Date of Filing: 30-01-2017
Date of Order:07 -11-2019
BEFORE THE DISTRICT CONSUMER DISPUTES REDRESSAL FORUM – I, HYDERABAD
P r e s e n t
HON’BLE Sri P.VIJENDER, B.Sc. L.L.B., PRESIDENT
HON’BLE Sri K.RAM MOHAN, B.Sc. M.A L.L.B., MALE MEMBER
HON’BLE Smt. CH. LAKSHMI PRASANNA, B.Sc. LLM., LADY MEMBER
Thursday, the 7th day of November, 2019
C.C.No.79 /2017
Between
M/s. Geosansar Advisors Pvt. Ltd., Age : 60 years,
8-2-684/2/A, Second Floor, NSL Icon,
Road No.12, Banjara Hills,
Hyderabad – 500 034
Rep. by its authorized signatory Sri A.Satyadev ……Complainant
And
SBI General Insurance Company Ltd.,
3rd floor, Ozone Commercial Complex,
6-3-669/1, Panjagutta Main Road,
Hyderabad – 500 082
Rep. by its Sr. Manager ….Opposite Party
Counsel for the complainants : Mr. Bhaskar Poluri
Counsel for the opposite Party : Mr. Katta Laxmi Prasad
O R D E R
(By Sri P. Vijender, B.Sc., LL.B., President on behalf of the bench)
This complaint has been preferred under Section 12 of C.P. Act 1986 alleging that repudiation of the claim submitted by the complainant to the opposite party amounts to deficiency of service hence a direction to the opposite party to pay insured amount of Rs.11,16,430/- towards satisfaction of the claim and to award a sum of Rs.2,00,000/- towards compensation for causing mental tension and inconvenience to the complainant on account of repudiation of the claim.
- The complaint averments in brief are that the complainant is a private limited company in the business of correspondence of State Bank of India and other Nationalized Banks having its Corporate office at Banjara Hills, Hyderabad. The complainant company got over 500 branches which are referred to as Kiosks all over India to cater to the needs of unorganized and migrant labourers besides unbanked public for opening of Savings Bank accounts facilitating Money transfers, old age pensions, National Rural Employment Guarantee Scheme etc.,
During the business operation of the company its branches will operate and deal with cash to be handled by its executives who collects the amount in cash and remit to the bank at headquarters. Hence the complainant company obtained a Fidelity guarantee insurance policy from the opposite party for the period from 19-02-2015 to 18-02-2016 for an insured amount of Rs.1.00 Crore. As per the said policy the opposite party as insurer has to indemnify the complainant company against any misappropriation or loss of money caused on account of employee operating the Kiosk internally. That means the insurer has to make good the loss sustained by the complainant company.
During the course of the complainant’s business it operated Kiosk at Siddique Nagar, Madhapur, Hyderabad and appointed one Sri K.Samba siva Rao as customer service executive. The said K.Samba siva Rao during the course of his work written inflated remittance figures compared to the actual remittances in the cash remittance register but made deposit of lesser amount or made no deposit. The said misappropriation occurred during the period from 08-09-2014 to 30-1-2016 and the loss reported to have been occurred to the complainant company was Rs.11,16,430/-. The said fraud was detected in the month of February 2016 and the claim was lodged with opposite party on13-02-2016 & 27-02-2016. The surveyor appointed by the opposite party after going through the various records did not dispute the loss but proceeded on erroneous presumption and recommended to repudiate the claim citing breach of warranties. The said report of the surveyor was accepted by the opposite party and repudiated the claim and communicated to the complainant company by a letter dt.1.4.2016. The rejection of the claim by the opposite party amounts to deficiency of service and violation of the policy terms and conditions. Hence the present complaint.
- The opposite party while admitting issuance of subject policy to the complainant company denied the allegation of deficiency of service and liability to pay any amount to the complainant company. The defense set out in the written version is that the complainant company obtained Fidelity Guarantee Insurance policy towards misappropriation by On Roll Employee, 1000 employees, unnamed basis SI Rs.1.00 Crore Limit per employees Rs.15,00,000/- subject to terms, conditions, warranties, exclusions and policy excess. The claim of misappropriation being from 08-09-2014 to 30-01-2016 is not covered under one policy period. The two policies were issued for a period from 19-02-2014 to 18-02-2015 and 19-02-2015 to 18-02-2016. The complainant failed to make out as to under which policy the claim was made out. After receipt of the claim from the complainant the company appointed Mr. M.V.Radhakrishnan as Surveyor and Loss assessor who submitted a report with a recommendation to the repudiate the claim on the ground of violation of policy conditions by the complainant company.
