BANARSI LAL AGGARWAL RICE And GENERAL MILLS vs United India Insurance Co. Ltd.

WHETHER the holder of a policy against burglary and house breaking is still required to watch and ward the insured property? This has come to be the crucial question in this complaint. The facts and merits may consequently be noticed with brevity and with relevance to this issue.

THE complainant had purchased a 75 KVA Kirloskar Generator set and thereafter had it insured for a sum of Rs. 1,50,000/- vide Annexures C.1 and C.2 to the complaint for a period of one year with effect from the 31st of August, 1989, against burglary with the United India Insurance Company Ltd. (hereinafter referred to as the Insurance Company). THE Rice and General Mills of the complainant remained closed for the off season and was properly locked therefor and the partners of the complainant concern visited the same frequently. However, when in the end of November Shri Vishnu Bhagwan, one of the partners visited the Mills, he found the insured generator set missing there from and having failed to locate the same, immediately lodged a First Information Report on the 1st of December, 1989. THEreafter, a claim was lodged with the Insurance Company and later the Police gave a non-traceable certificate with regard to the stolen property. After protracted correspondence with the Insurance Company, the latter chose to reject the insurance claim on the ground that the insured property was left un-attended for a long time and adequate safety measures to safeguard the same had not been taken and consequently they were beyond the insurance cover, vide letter dated February 21, 1992 (Annexure P.1). THE complainant''s plea was that they had always kept the premises of the Mills and the doors and windows locked and taken all due precautions and it was not expected that they should either employ a Chaukidar for twenty-four hours on the Generator set or otherwise perpetually guard it after the taking out of the policy. THE relief claimed was the insured sum of Rs. 1,50,000/- with interest @ 24% thereon plus damages or compensation to the tune of Rs. One Lac. The Insurance Company in its reply took up two preliminary objections to which reference is unnecessary because they were not pressed. On merits, the valuation of the Generator set at Rs. 1,50,000/- was sought to be disputed whilst admitting the factum of the issuance of the insurance policy. It was alleged that the First Information Report was lodged somewhat belatedly and it was pleaded that no effective steps for the protection of the Generator Set had been taken, nor had the partners of the firm visited the place of occurrence frequently. Somewhat curiously, it was alleged that reasonable steps to safeguard the property had not been taken though it was admitted that the Generator set was fastened to the earth and the burglars demolished the wall of the room and the shaft of the Generator was cut with a cutting tool and thereafter the set was removed with the help of many persons and apparently some transport was used. The plea was that because the mill premises were not guarded during the day or night, such a thing happened due to the negligence of the insured himself and the conditions of the policy were therefore, violated. In the para wise reply, the whole refrain of the defence was that the insured Generator Set was left unattended by a human guard, the said property became accessible for the type of mishap which happened and, therefore, the insurers were absolved all liability. The dismissal of the complaint was consequently sought.

In support of their case the complainants put in two affidavits of Shri Vishnu Bhagwan, a partner of the concern who buttressed the averments in the complaint. He was cross-examined at some length on behalf of the Insurance Company but far from making any dent in the testimony the same appears to have boom-ranged on the opposite party. Reliance was also placed on the documents adduced on record, the authenticity of which was not challenged.

IN rebuttal, the INsurance Company adduced the affidavit of Shri V.K. Malik, their Assistant and Administrative Officer and placed on record the copy of the insurance policy and Ext. R.2 the report of Col. Surinder Raj Singh of the Raj Services INvestigators deputed by the INsurance Company. Shri V.K. Malik was cross-examined on behalf of the complainant but as already noticed, the primal reliance is on the documentary evidence. Mr. D.R. Bansal, the learned Counsel for the complainant has forcefully assailed what he rightly termed as the wholly arbitrary repudiation of the claim of the complainant. It was pointed out that the Generator had been installed at a Rice Mill which was closed due to the same being the off season therefor. Counsel highlighted that the premises of the said Mill were fully secured and it is not in dispute that the gates, doors and windows thereof were duly locked and the same were frequented both by the partners of the concern and the other employees of the Mill. Equally, the case was that the thieves had broken the wall of the premises and dislodged the Generator from where it was embedded in the earth with cutting tools and thereafter had transported it away. The complainants had lost no time in reporting the matter to the police immediately on the discovery of the burglary and made all attempts to recover the property. The core of the submission was that the claim could not be denied on the spacious ground that either the complainants themselves or a Chaukidar on their behalf had not kept continuous guard over the insured property both at day and night.

