T.S. Vivekananda Kumar vs United India Insurance Co. Ltd. And Anr.

THESE two revisions arise out of the same order and as such, were heard together and are being disposed by a common order.

THE complainant - Sri T.S. Vevekananda Kumar, Prop. M/s. Srikanteshwara Jewellers had taken insurance policy covering jewellery, gold and silver ornaments, etc. for a sum of Rs. 12,00,000. During the currency of the policy, theft took place in the business premises on 28.8.2003 at about 2 a.m. Report of theft was lodged with the Police. The loss was assessed by Surveyor, S. Upendra. However, claim filed by the complainant was repudiated by the Insurance Company. The complainant challenged the repudiation before the District Forum.

ADMITTEDLY , jewellery, which was stolen, had been kept in the glass show case and drawer of the shop. The jewellery kept in the safe locker was not stolen. The complainant had taken the plea that he had converted the entire shop into a burglar proof shop inasmuch as collapsible gates and rolling shutters were provided with locks. The Insurance Co. had relied upon the warranty in the policy, as also Exclusion Clause No. 12 of the Insurance Policy. The District Forum as also the State Commission had accepted the case put up by the complainant that the shop had been converted into burglar proof shop and Insurance Co. was liable to pay. The District Forum allowed the complaint in part and directed the Insurance Company to pay Rs. 8,00,000 with 6% interest per annum from the date of repudiation till payment with costs of Rs. 500. The State Commission on the basis of Surveyor''s Report reduced the said claim to Rs. 6,63,000 with 9% interest per annum from the date of repudiation of the claim till payment and further directed to pay costs of Rs. 2,000. We have heard the learned Counsel appearing on both sides.

LEARNED Counsel appearing on behalf of the Insurance Co. drew out attention to the policy at pages 35 to 40 of the record of R.P. No. 569/07. It is submitted before us that claim has been filed by the complainant under Section 1 of the said policy in which jewellery in display windows was insured for Rs. 8,00,000 and jewellery in locked safe was insured to the tune of Rs. 2,00,000. According to him, the warranty contained under Section 1 has an important bearing on the decision of the case. The warranty reads as under: "Warranted that all stocked whilst at the premises specified in the schedule shall be secured in locked burglar proof safe at night and at all times out of their business hours. Classification Warranties. Class III Without warranty."

It provides that Stock specified in the Schedule is required to be secured in locked burglar proof safe at night and at all times out of their business hours. It has been pointed out that jewellery, which was kept in the safe, was not stolen but jewellery from the glass show case / display window, which as per warranty was required to be secured in the locked proof safe at night, was stolen and in view of the said warranty, Insurance Co. was not liable to make good the loss suffered on account of theft. He also urged that before us that even under Exclusion Clause 12, loss or damage to property insured whilst in window display at night or whilst kept out of safes after business hours was not covered and Insurance Company shall not be liable under the policy. On merits, it was contended by him that the Surveyor had assessed the loss at Rs. 5,22,064, which was reported to the Police and the claim of the complainant even otherwise could not exceed the said amount. He also urged that the State Commission was not justified in increasing the interest from 6% to 9%.

LEARNED Counsel for the complainant submitted before us that the claim of the petitioner/complainant is under Section 1 of the Policy and that even though, the stolen items had been kept in the show cases, yet, the shop had been converted into burglar proof shop by providing collapsible gates and rolling shutters with locking arrangement. According to him, the State Commission erred in reducing the claim allowed by the District Forum and as such, the order of the State Commission be set aside. Accordingly, revision was filed by the complainant, which is R.P. No. 324/07. In R.P. No. 324/07, an application has been filed for condoning delay, which is for a few days. For the reasons stated in the application, delay is condoned.

WE have gone through the record.

