Bench: M Shah, P Shenoy
Orient Treasures Pvt. Ltd. vs United India Insurance Company Ltd. on 19/3/2007
ORDER
M.B. Shah, J. (President)
1. It is the say of the Complainant that it is carrying on business in retail sale of gold jewellery and silver wares at his shop known as Kanchan Mahal at Jan Priya Centre, T-Nagar, Chennai.
2. The Complainant obtained insurance policies from the Opposite Party under "Jeweller's Block Insurance Policies" from 2.7.1993 onwards. It is also pointed out that after the Complainant used to submit the proposal form every year, the Opposite Party used to inspect the shop in order to verify the security and storage particulars and used to issue the policies. It is pointed out that for the period from 2.7.1994 to 1.7.1995 the Complainant has taken the insurance policy covering the risk of burglary by submitting specific proposal form.
3. On the night of 2.6.1995 burglars broke open the locks of shutters, entered the shop and decamped with the gold and silver articles valued at Rs. 40,63,735/-. For that an FIR was lodged at Police Station on 3.6.1995 and after investigation the Police submitted a final investigation report which was received on 24.6.1996 treating the case as untraceable.
4. It is also contended that immediately by a telegraphic communication the Insurance Company was informed on 3.6.1995 with regard to the theft. By letter dated 5.6.1995 the Opposite Party informed the Complainant that Surveyor was appointed. Thereafter, the surveyor finally submitted his report and assessed the loss at Rs. 36,10,211/-.
5. Despite the aforesaid survey report, nothing was done by the Insurance Company.
6. Finally on 19.1.1998, the Divisional Manager of the Insurance Company at Tuticorin repudiated the claim on the ground of breach of warranty of policy and exclusion clause No. 12 of the policy. The relevant part of the warranty is as under:
Warranted that all stocks whilst at the premises specified in the schedule shall be secured in locked burglar proof safe at night and at all times out of business hours;
and exclusion No. 12 of the policy which reads as follows:
Loss or damage to property insured whilst in window display at night or whilst kept out of safe business hours.
7. Thereafter, the Complainant sent letters and reminders pointing out the terms of the policy and proposal form. Yet, as nothing was done, complaint was filed before this Commission on 17.6.1999 claiming a sum of Rs. 40,54,683/- with interest at the rate of 24% p.a. and Rs. 25 lakhs for mental agony.
Submissions:
8. It is the contention of the learned Counsel for the Complainant that the before taking the insurance cover the Complainant has submitted the proposal form and on the basis of the proposal form the policy was issued. In the proposal form it was specifically highlighted that the stocks of gold items, jems, silver and other precious stones were being kept outside the safe and its valuation was Rs. 2 Crores. For that purpose, the policy was sought and the same was issued by the Insurance Company.
9. As against this, the learned Counsel appearing for the Insurance Company submitted that the policy is a contract between the parties and both the parties are bound by the terms of the contract. Therefore, the Insurance Company has rightly repudiated the claim by pointing out that the articles which were kept outside the safe during the night time, and hence, the Insurance Company is not liable to reimburse the Complainant.
Findings:
10. For appreciating the contention of the parties we would first refer to the proposal form:
3(c)(i)
Whether he/they is/are your employees and is/are employed for all the 24 hours of the day. OR
(i)
Guard Watchman Employed 24 hours
(ii)
Whether he is/they are common watchman for the whole building/locality
Or only a night watchman to guard the insured premise(s) or the building or the
Locality.
(ii)
Yes. Common watchman for the comlex. 24 hours.
(e)
Is an inside grill fitted to your Gold and Gems, Showroom, Window or is any other protection installed against loss by window smashing? If so, state what protection.
(e)
To be installed shortly. Alternatives a punching clock is installed. Time punching machines. Yes Inside Grill fitted.
(g)
How are the doors secured outside business hours?
(g)
Fully locked/protected by Watchman.
(h)
How are the windows protected?
(h)
(i)
How are Skylights, if any, protected?
(i)
No-Windows. None.
4.
Window display:
State the approximate maximum value of any one article of jewellery or gem stock which will be displayed in the window (A pad or tray containing an umber of rings or other articles to be counted as one article) (Give separate answer for each location)
Note: Window display at night is not covered.
Rs. 3,50,000/-
5.
Stock
(a)What was (i) the average daily total value of your stock during the past 12 months?
(ii)Cash and currency notes during the pass 12 months?
(b)Will the whole of your stock when on you premises be kept in safe at night and at all times when the ., if not, state value and class of stock which will be left outside safes.
Note: We do not cover stocks kept out of the safe after business hours at night.
