Mr.S.R. Khanzode – Hon’ble Presiding Judicial Member:

     This appeal is directed against the order dated 30.06.2009 passed in Consumer Complaint No.164/2007, M/s. Puneet Advisory Services Pvt. Ltd. V/s. the New India Assurance Co. Ltd. & Anr., by Consumer Disputes Redressal Forum, South Mumbai District.  The consumer complaint was filed by Respondent against the Appellant Insurance Company since they unjustly/arbitrarily repudiated the claim.

     Undisputed facts are that Respondent had taken insurance policy, i.e. Brokers Liability Insurance Policy, for the Brokers of Multi Commodity Exchange of India  and which was valid for the period 29.03.2004 to 28.03.2005.  Under the said policy the Insurance Company agreed to indemnify loss due to dishonest or fraudulent act of employees.  It was the contention of Respondent/Complainant that one Prashant Mathur was appointed as Chief Executive Officer and as per the Memo of Understanding (‘MOU’ in short) dated 23.03.2004, he agreed not to transact any business on his own without the permission of management/directors of the Respondent.  Contrary to it he had executed three promissory notes on behalf of Respondent for `1,00,000/-, `2,00,000/- and `4,00,000/- respectively on 18.01.2005 and Respondent had to suffer loss on that count.  Criminal complaint was lodged against said Prashant Mathur by Respondent and thereafter insurance claim was made for `7,00,000/- which stood repudiated on 08.12.2006 by the Insurance Company on the ground that there was breach of conditions of the insurance policy.

     Forum below partly allowed the claim of the Complainant and directed insurance company to pay `5,71,943/- along with interest and `2,000/- as compensation for mental torture and `2,000/- as costs.  Feeling aggrieved thereby, insurance company preferred this appeal. 

     We heard Mr.A.S. Vidyarthi, Advocate for the Appellant and Mr.U.B. Wavikar, Advocate for the Respondent.  Perused the record.

     The insurance policy stipulates as under:

“What is agreed to be indemnified under the insurance policy in question is loss resulting solely and directly from dishonest or fraudulent acts by Employees of the insured committed with the manifest intent to cause the insured to sustain such loss or to obtain a financial gain for themselves wherever committed and whether committed alone or in collusion with others, including loss of property through any such acts by employees. 

The policy was subject to general conditions of reasonable care and further as per the exclusion, trading by Insured and their dealers in their own names for their own transactions and any liability or loss directly or indirectly arising out of or resulting from trading by or on behalf of any of the Insured/their dealers for their own transactions in documents actual or fictitious whether or not within the knowledge of the Insured and whether or not acting within the scope of authority given by the Insured.“

     It can be seen that Shri Prashant Mathur, designated as CEO of the Respondent is not the employee since he is not a salaried person.  Said Prashant Mathur was to share the profit only and thus, he cannot be termed as an employee of the Respondent.  It is tried to be submitted on behalf of Respondent that Shri Prashant Mathur, as a CEO, was to receive the amounts/share of profit as per  the terms and conditions of MOU, supra.  However, the above referred character of his so called employment being not in dispute, we find such argument is devoid of any substance.  It is also tried to be argued on behalf of Respondent that Mr.Mathur was only authorized to share profit and, therefore, he was a working partner.  For the reasons stated earlier, even if it was only agreed to share profit, it cannot be said that he is an employee of the Respondent.  Thus, if he is not an employee, the present insurance claim would not fall within the ambit of the insurance policy and no question arises to indemnify the alleged loss suffered by the Respondent.

     Further, even if, Mr.Mathur has exceeded his authority in dealing with the transactions in question, the case would fall within the exclusion clause of the policy, referred earlier. Similarly, in view of the said exclusion clause the case of Respondent that loss was suffered since Mr.Mathur had illegally traded in its account by misusing or misappropriating margin money of the client of the Company it would also not make actionable insurance claim.

     Considering these aspects repudiation of insurance claim by appellant/Insurance Company cannot be faulted with.  Forum below did not address itself properly to the facts and terms of policy and arrived at a wrong conclusion.  We cannot support the impugned order in view of the discussion held above.  We hold accordingly and pass the following order:

O  R  D  E  R

    (i)               Appeal is allowed.

  (ii)               The impugned order dated 30.06.2009 is quashed and set aside.

(iii)               In the result, the Consumer Complaint No.164/2007 stands dismissed.

(iv)               No order as to costs.

  (v)               Copies of the order be furnished to the parties.