THE entire controversy centres around the warranty and the Exclusion Clause of the Policy to which, reference has already been made about. The report of the Surveyor appointed by the Insurance Company shows that the insured''s premises was located on the ground floor; the insured premises measures 11'' x 11'' and was secured with collapsible gate as well as steel rolling shutters. The collapsible gate and the rolling shutters were secured with 2 locks each. There .are wooden counters for display and sale. The display includes wall mounted display show case counters. The display counters are provided with glass shutters but the glass shutters are not provided with any locking system. The insured had installed a safe locker inside the shop premises for over night safe keeping of gold ornaments. The safe is provided with two keys for the inner portion of the safe and the inner compartments are secured with four inner locks for the four inner compartments. The table drawers are not usually locked as per the insured either during the business hours or after business hours. The insured had not appointed watchman to guard the premises during the day or night time, but, there is a watchman for the entire building. Thus, the jewellery kept in the show cases which are provided with glass shutters and in the drawers was easily accessible since no locks were provided to glass shutters or the drawers. Admittedly, the jewellery was stolen from the show cases and the drawers. The Surveyor found that the lock of the grill had been removed by using some weapon and the rolling shutters had been pulled up. The middle lock of the shutters had been broken. The Surveyor also found that the silver articles kept in locked show case were not stolen. He also found that gold ornaments kept inside the safe were not stolen and miscreants had not even tampered with the seal. The Surveyor also found that insured had not maintained day -to -day stock records of gold/silver ornaments but had compiled a record/statement only for the current year for which the claim had arisen. The authenticity of self purchases could not be confirmed which were to the tune of Rs. 2,64,957. The Surveyor concluded that in terms of Jewellery Block Policy, the gold ornaments/ silver ornaments should have been kept over night/out of business hours only in a Burglar Resistant Safe and since gold and silver ornaments kept outside the safe were reported stolen, the same was not payable in terms of Jewellery Block Policy. The Surveyor also found that as per details furnished by the insured, the value of the jewellery stolen was Rs. 6,62,040 but the complainant had reported theft of jewellery valued at Rs. 5,22,064 and as such, the loss was to be restricted to Rs. 5,22,064, but, the net loss does not fall within the scope of Jewellery Block Policy.

IT is now well settled that the terms of the Insurance Policy should be strictly construed to determine the extent of insurer''s liability. In Oriental Insurance Co. Ltd. v. Sony Cheriyan, II (1999) CPJ 13 (SC)=VI (1999) SLT 565=II (1999) ACC 196 (SC)=(1999) 6 SCC 451. It has been laid down that - "The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy. That being so, the insured has also to act strictly in accordance with the statutory limitations or terms of the policy expressly set out therein.

IN United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal, IV (2004) CPJ 15 (SC)=V (2004) SLT 876, after referring to 3 decisions of Apex Court, it has been laid down that it is settled law that the terms of contract have to strictly read and natural meaning has to be given to it. No outside aid should be sought unless the meaning is ambiguous. In this case the observations of the Constitution Bench of the Apex Court in the case of General Assurance Society Ltd. v. Chandumull Jain and Anr., (1966) 3 SCR 500, have been quoted, which read as under: "In Interpreting documents relating to a contract of insurance, the duty of the Court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however, reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone, etc. had come into being."

IN the case of United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (supra), the decision of the Apex Court in the case of Oriental Insurance Co. Ltd. v. Samayanallur Primary Agricultural Coop. Bank, IX (1999) SLT 250=AIR 2000 SC 10 has been quoted. In this case, question came up for interpretation of policy against burglary. The bank had a Burglary Insurance Policy for Rs. 25,00,000. The Apex Court referred to the relevant terms of the policy and made the following observations: "3(a) Are all valuables secured in burglary resistance safes when premises are locked Yes (b) If so, state name or maker of safe and cost Trani"

"The answer to the question 3(a) was in positive. The question arose that according to the complaint burglary took place from the cashier''s cash box. The Surveyor''s report was that the stolen jewels had not been kept in safe locker and the theft was not covered under burglary insurance policy. Though the District Forum directed the Insurance Company to pay a sum of Rs. 43,729.25, however, the State Commission observed that what is insured is not the contents of the cash box but the jewels kept in the safe which means a safety locker made by Tansi as agreed to in the proposal form. And it was observed that jewels kept in the cashier''s cash box which were not covered by the policy. The State Forum overruled the order, passed by the District Forum. The order passed by the State Commission in revision was reversed by the National Commission. The matter came before this Court in special leave petition by Insurance Company. Their Lordships observed that there was no necessity of referring to the dictionaries for understanding the meaning of the world "safe" which the parties in the instant case are proved to have understood while submitting the proposal and accepting the insurance policy. The cashier''s box could not be equated with the safe within the meaning of the insurance policy. The alleged burglary and the removal of the jewellery from cash box, the cash box was not covered by the insurance policy between the parties. The insurance policy was to be construed having reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it. And, therefore, they set aside the order of the National Commission."

IN the said case, it was held that cashier''s box could not be equated with the safe within the meaning of the insurance policy. The alleged burglary and the removal of cash box containing jewellery and the cash box was not covered by the insurance policy between the parties. It was held that the insurance policy has to be construed having reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it. This decision has an important bearing in the matter before us.

