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Judgment
Avm J. Rajendra, Avsm, Vsm (Retd.), Member
The present First Appeal has been filed under Section 19 of the Consumer Protection Act, 1986 (hereinafter referred to as “the Act”) against the Order dated 02.05.2018 passed by the State Consumer Disputes Redressal Commission, Delhi (hereinafter to be referred as “the State Commission”), in Consumer Complaint No. 198 of 2006, wherein the Complaint filed by the Complainant (Respondent herein) was allowed by the learned State Commission.
For the sake of Convenience, the parties in the present matter being referred to as mentioned in the Complaint before the State Commission Shri Naresh Kumar Bansal, Proprietor of M/s. Shyam Jewelers is identified as ‘the Complainant’ and while M/s. Oriental Insurance Company Limited & Anr. are referred to as ‘the Opposite Parties’ or ‘the Insurer’.
There was a delay of 27 days in filing the present appeal. For the reasons stated in IA/14680/2018 the delay in filing the Appeal is condoned.
Brief relevant facts of the case as per the Complainant are that the Complainant was the proprietor of M/s Shyam Jewelers, located in Chandni Chowk, Delhi. He obtained a 'Jeweler’s Block Insurance' Policy No.46/2005/77 issued on 30.09.2004, covering loss of Rs.1,15,50,000/- with a premium of Rs.18,899/-, for the period from 30.09.2004 to 29.09.2005. On 04.01.2005, he was traveling to Jaipur by bus, carrying Rs.30 lakhs in cash for his gold trade. At around 03:00 AM on 05.01.2005, the bus halted at Beharor (Rajasthan) for refreshments and he deboarded the bus to use toilet. On return, he discovered that his briefcase containing the cash was with its locks open and the cash was missing. The incident was reported to the police, who filed an FIR at Sindhi Camp Police Station. The Complainant filed a claim with the insurance company (OP-1) for the stolen cash. However, it was repudiated on the ground that loss of cash was not covered under the 'Jeweler’s Block Insurance' policy. He then represented to OP-1 for review, which was without success. After sending a legal notice on 28.01.2005, he filed a Complaint before the learned State Commission, which vide order dated 27.04.2006, directed OPs to reconsider the claim of the Complainant. However, the OPs informed him on 17.10.2006 that his claim was already rejected vide letter dated 25.07.2006.
Being aggrieved by the repudiation, the Complainant filed Consumer Complaint No. 198 of 2006 before the learned State Commission, sought claim of loss amount of Rs.30 Lacs along with interest from the date of the theft/loss till the date of actual payment along with cost of the complaint.
The OPs/Insurer, in their written version, denied the claim, stating that a Jeweller's Block Insurance Policy was issued to the Complainant, for the period from 30.09.2004 to 29.09.2005. This policy provided coverage for risks up to Rs.35 Lakhs under Section-II. However, it specifically excluded coverage for cash and currency notes while in the custody of the insured, their partners, Directors, Attorneys, employees, or other individuals handling diamonds. There was a separate coverage of Rs.10 Lakhs for property insured, including cash and currency notes, but only if they were in the custody of individuals not in regular employment of the Complainant, viz. brokers, agents, cutters, or goldsmiths. The OPs acknowledged that the Complainant reported the loss of Rs. 30 Lakhs cash while traveling from Delhi to Jaipur in a letter dated 06.01.2005. In response to this claim, the OPs informed the Complainant on 13.01.2005 that his claim was not admissible under the Jeweller's Block Insurance policy.
The OPs/Insurer OPs further asserted that they had replied to a legal notice received from the Complainant, reiterating that the claim was not eligible for coverage under the subject policy. Furthermore, in a subsequent letter dated 25.07.2006, they provided detailed reasons for the non-admissibility of the claim. The OPs emphasized that the policy's terms and conditions explicitly excluded coverage for cash and currency notes, as stipulated in Section 2 of the policy.
