KESARIA CORPORATION vs Oriental Insurance Co. Ltd.

THE complainant has claimed the amount of Rs. 89,156/- for the theft of 1357 pieces of rough diamonds of 49 carat and 362 rough diamonds of 22.51 carats valued at Rs. 90,000/-stolen from the custody of Babubhai Karsanji Patel of Bulsar to whom the rough diamonds were given for cutting and polishing. THE opponent Insurance Company issued a Jewellers Block Insurance Policy covering the property of the complainant for the risk upto Rs. 8,00,000/-. Under Section 2 of the policy the loss or damage to the property insured was covered even though it was in possession of the cutters of the diamond or such persons to the extent of Rs. 8,00,000/-. THE complainant gave the said rough diamonds on October 1,1990 to Babubhai Karsanji Patel, resident of Bulsar for cutting and the receipt for that was issued by Bahubhai. On 2.10.90 being Tuesday and the diamond cutting and polishing factory was closed Babubhai had gone to the factory for attending the account work and at that time one person demanded change for Rs. 500 / and Babubhai gave and subsequently after finishing the work he closed the factory. Babubhai had kept the rough diamonds in packets given by the complainant to him for processing and when he went to the factory on 3.10.90 he found that the said rough diamonds were stolen. He then enquired about it and then gone to the complainant and informed him and the complainant advised him to file the complaint and, therefore, Babubhai went to Bulsar and the complaint was lodged on 6.10.90. THE opponent Insurance Company was informed and after some correspondence the Insurance Company settled the claim vide their letter dated 27.12.91 for Rs. 66,414/- for 75% of the amount Rs. 89,158/-treatingthe claim as non-standard basis as according to the Insurance Company the condition No. 13-A of the policy stipulating that the police should be informed within 24 hours was violated. THE voucher for the amount of Rs. 66,414/- was sent to the complainant for full and final settlement of the claim but the complainant struck off the endorsement ''full and final settlement'' and signed the voucher under protest. THE Insurance Company therefore, did not pay the amount due. THE complainant also claimed Rs. 16,000/- for interest, Rs. 5,000/- compensation for damage, loss, injury, etc. and Rs. 5,000/- for the cost of the complaint.

THE opponent admitted the Insurance Policy and contended that the Commission has no jurisdiction as the complainant is not the consumer and the claim was settled at 75%. It was also contended that the complainant committed breach of the terms of the policy by not informing the police within 24 hours etc. and, therefore, the Insurance Company considered the claim as non-standard claim and settled for 75% of the claim and sent the voucher for the amount of Rs. 66,414/-. Both Shri H.J. Thakkar, the learned Advocate for the complainant and Shri H.J. Bhatt the learned Advocate for the opponent referred the relevant provisions of the policy and tried to support their case. Shri Thakkar submitted that no such breach was committed while in the submission of Mr. Bhatt breach of the terms of the policy is committed and, therefore, the Insurance Company has rightly treated the insurance as non-standard claim and settled the claim. The fact that the claim is settled by the opponent for Rs. 66,414/ is admitted and, therefore, the only point requiring consideration is as to whether the Opponent is liable for the entire loss or is entitled to settle the claim amount at 75% of the, value.

The Insurance Company has undertaken to indemnify the insured against the loss or damage to any of the properties or part thereof, occurring during the period of insurance. The learned Advocate for the opponent referring to clause 8(c) of the proviso submitted that the loss or damage occasioned by theft or dishonesty is not covered. With due respect the submission of Mr. Bhatt cannot be accepted as the said clause provides for the loss or damage occasioned by theft or dishonesty or any attempt threat committed by or where such loss or damage has been expedited or in any way sustained or brought about by any customer or broker or broker''s customer angadias or cutters or goldsmith in respect of property hereby insured entrusted to them by the insured, his or their servants or agents. That clause is applicable only in the case if theft is committed by such persons but not by an outsider from the custody of crush person.

