NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
FIRST APPEAL No.409 OF 2005
(from the order dated 4.8.2005 in Comp. No.99/2001
of the State Commission, Andhra Pradesh)
National Insurance Company Ltd.
Having its registered office at
one of its Divisional Offices at II,
414 to 416, 4th floor, Swapnalok Complex,
M/s. Padmavathi Jewellers
Represented through its partner
Carrying business at 6-3-672,
HON’BLE MR.JUSTICE M.B. SHAH, PRESIDENT
MRS. RAJYALAKSHMI RAO, MEMBER
For the Appellant : Mr. Yogesh Malhotra, Advocate
For the Respondents : Mr. Dinesh K. Gilda, Advocate
M.B.Shah, J. President:
Heard the learned counsel for the parties.
Being aggrieved and dissatisfied by the judgement and order dated 4.8.2005 passed by A.P. State Consumer Disputes Redressal Commission in C.D. No.99/2001, the National Insurance Company Ltd. (in short the Insurance Company) has preferred this appeal. By the impugned order, the State Commission has directed the Insurance Company to reimburse the Complainant a sum of Rs.8,50,818/- as assessed by the surveyor with costs of Rs.5,000/-, within a period of six weeks, failing which it would attract interest @ 9% p.a. till the date of realization.
Learned counsel appearing on behalf of the Insurance Company vehemently submitted that as per the terms of the insurance policy, the complainant was required to keep all the articles in the burglar proof safe at night. He, therefore, contended that the order passed by the State Commission is erroneous on the face of it because as found by the surveyor as well as investigator, the articles were not kept in burglar proof safe during the night time.
As against this, learned counsel appearing on behalf of the respondent/complainant submitted that the order passed by the State Commission is justified because the entire business premises was properly locked and there was a strong room. He further contended that it is difficult to find out ‘burglar proof safe’ as contended by the Insurance Company. Entire premises was properly locked and was having grill in front of it. He, therefore, submitted that the order passed by the State Commission is justified on the basis of the facts of the case.
For the purpose of appreciating the contentions, we would state that complainant has taken the insurance cover for a sum of Rs.50,00,000/- (Rupees fifty lakhs only). Rs.49,80,000/- was for the property insured and Rs.20,000/- for cash and currency notes. Further, there is no dispute with regard to theft/burglary. To find out the truth the Insurance Company appointed an Investigator who submitted his report dated 4.1.2001, inter alia, stating as under:
1. “During my enquiry, it is found that the culprits entered the Padmavati Jewellers shop by breaking the locks and grill of the rear door. They also broke the wooden cup boards where the silver items are kept and also gold items and diamond fitted items which were visible through the top glass of the big counter show case the gold items kept in the safe were (worth about Rs.41.00 lacs) unaffected.
2. A case under FIR no.839/99 was filed by the insured at Panjagutta Police Station on 6.12.1999.
3, The Sr. Police including clue personnel attended the scene of offence, took photographs of the ransacked position of the shop and took up investigation.
4. For the entire building, there was one watchman on duty and on 5.12.1999 after 12.00 hrs. he went up stairs and no body was at the down stairs and as the rear portion of the shop was not visible to the main road, it became advantage for the offenders to break open the locks and grill and made their entry into the shop. They broke the cup boards and stole silver, gold and some diamond fitted items totally worth about Rs.8.80 lacs.”
Further, S.Prabhakar & Company have submitted its survey report on 25.4.2000 and have assessed the net loss as under:-
Assessment of Loss :-
1. Cash reported to be stolen/lost/assessed 18,200/-
as per the cash book (xerox copy of the
Extract dated 9.12.1999
(The preliminary report referred on
“Cash kept in the counter is safe”
This fact of missing cash was also not
mentioned in FIR. Hence the loss is not admitted.
2. Gold items lost/assessed 1,23,703/-
3. Silver articles loss/assessed …… 7,08,915/-
4. Diamonds etc. 1,75,000/-
Thereafter, the claim was repudiated on 17.4.2001 on the ground that there was a breach of the warranty clause prescribed in Section 1 of the Policy, as the stock was not kept in a ‘secured locked burglar proof safe’ at night time.
It is also true that in the Proposal Form paragraph 5 (1)(b), it has been stated as under:-
“Will the whole of your stock when on your
premises be kept in safe locker at night and (Yes)
at all times when the premises are closed?
If not, state value and class of stock which
Will be left outside safes locker?”
There is no dispute that in the column no.8 of Proposal Forum, property insured on the premises is Rs.49,80,000/- and for cash and currency notes, it is for Rs.20,000/-.
