National Insurance Co. Ltd vs M/S. Mehta Jewellers

This appeal has been filed by the appellant National Insurance Co. Ltd. against the order dated 24.04.2012 of the State Consumer Disputes Redressal Commission, Maharashtra, (in short 'the State Commission') passed in Complaint Case No.CC/10/117.

Brief facts of the case are that the complainant (Respondent herein) filed a complaint before the State Commission against opposite party Insurance Company (appellant herein). The complainant jewellers had obtained insurance policy for a sum of Rs.31,00,000/- for insuring the ornaments. On 26.06.2007, it was noticed that the shop premises was burgled and gold ornaments of 31,00,000/- were stolen away. Immediately, FIR was lodged in the concerned police station and information was given to the opposite party Insurance Company about the same. M/s. Sunil J. Vora & Associates were appointed as surveyors who inspected the shop premises and submitted report after 5 months from the date of appointment. Opposite party ultimately repudiated the claim vide letter dated16.04.2009 on the ground that the 'ornaments in the shop at the material time of burglary were kept in a steel safe of local make and not in burglar resistant safe'. The repudiation of claim of the complainant was intimated after a gap of two years from the incident. Aggrieved, the complaint filed a consumer complaint before the State Commission. The complaint was resisted by the opposite party Insurance Company by filing written statement and justified the repudiation. The State Commission, however, allowed the complaint vide its order dated 24.04.2012 as under:-

"(1) The complaint is partly allowed.

(2) The opponent Insurance Company is directed to pay an amount of Rs.28,95,600/- to the complainant with interest @ 10% p.a. from the date of filing of the complaint i.e. 13.07.2010 till realization of the payment.

(3) Rest of the claims of complaint not specifically admitted stands rejected.

(4) In the given circumstances, both the parties shall bear their own costs."

Hence the present appeal.

Heard the learned counsel for the parties and perused the record. Learned counsel for the appellant stated that the basic warranty clause of the policy has been violated and therefore, the claim cannot be admitted. It was stated that the basic warranty reads as under:-

"Warranted that all property including cash and currency notes whilst at the premises specified in the schedule shall be secured in locked safe of standard make at all times out of business hours."

Learned counsel for the appellant argued that the surveyor has clearly reported that the jewellery was kept in an almirah with single lever. Even in the FIR the complainant has mentioned that he closed the jewellery and other documents in the iron cupboard, which is not a "locked safe". Thus, it is clear that the complainant himself is admitting that jewellery was not secured in a 'locked safe' of standard make. The State Commission has observed that a burglar proof safe is not a reality and has not been defined in the policy. Moreover, standard make is also not defined in the policy and therefore, the State Commission has allowed the insurance claim on the basis that the Insurance Company or the agent never objected to the steel almirah being used by the complainant as safe. Learned counsel submitted that locked safe of standard makes are known to every jeweller and jewellery is to be kept in such locked safe. Clearly, steel almirah with single lever cannot be treated as safe. Obviously, it is easier to break almirah of a single lever lock than to break a safe. In support of his arguments, learned counsel referred to the following judgments:-

(1) Oriental Insurance Co. Ltd. Vs. Samayanallur Primary Agricultural Coop. Bank, (1999) 8 SCC 543. It has been held that:

.............. The State Commission appreciated the real controversy between the parties and decided the dispute on interpretation of the insurance policies and the proposal produced before the District Forum. There was no necessity of referring to the dictionaries for understanding the meaning of the word "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 cash box containing the jewellery and cash was not covered by the insurance policy between the parties. 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. The National Commission was, therefore, not justified in setting aside the order of the State Commission and remanding the case back to it for the purposes of ascertaining the extent of actual loss caused to the respondent. The order of the State Commission did not suffer from any illegality or error of jurisdiction requiring interference by the National Commission."

(2) M/s. Karnataka Fisheries Development Corporation Ltd. Vs. M/s. United India Assurance Company Ltd. &Anr., RP No.2578 of 2008, decided on 12.02.2015 (NC) wherein following has been observed:

