Bench: M Shah, R Rao, P Shenoy
Mono Industries vs New India Assurance Co. Ltd. on 10/3/2008
ORDER
M.B. Shah, J. (President)
1. The issue that came up for consideration in this case is, whether the loss of goods sustained by the insured, fall within the meaning of 'burglary' as stated in the insurance policy?
2. It appears that the judgment rendered by the Apex Court in the case of United India Insurance Co. Ltd. v. Harichand Rai Chandan Lal is misunderstood by the Insurance Company. In the said case, it has been held that 'theft from the premises by forceful and violently' would mean entry by use of any force, however slight it may be. As such, an entry obtained by picking the lock or forcing back the catch by means of an instrument involves the use of violence. Whether it is burglary or not, depends upon the facts and circumstances of each case. In the present case, entry by the culprits was by removal of roof sheet which cannot be done without use of force. Hence, it would be a case of violent entry for committing theft/burglary.
Facts:
3. It is the say of the Complainant that the Complainant is engaged in manufacturing of Polythene rolls, bags and tubes. It had obtained an insurance policy from the New India Assurance Co. Ltd. for a sum of Rs. 4 lakhs, for the period from 10.4.1992 to 9.4.1993 on payment of Rs. 1,140/- towards the premium. On the intervening night of 31st August and the 1st September, 1992, a burglary took place in the insured premises and information to that effect was given to the Police and the Insurance Company. As the claim was not settled, the Complainant filed Case No.TC/826/98 before the District Forum, New Delhi, claiming a sum of Rs. 2,37,500/- towards the value of the goods stolen; and, Rs. 2,00,000/- towards compensation, with interest at the rate of 18% p.a. and costs.
4. The stand taken by the Insurance Company before the District Forum was that : (i) on survey being conducted, it was found that there was no burglary, but that it was only a case of theft, which was not covered under the insurance policy; and, (ii) the Complainant did not furnish any proof of burglary, and hence the claim of the Complainant was not tenable.
5. The District Forum after hearing both the parties and taking into consideration that the Complainant had shown to the investigator the broken roofing sheet which might have been removed by the miscreants to enter the premises, directed the Insurance Company to pay to the Complainant the value of the stolen goods to the tune of Rs. 2,37,500/- with interest at the rate of 18% p.a. from 1.9.1992, i.e. the date of the occurrence of the loss, till the date of payment. Rs. 2,000/- was also awarded by way of costs.
6. Feeling aggrieved, the Insurance Company went in appeal to the State Commission, Delhi, by filing Appeal No.A-01/2001. The State Commission vide its order dated 29.9.2005, while upholding the order of the District Forum, modified the order to the limited extent of deleting the direction of payment of interest, and, instead, awarded a lump sum of Rs. 25,000/- towards compensation and costs.
7. Against that order, both the parties have filed revision petitions before us.
8. The Insurance Company filed Revision Petition No.251 of 2006 for dismissal of the complaint and setting aside the order of the District Forum.
9. Revision Petition No.3049 of 2005 is filed by the Complainant praying that interest on the amount as awarded by the District Forum requires to be confirmed.
10. As both the revision petitions arise out of the same judgment and order of the State Commission, we dispose of both of them by a common order.
11. In the revision petition filed by the Insurance Company, the learned Counsel Mr.Seth contended that:
.(i). no burglary occurred in the premises of the Complainant, hence, the loss or damage caused to the Complainant is not covered by the policy, as it is only a case of theft as registered by the Police under Section 380 IPC;
.(ii). there is no evidence on record to establish that the Complainant suffered loss of Rs. 2.37,500/-;
Findings:
I. Whether it is a case of burglary or theft?
12. The learned Counsel Mr.Seth appearing on behalf of the Insurance Company heavily relied upon the decision of the Apex Court in the case of United India Insurance Co. Ltd. v. Harichand Rai Chandanlal and contended that in case of theft Insurance Company is not liable to reimburse.
13. In our view, the aforesaid judgment is misunderstood by the Insurance Company.
14. In the aforesaid case it is clearly held that if the entry is effected by exercise of any force, however slight, it was sufficient to constitute an entry within the meaning of the policy. Such entry can be described as violent in nature and character. For this purpose, the Court referred to Queen's Bench decision in the case of George and Goldsmiths and General Burglary Insurance Assn. Ltd.(1989) 1 All ER 422 : (1989) 1 Lloyd's Rep 379 (CA), wherein it has been held as under:
In the context of a policy of insurance against theft from premises by 'forcible and violent' means of entry, the word 'violent' was to be construed according to its ordinary meaning and meant entry by the use of any force which was accentuated or accompanied by a physical act which could properly be described as violent in nature and character. In the context of such a policy the word 'violent' accordingly referred to the physical character of the means of entry and not merely to its unlawful character.
