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Judgment
This appeal arises out of an insurance complaint rejected by the State Consumer Disputes Redressal Commission, UT at Chandigarh (hereinafter referred to as the State Commission) where the opposite party was the respondent Bharti Axa General Insurance Company Ltd. During the pendency of this appeal, the general insurance business of the respondent underwent demerger to M/s. ICICI Lombard General Insurance Co. Ltd. that was approved by Insurance Regulatory and Development Authority of India vide letter dated 03.09.2021 with a clear stipulation that the policy holder’s interest shall be ensured at all times including timely redressal of their grievances, if any. IA/6774 of 2023 had been filed by the respondents in this appeal with a request to substitute the respondents accordingly. The request was accepted and the application was allowed vide order dated 18.07.2023.
The appellant/complainant took a Burglary cum House Breaking Insurance Policy from the respondents/Insurance company which was continuing and the policy i.e. subject matter of this controversy undisputedly covered the risk of goods kept in the godown of the appellant, the duration whereof was 08.01.2015 to 07.01.2016. The dispute arose after a claim was made by the appellant informing the respondents that a burglary involving theft of the goods disclosed therein had been committed and therefore the appellant was liable to be reimbursed for the loss and damage caused. The coverage of the policy was for a sum of Rs.60,00,000/- and the loss claimed was Rs.55,74,429/-.
M/s Puri Crawford Insurance Surveyors & Loss Assessors India Pvt. Ltd. were appointed as surveyors who submitted a report assessing the loss to the tune of Rs.33,46,325/- but at the same time endorsed their clear opinion that there was a warranty clause in the policy that the claim would be admissible provided “24 hours security should be in force”. The observation was that since this warranty condition had been violated by the appellant, the Insurance Company was not liable for any indemnity. On receipt of the surveyor’s report, the claim was repudiated on 12.02.2016.
The core question therefore is as to whether the warranty clause had been violated by the appellant by not providing security for 24 hours as envisaged in the policy document. The arguments that have been advanced by the learned counsel for the appellant and the response given by the learned counsel for the Insurance company have extensively addressed this Bench on this issue.
The State Commission vide order dated 30.06.2017 accepted the stand taken by the Insurance company and dismissed the claim petition. Hence this appeal.
At the outset, one issue stands settled, namely, the contention of the appellant about non-availability of the policy terms and conditions. The finding recorded by the State Commission is categorical that is contained in para-14 of the impugned judgment. The said finding could not be assailed on any ground successfully before this Commission as well and accordingly the same is confirmed.
The second argument that seems to have been advanced before the State Commission about the insurance policy having been obtained for commercial purposes has also been settled in view of the law laid down in the case of National Insurance Co. Ltd. Vs. Harsolia Motors & Ors. 2023 SCC OnLine SC 409 where the Apex Court held that when an envisaged risk is covered under the policy, then it is not for commercial purposes and is only for indemnifying actual loss which cannot be construed to generate profit.
Having cleared this web, the core issue which has to be addressed is as to whether the appellant had failed in deploying 24 hours security or otherwise. As contended by the appellant, placing of locks on the godown was complete security. Learned counsel for the appellant advanced his submissions contending that locks were placed on the godown and there is absolutely no contrary evidence to demonstrate that the godown was not locked. The submissions have been primarily advanced by pressing an interpretation to persuade the Commission to accept the contention that the placing of the locks on the godown is a secured mode of storing goods safely that would amount to a 24 hours security of the goods stored in the godown. Explaining the same, it is urged that the observation of the surveyor, that there was no security arrangements, is thus contrary to record, and a mere absence of a security guard or a CCTV camera would not amount to deficient security so as to construe violation of the warranty clause.
Learned counsel for the appellant submits that the warranty clause reads “24 hrs Security should be in force”. Invoking the principles of contra proferentem rule, he submits that the aforesaid warranty clause admits of all forms of security and the policy nowhere ascribes the modes of security exclusively by the presence of a security guard or a CCTV camera. There is no imposition of any specific conditions. He submits that on a close reading of the warranty clause, the option of securing the goods by placing locks throughout on the godown would also amount to 24 hours of security, and hence the observation in the surveyor’s report and its acceptance by the insurance company for repudiation of the claim is an erroneous approach overlooking the fact that the locks placed on the godown are in force unless opened by applying genuinely matching keys.
It is also urged that it is not the case of the Insurance company that locks do not amount to security, and therefore, the warranty clause should be read in a way that also includes the option of such a secured system in which no fault has been pointed out. He also submits that where a warranty clause or a term and condition of policy is capable of being construed positively so as to give it a preferential correct meaning that is pragmatic and also otherwise acceptable, then such a meaning assigned to the clause should be read in favour of the insured for its benefit. He relies on two judgments of the Apex Court for applying the rule of contra proferentem, namely, United India Insurance Co. Ltd. Vs. Orient Treasures Pvt. Ltd. (2016) 3 SCC 49 para-37 and United India Insurance Co. Vs. Pushpalaya Printers (2004) 3 SCC 694 para-6. He submits that it is necessary to gather the intention that can be culled out without any violence to the warranty clause. The submission is that the warranty clause in the policy allows enough space to accept the proposition advanced by him. He, also through the written arguments, invited the attention of the Bench to the interpretation of the rule referred to above in Halsbury’s Laws of England which is as follows:
“Contra proferentem rule.—Where there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as the language used in answer to questions in the proposal or in a slip, a construction favourable to the insurers will prevail if the insured has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the rule has no application.”
