Case: ORIENTAL INSURANCE COMPANY LTD Vs. NATIONAL BULK HANDLING CORPORATION PVT. LTD

claim is covered by the insurance policy. It is submitted that after filing of the complaint, when the claim is repudiated, such rejection order also is questioned by way of amendment. It is submitted that when the impugned order is read in entirety with regard to urad and mentha oil, it is clear that the warehouse Supervisor Mr. Narender Yadav and security guard Mr. Ram Singh were involved in removal/substitution of mentha oil with water. 7. Learned counsel by taking us to the survey report, has also submitted that the survey report itself indicates for prosecuting borrowers as well as employees of the respondent, as such, there is no basis for the allegation of the appellant that employees were not involved. It is submitted that when it has come to light that mentha oil was substituted by water, 100 per cent sampling was undertaken, which was completed on 12.11.2008 and the investigation report was submitted to the respondent-complainant on 14.11.2008 and the matter was reported to the insurer on 18.11.2008, as such, there is no violation of condition no.1 of the policy. Learned counsel, explaining the scope of Fidelity Guarantee Insurance Policy, has placed reliance on a judgment of this Court, in the case of Food Corporation of India Vs. New India Assurance Co. Ltd. and Others (1994) 3 SCC 324 and a recent judgment of this Court dated 24.01.2020, in the case of Gurshinder Singh Vs. Shriram General Insurance Co. Ltd. & Anr. C.A. No. 653 of 2020. 8. Upon hearing the learned counsels on both sides and on perusal of the impugned order and other material placed on record, we do not find any merit in any of the contentions advanced by learned counsel for the appellant. The aforesaid judgments relied on by learned counsel for the respondent, though relate to insurance claims, but the issues decided in the aforesaid judgments, have no direct bearing on the issues which arise for consideration in this case. 9. It is not in dispute that the insurance policy for fidelity guarantee was in force during the relevant time, which was obtained by the respondent-complainant. 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. Precisely, it is a contract whereby, for a consideration, one agrees to indemnify another, against loss, arising from the breach of honesty, integrity or fidelity of an employee or other person holding a position of trust. In Blacks Law Dictionary, fidelity insurance is explained as under: Fidelity Insurance- Form of insurance in which the insurer undertakes to guarantee the fidelity of an officer, agent or employee of the assured or rather to indemnify the latter for losses caused by dishonesty or a want of fidelity on the part of such person. As such, the insurance policy of fidelity guarantee is to be construed as a policy, intended to protect the assured against the contingency of a breach of fidelity on the part of a person in whom confidence has been placed. 10. The impugned order is assailed mainly on the ground that the respondent has failed to prove involvement of any of the employees of the respondent- Company, as such, there cannot be any liability on the appellant-insurance company. It is not in dispute that the pledged goods of 601 barrels of mentha oil was stored in the warehouse. The survey report dated 26.03.2009, itself indicates the involvement of employees of the respondent-Company in removing 601 barrels of mentha oil stored by the respondent-Company. Immediately, after confirmation and 100 per cent sampling, it was disclosed that in all the barrels, the mentha oil was substituted with water, a complaint was lodged by the respondent-complainant on 18.11.2008 before the Gadarpur Police Station. In the complaint filed, specific allegation is made about involvement of staff of the respondent-Company. 11. There is a specific observation in the survey report that the security guard of the respondent- Company had allowed Mr. Sanjeev Chhabra(owner) to lift the stock. Referring to the complaint made by the respondent-Company to the Police, a request is made to take action against owners as well as the employees namely Mr. Narender Singh Yadav, who was the Warehouse Supervisor, Cluster Head Mr. Anil Saxena, Warehouse Executive Mr. Aneesh Mohd. and Security Guard Mr. Ram Singh for committing crime under various Sections of the Indian Penal Code. If the entire material is taken into consideration, it is clear that there is a clear involvement of the employees of respondent and other contract employees in substituting the mentha oil barrels with water. It is also argued by learned counsel for the appellant that during the inspection, seals were found to be intact but it does not make any difference in as much as 100 per cent sampling proved that all barrels which were earlier filled with mentha oil, were substituted with water. 12. There is yet another contention advanced by learned counsel for the appellant that there was a delay in lodging the complaint, as such, it is in violation of condition no.1 of the contract of insurance. It is clear from the impugned order and other material placed on record, when it has come to the notice of the respondent, that mentha oil was substituted by water in the barrels, respondent undertook 100 per cent sampling, by sending the samples drawn from the barrels to the laboratory and such sampling was completed only on 12.11.2008 and the investigation report came to be submitted to the respondent-Company on 14.11.2008. Before that respondents were not aware of mentha oil substituted by water in all the barrels. Thereafter, claim was made before the appellant on 18.11.2008. 13. 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.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]8. Upon hearing the learned counsels on both sides and on perusal of the impugned order and other material placed on record, we do not find any merit in any of the contentions advanced by learned counsel for the appellant. The aforesaid judgments relied on by learned counsel for the respondent, though relate to insurance claims, but the issues decided in the aforesaid judgments, have no direct bearing on the issues which arise for consideration in this case9. It is not in dispute that the insurance policy for fidelity guarantee was in force during the relevant time, which was obtained by the respondent-complainant. 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. Precisely, it is a contract whereby, for a consideration, one agrees to indemnify another, against loss, arising from the breach of honesty, integrity or fidelity of an employee or other person holding a position of trust10. The impugned order is assailed mainly on the ground that the respondent has failed to prove involvement of any of the employees of the respondent- Company, as such, there cannot be any liability on the appellant-insurance company. It is not in dispute that the pledged goods of 601 barrels of mentha oil was stored in the warehouse. The survey report dated 26.03.2009, itself indicates the involvement of employees of the respondent-Company in removing 601 barrels of mentha oil stored by the respondent-Company. Immediately, after confirmation and 100 per cent sampling, it was disclosed that in all the barrels, the mentha oil was substituted with water, a complaint was lodged by the respondent-complainant on 18.11.2008 before the Gadarpur Police Station. In the complaint filed, specific allegation is made about involvement of staff of the respondent-Company. If the entire material is taken into consideration, it is clear that there is a clear involvement of the employees of respondent and other contract employees in substituting the mentha oil barrels with waterIt is clear from the impugned order and other material placed on record, when it has come to the notice of the respondent, that mentha oil was substituted by water in the barrels, respondent undertook 100 per cent sampling, by sending the samples drawn from the barrels to the laboratory and such sampling was completed only on 12.11.2008 and the investigation report came to be submitted to the respondent-Company on 14.11.2008. Before that respondents were not aware of mentha oil substituted by water in all the barrels. Thereafter, claim was made before the appellant on 18.11.200813. 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.