New India Assurance Company Limited and Others vs Grower Apple Trading Company

Rajiv Narain Raina, J.—This is a second appeal preferred by the New India Assurance Company Limited against the plaintiff-respondent. The insurance company became a judgment-debtor when the plaintiffs suit for recovery of money under an insurance policy in the sum of Rs. 5 lacs as principal amount with interest was decreed by the Civil Judge (Junior Division) Chandigarh on 8th June, 2009 with the decretal amount due and payable with effect from 20th August, 2003 till the date of realization.

The first appeal to the learned Additional District Judge, Chandigarh has been rejected vide judgment and decree dated 7th October, 2010 against which the insurance company is before this Court questioning the correctness of the concurrent orders passed by the Courts a quo.

The fate of this case depends upon the interpretation and construction of the terms and conditions of a Money Insurance Policy purchased by the plaintiff from the appellant insurance company on 18th September, 2002 effective till midnight of 17th September, 2003. The Money Insurance Policy sold by the appellant caters to insuring safety of money/cash transported under a contract of affreightment by the assured or his agents from office/business premises for deposit in banks where the loss of money is indemnified. The insurance policy provides for insurance against theft of cash during transport in a vehicle. Such money represents payment of wages, salaries and other earnings or for petty cash in "direct transit" from the bank to the insured''s premises from the time the cash is received at the bank by the insured or authorised employee/s of the insured until delivered at the premises or other place of disbursement and whilst there until paid out provided that after business hours such cash shall be secured in locked safe or locked store room in the premises. Cheques drawn by the insured to provide for such cash are also covered in transit from the premises to the bank. These are the premises of Section 1A of the insurance policy. Section 1B provides and guarantees by indemnification that money (other than described in 1A above) in the personal custody of the insured or the authorized employee/s of the insured whilst in "direct transit" between the premises and the bank or post office and vice versa. Section 1C of the policy provides that money (other than described in 1A and 1B above) collected by and in the personal custody of the insured or the authorized employee/s of the insured whilst in transit to the premises or bank within a period of not exceeding 48 hours from the time of collection and vice versa stands covered.

The limit of insurance, in the present case, was agreed at Rs. 10 lacs. The insurance policy stipulates an exclusionary clause which covers cases and defines where the appellant company shall not be liable and in this respect are enumerated 11 instances of which exclusion 6 is part and alone is relevant to this appeal, in the combined interpretation of clause 6 read with the accompanying provisions of the premises in Section 1A of the policy and this exclusion from liability reads:--

"Exclusion 6: Money carried under contract of affreightment and theft of money from unattended vehicle."

The short but interesting question which arises is as to what is the meaning of the expression "unattended vehicle" used in the policy. In order to understand the combination of words, "unattended vehicle", it would be necessary to narrate a few facts as are necessary in the understanding of the case on facts before the policy provisions are applied.

The insured is a business firm of which the sole proprietor is Brij Mohan. The plaintiff withdrew a sum of Rs. 5 lacs on 15th January, 2013 from HDFC Bank, Sector 35, Chandigarh during the currency of the insurance policy and handed it over to his agent for transporting the cash to his workplace located at SCF 128, Sector 26, Chandigarh. His agent was his brother who he claimed to be his employee as well. It is the admitted case that on receiving the cash from his brother, he proceeded to ferry cash in his Zen car from Sector 35, Chandigarh to Sector 26, Chandigarh a little after 3:30 p.m. on the fateful day. The cash was kept in a hand bag on the front seat of the vehicle. The driver of the vehicle along with the insured cash left for destination from Sector 35, Chandigarh to Sector 26, Chandigarh. However, he did not go directly but made a detour. He stopped by at house No. 3001, Sector 27-D, Chandigarh which was a religious Ashram frequented by the family of the plaintiff respondent. It was the respondent''s case that he secured the car by locking it and went inside the Ashram to pay obeisance. After about 10 minutes, when Brij Mohan returned to the vehicle, he discovered to his horror that the lock of the door on the driver side of the car had been during his absence forcibly broken open. The glass of the window pane was also open. The hand bag containing the cash and other important documents in the bag went missing from the car. The money could not be found. An FIR No. 14 of 15th January, 2013 was registered under Section 379 IPC at Police Station Sector 26, Chandigarh. The police investigated the matter but without success. The money was lost forever. The insurance company was promptly notified of the theft. They appointed Shri Rakesh K. Khanna, a duly approved Surveyor and Loss Assessor to assess the loss and investigate the matter. Statement of Brij Mohan and other witnesses were recorded by the Surveyor. The insured cooperated with the investigation. The Surveyor''s report was submitted on 5th March, 2003 recommending that the loss was genuine and payable under the terms and conditions of the policy. The insured laid claim to insurance cover and to be indemnified of the loss. The insurance company repudiated the claim for two reasons vide letter dated 28th August, 2003 sent to Brij Mohan which are as follows:--

"i) As per exclusion No. 6 of Money Insurance Policy the company shall not be liable in respect of money carried under contract of affreightment and theft of money from unattended vehicle.

ii) Secondly, policy covers money whilst in direct transit between premises and the bank or post office and vice versa."