(i)New Shop
(ii)All stocks of Gold, Diamond Gems, Silver and other Precious Stones-Kept Outside the Safe. Rs. 2,00,00,000/- (Two Crores)
8.
Any where in India
SECTION:
(a) Property Insured on the Premises
(b) Property Insured in display windows
(c) Property Insured in locked safe on the premises
(d) Cash and Currency Notes
(e) Property Insured in Bank lockers subject to insured maintaining a separate register to record all deposits/withdrawals in such Branch of the Bank
Rs. 2,00,00,000/-
Rs/3.50.000-
(Gold Nil)- Currency and documents.
Rs. 2,50,000/-
Nil.
11. Learned Counsel for the complainant further relied upon following conditions in the proposal form, which are as under:
Signing this form does not bind the proposer to complete the insurance, but is agreed that this form shall be the basis of contract should policy be issued.
I/We have read the above and agree that to the best of my/our knowledge and belief, it represents true and complete statement.
I/We agree that if this insurance is completed the protections and/or safeguards mentioned above shall not be withdrawn or varied to the detriment of the interest of the underwriters without their consent.
12. As against this, learned Counsel for the Insurance Company relied upon the following warranty of the policy and the exclusion Clause No. 12 of the policy, which are as under:
Warranted that all stocks whilst at the premises specified in the schedule shall be secured in locked burglar proof safe at night and at all times out of business hours
and exclusion No. 12 of the policy which reads as follows:
Loss or damage to property insured whilst in window display at night or whilst kept out of safes after business hours.
13. The relevant portion of Schedule-B of Section-I wherein the warranty is mentioned as under:
Section-I
(a) Property insured on the premises : Rs. 2,00,00,000/- (b) Property insured in display windows : Rs. 3,50,000/- (c) Property insured in locked safe on the : (Gold Nil) premises Currency & documents (d) Cash and currency notes
(e) Property insured in bank lockers subject to insured maintaining a separate register to record all deposits/withdrawals in such lockers, address of the branch of the bank
Warranted that all stock whilst at the premises specified in the schedule shall be secured in locked burglar proof safe at night and at all times out of their business hours.
14. From the facts stated above, the question for consideration would be whether the proposal form binds the Insurance Company or not? In our view, the proposal form itself makes it clear that the proposal submitted by the Complainant would be binding to the Insurance Company and that it shall be the basis of issuing the policy. By the following clause this has been made clear:
Signing this form does not bind the proposer to complete the insurance, but is agreed that this form shall be the basis of contract should policy be issued.
15. This clause would certainly indicate that even after submitting the proposal form, it does not bind the proposer to take the insurance policy. As against this, once the proposal form is accepted, it would be the basis of issuance of insurance policy. In the proposal form, it is specifically mentioned that the insured property would be kept outside the safe but within the premises. Knowing fully well, if the proposal is accepted by the Insurance Company, it cannot be said that it is not binding to the Insurance Company. In item 5 of the proposal form which pertains to the column - 'Stock', a question has been specifically asked - Will the whole of your stock when on your premises be kept in safe at night and at all times when the premises are closed. If not state value and class of stock which will be left outside safes". The Complainant has specifically stated that gold, diamond, gems, silver and other precious stones would be kept outside the safe and its value is shown at Rs. 2,00,00,000/- (two crores). With regard to the window display, it is specifically stated that its was Rs. 3,50,000/-. Exclusion Clause No. 12 would apply only to a case of window display, that means loss caused to the property kept in window display at night or whilst kept out of safe after business hours.
16. Therefore, the property which was kept in window display for a sum of Rs. 3,50,000/- would not be covered, if it was kept outside the safe.
17. Secondly, the property, i.e. gold, diamond, gems, silver and other precious stones, which was kept in the premises, worth Rs. 2 Crores, would be covered. On this aspect it is worthwhile to quote Halsbury's Laws of England, Fourth Edition, Volume 25, para 119 deals with the circumstances affecting the risk. It has been observed "The insurers' acceptance of the proposal is on the basis of the description of the risk given to them, not on their own knowledge of it".
18. The learned Counsel for the Insurance Company, further submitted that the terms of the insurance policy are to be read as they are. It is true that the terms of the insurance policy are binding, but at the same time, if there is apparent mistake in mentioning the terms and conditions of the policy, it would not be binding to the insured. Insurance cover was asked on the basis of the proposal form and that proposal form was accepted by the insurer and that is binding to the insurer.
19. It is also to be stated that the insurance policy is issued only as per the standard prescribed terms and conditions without deleting the portion on the basis of the proposal form.
