1. Challenging the judgment and decree, dated 01.11.2012, made in O.S.No.8048 of 2010 on the file of IV Additional Judge, City Civil Court, Chennai, defendant in the suit has filed this appeal.

2. Defendant is the appellant and plaintiff is the respondent herein.

3. The case of the respondent/plaintiff, as per the plaint, was that he had taken a Banker's Indemnity Policy bearing No. 411800/48/2008/16, dated 05.04.2007, from the appellant insurance company for the period from 01.04.2007 to 31.03.2008. On 24.01.2008, he preferred a claim to the appellant for loss of cash suffered on 18.01.2008 due to robbery committed by some unknown persons while the cash was transmitted and the bank incurred a loss of Rs.13.00 lakhs. He also gave a complaint to police for robbery and police were investigating the case registered in F.I.R.No.116 of 2008 on the file of B3 Kattoor Police Station, Coimbatore, for the robbery. However, his claim to make good the loss of money was rejected by the appellant on 31.03.2009, stating that the incidence of robbery fell outside the purview of the policy, blaming the respondent for loss of cash occurred due to lapses in procedures and safeguards while handling the cash in transit. Hence, the suit.

4. The case of the appellant/defendant, in the written statement, was that the plaint was bereft of appropriate details. The Banker's Indemnity Insurance Policy, issued by the appellant, was governed by various terms and conditions, including the one that there should be reasonable care on the part of the insured. The respondent should follow certain procedure for Cash-in-Transit. There are strict guidelines for transportation of cash from one place to another. The act of the respondent in not following the said guidelines amounted to clear and sheer negligence and was a breach of the terms of the policy. Loss, resulting wholly or partially from any negligent act or omission of the insured employee, would disentitle him from claiming indemnity. The claim was rightly rejected and, accordingly, he sought for dismissal of the suit.

5. On the above pleadings, the trial Court framed the following issues for trial :

(1) Whether the plaintiff is entitled to the suit claim with interest as prayed for

(2) Whether the suit is maintainable

(3) Whether the breach of the policy of terms and conditions on the part of the plaintiff is true

(4) To what other relief

6. During the course of trial, on behalf of respondent/plaintiff, two witnesses were examined as P.Ws.1 and 2 and documents Exs.A-1 to A-11 were marked. On the side of appellant/defendant, one witness was examined as D.W.1 and documents Exs.B-1 and B-2 were marked.

7. The trial Court, considering the evidence, both oral and documentary, and relying on Clause B of the Indemnity Policy, decreed the suit as prayed for, with costs. Aggrieved over the same, this Appeal Suit is filed, at the instance of the defendant.

8. Learned counsel for the appellant would contend that when there is a clear breach and violation of the terms and conditions of the policy, the appellant is not under any obligation to entertain the claim under the policy. According to him, the trial Court has grossly erred in allowing the claim of the respondent on misinterpretation of facts and evidence and, therefore, the claim is liable to be rejected.

9. Conversely, learned counsel for the respondent would contend that the trial Court, on analysing the evidence, both oral and documentary, has correctly come to a conclusion, thereby allowing the claim, with which no interference is called for.

10. I have heard the learned counsel for the parties and also gone through the records.

11. The points, which arise for consideration in this appeal, are :

(i) whether the respondent has suffered the loss of Rs.13.00 lakhs due to the alleged robbery and

(ii) if so, whether the appellant is bound to indemnify the same

12. This is a legal battle between two Government entities. While the appellant is an Insurance Company, the respondent is a Nationalised Bank.

13. As regards the first point, according to the respondent, the alleged loss took place on 18.01.2008 when a sum of Rs.13.00 lakhs was being transited from their Kovai Branch to Currency Chest. In order to prove the loss, he gave a police complaint and the same was registered in F.I.R.No.116 of 2008 on the file of B-3 Kattoor Police Station, Coimbatore. Following that, on 24.01.2008, he preferred a claim to the appellant for loss of cash suffered on 18.01.2008 due to the alleged robbery, committed by some unknown persons. He also examined two bank officials as witnesses and filed several documents, such as Authorisation Letter, Banker's Indemnity Bond, Claim Form, FIR Copy, Letter of Plaintiff, Lawyer's Notice, Security of Cash-in-Transit, Report on Robbery etc.

14. At the outset, it is to be stated that when money is transited from one branch to another, it is the primary duty of the originating branch to enter the same in its records, such as, Cash Remittance Register, Books of Accounts, Ledgers, Outward Movement Register etc. This is indispensable. This is also a proof of cash movement. It is a sine qua non for making a claim in case of loss of cash too.