The said arguments have been controverted vehemently by the learned counsel for the Insurance company to submit that on facts it is clear that there was no security arrangement at all, and even the contention of the removal of locks and the commission of burglary in the circumstances would indicate that no arrangements worth the name were existing. The incident itself is suspicious and a matter of grave doubt.
He submits that according to the argument of the learned counsel for the appellant himself the contra proferentem rule would apply only if there is any ambiguity or doubt in the meaning of the warranty clause. He urges that there is only one meaning which can be assigned to it, and which can be understood from the wordings thereof that a security for 24 hours in force means vigilance and securing of the godown by all possible means, and not by merely putting locks on the godown. He submits that the placement of locks is something obvious inasmuch as a godown cannot be secured by remaining exposed. He contends that in order to secure the godown it is also necessary that it should be guarded by some arrangements like a security personnel or even otherwise could be kept under guard through electronic devices like CCTV cameras. He contends that no such arrangements were available which is evident from the First Information Report (FIR) dated 31.07.2015 where, it is the own admission of the informant that there was neither any guard nor any CCTV cameras were installed either inside or outside the godown. He therefore submits that there is a clear admission on the part of the appellant of not having made any security arrangements round the clock.
Responding to the submissions, he further points out that on facts the State Commission has also found that a CCTV camera was installed only at the outer gate and the manner in which the locks were replaced also indicates a mysterious operation to demonstrate that even the proclaimed security through locks was conveniently altered. There is no explanation by the appellant except for the contents in the FIR which in no way throw light on any security arrangements. He therefore submits that the repudiation was well founded and there is no infirmity either in the surveyor’s report or the conclusion drawn by the Insurance Company. He therefore contends that the arguments advanced on behalf of the appellant cannot be countenanced to either add, subtract or redefine the terms of warranty.
On facts there is no ambiguity. The FIR lodged by the Accounts Officer of the Complainant on 31.07.2015 recites that the Company has not deployed any guard nor any CCTV camera has been installed at the godown. There are two shutters on the front and two at the back for entering into the godown. The locks had been secured wen the accountant had visited the godown on 29.07.15. On 31.07.15 at about 10:30 am one Mr. Shyam Lal who works as a loader at the godown enquired from him as to whether he had changed the locks on one of the shutters by replacing it with steel locks. On this, the accountant went to the godown and found that one of the shutters had brass locks but another shutter had steel locks on it. When he entered the godown, he found the stocks missing whereupon the FIR was lodged.
On 01.08.15 the surveyor visited the site and submitted an immediate loss advice report on 17.08.15 pointing out the breach of warranty. A claim form was submitted by the Complainant on 16.09.15. After exchange of communications between the surveyor and the claimant a final survey report dated 30.01.16 assessing and computing the loss was submitted and simultaneously recommending no liability on account of breach of the warranty condition referred to above. This was followed by a repudiation on 12.02.2016 on the same grounds by the Insurance Company.
Thus, except the placing of locks as claimed by the complainant, there was admittedly no other security arrangements nor any other arrangements have been stated in the claim or even demonstrated through evidence. The only CCTV camera is stated to be mounted on the main road at nearby rice godown about which the claimant himself in an internal enquiry report of two paras has stated that the video recording from that camera could not be viewed for want of a technical person.
In this backdrop, the question that needs to be considered is as to whether the security arrangements as envisaged in the warranty condition “24 hours security should be in force” which has been mentioned as “24 Hrs Security should be in place” in the repudiation letter dt. 11.02.2016 fulfils the warranty or not. The policy recites “in force” and the letter of repudiation recites “in place”. The letter obviously seems to treat them synonymous and ordinarily the Insurance Company cannot travel beyond its terms of repudiation, nonetheless since the terms of warranty as quoted in the policy are not disputed, it will be safe to assume that unless the security is “in place”, it cannot be “in force” whatever security measures are being debated upon by either side. Existence of a secured system is one thing and it’s adequacy another. This is a case where the existence of adequate security as per the warranty clause is in question. Whether locks on shutters would fulfil the stipulation in the warranty clause or any other pragmatic facility was needed to suffice adequacy, is the issue to be determined for assessing liability under the policy.
The contention of the claimant is that locks were put on to keep the shutters closed and safe and hence the godowns were secured. The argument and suggestion what appears to be is that locks were “in place” and therefore, security was “in force” round the clock. This factual premise is being justified to apply the contra proferentem rule to the warranty clause to urge that if the clause can admit this meaning, which it does according to the learned counsel for the claimant, then the rule has a definite application as the warranty clause does not specify the exact form of security, in place or in force.
