New India Assurance Co. Ltd. vs Choudhri Bababhai Amtharam

THIS case pertains to the theft of Rs.2,86,138.20 in cash from the premises Dudh Sagar Dairy Employees Coop Credit Society (DSDECS) on 23.4.1995. The Society had an insurance policy for coverage of cash up to Rs.7 lacs. The claim against this theft was repudiated by the revision petitioner, New India Assurance Company Ltd.

THE repudiation, as per the letter of Branch Manager, New India Insurance Co written of 22.3.1996, was on the ground that the cash has been stolen either by your own Employees or by some one by using duplicate keys. THE District Forum did not accept the stand of the insurance company and ordered payment of the claim of Rs.2,86,138.20 with 9% interest. THE complainant was also awarded Rs.5,000/- as compensation and 1,000/- as costs. The appeal of the insurance company, against this order of the District Forum, was dismissed by the State Commission. The award of the District Forum was confirmed with the exclusion of compensation for mental torture and costs.

The present revision petition against the above order of State Consumer Disputes Redressal Commission Maharashtra, was filed before this Commission in 2006 with a delay of 32 days. It was admitted for consideration on merits on 5.4.2006. The Revision Petitioner (RP) has pointed out that an FIR was lodged on 25.4.1999 with Mehsana police who arrested two employees of the DSDCES on the same day. A copy of this FIR was produced before the District Forum. According to this FIR, when the safe was opened by two employees of the DSDCES, it was found that there was no money. The lock of the safe had not been broken. The cashier who claimed to have put the money in the safe on the previous evening was suspected to have stolen the cash. The cashier Chowdary Laxmanbahi Ragunathbhai and Manager Somabhai Ishwarbhai, were named as suspects in the FIR lodged by the complainant/ respondent. The case of the Revision Petitioner (RP) is that the District and State fora had wrongly held that mere naming of the employees of the FIR does not mean that they have committed the theft.

WE have heard the counsel for revision petitioner. None was present on behalf of the respondent. Counsel for the RP argued that as there was no sign of forcible entry, it is a case falling within condition No.2(e) of the insurance policy taken by the respondent. Under this condition, the policy does not cover, unless specially mentioned in and expressly insured by the policy, any Loss or Damage where any inmate or member of the insureds Household or of his Business staff or any other person lawfully in the premises is concerned in the actual theft of or Damage to any of the Articles or premises or where such Loss or Damage has been expedited or any way assisted or brought about by any such person or persons. The question that needs to be raised and answered here is whether it is a case coming within the condition cited above. For the answer to be in the affirmative it should be a case where it is proved that some employee of the DSDCES is involved in the theft or some person, who in the course of his legitimate business with the DSDCES, has used the opportunity to commit it. The revision petition itself refers to the arrest of two employees of the society and states that Ultimately, one the accused was acquitted by granting benefit of doubt as the proper evidence was not led by the respondent and the second accused was acquitted being not connected with the crime. However, it is argued in the revision petition that the main accused was given the benefit of doubt and not honourably acquitted. It is further argued that the foras below have failed to appreciate that the standard of proof in a criminal case is different.

THE State Commission has referred to the decision of Honble Supreme Court of India in United India Insurance Co Ltd Vs. Harchandrai Chandanlal - AIR 2004 SC 2004 and has sought to distinguish it on the facts of the present case. THE issue before the Supreme Court was interpretation of the clause in a policy, which defined the terms burglary, and housebreaking. Honble Supreme Court held that It is settled law that the terms of the contract have to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous. In the case now before us the policy is of insurance against burglary. In terms of the policy:- (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 or

(b) if any damage falling to be borne by the insured shall be done to the premises described in the Schedule hereto following upon or occasioned by any actual forcible and violent entry of the premises or any attempt threat by the person or person committing or attempting to commit such theft then the company will pay or make good to the insured such loss to the extent of the intrinsic value of the property so lost or such damage to the property so sustained, Provided that the liability of the company shall in no case exceed in respect of each item the sum expressed in the schedule hereto to be insured thereon or in the whole the total sum insured hereby.

A plain reading of the above would suggest that if the theft is committed without evidence of actual forcible and violent entry, no claim under the policy would lie. In fact, this is the ground mentioned by the revision petitioners in their letter of 22 March 1996 for repudiating their liability. The said repudiation letter reads as under: With reference to the above, it was observed from claim paper that the Cash has been stolen either by your own Employees or by somebody by using duplicate keys. As per Charge sheet tow of your employees were charge sheeted for the same. As per scope of the policy the Company will indemnify the Insured against loss or damage to Insured property by theft following upon an actual forcible and violent entry of the premises by the persons committing such theft. Moreover, as per condition 2(e) of standard policy, loss or damage where any inmate or member of the Insureds household or of his business staff or any other person lawfully in the premises is connected in the premises is connected in the actual theft of or damage to any of the article or premises non where such loss or damage has been expedited or was assisted or brought about by any such person or persons.

THE repudiation letter also refers to Clause 2 (e) of the policy, which follows the above definition. 2 THE policy does not cover the following unless specially mentioned in and expressly insured by the policy. (e) Loss of damage where any inmate or member of the Insureds household or of his Business Staff or any other person lawfully in the premises is concerned in the actual THEft of or Damage to any of the Articles or premises not where such Loss or Damage has been expedited or any way assisted or brought about by any such person or persons.

