M/s Baijnath Ramkishore Jewellers vs Oriental Insurance Co. Ltd

Heard Mr. Ramesh Singh, Senior Advocate, assisted by Ms. Shreya Jain, Advocate, for the complainant and Mr. Vishnu Mehra, Advocate, for the opposite party.

M/s. Baijnath Ramkishore Jewellers (the Insured) has filed above complaint for directing M/s. Oriental Insurance Company Limited (the Insurer) to pay (i) Rs.24933505/- with interest @ 18% per annum, from 20.04.2010 till its payment i.e. the insurance claim, (ii) Rs.25000000/- to recompense for consistent rise of prices of gold and diamond, from the date of loss and onward, (iii) Rs.500000/- as compensation for mental agony and harassment, (iv) Rs.100000/- as cost of the litigation and (v) any other relief, which is deemed fit and proper, in the facts and circumstances of the case.

The facts, as stated in the complaint and emerged from the documents attached with the complaint, are as follows:-

(a) The Insured was a proprietorship firm and started its business of sale/purchase/repair of jewellery, bullion and precious stones since 13.10.2008, at the given address, which was a three storied building, in which, ground floor and first floor were shop/show room and second floor was used for office, pantry, workshop etc. Entrance/exit was only in front side of showroom, where rolling shutter and glass door were installed. There was another door at the terrace leading to staircase, where iron door was installed. The Insured had two safes/strong rooms i.e. one at ground floor near the reception under staircase and other at the second floor. Strong rooms were built with thick RCC walls from three sides and covered by thick iron/metallic door with heavy locks, which were not breakable manually.

(b) M/s. Oriental Insurance Company Limited (the Insurer) is a public sector company and provides various types of insurance services. The Insured obtained “Jeweller Blocks Insurance Policy” of his shop for the period of 15.10.2008 to 14.10.2009, from the Insurer. At the time of renewal of the policy also, a Proposal Form was got dully filled up. Based on the Proposal Form, the Insurer assessed the premium of Rs.61798/-, which was paid by the Insured and “Jeweller Blocks Insurance Policy No.222100/48/2010/627” was issued on 15.10.2009, for the period of 15.10.2009 to 14.10.2010, in which, the property kept in Display Window of Rs.60/- lacs, property kept in Locked Safe of Rs.275/- lacs and Cash & Currency notes of Rs.5/- lacs (Total Rs.340/- lacs) were insured.

(c) Dilip Kumar Agarwal closed the jewellery shop on 19.04.2010 at 21:15 hours, after keeping the stock and cash, in safe strong rooms and locking its doors. Sanjay Sarkar, Manager, Sunil Gupta, Accountant and Mewa Lal, Peon remained there, for finishing their paper work up to 22:00 hour. Thereafter, the shops were locked and keys were handed over to Dilip Kumar Agarwal, in night at his residence. Mewa Lal, Peon opened the shop on 20.04.2010 at 10:00 hours, in presence of security guard. They found that the empty jewellery boxes at ground floor were scattered and door of strong room at ground floor was broken open using gas cutter. Mewa Lal immediately informed Dilip Kumar Agarwal about the incident, who immediately checked other strong room at second floor, which was found intact. On inspection, he found that the intruders made a hole in the wall by the side of door at the terrace and broke open the lock of terrace gate, which was inside the room. The Insured informed the local police on 20.04.2010 at 10:30 hours, about the incident, where FIR of Case Crime No.69/2010 under Section 457/380 IPC was lodged.

(d) The Insured informed the incident to the Insurer, on 20.04.2010, on which, the Insurer appointed Surveyors Atul Kumar & Company, New Delhi, for survey and assessment of the loss, who inspected the shop on 21.04.2010 and found that lock of strong room’s door and area around it was broken by gas cutter. He prepared inventory and took photographs. He took statements in writing of the Proprietor and other staff. He collected stock statements and other papers relating to the business. The Insured submitted Claim Form. The surveyor, vide letter dated 10.05.2010, demanded various papers for assessment of loss. After collecting all those papers, it were handed over to the surveyor with letter dated 13.08.2010 and a revised Claim Form, claiming Rs.24933505/- on 14.08.2010. The surveyor demanded some more papers, during discussion on 14.08.2010, which were handed over on 19.08.2010, along with letter dated 18.08.2010 and some papers were given on 25.08.2010. The Insured, vide letter dated 30.08.2010 and 03.01.2011, requested for on account payment. The Insured wrote a letters dated 09.09.2010 and 17.09.2010 and email dated 17.12.2010 and 201.12.2010 to the surveyor for expediting his report.