AT this stage, we would also like to refer to a judgment of this Commission to which one of us namely, Dr. P.D. Shenoy was a Member besides the then Hon''ble President of this Commission. In this case, the complainant had relied on proposal form on the basis of which, the policy was issued. In the proposal form it was specifically highlighted that "the stocks of gold items, jems, silver and other precious stones were being kept outside the safe and its valuation was Rs. 2 crores". Column No. 5(b) of the proposal form was as under: "5. Stock (a) .............. (b) Will the whole of your stock when on you premises be keptin safe at night and at all times when the ... if not, state value and class of stock which will be left outside safes (ii) All stocks of Gold, Diamond Gems, Silver and other Precious Stones - kept Outside the safe Rs. 2,00,00,000 (Two crores). Note: We do not cover stocks kept out of the safe after business hours at night".

THE question for consideration which arose before this Commission in the said case was whether the proposal form binds the Insurance Company or not. One of the conditions in the proposal form was as under: "Signing this form does not bind the proposer to complete the insurance, but is agreed that this form shall be the basis of contract should policy be issued."

IT was held that in the proposal form, it was specifically mentioned that the insured property would be kept outside the safe, but within the premises and knowing fully well, the proposal was accepted by the Insurance Company. It was further held that the insurance cover was asked on the basis of proposal form and that proposal form was accepted by the insurer and that is binding on the insurer. It was further observed that binding contract, as agreed between the parties comes into existence on the basis of proposal form. In the proposal form, it was stated that inside the shop, grill was fixed and doors properly locked and secured, it would be burglar proof shop, it was also held that the insistence by the Insurance Company that the goods should be kept in a burglar proof safe is apparently a vague condition and it is difficult to find out any safe, which could be said to be burglar proof. This decision was rendered by this Commission mainly on the basis of the proposal form and facts disclosed therein on the strength of which the policy was issued.

IN the case before us, none of the parties had relied upon the proposal form, nor was the same placed before the Fora at any stage. It is no doubt true that burglar proof safe is the misnomer, but expression safe in common parlance is understood as the safest receptacle which protects against theft.

IN Black''s Law Dictionary Safe'' is defined as - A metal receptacle for the preservation of valuables. Untouched by danger; not exposed to danger; secure from danger, harm or loss. In Concise Oxford Dictionary Safe'' is defined as - "Protected from or not exposed to danger or risk; not likely to be harmed or lost -not causing or leading to harm or injury -(or a place) affording security or protection."

IN other words, safe is still considered to be a safest place to secure goods against the theft or burglary. The warranty in Insurance Company was to the effect that stocks in the premises specified in the Schedule shall be secured in locked burglar proof safe at night and at all times out of their business hours, which means that all goods at night and out of business hours were to be kept in the safe. The complainant had taken the plea that entire shop is burglar proof and in support of the same, it has been contended that locks had been provided to iron grills and the rolling shutters. If that is so, the complainant should have insisted for terms in the policy to that effect. Besides this, it is but natural that in a jewellery shop, safe will not be kept in the insecure premises without adequate and proper protection by fixing iron grills and shutters. The provision of iron grills and shutters would not dispense with the keeping of jewellery in safe, as required in terms of policy conditions. Admittedly, all the jewellery, which was stolen was lying in the premises in display show case counters with glass shutters and table drawers which were not locked. Jewellery from one of the display shop counters with glass shutters, which was locked was not stolen. From the safe, inside the shop, no gold ornaments or jewellery was stolen and the thieves did not even tamper with the safe, which also goes to show that the safe is still the safest mode of keeping jewellery. Not only that the Insurance Company would not be liable in this case in view of the warranty referred to above, but in addition even the Exclusion Clause 12 negates the liability of the Insurance Company of any loss or damage to property insured whilst in window display at night or whilst kept out of the safe after business hours. The finding of State Commission that exclusion clause has no application, is erroneous.

IN view of the above, we are of the opinion that the Insurance Company is not liable in this case to pay any amount to the complainant under the Insurance Policy, in question. Accordingly, the orders of the Foras below are hereby set aside and the complaint is dismissed. Accordingly, Revision Petition No. 569/07 filed by Insurance Company is allowed and Revision Petition No. 324/07 filed by complainant is dismissed. Parties shall bear their own costs throughout. Ordered accordingly.