KONARK ROLLER FLOUR MILLS PVT. LTD. vs NEW INDIA ASSURANCE CO. LTD.

THIS complaint has been filed by M/s. Konark Roller Flour Mills alleging deficiency in service on the part of opposite party, New India Assurance Company.

ADMITTED and undisputed position is that the complainant had two valid and live Insurance Policies - ''Fire Policy'' and ''Burglary and House Breaking'' covering the period of loss. Brief facts of the incident are that coastal areas of Orissa were hit by a super cyclone on 29.10.1999 causing wide spread havoc. The factory of the complainant is situated between Bhubneswar and Cuttack in Orissa. On 31.10.1999 at about 10.30 a mob of about 1,000 people forcibly entered into the complainant''s factory after assaulting the complainant Company''s staff, broke down the shutters of the godown and looted away the stocks from the godowns. Incident was reported to the police. F.I.R. was filed. Police after investigation filed challan against certain number of persons under Sections 455/380/34 of I.P.C. Matter was also reported to the opposite party and a claim for over Rs. 47 lakhs was preferred with the Insurers who in turn appointed Surveyors. The Surveyors after extensive discussion, visited to factory and other places, perusal of record, assessed the loss at Rs. 34,95,750/-. Gist of the report was supplied to the complainant. Insurers after internal processing repudiated the claim of the complainant on 9.11.2000 on following grounds : "(1) You have taken both fire and burglary policies for the stocks in the factory godown. (2) That taking advantage of the situation arose out of super cyclone a large number of people from the nearby villages looted the stocks in the factory godown as there was disruption of traffic and the law enforcing authorities themselves taken unawares and it could be said that enforcement of any semblance of order became beyond the capacity of the Force (Police). (3) There was no intention of riot, strike or malicious damage of the looters. The Fire Policy excludes loss by theft during or after operation of any insured peril like flood, cyclone, storm or any other convulsion of nature except as provided in the Riot and Strike Clause. The intention of mob was not rioting and they only looted the stocks in the factory godowns. Therefore, the claim is not payable under fire policy. The Burglary Policy clause under Exclusion section [Condition 2(f)] says that loss or damage either in origin or extent is directly or indirectly, proximately or remotely arise out of or in connection with ...cyclone or other convulsion of nature or atmospheric disturbances ...riot, strike, civil commotion ...is not covered under the policy. As the theft/burglary loss is arisen out of or related to cyclonic situation the loss is not payable under Burglary Policy. Therefore, we regret to inform you that we are not in a position to pay your claim as the nature of loss is not within the purview of the policies."

A request to reconsider the matter also was negatived by the opposite party. It is in these circumstances that alleging deficiency in service, the complaint was filed seeking following reliefs : "(a) Directing New India Assurance Company to make payment with regard to both the claims of the petitioner Company as under : (i) Rs. 47,25,660.80 for the loss incurred on stocks in terms of the policies. (ii) Rs. 10,80,952.00 the loss incurred with regard to the plant and machinery, factory building etc. (iii) Interest @ 24% per annum on the claims mentioned in Item Nos. (i) and (ii) above payable from the date of the loss suffered till the date of payment. (iv) Other damages incurred including loss suffered owing to the Insurance Company failing to make payment of the requisite amounts in terms of the claim within the time provided and/or reasonable period as required under law. (v) Losses suffered by the Company owing to the various acts and omissions of the Insurance Company resulting in loss of reputation and loss of profit etc. assessed approximately to the extent of Rs. 20,00,000/-. The petitioner craves leave to furnish further details of the losses suffered by the Company and to suitably modify the claim including enhancing the extent of loss business, profit being claimed before this Hon''ble Commission at the time of hearing of the present petition. (vi) Loss suffered by the Company by way of loss of reputation, mental agony etc. estimated at Rs. 25,00,000/- and/or such amount as the Hon''ble Commission may deem fit in the facts and circumstances of the case."