(e) The surveyor submitted his Final Survey Report dated 18.01.2011, in which, he worked out adjusted loss to Rs.12543125/-, in which, applying under-insurance clause, 25% of the loss has been reduced. The Insured, vide letter dated 04.02.2011, demanded copy of Final Survey Report. On examining the survey report, the Insured wrote letters dated 10.02.2011 and 28.02.2011 to the surveyor, pointing out the discrepancies in his report and requested to revise it. The Insured also sought query from M/s. Godrej & Boyce Manufacturing Co. Ltd., Lucknow, in respect of “fire and burglar proof resistant safe”, who vide letter dated 18.03.2011, informed that “fire and burglar proof resistant safe resists for certain period”. The Insured supplied this letter dated 18.03.2011 to the surveyor and Divisional Office of the Insurer. The surveyor vide addendum report dated 30.03.2011, revised Adjusted loss to Rs.13339189/-.

(f) Divisional Office recommended for payment of Rs.12543125/- vide Note dated 28.01.2011 and forwarded to Regional Office, which was later on revised for Rs.13339189/- on 25.04.2011. Divisional Office also wrote letters dated 19.07.2011, 21.09.2011 and 04.10.2011 for settlement of the claim. However, by subsequent letters dated 02.01.2012 and 18.01.2012, the claim was repudiated on the ground that warrantee clause of the policy required that stock above Rs.25/- lacs would be kept in burglar proof safe while strong room of the Insured was not a burglar proof safe and there was violation of the term of the policy. The Insured wrote a letter dated 14.02.2012, for reconsidering the matter but nothing was done. Then the Insured filed above complaint 12.04.2012 alleging that the claim has been illegally repudiated and there was deficiency in service.

The Insurer filed its written reply on 28.01.2013 and contested the matter. The material facts, as stated in the complaint, have not been denied. It has been stated that as soon as the Insurer received information of the burglary, they appointed Surveyors Atul Kumar & Company, New Delhi, for survey and assessment of the loss, who inspected the spot on 21.04.2010. The Insured took time in supply of the papers for assessment of loss, which were supplied time to time up to 30.08.2010. The surveyor, after verification of records, submitted Final Survey Report dated 18.01.2011, in which, he had has noted warrantee clause of the policy as “provided stock above Rs.25/- lacs would be kept in standard safe and in burglar proof safe after business hours”. He found that the metal door of strong room had no marking, regarding its make and extremely covered with a laminate from the outside and the locks were of Myto make. The surveyor submitted his addendum report dated 30.03.2011. The Insurer after considering Final Survey Report dated 18.01.2011, addendum report dated 30.03.2011, warrantee clauses of the policy and letter of M/s. Godrej & Boyce Manufacturing Co. Ltd., Lucknow, dated 18.03.2011 came to the conclusion that there was violation of warrantee clause of the policy, inasmuch as the strong room of the Insured was not a standard and burglar proof safe as such the claim was repudiated vide letter dated 02.01.2012 and detail reasons for repudiation have been recorded in the letter dated 18.01.2012. There is no deficiency in service on the part of the Insurer and the complaint is liable to be dismissed.

The Insured filed his Rejoinder Reply on 19.11.2013, in which, the material facts as stated in the complaint were reiterated. The Insured filed Affidavit of Evidence of Dilip Kumar Agarwal. The Insurer filed Affidavit of Evidence of S.R. Tripathi, Divisional Manager and Affidavit of Evidence of Atul Kumar, the surveyor. Both the parties filed their documentary evidence and short synopsis.

We have considered the arguments of the counsel for the parties and examined the record. The Insurer in the impugned letters of repudiation, did not doubt the genuineness of the claim and that burglary had taken place by cutting lock of strong room’s door and area around it using gas cutter. The claim was repudiated on the ground that there was a violation of warrantee clause.