"10. As per the settled position of law the condition or the term in a particular document has to be construed and understood with reference to the nature of document and the context in which the term has been used. When condition Nos.4 and 7 have expressly excluded the loss of money not kept in "safe or strong room", the "safe" which was required to be provided in the office for keeping the money has to be such as would constitute a suitable replacement for a "strong room". In the present case admittedly it was an ordinary Godrej steel cupboard with a locker inside. This being the admitted position emerging from the testimony of the witnesses of the petitioner Co., we are convinced that no fault could be found with the findings of both the foras below in regard to the exclusion of the claim of the petitioner Co. We have glanced through the judgments cited by learned counsel (supra). However, none of them provide any comfort to the petitioner Co. in the facts and circumstances of this case. The ratio laid down by the Apex Court in the case of Harchand Rai Chandan Lal where it has been held that the terms of the policy shall govern the contract between the parties and the parties have to abide by the definition given therein and all the expressions appearing in the policy have to be construed as it is and something cannot be added, subtracted or substituted, cannot be applied to the present case while interpreting the word "safe" and the same has to be interpreted and understood by inviting the reference to the context in which the expression has been used in the policy and also by understanding the meaning of this expression when it is used in other similar policies or situations as well. Keeping this aspect in view, the plea of the counsel for the petitioner that the locker fixed inside the normal Godrej steel cupboard is the same thing as a safe or a strong room referred to in the present policy is not acceptable. The scope of our revisional jurisdiction under section 21 (b) of the Consumer Protection Act under which this petition has been filed being very limited, we do not find any justification to interfere with the impugned order. Revision petition, therefore, stands dismissed with the parties bearing their own costs."

(3) National Insurance Co. Ltd. Vs. Ram Kumar Aggarwal, IV (2007) CPJ 215 (NC). It has been held that:

"4. The money was neither in a safe nor in a strong room hence not covered under the policy. The whole case hungs on the interpretation of word 'strong room'. It was his plea that it is admitted position that money was kept in an almirah which by no stretch of imagination can be said to be a strong room. It is misinterpretation of this word on the part of the State Commission, which has led it to award relief in favour of the respondent/complainant, which need to be set aside. On the other hand, it was argued by the learned Counsel for the respondent/complainant that it is true money (cash) was in an almirah but it was protected by a collapsible iron gate and further by wooden door with glass and grill. The interpretation of the State Commission is correct in this context. They are not covered by the exception-hence order of the State Commission is just and proper. The appeal needs to be dismissed."

(4) United India Insurance Company Ltd. Vs. Orient Treasures Private Limited, AIR 2016 SC 363. It has been held that:

"40. Coming now to the facts of the case, it is not in dispute that the burglary took place in the respondent's shop during night hours on 02.06.1995 when the burglars took away the jewellery (gold/silver ornaments) kept in display window and jewellery lying out of safe. The appellant was, therefore, justified in contending that the stolen articles were not covered under the policy by virtue of clauses 4, 5 of Proposal Form and Clause 12 of the policy and no liability could be fastened on them to indemnify the loss of such articles for awarding any compensation to the respondent. Indeed clauses 4, 5 and 12 were clearly attracted in appellant's favour."

On the other hand, learned counsel for the respondent stated that the complainant is getting his shop insured for the last many years from the same opposite party/Insurance Company and officials of the Insurance company and the agent of the Insurance Company have inspected the shop many times, but never objected to the almirah, which was used to keep the jewellery and precious items. The Insurance Company should not have given the insurance if they were not satisfied with the quality of the safe. In the repudiation letter dated 10.04.2009, the Insurance Company has stated that surveyor has found that the ornaments were kept in the steel almirah of the local make and not in burglar resistant safe. It was argued by the learned counsel that there is nothing like burglar resistant safe and this word is not present in the terms and conditions of the policy. The State Commission has also observed that it is difficult to find burglar resistant safe. In fact, the policy only mentions 'locked safe' of standard make'. Neither the word "safe" is defined in the policy nor standard makes have been mentioned in the policy. Thus, the State Commission has found the steel almirah kept in the shop to be a "safe" within the meaning of the terms and conditions of the policy. Thus, there is no illegality in the order of the State Commission.

I have given a thoughtful consideration to the arguments advanced by learned counsel for both sides and have examined the material on record. The complainant has mentioned that the jewellery was kept in the iron cupboard in the shop and the surveyor has also found that the jewellery was kept in a steel almirah with single lever lock, whereas the warranty mentioned in the policy requires the jewellery to be secured in a 'locked safe' of standard make beyond the normal business hours. It is true that the Insurance Company in its repudiation letter has mentioned burglar resistant safe, but the policy does not use this term and it is only using the term 'locked safe of standard make'. As no standard makes are prescribed in the policy or no reference has been made in the policy for such standard makes of the locked safe, if the locked safe of any make is used, Insurance Company perhaps cannot object, but the word "locked safe" is important.