In the written version filed by the opposite party, their defence is that the claim does not fall within the purview of any of the policies. While the Fire Policy excludes the loss by theft during or after operation of any insure peril like flood, cyclone, storm or any convulsion of nature, it is also not covered by the policy on ''Burglary and House Breaking'' as per exclusion clause Condition 2(f) which reads as follows : "loss or damage either in origin or extent is directly or indirectly, proximately or remotely occasion by or contributed to by or which is either in origin of extent directly or indirectly, proximately or remotely arises out of or in connection with earth quake, volcanic eruption, typhoon, hurricane, tornado, cyclone or other convulsion of nature or atmospheric disturbances or war, invasion, act of foreign enemy hostilities or war like operations (whether war be declared or not) mutiny, riot, strike, civil commotion rebellion, revolution, conspiracy, military, naval or unsurped power, martial law or state of sledge. Any loss or damage happening during the existence or abnormal conditions (whether physical or otherwise) directly or indirectly proximately or remotely occasioned by or contributed to by or arising out of or in connection with any of the said occurrence shall be deemed to be loss or damage which is not covered by this insurance except to the extent that the insured shall prove that such loss or damage happen independently of the existence of such abnormal conditions. In any action, suit or other proceedings were the Company alleges this by reason of the provisions of this condition any loss or damage is not covered by this insurance the burden on proving that such or damage is covered shall be upon the insured."

THIS was a case of looting which was a spontaneous mass upheaval and not an organised activity. It is not possible to believe, loss of stocks worth Rs. 47 lakhs taking place in such a short time, i.e., of 3 hours. The repudiation is in order as it is as per terms and conditions of policy. Rejoinder was filed by the complainant Company reiterating his earlier continuous and rebutting the pleas raised by the Insurers in its written version. Affidavit in evidence was filed only by the opposite party.

ON 23.9.2002, we recorded "Mr. Kumar, Counsel for the complainant states that the Surveyor appointed by the Insurance Company has assessed the loss at Rs. 34,95,755/-. But he says that this amount has not been given as the claim has been repudiated in view of the grounds mentioned in the reply to the application at page 140 of the paper book and also at para 3 of the reply filed by the Insurance Company. The question, therefore, that arises is the interpretation of the policy. It is agreed between the parties that in case interpretation is held in favour of the complainant, he will be satisfied with the amount assessed by the Surveyor and for the balance, if any, he shall go to the Civil Court". In view of this, arguments were heard on the interpretation of related conditions/clauses of the Policy. While we may be inclined to agree with the learned Counsel for the opposite party that the present case falls within the ''Exclusion'' Clause (b) of fire policy as also its Riot, Strike and Malicious Damage clause but we are unable to agree with the Insurers that it is not covered by ''Burglary and House Breaking'' Policy. Clause (a) of the policy reads as follows : "(a) if the property described in the schedule hereto or any part thereof shall be lost, destroyed or damaged by theft following upon an actual forcible and violent entry of the premises by the person or persons committing such theft. then the Company (Insurance Company) will pay and make good to the insured such loss...."

(Emphasis supplied) A plain reading of the F.I.R. shows that a large mob after assaulting the staff present, and after breaking open the shutters of the godown took away the stocks. Police investigation and the Surveyor''s report substantiate this fact. Charges are filed in a Criminal Court under Sections 455/380/34, I.P.C. These sections read as under : "Section 455. Lurking house - trespass or house-breaking after preparation for hurt, assault or wrongful restraint.-Whoever commits lurking house-trespass, or house-breaking, having made preparation for causing hurt to any person, or for assaulting any person, or for wrongfully restraining any person, or for putting any person in fear of hurt, or of assault, or of wrongful restraint, shall be punished with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine. Section 380. Theft in dwelling house, etc.- Whoever commits theft in any building, tent or vessel, which building, tent or vessel is used as a human dwelling, or used for the custody of property, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine. Section 34. Acts done by several persons in furtherance of common intention-When a criminal act is done by several persons in furtherance of the common intention of all, each of such persons is liable for that act in the same manner as if it were done by him alone."

Section 378, I.P.C. defines ''theft'' which read as under : "Theft-Whoever, intending to take dishonestly any movable property out of the possession of any person without that person''s consent, moves that property in order to such taking, is said to commit theft."