Is the insurance company liable to pay the insured and make good the loss, is the question in appeal. Both the Courts below have held the insurance company liable to indemnify the loss. Learned trial Court has reasoned that by act of locking the car, the vehicle was not left unattended. Therefore, there was no violation of exclusion clause 6 in the policy Ex. RX/DX. Unfortunately, the evidence of the defendant appellant Insurance Company was closed by an order before they could produce their entire evidence. But the insurance policy stood exhibited on record. Appellant''s witness was cross-examined. The appeal court noticed that the insurance company did not furnish list of witnesses and the argument of the learned counsel for the defendant was not found satisfactory inasmuch as the company official who had issued the policy should have been examined and if that was allowed how would it improve the case. On these premises, learned ADJ, Chandigarh has dismissed the appeal on 9th October, 2010 by endorsing the view of the learned trial Court that the suit must succeed.

The policy Premises contained in Sections 1A and 1B in the insurance policy speak of "direct transit". Direct transit means the shortest point between the two termini. A detour from the shortest road link to destination is not to my mind, direct transit. A diversion or a detour for purposes other than transport of cash would not fall in the expression "direct transit". It is trite that the terms of insurance are contractual in nature and binding as they have been mutually agreed upon. Both the parties are bound by contract of insurance. A contract of insurance is to be strictly read especially in a Money Insurance Policy. The flight of cash must be direct and by the shortest route possible as known to persons well acquainted with the roads of the city in which the business is done for profit and gain as would be reasonably expected from a prudent businessman. This is one part of the construction of Section 1A and 1B. Even if a slight detour is made on account of unforeseen road conditions, then breaking journey to travel elsewhere from the shortest and direct path will disconnect direct transit and dislocate it within the meaning of the exclusionary clause read with the Premises. Exclusion 6 deals with carriage of money under the contract of affreightment and excludes theft of money from unattended vehicle. The expression, "unattended vehicle", to my mind, is plain and unambiguous and must be given its ordinary meaning. It would mean leaving a vehicle unattended by human agency. Since the admitted fact is that the insured made a detour and stopped by at a Ashram which was not in the direct path between Sector 35 and Sector 26, Chandigarh, then that slight detour and act of leaving the car unattended for sometime outside House No. 3001, Sector 27-D, Chandigarh would eminently fall in the exclusion clause giving freedom from insurer''s liability. Merely securing the unattended vehicle by locking its doors is not sufficient duty of care owed by the insured to protect his property from theft. When the vehicle is left unattended, it is not supervised or looked after. It is left unguarded, unwatched, alone and by itself. The dictionary is replete with the synonyms of the word "unattended" which include words such as unaccompanied, unescorted, un-cared for, isolated, un-heeded, un-assisted and un-suspecting.

In the present case, the act of the carrier/driver was negligent. Where the insured himself is guilty of committing breach of terms in the contract of insurance, then exclusion clauses would operate. The distinction would also have to be kept in mind from insurance cases involving third party claims which not the principle is arising in the present case.

In Suraj Mal Ram Niwas Oil Mills (P.) Ltd. Vs. United India Insurance Co. Ltd. and Another, (2011) ACJ 418 : (2010) 11 JT 404 : (2010) 10 SCC 567 : (2010) 9 UJ 4640 , the Supreme Court had occasion to opine and hold, in a case of transit insurance, that an obligation arises under insurance contract in cases of privity of contract and those involving third party rights observed on the interpretation of the insurance contract before it and its terms that there should be a strict construction prescribed. The words in an insurance contract must be given paramount importance and interpreted as expressed without any addition, deletion or substitution. When the exclusion clause 6 and Premises 1A and 1B of the policy are read in the manner in which the Courts are guided by the Supreme Court, no other interpretation is possible to be attached to the meaning of ''direct transit'' and ''unattended vehicle''. The plaintiff left the vehicle unattended to his own peril. If there was theft of money, the insurance company is not bound to indemnify the loss upon the terms and conditions of the Money Insurance Policy. Both the Courts below completely misinterpreted the provisions prescribed in the MIP giving rise to a substantial question of law by itself as to the construction of the terms and conditions of the affreightment insurance contract signed by the parties involving safe carriage of money by road transport in a vehicle. The rule of construction to be applied is strict when covering risk of theft. Insurer is not liable for risk taken by the insured by his neglect in leaving the vehicle "unattended" at a point not covered by "direct transit" of money. The detour was thus fatal to the action. The plaintiff is not to be reimbursed by the appellant as the loss is personal in nature.

Consequently, the appeal succeeds and the judgment and decrees of both the Courts below are set aside for the reasons recorded above. The suit is dismissed. However, parties are left to bear their own costs in appeal and in the courts a quo.