The learned State Commission upon hearing the parties, and considering the facts and the circumstances, of the case allowed the Complaint with following observation: -
“11. Insured had admitted the cover note and the policy in question. It has vaguely stated in its letter of repudiation that the claim was not covered under the policy. As discussed above loss of cash and currency during journey outside the business premises too is covered. I am, therefore, of the considered opinion that the letter of repudiation dated 13.01.2005 read with detailed letter dated 25.07.2005 is illegal, unjustified and not sustainable. The same are hence set aside. Complainant is entitled to the recovery of Rs. 30 lakhs along with interest @6% per annum w.e.f. the date of letter of repudiation i.e. w.e.f. 13.01.2005 till the date of its realization. The aforesaid amount shall be paid to the complainant within a period of 30 days from today failing which it shall carry interest @12% per annum. Complaint is accordingly disposed of. File be sent to record room.
Being aggrieved by the impugned order of the State Commission, the Opposite Parties (Appellants herein) have filed this present Appeal no. 1412 of 2018 with the following prayer:
a. Allow the First Appeal against the impugned final Judgment and Order dated 2.05.2018 passed in Complaint No. 198 of 2006 by the State Consumer Disputes Redressal Commission, Delhi.
b. Pass such other and further order as this Hon'ble Commission deems fit and proper under the facts and in the circumstances of the case
In the present Appeal, the Appellant mainly raised the following issues:
(a) The State Consumer Commission failed to appreciate that in terms under Section 1, Sub Heading 8 of the Proposal Form, pertains to coverage "Anywhere in India." It does not imply that the insured property can be located anywhere in India, but rather that the premises subject to insurance can be anywhere within India and not outside the country.
(b) The State Consumer Commission failed to appreciate that in the Proposal Form submitted, the insured declared 35 Lakhs cash and currency notes under Section 1 of the policy. However, as the loss occurred outside the premises declared, Section 1 of the policy cannot be invoked.
(c) The State Commission failed to appreciate that Section II of the Proposal Form is labeled "Outdoor Risk" and pertains to the value of property in the custody of the insured, partners or employees, excluding cash. This Section clearly excludes business cash taken outside the business premises.
(d) The State Commission failed to note that under Clause 9(a), "Loss or damage occurring whilst in transit in India to ultimate destination outside the geographical area stated in the schedule", the claim was not payable.
(e) The State Commission failed to appreciate that the risk of keeping money in transit is distinct and can be covered only by a separate Money Insurance Policy.
(f) The State Commission failed to note that the Complainant produced no evidence to show his ownership of the establishment which was insured and thus he has no locus standi to make such claim.
(g) The State Commission failed to note that the case of National Insurance Ltd Vs. Ishar Das, 2007 ACJ 1623, was inapplicable to the present case. The principle of contra proferentem - interpreting ambiguous terms against the party that drafted in inapplicable in the present case.
The learned Counsel for the Appellant reiterated the grounds advanced in the Appeal. His arguments were centered on the clear language of the Jewelers’ Block Insurance Policy's Proposal Form and its Exclusion Clause(s). He contended that the Complainant's claim for cash taken outside the insured premises is not covered by either Section-I or Section-II of the policy. He asserted that the Complainant failed to provide reasonable evidence to support the claim and lacked evidence of ownership of the insured establishment. The case of National Insurance Ltd Vs Ishar Das, 2007 ACJ 1623, is not applicable in this case, as the Proposal Form unambiguously excluded cover for cash outside the premises. He pointed to lack of evidence, both in terms of ownership for such large amount cash and the occurrence of theft. He questioned the validity of the decision of the learned SCDRC and asserted that the facts of the present case are not covered in the insurance policy and thus the Complainant is not entitled for any compensation.
The learned Counsel for the Respondent reiterated the issued raised in the Complaint and the affidavit of evidence filed before the State Commission. He argued that the main question at hand is ‘whether the loss of Currency Notes during the journey was covered or not under the policy’. He pointed that Section-I of the cover note explicitly refers to ‘Cash’ and ‘Currency Notes’ worth Rs. 35 lakhs under the subheading "anywhere in India". He asserted that these words imply that the coverage extends to cash and currency even when outside the insured business premises. If it was intended to be excluded from coverage for cash outside the premises, they should have part of a specific exclusionary clause to that effect. He relied on National Insurance Company Ltd. vs. Ishar Das, 2007 ACJ 123 and the judgment of the Hon'ble Supreme Court in "Texo Marketing Pvt. Ltd. Vs. Tata AIG General Insurance Co. Ltd. And Ors.", MANU/SC/1466/ 2022. He argued in National Insurance Company Limited vs. Ishar Das Madan Lal where the Hon’ble Supreme Court has held that:
“8. However, there may be an express clause excluding the applicability of insurance cover. Wherever such exclusionary clause is contained in a policy, it would be for the insurer to show that the case falls within the purview thereof. In a case of ambiguity, it is trite, the contract of insurance shall be construed in favour of the insured.”