20. Hence, the part which is inconsistent with the proposal form is not binding to the insured.
21. The aforesaid view is consistent with the general rule as stated in the case of Life Insurance Corporation of India v. Raja Vasireddy Komalavalli Kamba and Ors. , wherein the Court observed as under:
15. ...The general rule is that that contract of insurance will be concluded only when the party to whom an offer has been made accepts it unconditionally and communicates his acceptance to the person making the offer. Whether the final acceptance is that of the assured or insurers, however, depends simply on the way in which negotiations for an insurance have progressed.
22. In our view, the aforesaid judgement referred to by the counsel for the Insurance Company, does not support his contention because in the present the offer made by the Insurance Company on the basis of the proposal form was accepted by the Complainant by paying premium and that proposal form, as stated above, was required to be the basis of the contract. That particular term in the proposal form is binding to the Insurance Company and it cannot subsequently state that because they have issued the policy in a prescribed standard form which is in existence for years, the condition of the insurance policy would be binding to the Complainant. Binding contract, as agreed between the parties, comes into existence on the basis of the proposal form. Further, it is to be stated that even if the Insurance Company accepts the proposal form it was open to the insured not to pay the premium and reject the contract.
23. Learned Counsel for the Insurance Company further contended that in the proposal form there is a specific note that they do not cover stocks kept out of safe after business hours at night. It is true that the aforesaid note is there. Still, however, the Complainant made it clear that gold, diamond, gems, silver and other precious stones, would be kept out of the safe at night at all times. If this condition in the proposal form is accepted by the Insurance Company by taking premium, the contract is binding on the Insurance Company and subsequently, it cannot take a summersault and contend that it is not binding on it.
24. It is to be stated that in the proposal form itself the Complainant has made it clear that they were having a guard/watchman for 24 hours and he was the common watchman for the complex. Further, inside the shop grill was fitted. Time punching machines were there and doors were locked and protected. Now, in these circumstances, it is difficult to find out what type of safety is required by the Insurance Company when inside the shop grill is there, doors are properly secured and locked and normally it would be burglar proof shop. On this aspect again we would refer to para 649 Halsbury's Laws of England, Fourth Edition, Volume 25, reads as under:
649. Precautions to be taken. A burglary insurance policy may contain a condition imposing on the insured the duty of taking proper precautions for the safety of the insured property, such as securing all doors, windows, and other means of entrance. A failure to lock the door of an inside showcase is not a breach of such a condition. This duty may be amplified by a condition which provides that the premises are always to be occupied or that they are not to be left unoccupied at night. Such a condition does not require the continuous presence of someone on the premises; premises do not become unoccupied for the purposes of the condition by reason of the temporary absence of all the inmates. A condition may also require proper books of account to be kept or a burglar alarm to be fitted
25. Further, it is to be stated that the insistence by the Insurance Company that the goods should be kept in a burglar proof safe, is apparently a vague condition. It is difficult to find out any safe which could be said to be burglar proof. Up-till now it is not invented.
26. Hence in such cases where the term of the policy is vague interpretation of such condition should be such that it does not frustrate the purpose of having insurance cover. In case of ambiguity or doubt in terms of the policy it should be interpreted in favour of the insured and against the Company. In the case of General Assurance Society Ltd. v. Chandumul Jain and Anr. , while interpreting the insurance policy the Apex Court has held that documents like the proposal, cover note and the policy are commercial documents and to interpret them commercial habits and practice cannot altogether be ignored and that the contract is likely to be construed 'contra proferentem' that is against the company in case of ambiguity or doubt. The aforesaid judgement is relied upon in the case of United India Insurance Co. Ltd. v. Pushpalaya Printers , wherein the Court held that "Where the words of a document are ambiguous, they shall be construed against the party who prepared the document".
27. Hence, in our view, repudiation of the claim is unjustified.
28. The next question would be with regard to the loss suffered by the Complainant. The claim is for a sum of Rs. 40,54,683/-. The Insurance Company has admitted in its written version that the surveyor had assessed the loss at Rs. 36,10,211/-. For the reasons best known to the Insurance Company, the survey report is not brought on record for our perusal by the Insurance Company. In any case the admission made by the Insurance Company is binding to it. Hence, it would be just and reasonable to pass an order directing the Insurance Company to reimburse the Complainant a sum of Rs. 36,10,211/- with interest @ 10% p.a. from 3.12.1995 i.e. after six months from the date of occurrence of burglary.
29. In the result, the Original Petition is allowed and the Insurance Company is directed to pay a sum of Rs. 36,10,211/- with interest @ 10% p.a. from 3.12.1995 till the date of payment. The Insurance Company shall also pay costs assessed at Rs. 50,000/- to the Complainant.