MR. Bhatt the learned Advocate for the opponent submitted that it was obligatory on the complainant to inform the police and the Insurance Company within 24 hours which the complainant failed and, therefore, the breach of the conditions of the policy is committed. Clause 13 provides that upon the happening of any event giving rise to or likely to give rise to a claim under this policy coming to the knowledge of the insured, the insured shall give notice to the police and the company within 24 hours and take all practicable steps to discover the guilty person or persons.... etc. The submission of MR. Bhatt is that the complaint was not filed within 24 hours from the date of receiving information. Babubhai came to know about the theft on 3.10.90. He then went to inform the complainant on 4.10.90. Babubhai was searching for the stolen packets. The complainant therefore came to know on 4.10.90 and then the complainant advised Babubhai to lodge the complaint. Babubhai then filed the complaint on 6.10.90. The complainant therefore, took immediate action by instructing Babubhai to lodge the complaint and the complaint was then lodged on 6.10.90. Of course, it was not within 24 hours after the fact of theft came to the notice of the complainant but that by itself would not disentitle the complainant not to get the benefit of the insurance coverage as admittedly the Insurance Company has decided to compensate the complainant. The only contention of the opponent is that the claim should be settled at 75% i.e. for the amount Rs. 66,414/-. In view of the decision of the opponent the submission of MR. Bhatt has no relevance and in fact should not have advanced such contention. It appears that as a matter of policy the Insurance Company has decided not to raise such contentions and has issued guidelines for the settlement of non-standard claims. The guidelines for the settlement of non-standard claims provide that "where a breach of warranty or policy condition arises and where such breach is of a technical nature or is evidently beyond the control or knowledge of the Insured or is not material to the cause of occurrence of the loss settlement is considered after rectifying the policy and collecting additional premium where due. In settling the claim, a deduction may be made from the assessed claim amount equivalent to the extra premium due for three years". The guidelines also provide that "where the breach is material to the loss or where an act of the Insured or his agent has contributed to such a breach in such cases if the Insured has acted with the best of intentions and has not consciously committed the breach or where the legal question of liability is in doubt, payment: may be considered on merits of each case, upto a maximum of 75% of the assessed amount of loss". In the instant case the breach is only technical and is not material and, therefore, would fall within the provisions of Clause 1 of the guidelines, a copy of which is produced on the record. The claim therefore should have been settled under Clause 1 and not under Clause 2. However, it is not established by the complainant that the value of the property exceeded Rs. 66,414/-. The complainant is entitled to claim the actual loss under the policy and for that purpose the complainant should have established the value of the stolen property. Merely because the value is stated in the "jhangad note'' thereby itself is not sufficient to hold that the actual value of the property was the same as stated in the "Jhangad value''. On the contrary it is clear from the complaint that the value of the property was less as stated by the complainant in his complaint. We, therefore, hold that the claimant is not entitled to the amount more than Rs. 66,414/- for which the opponent has settled the claim. That amount therefore should be awarded to the complainant. The complainant has claimed interest of Rs. 16,000/- @ 18% from 1.2.91, The theft took place on 3.10.90 and after that the Insurance Company was informed. It took sometime for the Insurance Company to settle the claim and ultimately the Insurance Company decided to settle it at 75 % and informed the complainant by letter dated 27.12.1991. The Voucher for said amount was sent alongwith the letter. The opponent took undue time to settle the claim even at 75% of the amount claimed. Normally they should not have taken more than three months and, therefore, the claim should have been settled atleast by March 1991. The interest for the period of 9 months therefore should be awarded to the complainant. The interest @ 12% should be awarded even though the complainant has claimed'' @18%. Calculating the interest upto 27.12.91 for the period of 9 months it comes to Rs. 5,976/-. That amount should be awarded to the complainant. The complainant has also claimed compensation of Rs. 5,000/- but that amount should not be awarded to him but the cost of the complaint Rs. 1000/- should be awarded to the complainant. We, therefore, pass the following order. ORDER The opponent shall pay Rs. 72,390/- to the complainant which includes Rs. 66,414/- for the insured value of the stolen goods and Rs. 5,976/- interest, within one month from the date of receipt of the order and shall pay the cost of Rs. 1000/- of this complaint and bear its own cost. Complaint allowed. _______________