THERE is patent and substantial merit in the submission aforesaid. The factual background may first be cleared before adverting to the legal aspect. It is not in dispute that the insured Generator Set lay embedded in the ground and installed in a Rice Mill. That such Rice Mills have an off season during which they have to be inevitably locked up, was not a matter of serious challenge. It is even apparent from the report of the Investigator appointed by the Insurance Company itself that there was no default in fastening the doors and windows of the premises of the said mill during the off season. That the burglary was committed forcibly is evident from the fact that the Surveyor noticed that the latch and the lock had been broken open and a part of the wall of the room had been demolished. The shaft of the Generator set was cut with a cutting tool and the set was removed from its foundation on the ground on which it had been fastened and transported away at night. This being so, the said Investigator in fact concluded his report as under:- ''The Generator Set 75 KVA Kirloskar was burgled. Loss was discovered on 1.12.1989: Claim is payable after the purchase price and insured price are reconciled and loss assessed by a competent surveyor." From the aforesaid resume it would be evident that the insurer had taken all reasonable steps in the matter and the sole alleged default laid at their door is that they had not employed a fulltime Chaukidar for the Generator set or the premises where it was located or to kept guard thereon themselves. Inevitably, one has turn to the admitted terms and conditions. It is common ground that the risk insured was against the property or any part thereof being lost or damaged by burglary or house breaking. It is not in dispute that herein the incident comes squarely within the terms of ''burglary or house breaking''. The risk is hedged by certain exceptions spelt out in Clause (ii) to (vi) of para 1 of Ext. R.1. It is again common ground that the present case does not in any way come within the said exceptions. The sole plea set up is on the basis of conditions Nos. 3, 5 and 11 of the policy and these may be noticed in extenso :- "3. Reasonable Care :The insured shall take reasonable steps to safeguard the property insured against any loss or damage and to secure all doors, windows and other openings. 5. Claim Procedure: The insured shall upon the occurrence of any event giving rise or likely to give rise to a claim under this Policy: (a) lodge forthwith a complaint with the Police and take all practicable steps to apprehend the guilty person or persons and to recover the property lost. (b) give immediate notice thereof to the Company and shall within Fourteen (14) days thereafter furnish to the company at his own expense detailed particulars of the amount of the loss or damage together with such explanation and evidence to substantiate the claim as the Company may reasonably require. 11. Observation of Terms and Conditions :- The due observance and fulfilment of the terms, conditions and endorsement of this Policy in so far as they relate to anything to be done or complied with by the insured shall be a condition precedent to any liability of the Company to make any payment under this policy."

NOW it is common ground that herein conditions Nos. 5 and 11 stood plainly satisfied on un controverted facts. The sole plea of the Insurance Company is that there was violation of condition No. 3. Analysing the same, it is common ground again that the specific part of the said condition was satisfied in so far that the doors, windows and other opening of the Mill premises where the Generator set was embedded had been duly secured. The company''s own Investigator had found that the criminals had to break open the lock and even a portion of the wall, apart from using the cutting tools to sever the Generator set from its foundation for being extracted away. In this context, the alone and specious thing that was urged on behalf of the Insurance Company was that under Condition No. 3, it was incumbent on the insurer to employ a Chaukidar for day and night at the premises or in his absence, to guard the same themselves with similar vigilance.

IT is somewhat plain that the stand taken on behalf of the opposite party is plainly untenable and specious. The tenor of condition No. 3 would show that the reasonable steps to safeguard the property is to keep it secure by locking the doors and windows and other openings. The said condition does not in any way talk of the employment of a permanent guard over the property day and night. The complainants are not therefore wrong in the simplistic plea taken on their behalf that if they had to themselves watch and ward the insured property for day and night, the very purpose of its insurance would become pointless. Even a broad construction of condition No. 3 cannot read it to imply even remotely that the property of the nature of a heavy Generator set embeded in the ground must be guarded by a sentry without a break. Such a construction of condition No. 3 is wholly unwarranted and the stand taken on behalf of the Insurance Company is specious and cantankerous. In the light of the above, it has to be held that the holder of a policy of the present nature against burglary and house breaking is not enjoined to mount a permanent guard over the insured property.

Once it is concluded as above, it inevitably follows that the rejection of the complainant''s claim was totally specious and arbitrary disclosing a glaring deficiency in the insurance services which they had undertaken to render and for which they received a substantial premium.

BEFORE parting with the case, it may also be noticed that a somewhat halting plea was also taken that the complainants have over-insured the valuation of the property. This has only to be noticed and rejected. There is firm evidence on the record that apart from the original purchase the complainants had expended substantial expenses on the insured machine. This could not be seriously challenged. The Insurance Company had accepted the risk at the valuation given by the complainants and charged a premium according to the same. No conclusive evidence was brought on behalf of the opposite party to establish the over-insurance in the present case. The burden to do so obviously lay upon them after the complainants had fully established their stand and they however, miserably failed to discharge the same. In this factual situation, they cannot now attempt to wriggle out of the valuation of the risk which they had themselves accepted and the prorata premium which have charged therefor. For the foregoing reasons, this complaint has to be allowed an the specious and arbitrary repudiation of the claim''s set-aside. The opposite party shall pay the insured amount of Rs. 1,50,000/- with interest of 18% thereon with effect from the 1st of April, 1990 on which date the said claim would reasonably have been finalised. The complainants are also entitled to their costs which are assessed at a sum of Rs. 1,000/- only. The said amounts shall be paid within a period of one month from today failing which compliance would have to be enforced under Section 27 of the Act. Complaint allowed with costs.