15. In the same context, the Court also referred to the passage from the Halsbury's Laws of England, 4th Edn., para 646 wherein it has been observed that an entry obtained by picking the lock or forcing back the catch by means of an instrument involves the use of violence and is therefore covered.
16. Thereafter, the Court held that:
The determination of what constitutes visible marks or visible evidence within the meaning of such a provision, and of where such marks or evidence must be located in order to satisfy the policy requirement, is to a great extent dependent upon the particular facts involved in relation to the specific requirements imposed by the policy. Where, for example, a burglary or theft policy requires that there must be visible marks of force or violence 'at the place of entry' into the premises, this requirement has been held complied with if the visible marks are only on one of the outer doors to the insured's premises, which the burglars or thieves must have used to accomplish their deed.
Keeping the aforesaid principle in back ground we would first refer to the finding recorded by the State Commission on the basis of the evidence of the Complainant.
17. The State Commission after appreciating the evidence which was brought on record arrived at the conclusion that it was a clear case of burglary. For this purpose, the State Commission relied upon the version of the Complainant that at about 7.00 pm the office Supervisor of the factory locked the godown from inside and kept the key in the office. On the next day morning at about 9.30 a.m., the Operator, Mr.Jaganath, informed the Complainant on telephone that plastic granules lying in the godown had been stolen. On receipt of the said information at about 10.15 am, the Complainant came to the factory and found that the plastic items weighing 4,750 kgs had been stolen. For this purpose, undisputedly, an FIR was lodged with the Police. The Police registered the case under Section 380 of the IPC. It is also pointed out that for entering the godown premises a skilled person removed the plastic sheet from the ceiling of the roof, and, thereby entered into the premises, opened the door and took away large quantity of the granules.
18. Further, with regard to cause of incident, the surveyor appointed by the Insurance Company also stated to the same effect in the interim survey report dated 19.7.1993, which is as under:
During our Survey, following are our observations:
1. The main gate/entry, made of steel shutters were duly locked and intact with no breakages at all either in the locks, shutters or their Kundas etc.
2. There is a small door entering in the godown from inside the shed which was opened by the culprits after using the key in the lock but it was not tampered at all.
3. After entering this godown, the culprits broke the Kundas of he steel door/gate with locks intact in the hooks and thus opened it and through which the insured's raw material packed in bags ware taken out from this godown and were loaded on a truck just waiting outside on the main road on exit of this broken door/godown as claimed by the insured.
4. On enquiring the matter and how the culprits in the above circumstance entered the factory, the insured replies that he exactly does not know but there is possibility that the culprits must have entered after removing the roofing sheet of the shed. During our survey the sheet was already placed in its original position as per statement of the insured and before our arrival at the Insured factory. Reason given by the insured is that for further security and to stop water coming inside the shed during the rainy day which was already on during that period.
In the circumstances, as stated above the forcible entry inside the shed premises is yet to be established and it is under our investigations.
19. This would mean that even the Surveyor has considered it to be probable that entry of the culprits must be by removing the sheet of the roof.
20. It is also to be stated that by letter dated 1.2.1996 the Complainant informed the Grievance Officer of the Insurance Company as under:
This is further to our letter dated 8.8.1994. We write with much regret that no reply has been received from you. We contacted you personally and explained in detail the entire case.
Recently, we have been contacted by Police Inspector of Samaipur Badli, Police Station, regarding the burglary occurred at our factory on 31st August, 1992. We have been informed that a gang was caught by them, who were indulged in theft of plastic-raw-material. They took away the material from many factories/godowns in Delhi. The Police Inspector brought the person from that gang with him, who admitted that he along with many people broken the locks of our factory-godown and took the raw-material bags in Nishan truck on 31.8.1992 and confirmed the quantity too. The Police Inspector confirmed that they have complete reports at Samaipur Badli Police Station, and given phone number for any details if, required.
Now it has been proved that the burglary took place at our factory/godown on 31.8.92. Therefore, we request you once again to kindly look into the matter carefully and settle our claim at the earliest.
21. Despite this, the Insurance Company never bothered to verify from the Police Officers with regard to the incident.
22. In the light of the aforesaid evidence, the finding recorded by the District Forum and the State Commission that burglary as contemplated by the terms of the policy has taken place. The entry of the culprit was by removal of roof sheet and exist was by breaking of locks. This would amount to forceful entry and forceful exit.
II. Assessment of loss:
The next question is with regard to assessment of loss.
23. Admittedly, the Insurance Company had appointed a surveyor. Thereafter, the Chartered Accountant appointed by the surveyor examined the records and arrived at the conclusion that the total value of the stock was Rs. 15,54,820/-. However, as stock was kept in two godowns, they arrived at the conclusion that it was not possible to work out the closing stock just before the occurrence of the loss at the factory premises where the burglary had occurred, with the records available with the insured.
