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Judgment
The present appeal has been preferred against the order dated 05.08.2010 of the State Consumer Disputes Redressal Commission, Chhattisgarh, (in short 'the State Commission') whereby the State Commission rejected the plea of the appellant/Opposite Party; allowed the complaint and directed the OP/appellant to pay Rs.10, 00, 000/- with 9% interest from date of repudiation till date of payment.
Facts relevant for the disposal of the revision petition are that the complainant/respondent is a registered Sahkari Bank. Complainant obtained Bankers Indemnity Policy from the appellant/opposite party for the period of 10.11.2007 to 31.3.2008. Rs.61,127/- was charged as a premium and policy number 190500/46/62/00000094 was issued to the complainant. It is the case of the complainant that during the subsistence of the insurance policy one person namely Vasudeo Mandal encashed 40 fake Bank Draft on different dates through the a/c of Federal Bank, Raipur between 14.12.2007 to 01.01.2008 and has withdrawn Rs.35,29, 500/- from the complainant bank and caused a loss of Rs.35, 29,500/- to the complainant bank. Complainant lodged an FIR in this respect and the said fact was also brought to the knowledge of the opposite party on 27.02.2008. Complainant submitted the claim form on 05.02.2008 with the opposite party. Vide letter dated 31.3.2009, which was received by the complainant on 08.04.2009, the OP repudiated the claim. It is also alleged by the complainant that the OP took a long time of more than one year to decide the claim of the complainant. Such delay and repudiation amounts to deficiency in service on the part of the OP. Hence, the complainant filed the consumer complaint in the State Commission seeking a direction to be given to the OP for payment of the aforesaid sum of Rs.35,29, 500/- with interest @ 12% p.a from the date of claim i.e. 05.02.2008, besides cost of proceedings, advocate fee and any other remedy deemed fit in the facts of the case.
OP filed his written statement and resisted the complaint, denying the allegations of deficiency in service. It was admitted by the OP that the OP had issued the policy in question but the said policy was issued with certain terms and conditions and these were binding on the parties. As per written version, the basic premium paid for the items mentioned from A-H was only for covering the risk up to Rs.10,00,000/- and as no additional premium was paid for covering risk of forgery or alteration, so even if, the complainant proves his case, the amount claimed by him, cannot be awarded as it is in excess of the limit of coverage of risk. The OP had appointed Shri Ram Mohan Gupta as surveyor who gave his report on 15.02.2008. Appellant also sought the legal opinion. On the basis of surveyor's report and legal opinion, it was found that the loss suffered by the Bank came under Exception (b) of the policy, as the same had resulted due to negligent act of the insured's employee(s). Hence, the claim was repudiated by the OP.
State Commission decided in favour of the complainant and held that discrepancy in the policy is to be decided in favour of the complainant. As specifically the OP had undertaken to indemnify the loss up to the sum insured caused by acts and / or omissions of the employee(s) of the Bank, State Commission allowed the complainant and directed the OP Insurance Company to pay Rs.10,00,000/- to the complainant. State Commission relied upon the well-founded view taken by the Apex Court in B.V.Nagaraju vs M/S. Oriental Insurance Co. Ltd.- II (1996) CPJ 28 (SC) wherein it was held that if the contract is vague, benefit should be given to the insured.
Aggrieved by the order of the Ld. State Commission, OP has approached this Commission in appeal.
Heard the learned counsel for the parties and perused the record. Learned counsel for the appellant stated that the loss has occurred due to pure negligence of the employee of the bank and as per the Exception Clause of the policy, the losses resulting wholly or partially from any negligent act of the insured's Employee are not covered under the policy. The State Commission has wrongly interpreted the clauses of the policy in favour of the complainant.
On the other hand learned counsel for the respondent stated that according to the Clause 'C' of the main policy all the losses due to payments of forged and fraudulent cheques and drafts are covered under the policy and the Insurance Company is liable to indemnify the same. The State Commission has considered both the clauses i.e. Clause 'C' of the policy and Clause (b) of General Exceptions of the policy and has relied upon general principle in respect of the insurance that if any issue is ambiguous then it has to be interpreted in favour of the complainant and against the Insurance Company. On this basis, the State Commission has allowed the payment as per the recommendation of the surveyor. In fact the surveyor has assessed net loss of Rs.26,77,500/- , however, as the total limit under for Clause 'C' & 'D' of the policy was only Rs.10,00,000/-, therefore, the award has been restricted to this amount only. For the negligence of the employee, if any, the criminal case is already going on and that will take its normal course. However, so far as the insurance is concerned, the loss is fully indemnifiable by the Insurance Company under Clause 'C' of the policy as well as on the basis of the condition mentioned in the policy after Clause 'H', which reads as under:-
"THE INDEMNITY GRRANTED UNDER THIS POLICY IN RESPECT OF SUCH DIRECT LOSSES WILL NOT EXCEED:
(a) The sum insured hereby:
(i) In respect of any loss or losses caused by acts and/ or omissions of any Employee(s) of the Insured either singly or jointly with other Employees, or acts/and/or omissions in which such a person is concerned or implicated either as single act and/or omission or a series of acts and/or omissions, during any one period of insurance."
