VIJAY SHREE JEWELLERS vs UNITED INDIA INSURANCE COMPANY

AN applicant is a jeweller who has been carrying on its business from the premises C-2, Shopping Arcade, Hotel Best Western Surya, New Friends Colony, New Delhi. As in past, it got its stock and other articles insured through the United India Insurance Co., New Delhi. It insured its stocks for Rs. 20 lakhs under the insurance cover for the period 22.3.1995 to 21.3.1996. On 29.12.1995 around 5 p.m. three ladies with a male entered the shop as customers and on the pretext of buying the ornaments, decamped with the jewellery of the stated value of Rs. 9,40,855/-. FIR was lodged and the claim for the loss was also made to the Insurance Company. Under the report dated 4.6.1996, the police informed the applicant that the theft had remained untraced and in case some development takes place later on, the applicant would be duly informed. M/s. Mehta & Padamsey Surveyors Pvt. Ltd. who were appointed by the respondent to assess the loss in turn recommended appointment of a suitable private Detective Agency. Mohan Detective and Security Services Bureau, C-216, Madhuban, Preet Vihar, New Delhi was assigned the task of investigating the theft. The private Detective Agency submitted its report on 29.3.1998. The Surveyor thereafter submitted the report assessing the claim of the applicant at Rs. 1,56,260/- on 16.2.1999. On the facts, the applicant has filed an application pleading the deficiency in service on the part of the respondent squarely covered within the meaning of Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (for brief the Act). It is prayed that the applicant''s application for compensation at Rs. 16,78,500/- should be entertained and allowed along with interest @ 18% on the aforesaid amount.

IN reply to the notice issued, the respondent denied having indulged in any unfair trade practices as alleged by the applicant. Delay in assessing the loss, if any, was stated to be mostly due to non-supply of information on the part of the applicant. It is contended that the cost of the articles stolen were arrived at Rs. 6,03,135.12 and as per condition of an average applicable under Sections I and IV of the Policy and the Schedule, the loss was correctly arrived at Rs. 1,56,260/-. This was stated to be for the reason that at the time of theft, jewellery in display window was found at Rs. 11,57,926.48. As it was under insured to the extent of 74.092%, the loss was reduced proportionately. After the pleadings were complete, the following issues were framed : (1) Whether the respondent has been or is indulging in unfair trade practices as alleged in the compensation application ? (2) If so, whether the applicant has suffered any loss or damage due to the same and whether it is entitled for any compensation ? (3) Relief.

Evidence in the form of affidavit and counter-affidavit with supporting documents was furnished on both sides. The documents included the reports of the Surveyors as well that of the Detective Agency. Reliance was also placed on various judgments of the Courts by the respective Advocates.

RIVAL submissions have been considered in the light of the documents brought on record. Admittedly the theft occurred on 29.12.1995 during the currency of the policy taken by the insurer. The particulars of the articles stolen are also not in dispute. They are : (1) 15 gold rings made in 18 carat gold studded with diamonds. (2) One necklace 18 carat studded with diamond and ruby along with one pair of ear-rings and one ring. (3) One necklace gold studded with diamond/Emerald. One pair of ear-rings and one pair of bangles.

The dispute is in regard to the quantum of the loss as claimed by the applicant and the one determined by the respondent. The difference has arisen on two counts - one relating to working of the cost of the jewellery/stolen articles and the other to the head under which the stolen articles had been considered. While the applicant has claimed loss on the basis of the cost of each item plus the making charges of the jewellery, the respondent has worked out the cost of the items on the basis of the purchase vouchers wherever available and average price of different items i.e. gold, gems, precious stones etc. which have gone into the manufacture of the same. As regards former, we find that the Clauses 17 and 21 under the head ''Conditions'' of the policy read as under : Clause 17 "The basis of valuation for the purpose of this insurance shall be the insured''s cost plus the percent thereof." Clause 21 "In the event of loss or damage to any article forming part of a pair or set the Company shall pay the value of the particular part or parts without reference to any special value of the part forming part of a pair or set, but in any event the Company''s liability shall not exceed the proportionate part of the sum insured in respect of the part or set."

It also stands to reasons that when an item is not particularly identifiable and is relatable to the common stock, the cost can be best arrived at by method of valuation on the basis of average cost. Accordingly, the total cost of stolen articles worked out at Rs. 6,03,134.12 as against Rs. 9,40,855/- on the basis of cost plus 10% of the cost price is upheld. There being no infirmity in the same, the contention of the respondent is upheld.