The counter to this argument is that the terms of the contract cannot be altered to give a different meaning than what is conveyed. There can be no addition or subtraction to the terms so as to suit or convenience the claimant’s wish and the counsel’s interpretation. It is also contended that the word “security” does not simply mean placing of locks and is unambiguous clearly intending a complete secured arrangement, and not simply putting locks. The contra proferentem rule cannot be availed of to change the entire meaning of the warranty clause.
On an analysis of the substantively serious arguments raised, the issue appears to be contentious as no direct precedent on “locks” versus “security in place or force” is available.
Learned Counsel for both sides have very ably discharged their burden, and as proverbial as it is, it is now the Judge who is on trial. To discharge this burden, the warranty clause as available and understood plainly as it can be, states “security” which is to be “in place” and “in force” should extend “24 hours”. The words in my opinion are compulsive and not an altogether open ended option. They envisage a reasonable arrangement as an effective operational system round the clock and not a singular device of a lock. A lock is an appliance for fastening doors, lids, shutters, vaults, almirahs and the like on hooks, slides, hinged connects, etc. operated by dedicated keys for preventing any entry, and is a safety device. It can, therefore, be understood as an instrument for safekeeping.
To keep something secure is to keep it free from risk, make safe against loss and assure against any invasion. For security a lock is a device in its aid and cannot be comprehended as a complete form of security for a big godown. To minimise the warranty clause to mean only a lock would be reducing and subsidizing the intention of security of a promises with substantial stocks inside. Had it been so, the warranty could have stated only locks would be sufficient for security. The clause is not shrouded and it clearly reflects to keep the godown secure by ensuring it through a watch “24 hrs”. It could be manual or through a CCTV camera or even a burglar alarm or any such arrangement that can logically fit in the words “in force 24 hrs.” to attribute a pragmatic meaning. Had the clause intended sufficiency by only using the word “locks”, one could have attempted to assign a specific meaning excluding other options, but that is not the case here. Therefore, the argument tested from any angle does not yield the result as suggested by the learned counsel for the claimant.
The security involved is not for something trivial. It is a godown that constantly houses stocks worth more than Rs.50 lacs at a time. The same cannot be left unattended just by placing locks. There was not even a burglar’s alarm deployed, much less a watchman or a night guard. The only evidence that has been pleaded is of an interse dialogue noted in the FIR between the informant Accounts Officer and a loading labourer which exposes the vulnerability of so-called security. The existence of a CCTV camera on the main road is not a security arrangement of the claimant and even that did not convey any clue. The complainant therefore could not satisfy by offering any evidence for believing the existence of security. Admittedly, any arrangement for “24 hrs security in force” was completely absent. Any other connotation of the description would be redefining the warranty condition.
It is not to say that some fortification or an army was needed. What reasonably expected arrangements could be made is the unambiguous meaning that can be attributed to the words used in the warranty clause. To infer a lock or locks as a singular device to be sufficient would be denuding the real intent of the phrase “security for 24 hrs.” What is clearly intended is strengthened by the composition of the clause that denotes a comprehensive secured arrangement and not a simple placement of locks.
Learned counsel for the Insurance Company is therefore correct in submitting that the clause cannot be narrowed down in its letter and spirit so as to benefit the insured.
There is one argument on his behalf that needs attention as well as a clarification namely the reliance placed by him on the judgment of the apex court in the case of Export Credit Guarantee Corporation of India vs. Garg Sons International, (2014) (1) SCC 686 to urge that the terms of an insurance contract are to be construed strictly for determining liability on the insurer. In this regard the response of the learned counsel for the claimant is by placing placed reliance on the judgment in the case of United India Insurance Company Ltd. Vs. Pushpalaya Printers, 2004 (3) SCC 694 that in turn relies on a constitution bench decision of the apex court in the case of General Assurance Society Ltd. Vs. Chandmull Jain AIR 1966 SC 1644. Suffice it to say that neither the constitution bench pronouncement nor the judgment of Pushpalaya Printers (supra) have been noticed or dealt with in the case of Export Credit Guarantee Corporation (supra). It is not necessary to assess the applicability or otherwise of these judgments as, on the facts of the present case, the findings recorded hereinabove are sufficient to reject the claim.
The findings and the conclusions as well as observation in this order are not for general or universal application and are confined to the facts of this case where the concerns of security of a godown stocking goods was for assessment on the pleadings and evidence adduced by the parties. This may not apply in respect of buildings or shop establishments of a different nature or any other category or their locations or the phraseology of security arrangements in other types of policies. The facts of each case have to be assessed on their individual worth.
Consequently, for all the reasons hereinabove, the claimant has failed to dislodge the conclusions of the surveyor as accepted in the letter of repudiation and as upheld by the State Commission so as to establish any deficiency of service. The claim has no merits as the claimant has clearly failed to secure the godown in terms of the warranty clause, hence it is a clear breach of the same thereby disentitling the claimant for any relief, as prayed for. The findings recorded and the conclusions drawn by the State Commission in the impugned order dated 30.06.17 are upheld.
The appeal has no merits and is accordingly dismissed.