15. However, in this case, as could be seen from the records, no entry as regards the transit of money in Cash Remittance Register, Books of Accounts, Ledgers and Outward Movement Register of the bank was made. There was not even internal correspondence regarding the same. The alleged incident was also not brought to the notice of the higher-ups. The matter was suppressed all along at a particular point. Only in order to initiate a litigation after rejection of claim by the appellant insurer, one officer of the respondent bank was authorised, at a later point of time. This Court wonders why the entries are not made in the registers. Not even a single document, namely, Cash Remittance Register, Books of Accounts, Ledger, Outward Movement Register, Office Notice, Internal Circular, is filed by the respondent before the Court to prove the alleged loss of cash. Every movement of cash should reflect in bank's Inward and outward Movement Register. More so, it may also be by digital means Nothing of that kind has taken place herein. P.W.2 has also admitted in his evidence that the cash transaction pertaining to the suit claim was not recorded in the registers. It is also admitted that they have not filed any document to prove that the sum of Rs.13.00 lakhs was robbed during transit. But, only in the F.I.R., it is stated so. P.W.1 also admitted in his evidence that they had failed to take reasonable care of cash during transit as per the RBI rules as well as their own internal guidelines, regarding steps to be taken during transfer of cash from one place to another. The matter was confined to some particular persons for the reasons best known to them and also for the reasons unknown to this Court.

16. Mere examination of witnesses, tendering of evidence, filing of police complaint and First Information Report are not enough to substantiate the loss of cash. F.I.R., at times, may even be referred to as a mistake of fact. It is also not pleaded in the plaint as to the denomination of the amount lost in transit. The plaint also did not contain any pleading as to where exactly the robbery took place.

17. There is absolutely no proof as regards the amount, which was taken for transit. In the absence of any concrete evidence by virtue of document or register regarding the movement of cash and loss of the same, merely based on the ipse dixit of the witnesses, this Court is unable to come to the conclusion that the respondent has incurred the loss of Rs.13.00 lakhs during transit, as alleged. If the loss so occurred, the case of collusion among employees of the respondent bank shall not be ruled out. This Court is at a loss to understand as to how the alleged robbery will take place without the knowledge and involvement of the employees of the bank within minutes of transit. The entire episode seems to be a high drama to engulf public money.

18. In view of what is discussed above, the respondent has failed to establish that he has suffered the loss of Rs.13.00 lakhs during transit, due to robbery. Accordingly, the first point is answered in the negative.

19. In view of the answer to the first point as above, the second point as to liability of indemnity automatically fails. However, in academic interest, this Court is inclined to deal with the said point as well.

20. Even assuming that the alleged loss has occurred to the second respondent bank, the point that falls for consideration is, whether the appellant insurer is bound to indemnify the loss

21. In this regard, the stand of the respondent bank is that the loss has occurred due to the robbery in transit of cash. According to him, the cash was being transited in an autorikshaw with two officials and, at that time, the autorikshaw was waylaid within 1.5 k.m. from the originating bank. His stand is also that as per the Banker's Indemnity Policy, the appellant is bound to indemnify the loss so occurred. He relies upon Clause (B) of the Policy for the claim.

22. It is true, Clause (B) of the Banker's Indemnity Policy provides for indemnity for any money or security being lost, stolen, mislaid, misappropriated or made away with, whether due to the negligence or fraud of the employees of the insured or otherwise whilst in transit in the hands of such employees, such risk or transit to commence from the moment the same is received by the employees on behalf of the insured and to continue until delivery thereof at destination. However, it is important to mention here that the said Clause should not be read in isolation. It has to be read with Clauses 3 and 13 of the Conditions of the Policy. Clause 3 of the Conditions stipulates 'Reasonable Care', as per which, the insured should take all reasonable steps to safeguard the property insured against any accident, loss or damage and to secure all doors, windows and other openings and all safes, strong room etc. Clause 13 speaks about observation of terms and conditions. It says that due observance and fulfilment of the terms, conditions and endorsements of this Policy in so far as they relate to anything to be done or complied with by the Insured shall be a condition precedent to any liability of the Company to make any payment under the Policy. Likewise, Clause (b) of 'Exceptions' says that the Company shall not be liable in respect of losses, resulting wholly or partially from any negligent act or omission of the insured employee.