The learned Counsel for the Respondent argued that the Hon’ble Supreme Court clarified the principles of interpreting exclusion clauses in insurance contracts and the burden of proof lies on the Insurer to demonstrate that the claim falls under exclusion clauses.
We have examined the pleadings and other associated documents placed on record and rendered thoughtful consideration to the arguments advanced by the learned Counsels of both the parties.
The main issue in question in the present case is ‘whether the alleged cash loss during transit occasioned on 04.01.2005 is covered under the Jeweller's Block Insurance Policy in question’? In this regard, the relevant portion of the Proposal Form and the Exclusion Clause(s) under the policy in question are as follows:-
PROPOSAL FORM FOR JEWELLERS’ BLOCK INSURANCE
Anywhere in India
Section-I
(1) Property Insured on the Premises
(2) Property insured in display windows. NIL
(3) Property insured in locked safe on the premises Rs. 35 lakhs
(4) Cash and currency notes Rs.35 lakhs
(5) Property insured in bank lockers subject to insured maintaining a separate register to record all deposits/withdrawals in such lockers.
Section-ll (Outdoor Risk)
(1) Property in the custody of the insured his partners and his employee
(2) In the custody of brokers
(3) In the custody of cutters
Section-Ill
(1) Regd. Insured Parcel Post
(2) Air Freight
(3) Angadia
Section-IV
Furniture, Fixtures, Fittings at premises not used as residence and sales at residences
Sums to be insured (only total to be insured maybe given)
NIL
Rs.35 lakh
Rs. 10 lakh
Rs.50,000/-
Signing this Form does not bind the Proposer to complete the insurance, but it is agreed that this Form shall be the basis of Contract should policy be issued.
POLICY FOR JEWELLER’S BLOCK INSURANCE
Section I
Loss of or damage to property Insured under items 1 to 5 under Section I of the Schedule whilst contained in the premises where the Insured's business is carried on or at other premises where the insured property is deposited as specified in the Schedule, by FIRE, EXPLOSION, LIGHTING, RIOT AND STRIKE, MALICIOUS DAMAGE, BURGLARY, HOUSE BREAKING, THEFT, ROBBERY AND HOLD-UP RISKS ONLY.
……
Section II
Property Insured excluding cash and currency notes whilst In the custody of the Insured, his partners, Directors, duly constituted Attorneys, his employees or sorters of diamonds:
(Limits for any on loss Rs._______)
Property Insured excluding cash and currency notes whilst in the custody of persons not in regular employment of the insured such as brokers or agents or cutters or goldsmiths.
(Limits for any on loss Rs.________)
In catena of judgements, the nature of insurance contracts, scope and restraint to be exercised in interpreting the terms of the insurance contracts are well discussed and crystallized by this Commission as well as Hon’ble Supreme Court. In Civil Appeal No. 4769 of 2022 in the case of National Insurance Company Ltd Vs The Chief Electoral Officer & Ors, Hon’ble Supreme Court has held as follows:
The insurance contracts are in the nature of special class of contracts having distinctive features such as utmost good faith, insurable interest, indemnity subrogation, contribution and proximate cause which are common to all types of insurances. Each class of insurance also has individual features of its own. The law governing insurance contracts is thus to be studied in three parts, namely, (1) general characteristics of insurance contracts, as contracts; (2) special characteristics of insurance contracts, as contracts of insurance, and (3) individual characteristics of each class of insurance.
Now turning to some of the judicial pronouncements, wherein it has been opined that the words used in a contract of insurance must be given paramount importance and it is not open for the Court to add, delete or substitute any words (Suraj Mal Ram Niwas Oil Mills (P) Ltd. vs. United India Insurance Co. Ltd.). Insurance contracts are in the nature where exceptions cannot be made on ground of equity and the Courts ought not to interfere with the terms of an insurance agreement (Export Credit Guarantee Corporation of India Limited vs. Garg Sons International).
