19 years after Rs 19 lakh vanished from ATM, apex consumer body slashes 25 per cent insurance payout

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Written by: Vineet Upadhyay5 min readNew DelhiApr 18, 2026 09:00 AM IST The consumer commission rejected the insurer’s argument that ATM cash was excluded, holding that custody and control remained with the insured employees at the relevant time. (Image generated using AI) Make us preferred source on Google Whatsapp twitter Facebook Reddit PRINT Consumer news: Nearly two decades after a mysterious cash shortfall of Rs 19.03 lakh was discovered in an ATM in Ghaziabad, the National Consumer Disputes Redressal Commission (NCDRC) has held the insurer liable but only partially, citing lapses by the insured cash-handling firm in safeguarding access credentials. A bench comprising Presiding Member Dr Inder Jit Singh and Member Dr Justice Sudhir Kumar Jain was hearing a first appeal filed by United India Insurance Company Limited challenging the September 28, 2016 order of the Delhi State Consumer Commission, which had allowed the complaint of M/s A P Securitrans Private Limited and directed payment of the full insured amount of Rs 19.03 lakh with interest. “After careful consideration of the entire facts and circumstances of the case, in particular, the Surveyor’s report, the State Commission‘s order, policy document and rival contentions of the parties including the ones contained in their written notes of arguments, we hold that the loss in the present case is covered under the policy,” the commission said on April 13. Observing that “there is some element of contributory negligence on the part of the insured company,” the national consumer commission limited the payout to 75 per cent of the claimed amount along with interest adding that while the loss was covered under the insurance policy, the conduct of the firm contributed to the incident, warranting a reduction in compensation. The NCDRC upheld the finding that the loss was indeed covered under the policy, noting that the ATM could only be accessed using keys and passwords held by the firm’s employees. The loss occurred within 48 hours of cash loading, a period explicitly covered under the policy. The consumer commission rejected the insurer’s argument that ATM cash was excluded, holding that custody and control remained with the insured employees at the relevant time. However, the national consumer commission found procedural lapses on the part of the firm, particularly regarding improper handling and possible sharing of passwords, and lack of a clear standard operating procedure for substitute staff. It noted that the system required two separate custodians with independent credentials as a safeguard, but this protocol may have been compromised. “An adhoc arrangement had been working… no clear record exists regarding authorised sharing of passwords,” the commission observed while attributing partial negligence to the firm. The dispute traces back to May 2007, when Rs 19,03,800 was found missing from an HDFC Bank ATM located at Shipra Mall in Ghaziabad. The ATM showed no signs of forced entry, and subsequent investigation indicated that the loss was likely due to misappropriation by employees who had access to the machine’s keys and passwords. The ATM had been loaded with cash on May 23, 2007 by two custodians employed by the respondent company. The following day, after the ATM guard was found dead, an audit revealed the substantial shortfall. Significantly, the locks of the ATM were intact, ruling out theft and pointing instead toward insider involvement. The employees concerned were later booked under criminal charges, reinforcing the suspicion of internal misappropriation. The cash handling firm had taken a money insurance policy from United India Insurance covering the period from September 1, 2006 to August 31, 2007. The insurance company repudiated the claim on March 7, 2008, arguing that the policy did not cover cash once deposited inside the ATM. The insured had failed to take reasonable precautions, particularly in handling access credentials, it said. Following this, the firm approached the Delhi State Consumer Commission, which in September 2016 allowed the claim in full, directing payment of Rs 19.03 lakh with 12 per cent interest. Challenging this, the insurer moved the national consumer commission. Modifying the state consumer commission’s order, the national consumer commission directed payment of Rs 14,27,850 (75 per cent of the loss), interest at 9 per cent per annum from March 7, 2008 (date of repudiation), payment within 45 days, failing which interest would increase to 12 per cent. The ruling underscores a balanced approach in insurance disputes involving employee misconduct recognising coverage under fidelity and custody clauses, while also penalising operational lapses by insured entities. It also highlights the importance of robust internal controls and clear protocols in high risk financial operations such as ATM cash management. Vineet Upadhyay is an Assistant Editor with The Indian Express, where he leads specialized coverage of the Indian judicial system. Expertise Specialized Legal Authority: Vineet has spent the better part of his career analyzing the intricacies of the law. His expertise lies in "demystifying" judgments from the Supreme Court of India, various High Courts, and District Courts. His reporting covers a vast spectrum of legal issues, including: Constitutional & Civil Rights: Reporting on landmark rulings regarding privacy, equality, and state accountability. Criminal Justice & Enforcement: Detailed coverage of high-profile cases involving the Enforcement Directorate (ED), NIA, and POCSO matters. Consumer Rights & Environmental Law: Authoritative pieces on medical negligence compensation, environmental protection (such as the "living person" status of rivers), and labor rights. Over a Decade of Professional Experience: Prior to joining The Indian Express, he served as a Principal Correspondent/Legal Reporter for The Times of India and held significant roles at The New Indian Express. His tenure has seen him report from critical legal hubs, including Delhi and Uttarakhand. ... Read More