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Only if there is a delay as mentioned in the terms of insurance of contract occur, the claim can be

Oriental Insurance Co. Ltd. v National Bulk Handling Corporation Pvt. Ltd., CIVIL APPEAL NO. 10409 OF 2016 – February 12, 2020.

CORAM: A two judge bench comprising of Justice MOHAN M. SHANTANAGOUDAR and Justice R. SUBHASH REDDY.

The respondent-complainant is a Collateral Management Company, which undertakes to store the commodities pledged by the farmers, traders and manufacturers etc., in availing loan from lending banks and other institutions. The company took Fidelity Guarantee Insurance Policy from the appellant party in respect of the pledged commodities stored in warehouse at several places. A claim was lodged by the respondent with the appellant, alleging that the commodities were removed in connivance with the employees. When the claim was not accepted, the respondent approached the National Commission, claiming certain amount. By considering the submissions on both sides and other relevant materials placed, the National Commission allowed the claim.

The counsel for the appellant contended that the respondent has failed to prove any employee is involved in removing the alleged commodities. Also the seal was intact as per the investigation report. The claim was not made immediately as per the terms of the contract of insurance. Thus it is evident that the respondent has not violated the terms and conditions of the contract of insurance. Thus it is claimed that the impugned order is fit to be set aside by allowing the appeal.

The counsel for the respondent that the owners of the commodity were charge-sheeted for the offences under Section 420, 406, 405, 415, 427 of the IPC and the case is pending trial. Also the survey report indicates the involvement of the employees of the respondent. When the claim is repudiated after filing of the complaint, such rejection order is questioned by way of amendment.  Food Corporation of India Vs. New India Assurance Co. Ltd. and Others, Gurshinder Singh Vs.Shriram General Insurance Co. Ltd. & Anr explained the scope of Fidelity Guarantee Insurance Policy.

After hearing the counsels of both sides and perusing the materials on record, the court observed that there is no merit in any of the contentions of the counsel for the appellant. Fidelity Guarantee is different from contingency guarantee. The insurance under it is for honesty, against negligence or for being faithful and loyal to its employees. The protection afforded is different than in normal insurance policies.

Another important contention advanced by the counsel for the appellant is that there was a delay in lodging the complaint. The court regarding this contention held that it is in violation of condition of the contract of insurance. From the impugned order and materials on record it is clear that when it comes to the notice of the respondent, he undertook 100 percent sampling, by sending the samples to the laboratory. “In that view of the matter, it cannot be said that there is any delay on the part of the respondent in lodging the claim, so as to accept that there is breach of condition no. 1 of the policy”.

Thus by mentioning the aforesaid reasons and in view of the findings of the impugned order, this court held that there is no merit in holding this appeal so as to interfere with the same. Therefore the appeal is dismissed.




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