IND SWIFT LIMITED vs New India Assurance Co. Ltd

THIS First Appeal has been filed by IND Swift Ltd. (hereinafter referred to as the ''Appellant '') being aggrieved by the order of the State Consumer Disputes Redressal Commission, Chandigarh (hereinafter referred to as the ''State Commission '') in complaint No.11/2005 decided in favour of New India Assurance Co.Ltd. and others(Respondents herein).

THE facts of the case according to the Appellant are that as a limited company it is engaged in the manufacture of pharmaceuticals and for this purpose it had stored raw materials in the shape of medicines, vials, ointments, capsules, syrups, injections and other packing materials in its godown which was earlier situated at the Chandigarh-Ambala Road, Zirakpur, Distt. Patiala and subsequently shifted to Plot No.787, Industrial Area, Phase-II, Ram Darbar, Chandigarh and an intimation about the same was given to the concerned authorities including the Respondent/Insurance Company from whom Appellant had taken insurance policy for Rs.1 Crore from 25.03.2003 to 24.03.2004. During the validity of the policy, on the intervening night of 25-26.02.2004, a theft took place in the godown of the Appellant in Plot No.787, Industrial Area, Phase-II, Ram Darbar, Chandigarh and goods worth Rs.41,02,145.83p were stolen from the said godown. THE theft was reported to the Police who registered an FIR and the Respondent/Insurance Company was also informed on the same day. A Surveyor was appointed to whom all the necessary documents and details were supplied including the untraced report from the Police. However, despite reminders no communication was received from the Respondent/Insurance Company in respect of the settlement of the claim till 14.10.2004 when Respondent/Insurance Company informed the Appellant that the claim could not be indemnified since the raw materials stolen from the business premises of the Appellant were not covered under the insurance policy. Being aggrieved, Appellant filed a complaint before the State Commission on grounds of deficiency in service and requested that the Respondents be directed to pay a sum of Rs.41,02,145.83p towards the insurance claim with interest @ 18% per annum from 26.02.2004 till the payment, Rs.5 lakhs towards mental agony and harassment and Rs.33,000/- as litigation costs. The above contentions were denied by the Respondents on the ground that the items stolen were raw materials which were not covered under the insurance policy as the coverage was restricted to finished and packing materials. Since only raw material worth Rs.39,28,628/- was stolen as per Surveyor ''s Report which was not covered in the insurance policy, the claim was rightly repudiated.

The State Commission after hearing both parties and considering the evidence filed before it, dismissed the complaint on two grounds i.e. for want of jurisdiction as also on merits. State Commission cited the judgment of the National Commission in M/s Harsolia Motors Vs. National Insurance Co. Ltd. and M/s Diwakar Goiram Porkhayat Vs. M/s National Insurance Co. Ltd. 2005(1) CPC 53, that if the goods are purchased for resale or for commercial purposes as in the instant case where raw materials were purchased for manufacturing pharmaceuticals for resale or profit and not for its own consumption, then such consumers would not be covered under the definition of a consumer as per Section 2(1)(d) of the Consumer Protection Act, 1986. Further, on merits as well, the State Commission concluded that from the details of the stolen goods as communicated by the Appellant itself, it is clear that these were not finished goods but raw materials i.e. salts which cannot be termed as medicines, capsules, vials etc. as per the details mentioned in the insurance policy and therefore, the Respondent was justified in repudiating the claim. The operative part of the order of the State Commission in this connection reads as follows: "Be that as it may, we cannot go beyond the policy and give a different interpretation or meaning to the word all kinds of medicines such as tablets, vials, capsules, syringes, injections, syrups, packing material as raw material and not finished goods. It was bounden duty of the complainant to be vigilant and to see whether the insurance policy covered the items stored at the godown. The cover note of insurance policy bearing No.00081 which is not in dispute in the present case also shows all types of stock containing all types of raw material, semi-finished goods or finished goods i.e. different types of medicines/empty gelatin capsules etc. but the insurance policy was issued with respect to finished goods only and for this reason the complainant had written letter Annexure R-5 to get the policy amended as per the cover note and also to get included the raw material. However, no such letter was written in the present case. "

Hence, the present First Appeal. Counsel for both parties made detailed oral submissions. Counsel for Appellant vehemently argued that the State Commission erred by misinterpreting the provisions of the insurance policy as also in concluding that the stolen goods were not medicines but raw materials. It was contended that the insurance policy, specifically states that the goods insured included stocks of all kinds of medicines and reads as follows: "On stocks of all kinds of medicines/such as tablets/vials/ointments/capsules, syrups/ injections/capsules/ packing material/other goods of like nature belonging to the insured and under lien to above said bank whilst lying/kept/stored/arranged at above address. The said building is built of 1st class construction and used as godown. "