THE State Commission has apparently, taken a view that the presence of this clause 2 (e) in the policy distinguishes the facts of this case from those in United India Insurance Co Ltd. Vs. Hirachandrai Chandanrai, noted above. Referring to the case before it, the State Commission has taken a view that the mentions of theft in condition 2 (e) will mean that the case of theft wherein employees of the insured are not involved, is included in the insurance policy. THE Commission has gone further and observed that Appellant at this stage represented that when they received a insurance claim, at that time, complainant themselves had lodged a police complaint against their employees and due to that reason claim was repudiated this should not be considered as lack in service. Of course, there is a considerable truth in this argument. The incident in question took place on 23.4.1995 and complaint was filed by Bababhai Amtharam, Accountant Assistant of the complainant with the police on 24.4.1995. In this complaint, it was stated that looking to the entire facts reported in the complaint, cashier has tactfully and intentionally stolen the cash of Sahakari Mandali. It is reiterated in the last paragraph of the complaint that the entire amount is stolen by cashier Chaudhary Laxmanbhai Raghunathbhai and Manager Shri Somabhai Ishwarbhai with the help of each other. It was categorically averred in the complaint that lock of the room is not broken.

In the Panchnama prepared by the police, lock of the safe and lock of the room and lock of the main gate has been found to be in same condition and there was no brokage of any of the locks. On opening the safe with its key, nothing was found in the safe. It is pertinent to note that the complaint was registered under Section 406, 420 and 114 of the IPC, namely; criminal breach of trust and cheating. Subsequently, the Police Inspector wrote to the Chief Judicial Magistrate on 14.8.1995 that there is only the possibility stealing the cash by applying duplicate during the absence of the watchman in the night and, therefore, Sections 457, 380 and 381 of the IPC were sought to be added.

IN the complaint before District Forum, however, the complainant stated that the amount was stolen by some wicked persons by entering illegally in respect of which, FIR was lodged on 24.4.1999. This averment is not in accordance with the complaint filed before the police on 24.4.1995. The above record establishes that there was no forcible or violent entry in the instant case. In United India Insurance Co Ltd. Vs. Hirachandrai Chandanrai (Supra), the Apex Court while dealing with burglary defined in the policy as theft preceded by use of force or violence has stated that if theft is not so preceded by use or force by violence, the Insurance Company is not liable to pay under such policy. In the policy in question before us Clause a of Burglary (Business premises) provides that 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, the Company will pay or make good to the insured such loss to the extent of the intrinsic value of the property as lost etc. Thus, in case of theft, actual forcible and violent entry is essential in order to fix liability on the Insurance Company. First of all, in the case before us theft has not been proved and besides that there is no case of actual, forcible and violent entry involved in the incident. The police had filed charge sheet in respect of the incident in question, but on failure of prosecution the charges they were acquitted. On the contrary, the case of the complainant right from the beginning is that it is the cashier and the manager were involved in the incident and the cash in question had been removed with the help of a duplicate key. The Apex Court in United India Insurance Co Ltd. Vs. Hirachandrai Chandanrai (Supra) has referred to the statement of law as summarized in Halsburys Law of England, 4th Edn. (2003) Reissue, para 646, which reads as under: 646 Forcible and violent entry The terms of a burglary insurance may exclude liability in certain circumstances unless there is forcible and violent entry into the premises. If so, the entry must be obtained by the use of both force and violence or the definition is not satisfied and the policy does not apply. An entry obtained by turning the handle of an outside door or by using a skeleton key, though sufficient to constitute a criminal offence, is not within the policy since the element o violence is absent. However, an entry obtained by picking the lock or forcing back the catch by means of an instrument involves the use of violence and is therefore covered. The policy may be so framed as to apply only to violent entry from the outside; or the violent entry into a room within the insured premises may be sufficient. In any case, the violence must be connected with the act o entry; if the entry is obtained without violence, the subsequent use of violence to effect the theft, as for instance where a showcase is broken open, does not bring the loss within the policy.

THIS Commission in Mastana Jogi International Pvt. Ltd. Vs. New India Assurance Co. Ltd. 2009 CTJ 1244(CP) (NCDRC) after placing reliance upon the judgement of the Apex Court in United India Insurance Co Ltd Vs. Harchandrai Chandanlal (Supra) has held that the insurance policy issued by the Insurance Company specifically provides that theft must be accompanied for forcible and violent entry. If the element of force and violence is not present, then the insured cannot claim compensation against the theft from the insurance. In that case the complainant had not led any evidence to show that theft was accompanied by forcible and violence entry in the factory. It was held that the element of force and violence is missing and, therefore, the claim in question did not fall within the purview of the policy. The policy condition in the said case was identical and exactly similar as is in the case before us. In terms of Condition No. 2 of the policy in question the policy does not cover the following unless specially mentioned in and expressly insured by the policy, namely; loss or damage where any inmate or member of the insureds Household or of his Business staff or any other person lawfully in the premises is concerned in the actual theft of or Damage to any of the Articles or premises or where such Loss or Damage has been expedited or any way assisted or brought about by any such person or persons. Right from the beginning the complainant had lodged involvement of the cashier and manager in the incident, but on account of failure to prove the same the case ended in acquittal. Be that as it may, in the facts and circumstances, the Insurance Company had rightly repudiated the claim of the complainant on the ground of lack of actual forcible and violent entry as also the involvement of the employees of the establishment of the complainant in the incident in question.

FOR the aforesaid reasons, the order of the State Commission cannot be sustained. The revision is accordingly allowed and the complaint is hereby dismissed. In the facts and circumstances the parties shall bear their own costs.