure OP -1) had to be issued to the Respondent in terms of the request made by it in which the breakup of basic amount, cash in transit insurance, cash in safe, number of branches and number of employees were mentioned. Under these circumstances, we hold that the terms and conditions of the policy were supplied to the Respondent Bank. We may observe here that the Respondent Bank has been taking similar policies since 1999. The plea taken by the Respondent that they were not aware of the terms and conditions of the policy cannot be accepted. State Commission has held that the condition of taking the armed guards with cash in transit was not a ''condition'' precedent to the liability of the Insurance Company. That there was discrepancy in the terms and conditions of the policy. We find substance in the submission made by the learned Counsel for the Appellant that the State Commission wrongly and erroneously relied upon "conditions precedent to liability" appearing at page 3 of the policy to hold that there were discrepancies in the terms and conditions of the policy. Under the policy, the Appellant agreed to indemnify the loss of cash to the extent specified under various heads, i.e. on premises, in transit, forgery or alteration, dishonesty, hypothecated goods, registered postal sendings, appraisers, Janata Agents/Chhoti Bachat Yojna Agents/PYGMY Collectors, etc. It provides that indemnity granted under this policy in respect of direct loss covered under the aforesaid headings will not exceed the sum insured. At page 3 of the policy, under the heading "DEFINIATION" the definitions of money, securities, employee and valuation Clause have been given which read as under: (a) MONEY: The terms ''Money'' as used in this Policy shall be deemed to mean Bank Notes (signed and unsigned) Bullion Coins Currency including foreign currency, jewellery, ornaments, Postages and Revenue Stamps (uncancelled) and Stamp papers.
(b) SECURITIES: The terms ''Securities'' as used in this Policy shall be deemed to mean Acceptances Air Consignment Notes, Bank Money, Order Bills or Exchange Bill of Lading, Bonds Certificates of Deposits, Certificate of Shares Stock Cheques, Coupons Debenture, Demand Drafts, Express Postal Orders, Fixed Deposit Receipts issued by the Insured, Lorry Receipts, lottery ticket, Time -draft, Warehouse receipts, Mail Transfer Travellers Cheques and Drafts and all other instruments of a negotiable character in respect of which if negotiated character in respect or which if negotiated by any holder the insured would have recourse against the innocent holder thereof.
(c) EMPLOYEE: The term ''employee'' as used in this Policy shall be deemed to mean all existing employees (Officers, Clarks or Sub -Staff) whether permanent or temporary, whole -time or part -time on contract or otherwise including apprentices on the salary roll of the insured at all of its offices but shall NOT include any directory or partner other than salaries.
(d) VALUATION CLAUSE: Value for the purpose or settlement of any claim and respect of jewellery/ornaments under this policy shall be as per the 100% value as recorded if the Register of the Bank at the time of pledging jewellery or ornaments.
Thereafter, the conditions precedent to liability have been given which read as under:
Conditions precedent to Liability - -
It is a condition precedent to any liability under this Policy that the insured shall comply in all material respect with the following - -
A manual of instruction covering the procedure for money and/or securities shall be kept on the premises.
Joint custody shall be established and maintained for the safeguarding of - -
(i) Money and/or securities while in safe vaults.
(ii) All keys to safe and vaults, and
(iii) Codes, ciphers and test keys.
Joint custody means the handling of the above in the presence of or under the observation of at least one other person, such person being equally accountable for the physical protection and safeguarding of the various security items including money locks and combination in vaults and safes must be so arranged that no one person can open them alone.
Dual control shall be established and maintained for the handling of - -
(i) All types of securities, negotiable and non -negotiable instruments and un -issued and blank forms of said items.
(ii) The reserve supply of official cheques, drafts and un -issued travellers cheques.
(iii) Dormant account of depositors.
(iv) Codes, ciphers and text keys.
(Duel control means the work of one person in processing transaction being verified by a second person and both sharing the accountability).
There should be job retain for employee handling money and/or securities.
In addition to the normal audit books of account of the business by the insured''s statutory auditor there shall be a review of internal controls atleast once in two financial years at all premises.
THESE conditions provide that under the policy, the Insured shall comply in all material respect with the instructions/conditions mentioned under this head to make the company liable for the loss failing which the company will not be liable to indemnify, the loss. Clause 3 requires the insured to take reasonable care to safeguard the property insured and thereafter under Clause 4(a) and (b) to take reasonable care for the money kept in the safe and in the transit. Clauses 3 and 4(a) and (b) read as under: 3. Reasonable Care - -
The insured shall take all reasonable steps to safeguard the property insured against any accident loss or damage and to secure all doors, windows and other openings and also all safes strong room.
4(a) Premises - -
The insured shall install alarm system at all vulnerable branches of the bank. In respect of branches holding Rs. 50 lakh not exceeding Rs. 1 crore, apart from installing alarm system, the insured bank should have additional security arrangements to safeguard the property insured against.
In respect of branches holding amount Rs. 1 crore and also in respect of currency chests branches, apart from alarm system the insured shall make arrangements for every additional security to safeguard the property insured against.
(b) In Transit - -
For cash -in -transit exceeding Rs. 5 lakh, and up to Rs. 10 lakh one escort with fire arm shall be provided.
For cash -in -transit exceeding Rs. 10 lakh, two guards with the arms shall escort, out of which one shall sit alone with the driver and other at the rear irrespective of whether the insured''s own vehicle is used or whether a private vehicle is engaged.........
