THE GURGAON CENTRAL COOP. BANK LTD. vs UNITED INDIA INSURANCE CO. LTD.

The Gurgaon Central Co-operative Bank Ltd., Civil Lines, Gurgaon, the complainant, is a Co-operative Bank, who were holders of "Banker''s Indemnity Insurance Policy" with United India Insurance Co. Ltd., the OP, for the period from 01.07.1996 to 30.06.1997 for a sum of Rs.20.00 lakhs in case of loss of money in transit. Para B of the said Policy, unequivocally, provides, as under :- " 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 by the employee on behalf of the insured and to continue until delivery thereof, at destination".

Unfortunately, on 11.09.1996, a car of the complainants carrying Rs.48.00 lakhs in cash, from State Bank of India, Mehrauli, Gurgaon to the Branch Office of the complainants at Wazirabad, was robbed in transit near Jharsa Village, Opp. Housing Board Colony, Gurgaon. FIR was got registered with Gurgaon Police Station on the same day. The OP was also apprised of this fact. The incident of robbery was covered within the policy. The complainants wrote about 20 reminders, but the OP turned a deaf ear to the same.

The OP, vide letter dated 29.05.2001, after the expiry of four years and eight months'', repudiated the claim of the complainants as "No Claim". The portion germane to the present controversy, runs as follows: " i) As per the departmental enquiry conducted by the Insured according to which the Gunman, Mr. Attar Singh was guilty of driving the vehicle of which he was the Gunman (Escort), which confirms that according to the insured also Gunman was not supposed to drive the vehicle. He was only required to act as Proper Escort, within the meaning of the expression used in Regulation No.8 of the Manual for Urban Co-operative Banks, issued by RBI. Once a Guard becomes a driver, he ceases to be a Guard, the purpose of the armed Escort got defeated when the Guard worked as a Driver of the car, with his weapon on adjoining seat. The loss of cash to insured has resulted because of the negligent act or omission of employee of the insured. The Gunman by driving the vehicle acted in breach of Regulation No.8 of the Manual for Urban Co-operative Banks which was a part of policy condition.

ii) That exception (i) of the policy reads ''the Company shall not be liable in respect of "(b) losses resulting wholly or partially from any negligent act or omission of the insured employee". The Gunman, Attar Singh, deputed by the insured has failed to use the cars which a reasonably prudent and careful Gunman would use under similar circumstances because he was driving the vehicle when was duty bound to work as an Escort / Gunman, with the cash. The Gunman, Attar Singh, has not acted as a proper Escort within the meaning of the term used in the Manual issued by the RBI.

iii) The insured ? Bank has committed breach of the policy conditions, i.e., requiring that the rules, regulations and directions as stipulated by the RBI and as are described by insured Bank as regards the Security arrangements.

iv) Sh. Ram Lal, Clerk-cum-Cashier of the Bank, who was deputed by insured to get cash Rs.40.00 lakhs in car on 11.09.1996, ran away at the time the Robbers drove away in car with cash Rs. 40.00 lakhs and his failure to assist the Gunman speaks of his negligent act in terms of exception (b) of the Insurance Policy.

v) Sh. The insured failed to give any cogent evidence till date to the Insurer to substantiate the claim & to prove that they have not violated the terms and conditions of the policy.

So, we regret our inability to entertain the claim and the claim file is being closed as "NO CLAIM".

It is averred that the action of the OP amounts to unfair trade practice as the claim of the complainant as per provision of policy stands proved beyond reasonable doubt. The policy is to be read in its true spirit and once read in true spirit, would necessarily mean that the complainants are covered, even in the case where, due to negligence of their employees or otherwise, the money is lost in transit. The term, ''otherwise'' covers all possibility that one can think of. Ultimately, this complaint was filed before this Commission on 16.01.2002, with the following prayers :- " 1. Order the opposite party to pay Rs.20 lakhs along with interest @ 18% p.a., with pendente lite interest as stated in para 14 of the complaint, from the date of filing of this complaint, till the same is made good to the complainant. 2. Any other relief or such order, as this Hon''ble Commission may deem fit and proper in the facts and circumstances of the case, be granted to the complainant". DEFENCE :