It is seen that the meaning of safe as given in the Oxford Dictionary is "a strong fireproof cabinet with a complex lock; used for the storage of valuables". A normal steel almirah does not come under this definition as it does not have a complex lock. In fact an almirah can be opened by widening of the gap between the doors of the almirah. Therefore, it cannot also be termed as strong cabinet. Thus, this is also clear violation of terms and conditions of the policy as due care and precaution was not taken by the respondent. I find force in the assertion of the appellant that the terms of a policy are to be understood as it is and in this context safe is to be understood as safe and not as any other place wherein cash can be kept safely. The word 'safe', is to be understood in the context of the terms and conditions of the policy. This Commission has already decided a similar case M/s. Karnataka Fisheries Development Corporation Ltd. Vs. M/s. United India Assurance Company Ltd. &Anr. (supra), wherein following has been observed:

"Based on the testimony of the employees of the petitioner Co., namely, Surendra Kanchan and RmaeshJeppu, the District Forum has convincingly held that the petitioner had no "safe" or "strong room" in terms of the conditions of the policy to cover the claim and as such the petitioner has not complied with the terms and conditions of section II of the insurance policy. We have perused the statements of the two employees of the petitioner Co. and after going through them, we do not find any fault with the finding of the District Forum. Both of them have confirmed that the money was kept in the locker of the steel cupboard kept in the room of the Executive Officer. It is thus clear that the money was not kept in a strong room. Coming to the point as to whether the ordinary steel cupboard having locker inside could construe "safe" with reference to the present insurance policy, it has to be appreciated that the expression "safe" mentioned in the policy has to be construed by having reference to the requirement under such a policy. When the expression "safe" is used as an alternative to the strong room in the policy, the safe obviously cannot be taken to mean the cashier's box which is easily removable or one also cannot go by the ordinary dictionary meaning of the word "safe" which would mean "a mettle respectable for the preservation of the valuables". In this context, the observations of the Apex Court in 200 SAR (Civil) 61 may be reproduced thus:-

"A. Insurance Claim- Burglary insurance policy and cash insurance policy taken by bank-pledged jewellary and cash in "safe" not insured and covered under the policy-Meaning of Expression "Safe" mentioned in the insurance policy must be construed by having reference to the insurance policies and other documents connected therewith - No dictionary or artificial for fetched meaning to be given to the word "safe" - cashiers cash box which is easily removable cannot be covered under the expression "safe" - Burglary of or from cashier's cash box gave no cause of action for claim under the policy-Cashier's cash box could not be equated with the "safe" within the meaning of Insurance policy in question."

It is clear that the contract of the policy is to be interpreted as it is and in terms, which are expressly provided in the contract. It is important to note the following judgments in this regard:

(a) In General Assurance Society Ltd. Vs.Chandmull Jain, [1966 ] 3 SCR 500, it was held as under:-

17." ...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."

(b) in Oriental Insurance Co. Ltd. Vs. Sony Cherian II(1999 )CPJ 13 (SC ), it has been observed as follows:-

"16. 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."

(c) United India Insurance Co. Ltd. Vs. Harchand Rai Chandan Lal, (2004) 8 SCC 644, the Hon'ble Apex Court held as follows:-

"6. ....The terms of the policy have to be construed as it is and we cannot add or subtract something: Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended.

...It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in other laws. It is a matter of contract and in terms of the contract the relation of the parties shall abide and it is presumed that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on definition given in other enactment.

Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous."

From the above authoritative judgements of Hon'ble Supreme Court, it is clear that in the present case the warranty is to be treated in the terms it is given in the policy. It is clearly stated that during non business hours all the cash and jewellery will be secured in a locked safe of standard make. Even if one leaves the condition of standard make, which is vague and not defined in the policy, one has to take into consideration that articles are required to be secured in a locked safe. As the word 'safe' is not defined, one has to take the help from other sources. It has already been seen that as per Webster Dictionary, the meaning of safe is "a strong fireproof cabinet with a complex lock". Clearly in a simple steel almirah the lock is not complex and the almirah can very well be opened by widening the space between doors. It is also clear that the articles kept in other space than the space described in the policy are not to be considered while deciding the claim as held by the Hon'ble Supreme Court in United India Insurance Company Ltd. Vs. Orient Treasures Private Limited (supra). Even in the common parlance, a normal steel alimirah is not referred as 'safe' and a 'safe' is understood to be a cabinet where valuables are safe as it cannot be opened without key. On the basis of the decisions cited by the learned counsel for the appellant as well as in the series of decisions given by this Commission, a general view has emerged that 'locked safe' mentioned in the policy is different from a steel almirah or from a cash box of a cashier. Accordingly, a steel almirah with a single lever lock cannot be treated as a 'locked safe' within the meaning of the terms and condition of the policy.

Based on this finding, the order of the State Commission dated 24.4.2012 cannot be sustained and is liable to be set aside. Consequently, the First Appeal No.435 of 2012 is allowed and order dated 24.04.2012 of the State Commission is set aside.