2019 Supreme(Mad) 1402

IN THE HIGH COURT OF JUDICATURE AT MADRAS
M. SUNDAR, J.
Indian Bank, Rep By Its Deputy General Manager, Chennai - Appellant
Versus
Oriental Insurance Company Ltd - Respondent
Civil Suit No. 167 of 2011
Decided On : 29-01-2019

Headnote:

Civil Procedure Code,1908 - Order XVIII, XXIX - Rule 1,2, 3(B) to 3(F) - Insurance Act, 1938 - Section 42-D, 64-UM and 114-A - Insurance Regulatory and Development Authority Act, 1999 - Section 26 - Bankers Indemnity Insurance Policy - Claim of Insurance Policy - negligence and not dishonesty on part of Banks employees - Banking Companies Act - plaintiff bank which had taken a Bankers Indemnity Insurance Policy with defendant insurance company suffered loss to tune of little over Crores owing to some bad transactions in its Purulia Branch made a insurance claim stating that it is owing to dishonesty of its Branch Manager defendant insurance company rejected claim saying that it is a case of negligence and not dishonesty on part of Banks employees resulting in instant suit by Bank claiming loss of little over Crores - Plaintiff is a nationalised bank which is a creature of Banking Companies Act - Plaintiff is governed by Banking Regulation Act - In course of its business plaintiff had taken an insurance policy with defendant insurance company which goes by name Bankers Indemnity Insurance Policy which has been marked as - A perusal of reveals that policy number is it it and it is for a sum of Crores - Period of insurance cover under - In other words it is for financial year - It is not in dispute that this policy was renewed for a further period of one year i.e upto - According to plaintiff during subsistence of policy loss was caused to plaintiff bank due to dishonest and criminal actions of an employee of plaintiff one who was then serving as Branch Manager of Purulia Branch of plaintiff Bank - It is plaintiff banks case that said Branch Manager had given credit facilities to some of banks customers beyond his power/limits allowed credit against various cheques lodged for collection such cheques were ultimately dishonoured resulting in loss of to plaintiff bank - Said Branch Manager was suspended with effect from a police complaint was lodged and he was ultimately dismissed from service after departmental proceedings is what can be gathered from plaint averments -Whether plaintiff is entitled to sum of together with quarterly compounding interest at rate of with effect from date of plaint till date of realisation in full? Does Bankers indemnity Policy covers losses caused due to dishonest behavior of employees of Plaintiff? Whether act of plaintiff employee resulted to loss to plaintiff due to dishonest intention or due to collective negligence of a particular employee who indulge in dishonest act or not? To what relief ?Whether person who has signed and verified plaint is competent/authorized to represent plaintiff? Whether claim falls under exception of Bankers indemnity policy issued by defendant - Whether person who had signed and verified plaint is competent/authorised to represent plaintiff Bank second aspect is whether claim of plaintiff bank qua policy falls under insurance claim captioned Dishonesty or under exception both of which are contained in and both of which have been extracted and reproduced supra in this judgment - Whether plaint was duly signed and verified by a competent person - Whether claim of plaintiff bank falls under ofor under exception - To put it pithily question is whether it is a case of dishonesty of plaintiff banks employee or negligence on part of employees of plaintiff bank - Held, A perusal of plaint reveals that it has been signed and verified by one who had been described as Deputy General Manager of plaintiff bank - Learned counsel for defendant pointed out that no document has been filed along with plaint or at trial to show that Kamatchi has been authorised by plaintiff to verify and sign plaint - Public interest should not be permitted to be defeated on a mere technicality and procedural defects which do not go to root of matter should not be permitted to defeat a just cause - Answer to this question turns heavily on Surveyors report being - A careful scrutiny of Surveyors report reveals following aspects Surveyor has been appointed by defendant insurance company - Surveyor has taken into account internal enquiry report of plaintiff bank Surveyor has come to categoric conclusion that plaintiff bank has in fact suffered loss to tune of little over Crores - Surveyor has opined that plaintiffs bank employee cannot be said to be dishonest in causing aforesaid losses but it can be said to be negligence in performance of duty - CSO deposed that facilities were sanctioned to and Associates with due business Considerations - But way of conduct of accounts allowing huge excesses over sanctioned limits and heavy cash withdrawals not conducting proper inspection of goods hypothecated purchase of a local cheque of high value with discrepancies and allowing cash withdrawal and not analyzing and assessing proper end use are indicative of dilution and deviations in procedural guidelines of bank for conduct of such business and these lead to fact that operations were allowed to accommodate borrowers with liquid funds - No record is available for having assessed business needs at any point of allowing excess or heavy cash withdrawals - Deposition of CSO need to be given some consideration - So Court hold that charge is partially proved - Insurance company which has original has marked same as learned counsel for defendant insurance company invited this Commercial Division to make a careful comparison between which are original and photocopy of same claim form filed by defendant insurance company and plaintiff bank respectively - He further submitted that a careful perusal and comparison of same reveals that column is State when and under what circumstances discovery took place or suspicion was aroused - In original it has been handwritten that After Bouncing of cheque of MKGB whereas in photocopy besides this name of in all capital letters has been added - This certainly is a very disturbing feature is learned defendant counsels say - Plaintiff bank has not attempted to improve its case with regard to circumstances under which suspicion was aroused as alleged by defendant insurance company - On contrary while filling up column address of being Banerjee para street P.O Uttarpara Dist-Hooghly West Bengal has been written clearly -There is no change with regard to this address - Obviously while column asks for name and address person in plaintiff bank who filled claim form has omitted to give name and left out same - On realising this as column asks for name and address of employee name has been interpolated - Fact that there is no change in address reveals that it is a clerical error wherein form asks for name and address of employee but only address was given - Subsequently name has been given without changing address - Therefore this Commercial division has no doubt in its mind that interpolation of which is seen in certainly not an attempt on part of plaintiff bank to improve its case with regard to circumstances under which discovery took place/suspicion was aroused so as to bring it directly under dishonesty or in other words to move it away from realm of negligence and bring it under umbrella of dishonesty - Therefore while having no two opinions that a large nationalised bank like plaintiff bank has to be careful and cautious in filling claim form and should not allow such clerical errors to creep in it cannot be gainsaid by defendant insurance company that it was done with intention of bringing claim directly under dishonesty as internal departmental enquiry was initiated against - Ordered Accordingly