The OP has listed the following defences in its written statement. The complainants have violated the terms, rules, specific endorsements of the insurance policy and, as such, the complaint is not maintainable. No cause of action has arisen in favour of the complainants. The repudiation letter is valid. The above dispute gives rise to intricate questions of fact, which require detailed trial, cross-examination of the witnesses and the same can be done before a civil court. The delay was caused due to non-co-operative attitude of the complainant. Sh. Atul Gupta, was appointed as Preliminary Surveyor & Loss Assessor, on 25.09.1997 and M/s. Thapar Srinivasan & Kapoor Pvt. Ltd., were appointed as Surveyors and Loss Adjustors as Final Surveyors, on 13.04.2000. The complainant was required to furnish further evidence, if any, and various meetings were held, but the complainant failed to give any response. The complainant has not submitted any copy of the Resolution of the Bank or any Attorney / Deed or any authority empowering Mr. Sandhu Ram Pachal to submit the affidavit or to engage the Advocate to lodge the complaint.

The cash was withdrawn from SBI, Gurgaon. Some cash was kept in a trunk and the other remaining cash was kept in cloth bags. Attar Singh, Gunman, was driving the vehicle. He was also escorting the vehicle. He kept the gun in the next seat and drove the vehicle. Out of Rs.48.00 lakhs, the robbers robbed Rs.40.00 lakhs. The said information was telephonically conveyed to the OP but they failed to issue any proper claim letter detailed to the OP. The loss of Rs.40.00 lakhs was caused due to the tremendous carelessness, reckless working of the insured-complainant Bank/its employees. All the other allegations have been denied. SUBMISSIONS AND FINDINGS

Apparently, it appears to a be a case of contributory negligence. The Commission has to be empirical and practical in confronting reality. It is bound to approach the problem more gingerly and realistically. We have heard the counsel for the parties. Counsel for the complainant submitted that the OP has provided Banker''s Blanket Policy with inclusion of words "whether due to negligence or fraud of the employees of the Insured or otherwise". It covers loss in transit for "whatsoever reasons". The repudiation itself is incorrect and against the policy. She vehemently argued that in case of any repugnancy between a specifically empowering clause and general clause, the specific / substantive provision over-rides the general provision as in the present case, Clause B specifically provides for insurance in transit "Whether, due to negligence or fraud of the employees of the insured or otherwise, which clearly covers even those cases where the employees of the insured are negligent, because of settled provision - " Generalia specialibus non-derogant, substantive and specific clause ". In support of her case, she has cited the following authorities ? (1) J.K. Cotton Spinning & Weaving Mills Co. Ltd. Vs. State of Uttar Pradesh, AIR 1961 SC 1170, (2) State of Punjab & Ors. Vs. Dalbir Kaur Kalyan, (2000) 6 SCC 516, (3) The South Eastern Roadways Vs. The United India Insurance Co. Ltd., AIR 1991 Kerala 41, (4) The U.P. State Electricity Board Vs. Hari Shankar Jain & Ors., (1978) 4 SCC 16 , (5) Motiram Ghelabhai (Dead) Through LR Maniram Motiram Vs. Jagan Nagar (Dead) Through LRs & Ors., (1985) 2 SCC 279, etc.

The counsel for the complainant further argued that though compliance of the RBI Guidelines was not mandatory, in terms of the insurance contract, yet, the complainant had fully complied with all the RBI guidelines. She explained that although, insurance is a beneficial provision, yet, liberal construction is favoured in case of any ambiguity in the policy. The OP, on the one hand, charged higher premium for providing a blanket risk coverage to loss of cash in transit "for whatsoever reasons", "whether due to negligence or fraud of the employees of the insured or otherwise", but, on the other hand, the OP is attempting to disclaim its liability under the garb of a general term, which had termed it as "fraud".