I have given a thoughtful consideration to the arguments advanced by the learned counsel for both the parties and have examined the material on record. It is seen that in the present case, forged drafts were presented by some person and the same were paid by the bank. There are three clauses of the policy, which seem related with this case. First, the Insurance Company is liable to indemnify the losses due to forgery of cheques and drafts as per the Clause 'C' of the policy:
"FORGERY OR ALTERATION: By reason of the payment made in respect of bogus or fictitious or forged or cheques and/drafts and or genuine cheques and/or travellers cheques and/or gift cheques and/or Drafts and/or Fixed deposit receipt (excluding bills of discount and other credit facilities) issued by the insured bearing forged endorsement or providing of an credit to any customer on the faith of such documents whether received over the Counter or through the Clearing house or Mail."
Moreover, the following condition is also mentioned in the policy:
"THE INDEMNITY GRRANTED UNDER THIS POLICY IN RESPECT OF SUCH DIRECT LOSSES WILL NOT EXCEED:
(a) The sum insured hereby:
(ii) In respect of any loss or losses caused by acts and/ or omissions of any Employee(s) of the Insured either singly or jointly with other Employees, or acts/and/or omissions in which such a person is concerned or implicated either as single act and/or omission or a series of acts and/or omissions, during any one period of insurance."
Apart from the above two conditions/directions the Exception Clause (b) reads as follows:-
"Losses resulting wholly or partially from any negligent act of the insured's Employee."
The State Commission has analysed all these conditions and has found that there is some ambiguity in the policy with regard to errors committed by the employees. The State Commission has observed the following:-
"14. From the aforequoted portion it clearly appears that the insurer had undertaken to provide indemnity up to the sum insured for 'loss or losses' caused by' acts and/ or omissions of any of its employee(s)'. However, on the other hand, under exceptions, it is mentioned that-
'The company shall not be liable in respect of:
(a)................,
(b) 'losses resulting wholly or partially from any negligent act of the insured's employee(s)'
From bare reading of the portions quoted above, it is abundantly clear that there is discrepancy in the terms of policy. On one hand, the OP undertakes to indemnify under the policy up to the limit of the insurance cover for acts and omissions of the employees, which also include negligent acts and omissions, but on the other hand, under exceptions it excludes the liability caused due to 'losses resulting wholly or partially from any negligent act of the insured's employee(s)'. Such discrepancy leads to ambiguity. Under the circumstance, we are of the considered view that discrepancy in the policy is to be decided in favour of the complainant as specifically the OP had undertaken to indemnify the loss, upto the sum insured, caused by acts and / or omissions of the employee(s) of the Bank. Our view is well founded on the view taken by the Apex court in B.V.Nagaraju Vs. M/s. Oriental Insurance Co. Ltd.-II (1996) CPJ 28 (SC) wherein it was held that if the contract is vague, benefit should be given to the insured. The exclusion term of the insurance policy must be read down so as to serve the main purpose of the policy. We believe that the words 'acts and/ or omissions' used in the policy are very important and they cover the 'negligent acts and/ or omissions' also. Hence the insurer cannot be permitted to shirk from liability under the garb of Exception (b) of the policy. We are of considered view that the OP has committed deficiency in service by repudiating the claim."
Clearly, the State Commission has arrived at the conclusion after proper appreciation of the different clauses of the policy and on the basis of the judgment of the Hon'ble Supreme Court in B.V.Nagaraju Vs. M/s. Oriental Insurance Co. Ltd. (supra). The State Commission has reached to the conclusion that in the case of ambiguity in the policy a decision is to be taken in favour of the complainant. Clearly, the exception clause seems to be in contravention with clause 'C' of the policy as well as against the general condition of indemnification, therefore, in my view, as the matter relates to forged drafts, clearly the matter is covered under Clause 'C' of the policy. Moreover, award has been limited to the sum insured under Clause 'C', therefore, decision of the State Commission is not against the general indemnification condition mentioned after Clause 'H' of the policy. Even if there is some contradiction in different Clauses of the policy, the advantage is to be given to the complainant and the same has been given by the State Commission.
Based on the above discussion, I do not find any merit in the appeal and accordingly FA No.450 of 2010 is dismissed with no order as to costs.