Shriram Transport Finance Co. Ltd. vs United India Insurance Co. Ltd.

THIS revision petition has been filed by the complainant having lost in both the lower Forums.

BRIEFLY, the facts of the case are that the complainant had obtained two separate "Fidelity Guarantee Insurance Policies - one each from National Insurance Company for Rs. 10 lakhs and from the O.P., United India Insurance Co. Ltd. for Rs. 3 lakhs. The complainant had taken the Fidelity Policy to cover the risk of pecuniary loss in the event of the complainant''s employee indulging in an act of fraud or dishonesty. The complainant has offices all over. Present case relates of its employee, Mr. G.K. Ganapathy, an Account Assistant in its Calcutta Office misappropriating cash/self cheques between 15.1.1991 and 28.5.1991. On the loss being detected as a result of audit in the last week of May, 1991, the complainant lodged claim with both the Insurance Companies. Surveyor was appointed by the National Insurance Company and on whose report dated 28.11.1991, the claim was settled so nothing survived qua this Company. It is the O.P., United India Insurance Co. Ltd. against whom the complaint was filed. District Forum after hearing both the parties dismissed the claim on two grounds namely that the said employee, Mr. Ganapathy even though appointed by the complainant was working for a sister but separate concern, Shri Ram Investments Ltd., therefore, he is not covered by the term of policy as under the terms of policy (Clause 4) the said change of services were not intimated to the respondent, hence violated clauses of the terms of policy. Secondly, the failure of the complainant to furnish copy of FIR is violation of terms of policy. On an appeal being filed by the complainant, the State Commission dismissed the appeal on the sole ground that this complainant''s failure to supply copy of FIR demanded by O.P., is violation of Clause 6 of the terms of the policy, hence this revision petition. It was argued by the learned Counsel for the petitioner, Mr. Maheshwari that no ground has been shown to not to accept the report of the Joint Surveyor appointed for the purpose, while National Insurance Company accepted its report and settled the claim, non-settlement of the claim based on the report of the Joint Surveyor is a deficiency in service. There is no deficiency on the part of the complainant for not supplying copy of FIR. Much has been made out of it but nothing should survive once this fact of filing of FIR finds a mention in the report of Surveyor. Incident of 15.6.1991, claim was preferred on 24.6.1991, it has not been settled nor repudiated till date which is a deficiency in services. The orders of both the lower Forums cannot be sustained in view of those averments hence they be set aside and complaint be allowed with costs. On the other hand, it was argued by the learned Counsel for the respondent, that it is incorrect to suggest that the Surveyor was a Joint Surveyor. Records will show that they were appointed by National Insurance Company and not by them. Any reference to this has no meaning and not binding on them. They never appointed any Surveyor for the purpose. He drew our attention to Section 64-UM of the Insurance Act which deals with the provisions relating to Licensing of Surveyors and that Surveyor has to be appointed to assist the loss of the claimed amount is more than Rs. 20,000/-. Sub-section (10) reads as under : (2) No claim in respect of a loss which has occurred in India and requiring to be made or settled in India equal to or exceeding twenty thousand rupees in value on any policy of insurance, arising or intimated to an insurer at any time after the expiry of a period of one year from the commencement of the Insurance (Amendment) Act, 1968, shall unless otherwise directed by the Controller, be admitted for payment or settled by the insurer unless he has obtained a report, on the loss that has occurred from a period who holds a licence issued under this section to act as a Surveyor or Loss Assessor (hereinafter referred to as "approved Surveyor or Loss Assessor"). (10) Where, in relation to any class of claims, the Central Government is satisfied that it is customary to entrust the work of survey or less assessment to any person other than a licensed Surveyor or loss assessor, or it is not practicable to make any survey or loss assessment, it may, by an order published in the Official Gazette, exempt such class of claims from the operation of this section. Notification on the above subject was gazetted on 30th May, 1970, which notifies : Now, therefore, in exercise of the powers conferred by Sub-section (10) of Section 64-UM of the Insurance Act, 1938 (4 of 1938) the Central Government hereby exempts the classes of claims mentioned in the said Schedule from the operation of the said section. Item 17 of the Schedule reads as follows : 17. Claims under policies of the nature of Bonds and Guarantees including fidelity guarantees, Banker''s Blanket policies, credit insurance and under policies insuring contractual liability.

The above shall show that in case of policies dealing with Fidelity Guarantee, the Insurance Company was exempted from appointing a Surveyor - so non-appointment of Surveyor in our case cannot be said to be a deficiency. It is also not correct to state that the claim was not repudiated, it was done vide the O.P''s letter dated 21.10.1992. The orders of both the lower Forums are as per facts and law on the subject and do not call for any interference by this Commission.

AFTER going through the material on record and the arguments advanced by the parties on the facts of the case, we see that both the lower Forums have gone at length to examine each and every aspect involved. We agree with the argument advanced by the respondent that as per law acted upon earlier they were not obliged to appoint a Surveyor, which they did not. Report of the Surveyor itself states "under instructions from National Insurance Company Ltd.", we have no hesitation in accepting the argument that it was not a case of joint survey as respondents were not a party in appointing the Surveyor - their report of assessment cannot bind the respondents in any way. We also see that the plea of petitioner that the claim has not been settled till date is also not sustainable. We see no merit in this contention of the petitioner as his claim stood repudiated by the respondents on 21.10.1992. As mentioned earlier, the District Forum had dismissed the complaint on the grounds of the complainant violating Clauses 4 and 6 of the terms of the policy whereas in appeal the State Commission dismissed the appeal on grounds of violation, only, of Clause 6 of the policy. On perusal of record, we find that the State Commission erred in its appreciation of material on record on this point of violation of Clause 4 of the policy by the petitioners. Clause 4 of the policy reads as under : "4. Change in risk-The insured shall give notice to the Company immediately of any change in the nature of the business of the insured or the duties or conditions of service of the employed or if the remuneration of the employed be reduced and unless the consent of the Company to such change be obtained and signified by Memorandum hereon the Company shall not be liable to make any payment hereunder."

The fact of the matter is that the delinquent employee was employed by the complainant to do his Company''s work. It is admitted position that the total claim lodged related to misappropriation of Rs. 8,89,268/-, breakup of which is as under : Shri Ram Transport Finance Co. Ltd. (complainant/petitioner''s Company) Rs. 8,01,975/- Shri Ram Investments Ltd. (Sister concern) Rs. 87,293/-

THE above claim itself makes it amply clear that the delinquent employee, while employed by and working for the complainant Company was also working for collection of cash a/c for Shri Ram Investment Ltd., otherwise how could he be collecting money - now being claimed under the policy - on behalf of that Company ? If an employee, employed by the complainant Company and covered under the Policy of Fidelity, taken by the complainant for his employee was also working for another Company - whatever be the internal relationship, unless notified to the insurer under the terms - was a violation of Clause 4 of the Policy. State Commission in our view erred in this regard and District Forum was right in holding the complainant deficient of not informing the change of employee''s status, hence violating the terms of the policy. In our view the order of the District Forum is correct and so is the repudiation of the claim by the respondent/O.P. in the light of this, this revision petition cannot be sustained. Be that as it may, yet we find the respondent deficient in rendering service by way of taking one year and four months to repudiate the claim for which no explanation is forthcoming on record before us. For this deficiency, we direct the respondent to pay Rs. 20,000/- as compensation to the complainant. Only to this extent, orders of the State Commission is modified. No orders on costs. Revision Petition disposed of.