The national consumer disputes redressal commission (NCDRC) has upheld an order directing United India Insurance Co Ltd to pay ₹59.84 lakh along with interest to Securitrans India Pvt Ltd and AP Securitas Pvt Ltd, the two cash logistics companies, after a major ATM cash van theft in Delhi, rejecting the insurer’s defence that the loss amounted to a 'mysterious disappearance'.
In an order last week, the NCDRC bench of justice Sudip Ahluwalia (presiding member), and Dr Sadhna Shanker (member) says, "...internal disciplinary proceedings were conducted and led to the termination of the involved employees, which further supports the claim that the loss arose from employee misconduct, thereby attracting the fidelity guarantee clause under the special contingency policy. United India Insurance’s insistence on a formal criminal charge sheet as a condition precedent to processing a claim under the infidelity clause is wholly unsustainable. Insurance contracts are not to be interpreted with the rigidity of criminal law, a reasonable evidentiary threshold suffices, particularly when the policy covers dishonesty of employees and a clear internal enquiry has established the same."
Dismissing the insurer’s appeal, the apex consumer forum ruled that the company had engaged in evasive and deficient conduct by delaying a clear decision on the insurance claim for more than three years, despite confirmation of the loss and completion of a police investigation.
The case arose from a theft reported on 19 February 2008, when a cash replenishment team deployed by Securitrans India and AP Securitas Ltd discovered that ₹65 lakh was missing from their ATM cash van while servicing ATMs on GTK Road in north Delhi.
The van was manned by four employees — two custodians, a guard, and a driver — who had already replenished ₹21 lakh in ATMs before heading to a Karnataka Bank ATM. Around 1.45pm, the shortage was noticed, leading to the registration of a first information report (FIR) under Section 379 of the Indian Penal Code (IPC) at Model Town police station.
While ₹5 lakh was later recovered, the remaining amount could not be traced. A final police report filed in July 2010 declared the case untraced.
Under pressure from client banks, the cash logistics companies reimbursed ₹50 lakh to Axis Bank through cheques within a day of the incident, while HDFC Bank recovered ₹15 lakh by deducting it from pending invoices. The incident was also reported in the media at the time.
The companies subsequently filed an insurance claim for ₹64.84 lakh under the special contingency policy issued by United India Insurance which covered losses due to theft, burglary, fraud and employee infidelity. The policy had an insured sum initially of ₹12 crore, later enhanced to ₹17 crore, against a premium of ₹313,800.
Although the insurer’s appointed surveyor acknowledged the loss, United India Insurance refused to settle the claim, citing alleged policy breaches and terming the incident a case of 'mysterious disappearance'.
The insurer argued that there was no charge-sheet or court finding establishing employee dishonesty, making the infidelity clause inapplicable. It also claimed delayed intimation of loss, lack of pre-employment verification of staff, and contradictions in the complainants’ version of events.
United India Insurance further contended that the complainants were engaged in commercial activity and therefore did not qualify as 'consumers' under the Consumer Protection Act, 1986.
In November 2015, the Delhi state consumer disputes redressal commission, had partly allowed the complaint, directing the insurer to pay ₹59.84 lakh with 6% interest from 19 June 2008, and a higher interest of 12% if payment was delayed beyond 90 days.
Challenging this order, United India Insurance approached NCDRC.
However, the commission noted that the complaint was filed in April 2011 only because the insurer had failed to take a definitive decision on the claim for over three years, despite having all documents and the benefit of a police investigation.
The bench pointed out that even after raising queries in January 2011, which were promptly answered, United India Insurance did not communicate its decision until October 2011 — after the consumer complaint had already been filed.
“This clearly shows that the insurer consciously remained non-committal for a prolonged period,” the commission observed, calling the conduct evasive.
Rejecting the insurer’s core defence, NCDRC held that the FIR clearly treated the incident as a cognisable offence of theft and partial recovery of cash did not change the nature of the crime.
“The inability of the police to trace the remaining amount does not convert theft into mysterious disappearance,” the commission ruled.
It further held that the insured could not be penalised for the failure of criminal prosecution, particularly when a final untraced report had already been filed by the police.
The commission also rejected United India Insurance’s insistence on a formal charge-sheet as a precondition for invoking the employee infidelity clause.
It noted that the complainants had conducted an internal disciplinary enquiry, found employees guilty, and terminated their services. Two employees had absconded.
“Insurance contracts are not to be interpreted with the rigidity of criminal law,” the bench observed, adding that a reasonable evidentiary threshold was sufficient when the policy expressly covered employee dishonesty.
NCDRC also dismissed arguments regarding the alleged lack of employee verification, noting that this ground was never cited in the repudiation letter.
“It is a settled principle that an insurer cannot improve upon the grounds of repudiation at a later stage,” the commission held.
Finding no perversity or illegality in the state commission’s reasoning, NCDRC dismissed United India Insurance’s appeal and upheld the payout order in full.
(First Appeal NoNC/FA/425/2016 Date: 9 December 2025)