As per the report of the surveyor and the claim of the company Mr. K.Sambasiva Rao an employee of the complainant company had misappropriated the accounts during the period from 5-09-2014 to 30-01-2016 reporting a loss of Rs.11,16,430/-. The complainant company suppressed the appointment letter of said K.Sambasiva Rao, the surety bond collected and recoveries processes not complied with and settlement of the last drawn salary etc. It clearly shows that the complainant company went overboard in dealing with and recovering the amounts from the said K.Sambasiva Rao apart from the violations of terms. The surveyor’s investigation report has been communicated to the complainant which is neither challenged nor proved wrong by the complainant company with any material. Except making from bald complaint against the delinquent employee the complainant company has not taken into consideration dates of misappropriation etc. The company had not followed accounting procedures for the period of two accounting years. The alleged cause of actions being multiple misappropriation at different dates and there was a supine silence on the part of the company by not complying with the accounting system. The report of the investigator reveals violation of the accounting system, reconciliation audit for the period of two accounting years which speaks of the clear and utter disregard to the practices which ought to have been put in place to avoid illegalities being perpetuated by the complainant company. The very admission of non obtaining of the surety bond etc is a clear violation of the Fidelity Guarantee policy coverage. Mere issuing of the police complaint etc cannot absolve the complainant and entitle the claim amount under the policy. In the letter sent to the complainant repudiating the claim reasons were assigned and they are not challenged by the complainant company. Hence the complaint is deserved to be dismissed.
In the enquiry for the complainant the evidence affidavit of its authorized signatory Sri Satyadev is got filed reiterating the material facts narrated in the complaint and to support the same Eight (8) documents are exhibited. Similarly for the Opposite Party evidence affidavit of its authorized signatory Miss. Madhavi Uttam Patil is got filed and the substance of her affidavit is in line with the defense set out in the written version. Six (6) documents are exhibited for the opposite party. For the complainant written arguments are filed and for the opposite party oral submissions are made.
On a consideration of material available on the record the following points have emerged for consideration .
- Whether the repudiation of the claim of the complainant by opposite party amounts to deficiency of service on the part of the opposite party ?
- Whether the complainant is entitled for the amounts claimed in the complaint?
- To what relief?
Point No.1: Issuance of the subject policy by the opposite party to the complainant company for two consecutive years from 19-02-2014 to 18-02-2016 is not in dispute. Similarly misappropriation of amount to a tune of Rs.11,16,430/- by an employee K. Sambasiva Rao appointed by the complainant company to operate its Kiosk at Siddique Nagar in Madhapur, Hyderabad and consequent submission of the claim by the company with the opposite party is not in dispute. Soon after receipt of the claim the complainant company got appointed Mr.V.Radhakrishnan as surveyor and loss assessor and basing on report the claim was repudiated assigning the reasons. The report of the said surveyor/loss assessor Mr. Radha Krishnan is placed on record as Ex.B3. The conclusion drawn by the said Radha Krishnan in the report is the Fidelity loss claim of insured is not payable for the reason the complainant company violated the Additional conditions (Warranties) as set out in the policy document in Ex.B2. The Additional conditions in the subject policy are enumerated as under :
It is warranted that
- Records of all insured employees to be maintained and no employee to be relieved from the employment of the insured (transfers to associate/group/parent companies shall be deemed as cessation of employment) until full reconciliation is completed.
- Dual control accounting system to prevail on all transactions and dual signatories on all monetary instrument/instructions
- Daily cash- book reconciliation and regular periodic reconciliation of all asset movements and monetary transactions including with banks and third parties
- Regular internal audit per documented procedure
- Excluding all monies due to the defrauding employee by way of terminal benefits.