We find force in her arguments to a substantial extent. A close scrutiny of the evidence on record goes to show that this is a contract entered into between the Bank and the Insurance Co. There can be no escape from the benefit of the said Blanket policy. However, the following

points as pointed out by the counsel for the OP and other provisions of the policy are otherwise not note-worthy.

The construction of a contract, entered into between the parties assumes importance. It is a settled law that court should refrain from any interpretation which would result in injustice and absurdity, AIR 1963 SC 25. The question to be considered is not what was intended, but what has been said. We cannot amend or substitute anything in the contract, as per law laid down in Suraj Mal Ram Niwas Oil Mills (P) Ltd. Vs. United India Insurance Co. Ltd. & Anr., (2010) 10 SCC 567 , General Assurance Society Ltd. Vs. Chandmull Jain, 1966 ACJ 267 (SC), Harchand Rai Chandan Lal''s case, 2005 ACJ 570 (SC).

Insurance policy must be read holistically and not in vacuua, for the benefit of one and to the detriment of another. The report of M/s. Thapar, Srinivasan & Kapoor Pvt. Ltd., the Surveyors & Loss Adjusters, dated 13.04.2004, which is germane to the present case, reads, as under :- "The RBI Manual for Urban Co-operative Banks states as follows (Annexure 8) Cash in transit .

Movement of cash to and from the Bank should be entrusted to a responsible employee of the Bank. The cash should be carried in a box / brief case under lock and key as per the warranties indicated in the insurance policy. In cases where Banks remit to or bring from other banks huge amounts of cash, it is desirable that proper escort is given to persons carrying / bringing such remittances". This can be analysed as follows : a. Movement of cash to and from the bank should be entrusted to a responsible employee of the bank. This condition was met, as cash is normally carried by cashiers.

b. The cash should be carried in a box/brief cause under lock and key as per the warranties indicated in the insurance policy .

Some of the cash was carried in a locked trunk (Rs.25 lacs), while the balance was in cloth bags. Hence, prima facie, this direction was violated. However, this factor did not contribute to the loss taking place.

The Insurance Policy vide condition (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 safe, strong room, etc."

Reasonable care is violated to the extent discussed in ''c'' below.

c. In cases where Banks remit to or bring from other Bank, huge amounts of cash, it is desirable that proper escort is given to persons carrying / bringing such remittances.

This condition is violated, as the armed guard who was escorting the cash, was also driving the vehicle, with his weapon on the adjoining seat. Once a guard also becomes a driver, he ceases to be a Guard. If the guard was not driving the vehicle, it is possible that the incident would not have taken place, as the robbers may not have attempted to loot the cash if the guard had all time access to his weapon. The fact of the guard driving the vehicle, also violates reasonable care, as the purpose of the armed escort was defeated. This has also been confirmed by the departmental enquiry.

We are of the opinion, that RBI guidelines were violated in the case".

Thus, it is clear that an Escort or a Gunman was required to be sent in the car/vehicle. The driver cannot be said to be performing double role. The two persons must be separate. This is violation committed by the Bank. The Bank should have sent two separate persons. No explanation is forthcoming. Every duty which we omit, obscures some truth, which we would have known.

It must be borne in mind that the Bank, as such, is a different entity. The employees may be negligent or fraudulent but the Bank cannot afford to do the same. The cash should not be sent in a cloth. There are not good things enough in life, to indemnify us for the neglect of a single duty.

In the result, we direct the insurance company to pay the major claim amount, i.e., Rs.15.00 lakhs (instead of Rs.20.00 lakhs), together with interest @ 8% p.a., from the date of filing of this complaint, i.e. 16.01.2002, proportionate to the negligence and deficiency it committed. The OP has taken four years'' eight months to repudiate the claim. Compensation, in the sum of Rs.50,000/- is also awarded to the complainant for such a huge delay. The OP shall comply with the entire order, within 90 days'' from the date of receipt of copy of this order, otherwise, the entire amount will carry interest @ 8% p.a., till realization.