Lala Urban Co Op Bank Ltd vs UNITED INDIA INSURANCE CO LTD

THE complainant before us is an Urban Cooperative bank which had taken an insurance policy from the opposite party United India Insurance Co. Ltd., to the extent of Rs. 3.81 Crores. The insurance policy inter alia covered the jewellery pledged with the complainant bank. In a theft which took place in the premises of the plaintiff bank on 28.12.2003, gold jewellery weighing 48,684 gms was stolen. The case of the complainant bank is that since the gold rate at the time of the loss taken place was Rs. 6,200/ - per gram, it had to reimburse the depositors of the gold at the aforesaid rate thereby incurring loss to the extent of Rs. 3,01,84,080/ -. The insurance company however paid only a sum of Rs. 1,32,97,390/ - to the complainant which comprised the value of the jewellery calculated @ Rs. 3500/ - per 10 gms which was the gold rate at the time the said jewellery was pledged with the bank. Being aggrieved from the decision of the insurance company to pay only a part of the claim lodged by the complainant bank, the said bank is before us by way of this complaint seeking payment of balance amount of Rs. 2,03,51,319/ - alongwith interest @ 18% per annum and compensation amounting to Rs. 20 lacs.

THE complaint has been resisted by the insurance company primarily on the ground that the complainant bank has been paid in terms of the valuation clause contained in the insurance policy and therefore, there was any deficiency in rendering services to the complainant. It is also stated in the reply that in violation of the guidelines issued by Reserve Bank of India, the complainant bank had advanced loan against pledge of jewellery to money lenders.

THE valuation clause contained in the insurance policy issued to the complainant bank reads as under: (d) Valuation Clause : Value for the purpose, settlement of any claim in respect of jewellery/ornaments under this policy shall be as per the 100% value as recorded in the register of the Bank at the time of pledging jewellery or ornaments.

It would thus be seen irrespective of the value of the jewellery at the time of loss to the bank, the insurance company was required to reimburse the said bank to the extent of the value as recorded in the register of the bank at the time of pledging of jewellery or ornaments. The value of the jewellery may go up or may go down after it has been pledged with the bank, but liability of the bank would not vary with the valuation in the value of the jewellery after it is pledged with the bank. The same gets crystalized on the basis of the valuation recorded in the register of the bank at the time the jewellery was pledged. Therefore, it can hardly be disputed that the insurance company was required to pay to the complainant bank only as per the value of the jewellery recorded in the register of the bank, at the time the said jewellery was pledged. Admittedly, the complainant bank has already paid as per the value recorded in its registers at the time the jewellery was pledged. Therefore, if the bank has paid a higher amount to the depositors, it will have to bear the difference between the amount it received from the insurance company and the amount which it paid to the depositors, since the policy taken by the bank was not a reinstatement policy.

ANOTHER reason why the complainant bank cannot succeed is that admittedly vide letter dated 09.08.2005 received by the bank on 10.08.2005, it was informed by the insurance company that the competent authority had approved the claim to the extent of Rs. 1,32,97,390/ - and requested the bank to discharge the enclosed voucher and submit subrogation letter on stamp paper. In terms of the aforesaid offer made by the insurance company, the complainant bank duly executed the letter of subrogation dated 09.08.2005 which is available on page no. 29 -30 of our paperbook and it also discharge settlement voucher which is available on page no. 31 of our paperbook. Vide the aforesaid settlement voucer, the complainant bank agreed to accept, in full and final discharge of its claim under policy no. 161000/46/83/08004, a sum of Rs. 1,33,10,614/ -. Having accepted the aforesaid amount in full and final without any and without any reservation, the complainant bank is stopped from claiming any further amount from the insurance company as far as the loss in question is concerned. The aforesaid settlement consitute valid and binding agreement between the parties.

FOR the reasons stated above, we find no merit in the complaint and the same stands dismissed with no order as to cost.