From the facts stated above, the question for consideration would be whether the Proposal Form binds the insurance company or not ? In our view, last part of the Proposal Form itself makes it clear that the proposal form duly signed and submitted by the insured would be binding to the insurance company and that it shall be the basis of issuing the policy. The following clause has been specifically mentioned in the policy itself:
“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”.
This clause would certainly establish that once the proposal form is accepted, it should be the basis of issuance of the insurance policy. At the same time, it is not binding to the proposer to complete the insurance policy.
In the Proposal Form, there is a specific endorsement by the officers of the Insurance Company to the effect that:
“Inspected the premises and found that the jewellery will be kept after business hours in specially constructed strong room with iron grill door. Round the clock security guards. Hence 10% discount may be given”.
Therefore, terms of the policy ought to have been according to the aforesaid endorsement.
Keeping the aforesaid terms and conditions in mind as well as the specific endorsement in the Proposal Form made by the officers of the Insurance Company, after the inspection of the premises, to the effect that only jewellery would be kept after business hours in the specially constructed strong room with iron grill door, for the loss of jewellery, namely, gold and diamond articles, Insurance Company is not liable to reimburse.
However, with regard to the silver items which are vessels and other articles being of a large quantity the Insurance Company is bound to reimburse the loss suffered by the Complainant. All such stocks cannot be kept in a safe strong room as contended by the learned counsel for the Insurance Company and this is not the requirement of the endorsement, because, only jewellery is to be kept in the safe and not the silver vessels.
It is contended by the learned counsel for the appellant that the Policy does not distinguish between gold and silver stocks and therefore, the terms of the policy are to be taken into consideration. As against this, it is settled proposition that when proposal form is submitted with a specific statement and that too when an insurance cover is given on that basis by the Insurance Company, that is binding. It cannot be tampered by the printed words which are there in the normal/usual policy.
It is also established law that if there is some vagueness in the terms,
interpretation should be such that it gives
benefit to the insured and the purpose of insurance is not
frustrated. For this purpose, it would be worthwhile to refer to the case of Skandia
Insurance Co. Ltd. Vs. Kokilaben Chandravadan
& Ors. – (1987) 2 SCC 654, wherein the
“14. ……….. When the option is between opting for a view which will relieve the distress and misery of the victims of accidents or their dependants on the one hand and the equally plausible view which will reduce the profitability of the insurer in regard to the occupational hazard undertaken by him by way of business activity, there is hardly any choice. The Court cannot but opt for the former view. Even if one were to make a strictly doctrinaire approach, the very same conclusion would emerge in obeisance to the doctrine of ‘reading down’ the exclusion clause in the light of the ‘main purpose’ of the provision so that the ‘exclusion clause’ does not cross swords with the ‘main purpose’ highlighted earlier. The effort must be to harmonize the two instead of allowing the exclusion clause to snipe successfully at the main purpose. This theory which needs no support is supported by Carter’s ‘Breach of Contract’ vide paragraph 251. To quote:
Notwithstanding the general ability of contracting parties to agree to exclusion clauses which operate to define obligations there exists a rule, usually referred to as the ‘main purpose rule’, which may limit the application of wide exclusion clauses defining a promisor’s contractual obligations. For example, in Glynn v. Margetgson & Co. [1893 AC 351,357], Lord Halsbury, L.C. stated:
It seems to me that in construing this document, which is a contract of carriage between the parties, one must in the first instance look at the whole instrument and not at one part of it only. Looking at the whole instrument, and seeing what one must regard… as its main purpose, one must reject words, indeed whole provisions, if they are inconsistent with what one assumes to be the main purpose of the contract.
Although this rule played a role in the development of the doctrine of fundamental breach, the continued validity of the rule was acknowledged when the doctrine was rejected by the House of Lords in Suissee Atlantique Societe d’ Armement Maritime S.A.V. N.V. Rotterdamasche Kolen Centrale [(1967)1 AC 361,393,412-413, 427-428, 430: (1966) 2 All ER 61. Accordingly, wide exclusion clauses will be read down to the extent to which they are inconsistent with the main purpose, or object of the contract”.
Considering the aforesaid law as well as the endorsement made by the officer of the Insurance Company on the proposal form, the Insurance Company is liable to reimburse the Complainant for the loss of silver items and not for the jewellery.
For the silver items, the loss assessed by the surveyor is Rs.7,08,915/-. The Insurance Company is liable to pay the said amount to the complainant.
In the result, the order passed by the State Commission is modified. Insurance Company is directed to pay a sum of Rs.7,08,915/- to the insured with interest @ 12% p.a. from the date of survey report i.e. 25.4.2000 till the date of its payment. Appeal is partly allowed accordingly. There shall be no order as to costs.