IMPORTANT POINTS
(1) Repudiation Grounds – An Insurer cannot introduce new grounds for rejecting a claim during litigation that were not part of the original repudiation letter.
(2) Standard of Proof for Fidelity Claims – Insurance contracts are not subject to the strict evidentiary standards of criminal law. The Insurer cannot reject a claim under the “Infidelity/Fidelity Guarantee” clause merely because the Police filed an “untraced report” instead of a Charge Sheet. If the insured conducts an internal enquiry that finds the employees guilty and terminates them, this establishes a sufficient basis for the claim.
(3) Delay as Deficiency – The Commission viewed the Insurer’s conduct as evasive and deficient because they sat on the claim for over three years. The repudiation was only issued after the Complainant had already filed the Consumer Complaint, indicating that the decision was reactionary rather than a bona fide assessment of the claim.

ORDER

Sudip Ahluwalia, Member.—This Appeal has been filed against the impugned Order dated 04.11.2015 in Consumer Complaint No. 107 of 2011, passed by the State Consumer Disputes Redressal Commission, Delhi, vide which, the Complaint filed by the Respondents was partly allowed with the following directions -

“...We, therefore, direct the insurance company (OP) to pay to the complainant as under:-

Pay an amount of Rs.59,84,700/- (64,84,700 - 5,00,000) alongwith interest @ 6% p.a. from 19.06.2008 till date.

Insurance Company (OP) shall pay the aforesaid amount within a period of ninety days from today failing which the insurance company/OP shall be liable to pay interest @ 12% p.a. on the amount accruing after the expiry of the period of ninety days from today. Complaint is accordingly disposed of.”

2. The factual background, in brief, is that the Complainant No. 1/ Respondent No. 1 is a Private Limited Company engaged in specialized services such as cash sorting, inter/intra-city transportation of cash and valuables, ATM cash replenishment, and bullion vaulting for leading Banks across the country. The Complainant No. 2/ Respondent No. 2, is also a similarly situated Private Limited Company and co-insured under the impugned Policy. The Opposite Party /Appellant/ Insurance Company, engaged in general insurance, issued a Special Contingency Policy No. 221800/46/07/39/00000305 (Cover Note No. 659109) for the period 18.09.2007 to 17.09.2008, initially for Rs.12.00 crores and later enhanced to Rs.17.00 crores w.e.f. 01.10.2007. The Policy for which total premium of Rs.3,13,800/- was paid, covered losses from theft, burglary, dacoity, fraud, employee infidelity, and other perils.

3. On 19.02.2008, the Complainants deployed their custodians- Raj Kumar and Rajesh along with guard- Harish Chand and driver- Sanjeev Kumar to load cash into ATMs. After replenishing Rs.21.00 lakhs, while visiting Karnataka Bank’s ATM on GTK Road, Delhi, it was discovered around 13:45 hours that Rs.65.00 lakhs was missing from the vehicle. An FIR No. 44 was lodged at P.S. K.W. Camp/ Model Town u/s 379 IPC. However, only Rs.5.00 lakhs was recovered. Based on the internal assessment, the Complainants suspected all four employees and reported the same to the Police. They also initiated disciplinary action through an internal enquiry, which found two guilty while the other two absconded.

4. Due to client’s pressure, Complainants reimbursed Rs.50.00 lakhs to Axis Bank by cheques dated 20.02.2008, and HDFC Bank deducted Rs.15.00 lakhs from Complainants’ invoices. The matter was also reported in the Media. Subsequently, a final Police report dated 24.07.2010 stated that neither the cash nor the culprits could be traced. The Complainants submitted their Insurance Claim for Rs.64,84,700/-, and the Surveyor appointed by the Opposite Party confirmed the loss, after which repeated follow-ups were made by the Complainants. Despite confirmation of the loss and submission of requisite documents, the Opposite Party failed to settle the Claim and continued raising irrelevant queries. It is the case of the Complainant that the Claim is admissible both under the infidelity extension, as the employees dishonestly misappropriated the amount, and also under the theft cover as per the FIR. The Complainants contend that the Opposite Party’s failure to honour the Claim constitutes a gross deficiency in service under the Consumer Protection Act. Aggrieved with the same, they filed their Complaint before the Ld. State Commission, Delhi.

5. In its reply to the Complaint before the State Commission, the Opposite Party/ Appellant contended that no deficiency of service can be attributed to it, as the Claim for Rs.65.00 lakhs was thoroughly examined and independently investigated, following which they concluded that the Claim was not payable due to material breaches of Policy terms and suspicious circumstances surrounding the loss. The Policy in question was a tailor-made Special Co