ACCORDING to Counsel for Appellant the stroke (/) after each item is to be construed as "or " and not read in continuation since admittedly all kinds of medicines were stolen and not only finished products, both the Respondent/Insurance Company and the State Commission erred in rejecting the Appellant ''s claim/contentions. As as per the records which were also supplied to the Surveyor, the medicines stolen were namely; Iron Polymaltose Complex, Hydroxy Progesteron Caporate, Phenyl Epherine HCL, Betamethasone Sodium Phosphate, Isoxsuprine HCL, Miconazole Nitrate and Bromhezxine HCL. All these are admittedly drugs and not salts which fall within the meaning of ''medicine '' as defined in the Pocket Oxford Dictionary edited by Frank R.Abate (2001 Edition). A similar provision is there in the Drugs and Cosmetics Act, 1940. Since, admittedly the above medicines were stolen as also confirmed by the Surveyor in his reports, it is clear that the claim was wrongly repudiated. Counsel for Respondent on the other hand stated that an insurance claim has to be considered strictly in terms of the insurance policy issued and in the instant case, a reading of the relevant provisions clearly establishes that the goods insured were stock of all kinds of medicines such as tablets, vials, ointments, syrups etc. The stroke (/) mentioned in the insurance policy has to be read as a continuum and the word "or " has never been used. In this context the use of the words "such as " before the specified items clears any ambiguity in the reading of these provisions in the policy document and therefore, by using the words "such as " it is clear that only tablets, vials, syrups etc. are covered. Further, The Appellant itself had described the stolen goods as raw materials vide its letter dated 23.04.2004. A plea, therefore, cannot now be taken that these were standalone medicines and not unfinished goods. The stolen materials were kept in huge drums and not packaged as finished goods. It was further contended that the Appellant was fully aware that the raw materials stocked in the godown was not covered under the insurance policy which led it to write a letter dated 11.10.2004 seeking insurance coverage for raw materials. We have considered the submissions made by Counsel for both parties and have carefully gone through the evidence on record. The fact that a theft occurred in the business premises of the Appellant in which goods were stolen from the godown at Plot No.787, Industrial Area, Phase-II, Ram Darbar, Chandigarh is not in dispute. It is also an admitted fact that the Appellant had taken an insurance policy in respect of these premises in which the description of goods insured were as follows: "On stocks of all kinds of medicines/such as tablets/vials/ointments/capsules, syrups/ injections/capsules/ packing material/other goods of like nature belonging to the insured and under lien to above said bank whilst lying/kept/stored/arranged at above address. The said building is built of 1st class construction and used as godown. It is also not disputed that as per the report of the Surveyor the following goods were stolen : Iron Polymaltose Complex, Hydroxy Progesteron Caporate, Phenyl Epherine HCL, Betamethasone Sodium Phosphate, Isoxsuprine HCL, Miconazole Nitrate and Bromhezxine HCL. Counsel for Appellant has forcefully argued that these were medicines and therefore, the claim was wrongly repudiated. We have carefully considered this issue and note that as per the wordings of the insurance policy document only those medicines which were tablets, vials, ointments, syrups, injections and packing materials were insured. Appellant ''s interpretation that the stroke (/) marked after each word should be construed as "or " and not read in continuation is not acceptable since the word "such as " has been used to make the intention of the insurance policy clear that only tablets, vials etc. were insured. It is well established through a catena of judgments including that of the Apex Court in United India Insurance Co.Ltd. Vs. Harchand Rai Chandan Lal 1(2003) CPJ 393 and Vikram Greentech(I) Ltd. and Anr. Vs. New India Assurance Co. Ltd. II(2009) CPJ 34 (SC), that an insurance policy is to be construed strictly as per the terms and conditions of the policy document which is a binding contract between the parties and nothing can be added or subtracted by giving a different meaning to the words mentioned therein. In the instant case, there is adequate evidence on record including the Appellant ''s own declaration vide its letter dated 23.04.2004 (page 46 of the paper-book) that the goods stolen were raw materials which was stocked in its godown as also in its register of closing stock of raw materials submitted to the Punjab National Bank as on 30.04.2004, and they were not covered in the insurance policy taken by the Appellant.

KEEPING in view these facts, we see no reason to disagree with the order of the State Commission and uphold the same. This First Appeal having no merits is dismissed. No costs.