Respondent had taken the policy for Rs. 70,00,000 covering the risk to cash in transit and Rs. 40,00,000 for cash in safe. Clause 4(b) of the policy specifically provides that ''For cash -in -transit'' exceeding Rs. 5 lakh and upto Rs. 10 lakh one escort with fire arms shall be provided and for cash -in -transit exceeding Rs. 10 lakh, two guards with the fire arms escort shall be provided, out of which one shall sit along with the driver and the other at the rear side of the vehicle. In the present case, Respondent Bank was carrying Rs. 65,00,000 without taking reasonable care of taking two guards with fire arms to safeguard the amount in transit. State Commission has confused the "conditions precedent to liability" given at page 3 of the policy with reasonable care clause to insure the cash in premises and in transit given under Clauses 3 and 4(a) and (b). Condition No. 13 of the insurance policy provides that due observance and fulfillment of terms and conditions and endorsements of this policy in so far as they relate to any things to be done or complied with by the insured shall be a condition precedent to any liability for the company to make any payment under this policy. Clause 13 of the policy reads as under - -
Observation of Terms and Conditions - -
The due observance and fulfillment of the terms conditions and endorsements of this policy insofar as they relate to anything to be done or complied with by the insured shall be a condition precedent to pay any liability for the company to make any payment under the policy.
FOR carrying the cash in transit exceeding Rs. 10 lakh, the Respondent was required to carry two armed guards with fire arms to take care of the amount being carried. Respondent has failed to comply with the Clause regarding the reasonable care while carrying the amount in transit without armed guards which was a condition precedent to any liability for the Appellant to make the payment under the policy. Since the Respondent has failed to carry out the condition/direction issued in the policy, the Appellant is not liable to indemnify the Respondent for the loss suffered by it. Policy of insurance is a contract between the insured and the insurer and the terms and conditions of the policy of insurance are binding upon the parties. Terms and conditions of the policy are required to be read with reference to the stipulations contained in the policy. Non -observance of the terms of the policy can vitiate the policy and absolve the Insurance Company of its liability to indemnify the loss. In the present case, as per terms and conditions of the policy, two guards with fire arms were required to escort the cash in transit exceeding Rs. 10 lakh. Admittedly, when on 28.12.2002, the Branch Manager of the Respondent Bank was carrying the sum of Rs. 65,00,000 for Chhura and Gariaband branches of the Respondent Bank, no armed guard was accompanying the cash in transit. As per the investigation/survey conducted by the Appellant Insurance Company the robbed cash was in transit without there being any guard for the safe transfer of huge amount of Rs. 65,00,000. There was breach of policy condition by the Respondent in sending the cash without any guard in terms of Clause 4(b) of the policy. Since, there was breach of the fundamental condition of the policy, the Insurance Company was justified in repudiating the claim of the Respondent and was not liable to indemnify the insured.
HON ''ble Supreme Court in the Suraj Mal Ram Niwas Oil Mills (P) Ltd.''s case (supra), after considering the earlier judgments in Harchand Rai''s and Sony Cherian''s cases (supra), in extenso has held that the terms of a contract of insurance have to be strictly construed and no exception can be made on the ground of equity. That in interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however, reasonable, if the parties have not made it themselves. That nothing can be added or subtracted in the terms and conditions. The relevant observations read as under: 22. Before embarking on an examination of the correctness of the grounds of repudiation of the policy, it would be apposite to examine the nature of a contract of insurance. It is trite that in a contract of insurance, the rights and obligations are governed by the terms of the said contract. Therefore, the terms of a contract of insurance have to be strictly constructed and no exception can be made on the ground of equity. In General Assurance Society Ltd. (supra), a Constitutional Bench of this Court had observed that - -
In interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however reasonable, if the parties have not made it themselves. (See also OIC v. Sony Cheriyan, : (1999) 6 SCC 451; Vikram Greentech (supra); Sikka Papers Ltd. v. NIC and Others, : (2009) 8 SCC and New India Assurance Co. Ltd. v. Zuari Industries Ltd. and Others, : (2009) 9 SCC 70; Amravati District Central Cooperative Bank Ltd. v. United India Fire and General Insurance Co. Ltd., : (2010) 5 SCC 294).
Similarly, in Harchand Rai Chandan Lal''s case (supra), this Court held that - -
The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.
Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties.
SIMILARLY , in Sony Cheriyan''s case (supra), the Hon''ble Supreme Court has held that the terms of the policy have to be construed strictly and the contract of insurance would be governed by the terms of the policy entered into between the parties. Para 17 of the said judgment reads as under: 17. The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of insurer. The insured cannot claim anything more than what is covered by the insurance policy.
Respectfully following the view taken by the Supreme Court and for the reasons stated in the foregoing paragraphs, the appeal is accepted, impugned order of the State Commission is set aside and the complaint is ordered to be dismissed without any order as to costs. Pursuant to the order dated 18.6.2007 of this Commission, Appellant Insurance Company had deposited 50% of the awarded amount with the State Commission. Liberty was granted to the Respondent to withdraw the same on furnishing bank guarantee. In case the amount is withdrawn by the Respondent, the same shall be refunded by it to the Appellant with interest ((THELAW)) 6% p.a. from the date of withdrawal till payment within a period of eight weeks from today. Registry is directed to refund the sum of Rs. 35,000 deposited by the Appellant as statutory deposit along with accrued interest.