Thus we see three ingredients to come within the definition of theft : (a) to take dishonestly; (b) any movable property out of the possession; (c) without the person''s consent.

MATERIAL on record leaves little room for doubt that a large body of people forcibly and violently, after assaulting the factory staff, entered the premises and removed the goods physically to come within the purview of Section 378 of I.P.C. In view of this one cannot but reach a conclusion that the above explained position fully meets the requirements of Clause (a) of the Policy on ''Burglary and House Breaking'' - in that there was a forcible/violent entry and commitment of theft, as defined in Section 378, I.P.C. Reliance by the Insurers on Condition 2(f) of the ''Burglary Policy'' (reproduced earlier) in our view is completely misplaced. It starts with the wording ''loss or damage'' associated with any of the natural calamity mentioned therein, it is this which is excluded.

A harmonious construction of this condition in our view shall be ''loss'' or ''damage'', arising or attributable to directly/indirectly or remotely but directly, from any of the natural calamity including ''cyclone'' listed therein. In the present instance these are two separate episodes - one is a natural calamity (cyclone) other is man made - a case of theft. 1st episode occurs on 29.10.1999 whereas the episode we are looking at occurs on 31.10.1999. Not even remotely it can be said that the loss of stock was on account of any impact of high/hurricane wind speed, sea storm/high waves or heavy rains. These are the features which are associated with cyclone. It will be correct to deduce in these circumstances, that the loss in the instant case was not even remotely the outcome or relatable to the main features of natural calamity enumerated earlier. Interpretive justice foresees a harmonious and a positive construction. It is a Burglary Policy - hence purpose of this clause could be said to be to exclude loss by a natural phenomenon. The clear intention of such a provision being that if insured wants coverage for any other eventuality, then separate Policy or endorsement need to be obtained after paying the necessary premium. In order to come within the purview of the terms of Burglary Policy, certain man-made ingredients like forcible/violent entry, theft are required to be fulfilled. It is not the exclusion Clause (2)(f) which comes first. It is the inclusive provision (a) of the policy, which comes first. This clause clearly spells out, ''loss by theft'' being covered under the policy. Purpose is to make it clear that only ''theft'', as defined in the policy, is covered. All these terms/conditions are tariff related. Pay tariff for a certain coverage and get benefit. Tariff in the case was paid for ''Burglary'' Coverage - hence only this is covered. In order to fall within the purview of ''Burglary Policy'' insured has to prove and satisfy that theft took place following on actual forcible and violent entry in the premises. Theft stands proved in this case as discussed earlier, so does the factum of forced and violent entry. Thus, in our view, a wholly wrong meaning is attempted to be given to this clause without appreciating the spirit of the Burglary Policy with the sole objective of ousting the claim of the insured. The grounds of repudiation relied upon by the opposite party are wholly misplaced. This point was also examined by us in R.P. 869/2001 and after detailed examination and meaning of word ''Burglary'', this Commission had reached the same conclusion.

We have gone through the Surveyor''s report in extension. We would like to reproduce these two lines. Para 19 of the Surveyor''s report : "19. "From the discussions on the circumstances as above, it stood established beyond all doubt that the loss suffered by the insured was attributable to looting following lood riots in the wake of havoc caused by the killer cyclone'' and go on to assess the loss at Rs. 34,95,756/-."

SINCE the Surveyor''s Report has not been found to suit their line of thinking, aspersions have been cast upon the Surveyors, who, as per experience in this Commission - are credited to be one of the leading Surveyors of all Insurance Companies. In the light of discussions above, we see no merits in the grounds of repudiation advanced by O.P. This complaint is allowed. We direct the opposite party to pay to the complainant, amount of loss, as assessed by the Surveyor along with interest @ 9% p.a. from 1.10.2000, i.e., from two months after the date of Report of the Surveyor, till the date of payment.

WE also allow cost of proceedings to the complainant which we fix at Rs. 10,000/-. All these payments shall be made within six weeks of this order - failing which rate of interest shall go up to 12% p.a. Complaint allowed.