23. Added to the above, transit of cash by the respondent from one place to another is governed by a Circular of its own, which contains several guidelines. The Circular, titled Security of Cash in Transit, dated 16.12.2006, which is marked as Ex.A-9, states that the respondent must follow the procedure and take maximum precautions to ensure that the cash and staff reach the destination branch safely. As per the said Circular, under Clause 4, stationary vehicles standing near to the exit of the branch should not be used. Also, such vehicles should not be from any particular stand / travel agency, but from different stands / travel agencies, so that the robber cannot plan his strategy. However, contrary to that, the vehicle, namely, autorikshaw, which was standing near the gate of the branch was engaged. Under Clause 6, the cash container should be chained to the body of the vehicle and the vehicle should be inspected to ascertain that the arrangements for chaining of cash box to the body of the vehicle are available and that the doors can be locked from inside, which is ostensibly not done. As per Clause 16, all branches should understand the need to maintain utmost secrecy regarding movement of cash and must keep the plan a closely guarded secret. This is very important for ensuring the safety of the remitting staff members and Bank's cash. Under Clause 19, Cash should, as far as possible, be transported in the bank's own cash van. But, here, it was an autorikshaw. Under Clause 20, Cash van movement must be recorded in a register, which should maintain the details of personnel accompanying the cash van, the time of departure and arrival at respective branch location / currency chests, which was not followed.

24. In this case, admittedly, all the above guidelines have been breached or violated and no security steps have been taken during transit of cash. It is true, as on the date of incident, the Indemnity Policy exists. But, the point to be examined is, whether the conditions in the said policy are properly complied with or not. Also, just because a claim is made based on the Policy, it cannot be taken for granted that the amount claimed would be indemnified by the insurer. Claim is subject to strict scrutiny as to the loss, documents, compliance of conditions of policy and so on and so forth. In the cross-examination, P.W. 1 also admitted that for breach of conditions of Ex.A-2 Policy, they are not entitled for claim.

25. It is also seen that the appellant insurer, in order to process the claim of the respondent bank, requested for production of Non-Traceable Certificate from the police. But, the same was not produced by the respondent. The alleged loss has resulted wholly due to the negligent act or omission of the respondent insured employees. This is also evident from the fact that the respondent bank has initiated disciplinary proceedings against its employees for their negligent act in handling the cash during transit and the said employees are also imposed with punishment. Therefore, it is proved to be an admitted case of act of negligence on the part of the respondent by its own employees, for which the Insurer is not liable to indemnity, as stated above. Further, the claim is also bald and not proved with proper documents and evidence. If the claim such as this is allowed, it will open a flood-gate of claims, thereby making the insurers cumbersome to shed huge sums of money on unwanted claims, for which the insurers are not liable.

26. In this context, it is useful to refer to a decision of the Hon'ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Private Limited v. United India Insurance Company Limited, 2010 (10) SCC 567, [LQ/SC/2010/1102] which is relied upon by the learned counsel for the respondent. In the said decision, it was observed that in a contract of insurance, the rights and obligations are governed by the term of the said contract and that the terms of a contract of insurance have to be strictly construed and no exception can be made on the ground of equity. It was also held therein that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the Court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavour of the Court should always be to interpret the words in which the contract is expressed by the parties. It is also worth-mentioning to note here that in the said decision of the Hon'ble Apex Court, the repudiation of the claim on the ground of breach of the special condition in the cover note for the insurance policy was upheld.

27. Having considered the instant case on the touchstone of the aforesaid broad principles to be borne in mind while examining the claim of the insured, this Court is of the considered opinion that the claim of the respondent must fail on the ground that there was a breach of the conditions incorporated in the Policy, as stated in Paragraph 22 above, coupled with the violation of the guidelines contained in the Circular - Ex.A-9, Security of Cash-in-Transit, as mentioned in Paragraph 23.

28. For all the foregoing reasons, this Appeal Suit is allowed as under :

1. The alleged loss of Rs.13.00 lakhs suffered by the respondent bank due to robbery is not established with substantive documents and evidence.

2. Even assuming that the said loss has occurred, the appellant is not bound to indemnify the same, in view of the breach of conditions contained in the Policy, coupled with the violation of the guidelines contained in the Circular - Ex.A-9, Security of Cash-in-Transit.

3. Since it is the definite case of the respondent that the loss has occurred, which is only due to the negligence of its employees, this Court is of the view that the said loss must not cause a dent to the State exchequer, which is public money. Therefore, the respondent is directed to fasten the liability on the employees, irrespective of the rank, who were negligent in discharge of duty and also who were responsible for not maintaining records for the cash in transit, and recover the loss from them, thereby retrieving the lost money This shall be an eye-opener for all the employees working in Government entities to avoid recurrence of incidents of the present nature.

4. Judgment and decree, dated 01.11.2012, passed in O.S.No.8048 of 2010 on the file of IV Additional Judge, City Civil Court, Chennai, is set aside.

5. Connected M.P.No.1 of 2013 is closed.

6. Parties shall bear their own costs.