This Court in Vikram Greentech India Ltd. v. New India Assurance Co. Ltd. reiterated that the insured cannot claim anything more than what is covered by the insurance policy. The terms of the contract have to be construed strictly, without altering the nature of the contract as the same may affect the interests of the parties adversely. The clauses of an insurance policy have to be read as they are. Consequently, the terms of the insurance policy, that fix the responsibility of the insurance company must also be read strictly.
In several other judgements, this court has held that the insurance contract must be read as a whole and every attempt should be made to harmonise the terms thereof, keeping in mind that the rule of contra proferentem does not apply in case of commercial contract, for the reason that a clause in a commercial contract is bilateral and has mutually been agreed upon.
In the present case, it is an admitted position that the Appellant started from ISBT Delhi by Rajasthan Roadways Bus to Jaipur in the evening hours on 04.01.2005. He was carrying Rs. 30 Lakhs with him in cash in the form of 20 bundles of Rs.1,000 notes and 20 bundles of Rs.500 notes for his gold trade. At around 03:00 AM on 05.01.2005, the bus halted at Beharor (Rajasthan) for refreshments. He deboarded the bus to use toilet. On return, he discovered that his briefcase containing the cash was with its locks open and the cash was missing. Therefore, admittedly the said cash loss was during transit and outside the premises. What care he has taken to ensure basic safety of such high value cash is unstated. Admittedly, it was in such a state that someone was able to open the briefcase and remove such volume of the cash and leave unnoticed, leaving the briefcase open. In addition, the Appellant was unable to account for the source of such high value cash for which he claimed possession. It needs to be noted that Even if such cash loss occasioned while it was placed in any bank locker also, it is a condition precedent for payment of claim that, the accounting for such cash shall be established. In the present case, while the Appellant had a Block Jewelers Policy for the shop, he did have insurance cover for cash in transit and claimed that the same policy covers this loss as well.
In is in common knowledge that various types of insurance products are in the market for providing insurance cover on life, health, light motor vehicles, commercial vehicles, special vehicles, personal risks, professional risks, immoveable properties, household furniture, household electronic items, crops, trees, furniture, goods, stocks, precious metals, cash in safe, goods in transit, luggage in transit, cash in transit etc. It is in common knowledge that each of these insurance products has its specific scope of cover, duration, terms and conditions as well as inherent safety/ security precautions the insured is liable to ensure so as to be entitled for the claim under the insurance contract.
Examination of the Performa Form for Jewellers Block Insurance policy in question reveals that the Proposal Form for Jewelers Block Insurance was submitted and the insurance contract was entered into on 30.09.2004. At Para 8 of the Proposal Form is mentioned that the policy is applicable anywhere in India. Beneath which is Section-I which contains five types of insurance liabilities for the insurer. The said policy of Jewelers Block Insurance is subject to certain notified terms and conditions which are brought on record. At Section-I of the same, loss or damage to property insured under items 1 to 5 viz. property insured on the premises; property insured in display windows; property insured in Locked safe on the premises; cash and currency notes; property insured in bank lockers subject to insured maintaining a separate register to record all deposit/ withdrawals in such lockers is listed. It is clearly seen that the property referred at Section-I is that at the establishment premises and the specified bank lockers for which records are maintained. Further, as per the terms and conditions:
Schedule-I: Loss or damage to property insured under items 1 to 5 of Section-I of the Schedule whilst contained in the premises where the Insured's business is carried on or at other premises where the insured property is deposited as specified in the Schedule, by FIRE, EXPLOSION, LIGHTNING, RIOT AND STRIKE, MALICIOUS DAMAGE, BURGLARY, HOUSE BREAKING, THEFT, ROBBERY AND HOLD-UP RISKS ONLY.
These policy conditions and insurers’ liability are subject to certain exceptions which are also listed in the same policy. At Para 9 of the said exceptions wherein, the loss or damage occurring whilst in transit in India to ultimate destinations outside the geographical area stated in the schedule are not covered.
As regards the sacrosanct nature of the terms and conditions of a contract has been reiterated by the Hon’ble Supreme Court in Suraj Mal Ram Niwas Oil Mills Pvt. Ltd. v. United India Insurance Co. Ltd,. (2010) 10 SCC 567, decided on 08.10.2010. The relevant portion is reproduced hereunder:
“26. Thus, it needs little emphasis that in construing the terms of a contract of insurance, the words used therein must be given paramount importance, and it is not open for the court to add, delete or substitute any words. It is also well settled that since upon issuance of an insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the policy, its terms have to be strictly construed to determine the extent of liability of the insurer. Therefore, the endeavor of the court should always be to interpret the words in which the contract is expressed by the parties.”