24. As against this, it is to be stated that as per the policy which is produced on record, the sum insured is Rs. 4 lakhs on stock used in manufacturing of polythene sheets/bags, whilst stored and/or lying in the insured's factory at the address mentioned therein, i.e. at the place where the burglary took place. It is also to be stated that to avoid any further complications, in appeal, the State Commission by order dated 24.1.2005 directed that as there was no dispute as to the price of the goods lying in the factory and as the surveyor appointed by the Insurance Company has not assessed the loss on the ground that it was because of theft which was not covered by the policy and that he was not in a position to assess the loss for want of documents which were to be furnished by the Complainant, directed the Insurance Company to call upon the Complainant within a period of one week from the date of the order to furnish the requisite documents on the basis of the claim preferred by the Complainant. Despite this specific order, assessment was not made by the surveyor/or the Insurance Company.
25. It is to be stated that the Divisional Manager wrote a letter to the Legal Department on 27th November, 2007 to the following effect:
As already informed to you that the assessment of the above loss was not done by the Surveyor, Mr. A.K.Gupta who had only issued the Interim Report in regard to the loss. The undersigned had personally discussed the matter with the Surveyor over telephone who has informed that since he is going to Dubai and will not be able to proceed further in the matter only after he comes back after 10 days.
In these circumstances, we request you to advise us whether we should satisfy the Award given by the consumer Court amounting to Rs. 2,37,500/- + interest @ 18% p.a. from the date of loss, i.e. 1-1-92 till the date of payment or we may get the loss assessed by the Surveyor on the basis of the adequacy of the sum insured since the amount of Rs. 2,37,500/- is the estimated loss of the insured.
26. Further, it is to be stated that by letter dated 18th March, 1984 the Branch Manager of the Insurance Company informed the surveyors to submit their report immediately by stating as under:
Please refer our letter dated 15.3.94. We have received a copy of our letter of the insured dated 9.11.93 photocopy attached herewith for your records. As reported by the bankers of the insured that all your requirements had been completed by the insured but till date we have not received the report. Further, we would like to inform you that all the required documents are available with the insured's banker. You may contact them also if required.
27. The surveyor has not complied with this. It is not the fault of the Complainant if the Surveyor fails to assess the loss for the reasons best known to him, despite necessary records furnished by the Complainant, then the complainant should not suffer.
28. Further, even in the stock statement dated 7.10.1992 which is produced on record before this Commission, the Dena Bank has specifically deducted a sum of Rs. 2,37,500/-. This would indicate that immediately after the burglary even the Bank has accepted the said amount as the loss suffered by the Complainant for the loss of goods weighing 4,750 kgs.
29. In this set of circumstances, the consistent version given by the Complainant with regard to the loss suffered by him was accepted by the State Commission as well as the District Forum. As per the facts and circumstances of the case, the finding recorded by the District Forum and the State Commission cannot be said to be in any way illegal or irregular which would call for interference.
III. Whether the Complainant is entitled to any interest?
30. The next question which requires consideration is whether the order passed by the District Forum directing the Insurance Company to pay the amount with interest at the rate of 18% p.a. requires to be restored or not?
31. The learned Counsel for the Complainant submitted that there was no justifiable reason for the State Commission in not awarding the interest on the amount of loss suffered by the Complainant and in awarding only Rs. 25,000/- in lump sum.
32. In our view, the aforesaid submission is also justifiable. Because, the incident of burglary took place on the intervening night of 31st August and 1st September, 1992. And, if the amount is withheld by the Insurance Company for years together, lump sum award of Rs. 25,000/- as compensation, covering both interest and costs, would not suffice. Hence, just compensation is required to be awarded. Just compensation would mean award of reasonable rate of interest in case of loss suffered in terms of Rupees. In other words, proper measure or yard stick for granting compensation would be award of appropriate rate of interest on the amount which Complainant would have received, had the claim been settled at the right time. Hence, the Insurance Company is directed to pay the aforesaid amount with interest at the rate of 10% p.a.
Revision Petition No.251 of 2006:
33. In view of the aforesaid discussion, the Revision Petition No. 251 of 2006 filed by the Insurance Company is dismissed.
Revision Petition No.3049 of 2005:
34. In the result, the Revision Petition No.3049 of 2005, filed by the Complainant is partly allowed. The Insurance Company is directed to pay the sum of Rs. 2,37,500/- with interest at the rate of 10% from 1st March, 1993, ie., after 6 months from the date of the occurrence of the incident, till the date of payment.
35. There shall be no order as to costs in both the Revision Petitions.
