Summary
The Supreme Court upheld a fidelity-guarantee insurance award for mentha oil replaced with water in 601 stored barrels. The insurer’s survey and the other material established employee and contract-staff involvement; intact seals did not defeat the laboratory-confirmed substitution. Notification followed completion of sampling and receipt of the investigation report, so the alleged delay did not breach the policy on these facts.
Issues
- Whether the material established employee involvement bringing the loss within fidelity-guarantee cover.
- Whether the claim was notified late in breach of the policy.
Held
- Fidelity insurance indemnifies the insured against loss caused by dishonesty or breach of fidelity by an employee or other person in a position of trust. The protection addresses that contingency and differs from an ordinary contingency guarantee. (¶ 9)
- The survey report, police complaint and surrounding material established involvement of employees and contract staff in substituting water for the oil. Intact seals did not negate the result of complete sampling demonstrating substitution in all the barrels. (¶¶ 10, 11)
- Complete sampling finished on 12 November 2008 and the investigation report reached the insured on 14 November; the claim followed on 18 November. The insured had not earlier known that all barrels contained substituted water. These facts did not establish delay breaching policy condition 1. (¶¶ 12, 13)
Result
Insurer’s appeal dismissed without costs. National Commission’s award of Rs 3,46,87,113 for the mentha-oil loss, with 9% annual interest commencing six months after lodgement of the claim until payment, left undisturbed.