The Hon’ble Supreme Court reiterated the mandate of strict interpretation of the Insurance Clauses in the case of Canara Bank v. United India Insurance Co. Ltd. (2020) 3 SCC 455, decided on 06.02.2020, the relevant portion is reproduced below:
“21. The principles relating to interpretation of insurance policies are well settled and not in dispute. At the same time, the provisions of the policy must be read and interpreted in such a manner so as to give effect to the reasonable expectations of all the parties including the insured and the beneficiaries. It is also well settled that coverage provisions should be interpreted broadly and if there is any ambiguity, the same should be resolved in favour of the insured. On the other hand, the exclusion clauses must be read narrowly. The policy and its components must be read as a whole and given a meaning which furthers the expectations of the parties and also the business realities. According to us, the entire policy should be understood and examined in such a manner and when that is done, the interpretation becomes a commercially sensible interpretation...”
In the present case, admittedly on 04.01.2005, the Appellant travelled from Delhi by Rajasthan Roadways Bus to Jaipur. He was carrying Rs. 30 Lakhs cash in the form of 20 bundles of Rs.1,000 notes and 20 bundles of Rs.500 notes for his gold trade. At around 03:00 AM on 05.01.2005, when the bus halted at Beharor (Rajasthan) and he deboarded the bus to use toilet. On return, he discovered that his briefcase containing the cash was open and the cash was missing. The care he has taken to ensure basic safety of such high value cash is unstated. Admittedly, it was left in such state that someone could open the briefcase and remove such volume of the cash and leave unnoticed. In addition, the Appellant was unable to account for the source of such high value cash, which he claimed ownership and possession. Even if such cash loss occasions while it was placed in a notified bank locker, it is a condition precedent for payment of claim that, the accounting for such cash shall be established.
Clearly, the loss of cash in transit allegedly occasioned at a location far away from the stores of the Appellant at Shree Shyam Jewelers, 1195/115 Kucha Mahajani, Chandini Chowk Delhi-110006 where the same was insured. The phrase Anywhere in India in the present context implies that the firm/ establishment shall be located anywhere in India and this Performa of Proposal is inapplicable for firms located beyond India. It was necessary for the Appellant to take insurance cover for such cash while in transit to cover the risk of loss.
Even after taking such cover, the cash needs to be clearly accounted for any claim, in the event of loss. Therefore, since the alleged loss of cash occasioned at entirely different place while in transit, such loss is not within the scope of the subject Block Insurance taken by him. Further, the Appellant was bound to account for the source and account for such high value cash and establish the adequacy of safety measures taken to protect the cash he was carrying at that time. In our considered view, by no stretch of imagination, the phrase ‘Anywhere in India’ would mean that the goods/ cash of a firm, which was duly inspected by the insurer before entering into insurance contract, could be spread anywhere in India and the insurer would continue to be liable for claim for losses, irrespective of proving of ownership and exercising of basic care. In the given circumstances under which the loss of cash loss as admitted by the Appellant, even if such additional insurance cover for Cash in Transit was taken, with due regard to the remaining conditions, the individual entitlement for reimbursement of claim for loss of case will be questionable.
The terms and conditions of the Insurance Policies require the Insured to take all reasonable steps to safeguard the property under insurance. However, in the present case, the Appellant, who himself is the owner of the firm was unaware of his surroundings to such an extent that some unknown person(s) accessed his luggage, opened the briefcase and took away such large volume of high value cash entirely unnoticed. The Complainant was certainly obliged to take reasonable care of the high value cash he was carrying. It can, therefore, be inferred that he failed to exercise due care and diligence. Accordingly, there is no deficiency of service on the part of the Insurance Company. Therefore, the repudiation of claim is valid and justified.
In view of the foregoing, the FA No. 1412 of 2018 is allowed. The order of the learned State Commission dated 02.05.2018 in Complaint No. 198/ 2006 is set aside.
All pending application, if any, stand disposed of.
The Registry is directed to release the Statutory deposit amount, if any, in favour of the Appellant.