Clause-3 (a) of the Proposal Form provides as “Give the safe maker’s name, cost, when purchased (state whether new or second-hand and whether marked ‘thief resisting’ or ‘burglar proof’. The Insured filled up this clause as “Old strong safe built by thick RCC walls from three sides and covered by thick iron/metallic door with heavy locks, which were not breakable manually”. Insurance Policy, Section-1 reads as “3. Property insured in locked safe of the premises- Rs.27500000/-. Section-IV contained warrantee clause as:-

The Insurance under the policy is subject to warrantees and clauses (as per forms attached).

(i) Warranted that stocks shall be kept in standard safe after business hours (for stock value up to Rs.25/- lakhs).

(ii) Warranted that stocks shall be kept in burglar proof safe after business hours (for stocks above Rs.25/- lakhs).

Constitution Bench of Supreme Court in General Assurance Society Ltd. Vs. Chandumull Jain, AIR 1966 SC 1644 (para-11) held that there is no difference between a contract of insurance and any other contract except that a contract of insurance there is a requirement of abberima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem i.e. against the company, in case of ambiguity or doubt. A contract is formed when there is unqualified acceptance of the proposal. Acceptance may be expressed in writing or it may be implied if the insurer accepts the premium and retains it. In interpreting the document relating to contract of insurance, the duty of the court is to interpret the words in which the contract as expressed by the parties. In Canara Bank Vs. United India Insurance Company Ltd. (2020) 3 SCC 455 (para-22), held that the provision of policy must be read and interpreted in such a manner so as to give effect to the reasonable exceptions of all the parties including the insured and the beneficiaries. The coverage provision should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured.

The term ‘burglar proof safe’ came for consideration before this Commission, time to time. This Commission, in Orient Treasures Pvt. Ltd. Vs. United India Insurance Company Ltd., IV (2007) CPJ 146 (NC), (para-25) and Champaklal Hansraj Shah Vs. United India Insurance Company Ltd., III (2012) CPJ 303 (NC) (paragraph-10) held that insistence by the Insurance company that the goods should be kept in a ‘burglar proof safe’, is apparently a vague condition. It is difficult to find out any safe, which could be said to be burglar proof. Up till now it is not invented. In Sh. T.S. Vivekananda Vs. United India Insurance Company Ltd. (2009) 2 CPR 463 (NC) and B.R. Exports Vs. United India Insurance Company Ltd., IV (2014) CPJ 7 (NC) (para-14) held that ‘burglar proof safe’ is the misnomer for the expression safe in common parlance, which proves against theft.

The proposition of law laid down by this Commission is that ‘burglar proof safe’ is the misnomer for the safe in common parlance. Warrantee clause of the policy was vague, as such, the term of the policy is liable to be interpreted in favour of the Insured and the claim could not be denied on the basis of Warrantee clause, particularly when section-I used the term “Property insured in locked safe of the premises”. The stock of the Insured were kept in strong room/safe and burglary took place by cutting lock of strong room’s door and area around it, using gas cutter.

So far as quantum of loss/claim is concerned, after recovery of part of stolen goods, the Insured revised his claim for Rs.24933505/-. The surveyor found that this claim included stock of customers for repair and other purpose. But the Insured was unable to provide any documentary evidence of the same such as inward challan, records etc. as such, he assessed loss for Rs.23849683/-, on which, under-insurance clause and excess clause were applied and in addendum report dated 30.03.2011, he assessed the loss to Rs.13339189/-. The Insured could not point out any illegality in it as such this amount was payable.

Regulation 9 of The Insurance Regulatory and Development Authority (Protection of Policyholder’s Interest) Regulations, 2002 directs the Surveyors to submit their Survey Report within 30 days and in any case within 45 days, from the date of his appointment. The Insurer has been directed to make settlement within 30 days of receipt of Surveyor’s report and in any case within 6 months. Regulation 9 (6) provides as follows:

Regulation-9(6). Upon acceptance of an offer of settlement as stated in sub-regulation (5) by the insured, the payment of the amount due shall be made within seven days from the date of acceptance of the offer of by the insured. In case of delay in the payment, the insurer shall be liable to pay interest at a rate which is 2 per cent, above the bank rate prevalent at the beginning of the financial year, in which the claim is reviewed by it.

ORDER

In view of the aforesaid discussions, the complaint is allowed. The opposite party is directed to pay Rs.13339189/-, along with interest @9% per annum from November, 2010 till the date of actual payment, within period of two months from the date of this judgement.