THE main difference in the claim filed and the one allowed has however arisen on account of the head under which the stolen articles have been considered. We find that as per the insurance policy, the jewellery has been insured under two heads : (1)Property insured in display window - Rs.3,00,000/- (2)Property insured in locked safe - Rs.11,50,000/- It is not disputed that at the time of incidence, the value of the gold and the precious stones (items 22 and 23 of Annexure 3) in the safe were at Rs. 1,53,887.36 (10,931.23 + 1,42,956.03). This was out of the total value of the ornaments/jewellery at Rs. 15,25,527.51. THE remaining were in display counter window. Ordinarily, therefore, the claim determined by the respondent should be acceptable. However, the difference lies in the fact that the theft occurred during day time and that too in the business hours and not at night - the usual time when the burglary occurs. THE relevant exclusion clause of the insurance policy is to be read in this context. Clause 12 of the exclusion clauses under ''Conditions'' reads as on overleaf : "Loss or damage to property insured whilst in window display at night or whilst kept out of safes after business hours." The above clause is reasonably susceptible to one meaning that is the property kept in window display has to be read along with the words ''night'' and ''after business hours''. Thus the loss relating to stolen items is not allowable in case the said articles are kept in window display at night or out of business hours. It is not so in case the theft occurs during the day time and that too in business hours. It is not in dispute that as per FIR lodged two expensive necklace set-studded with rubies and emerald were taken out of safe on demand of the decoy customers. These were necessarily to be placed on the counter for display till the time they were approved or rejected by the customers. Counting them as part of the jewellery displayed in the windows would not only be anomalous but also not in accordance with the plain reading of aforesaid Clause 12 of the Conditions. This is further supported by another Condition listed in the various conditions which is to the effect that goods to be kept under lock and key at night. Accordingly while working out the loss, the value of the articles namely two necklace sets taken out of the safe for display to the customers are to be included in the articles kept in the safe. This has been worked out at Rs. 5,11,813.06 out of the total cost of stolen articles at Rs. 6,03,135.12. While working out the value of jewellery under the head ''Safe'' connected with the above, is the Condition listed in Clause 20, which reads as under : "Condition of average applicable to losses under Sections I and IV of the policy : If the property covered hereby on all the insured''s specified premises shall at the time of any loss or damage by any paril hereby insured against be collectively of greater value than such sum insured then the insured shall be considered as being his own insurer for the difference and shall bear a rateable share of the loss or damage accordingly."

This clause has to be read alongwith Clause 21 of the Conditions as already cited earlier. The plain reading of the above clauses clearly show that the loss is to be determined on prorata basis. The loss has however to be worked out after including the cost of two necklace sets in the jewellery/ornament insured under the articles found in the safe. The deficiency worked out at 74.092% would accordingly stand modified. The percentage of deficiency/sufficiency, if any, may be determined after applying the prorata rule and the loss determined to be allowed to the applicant.

THE above facts show that the claim of the applicant was not allowed in full on flimsy grounds. THE repudiation of applicant''s legitimate claim is certainly deficiency in service covered within the meaning of the term unfair trade practices under the provisions of Section 36A of the Act.

SO is the delayed settlement of claim. Theft occurred as early as on 29.12.1995 and the claim on the other hand was settled as late as 1999 i.e. after four years time. This by no means can be termed as reasonable time for allowance of the same, specifically when delay of one year in appointment of a Detective Agency is not explainable. Unreasonable delay in settling the claim of the applicant is nothing but deficiency in service on the part of the respondent. This has direct bearing on the quality and standard of service rendered. To say that the applicant has not suffered any loss is to ignore the obvious. During the four years time the applicant could not replenish its stock for lack of funds. On the other hand it had to bear the running cost in the form of interest on the over draft facility availed by it from the Bank.

The decisions relied upon on both sides are distinguishable on the facts of the case.

IN view of above applicant deserves to be suitably compensated for the loss as suffered. Accordingly, in addition to loss to be allowed to the applicant as per directions in paragraph 9, the respondent is directed to pay interest @ 12% on the amount as determined from 1.1.1997 till the date of payment of amount. (This is after considering a period of one year being reasonable in view of special circumstances of the loss where the Detective Agency had to be appointed and the time taken by it in submission of the report). The order should be complied with, within six weeks from its receipt and an affidavit of compliance may be furnished within two weeks thereafter. No order as to the costs on the facts and in the circumstances of the case. C.A. disposed of.