- Any one occurrence shall mean one claim or series of claims arising out one or more acts of fraud/dishonesty on the part of one or more employees acting in collusion involving one or more business locations.
The report of the surveyor and loss assessor in Ex.B3 shows that the complainant employees namely K. Sambasiva Rao who operated Kiosk at Siddiq Nagar had taken advantage of system loopholes and misappropriated the cash from time to time. He had inflated remittance particulars in the cash book maintained by him but actually remitted lesser amount in to bank or handing over cash to CME or corporate office. It is further observed by the Surveyor Mr. Radha Krishna that if the insured officials had proper system of verification of record, mis appropriation of such high value amount would not have occurred. The Siddiq Nagar Kiosk is having two (2) CSE’s and they act independent of each other . There is no dual control accounting system for transactions carried out at the Kiosk. Insured had discontinued maintaining manual vouchers hence there was no dual signatories on all monetary instruments/instructions. Daily cash book reconciliation, regular periodic reconciliation of all assets movements and monetary transactions including with banks and 3rd parties was not carried out. Insured was having more than 1200 Kiosks/branches all over India and they stands reduced to about 250 Kiosks/branches. Internal Audit was not carried out in the said branch. Thus the additional conditions set out in the policy document were not complied with.
As rightly pointed out by the opposite party the complainant company insured was furnished with the copy of report of surveyor or loss assessor and same has not been challenged. Infact even in the complaint or in the evidence affidavit filed for the complainant side there is no denial of the findings of the surveyor that complainant company failed to maintain dual control accounting system for the transactions carried out the branch was not followed and there was no internal audit in the branch and there was no daily cash book reconciliation, regular periodic reconciliation of all monetary transactions including with banks not carried out are all not denied and it amounts to admission of the said findings surveyor and loss assessor that the additional policy conditions in subject policy are not complied by the complainant company and it amounts to violation of the same entailing the opposite party to repudiate the claim.
The learned counsel for the opposite party in support of his argument that without challenging the report of the surveyor or loss assessor the complainant cannot allege deficiency of service placed reliance in the case of M/s. Krishna Enterprises Vs.M/s. Bajaj Allianz General Insurance Co.Ltd., and another in the First Appeal No.673 of 2007 on the file of Hon’ble National Consumer Disputes Redressal Commission, New Delhi
The Hon’ble National Commission while citing the decision of Hon’ble Supreme Court of India in the case of New India Assurance Co.Ltd Vs. Rohan Lal Oil Mills (2010) (10 SCC 19) held that surveyor report has significant evidentiary value and cannot be displaced unless it is contradicted by credible evidence to the contrary. In the present complaint also as already said the complainant company except saying that the surveyor erroneously recommended for repudiation of the claim did not deny the specific violations of additional conditions of the policy as pointed out by the surveyor in his report and has not produced any viable or acceptable evidence to set apart the findings of surveyor and loss assessor. The repudiation of the claim for violation of additional conditions ( warranties) as set out in the policy document does not amount to deficiency of service on the part of the opposite party. Hence the point is answered against the complainant.
Point No.2: In view of the above findings of this Forum to point No.1 it is to follow that the complainant is not entitled for the amounts claimed in the complaint.
Point No.3: In the result, the complaint is dismissed. No order as to costs.
Dictated to steno, transcribed and typed by her, pronounced by us on this the 7th day of November , 2019
LADYMEMBER MALEMEMBER PRESIDENT
APPENDIX OF EVIDENCE
Exs. filed on behalf of the Complainant:
Ex.A1- copy of survey report
Ex.A2&3- clarification letter dated 4/5/2016 & 4-6-2016
Ex.A4- letter of opposite party dt.3/8/2016
Ex.A5- letter of complainant dt.25/8/2016
Ex.A6- Email letter dt.17-09-2016
Ex.A7- letter dt.30-09-2016
Ex.A8-authorisation letter dt. 30-12-2016
Exs. filed on behalf of the Opposite party
Ex.B1& B2 - policy documents
Ex.B3- surveyor and loss Assessor report dated 22/03/2016
Ex.B4- FIR
Ex.B5- surety bond
Ex.B6- repudiation letter with acknowledgment dt.1-4-2016
LADYMEMBER MALEMEMBER PRESIDENT
