Delhi

StateCommission

CC/08/173

BELWAL SPINNING MILLS LIMITED - Complainant(s)

Versus

ORIENTAL INSURANCE COMPANY LIMITED - Opp.Party(s)

05 Jul 2019

ORDER

IN THE STATE COMMISSION: DELHI

(Constituted under section 9 of the Consumer Protection Act, 1986)

 

 

Date of Hearing:05.07.2019

                                                                                                              

                                                                   Date of decision:12.07.2019

 

Complaint No.113/2006

Complaint No.173/2008

 

IN THE MATTER OF

 

M/s Belwal Spinning Mills Ltd.

Regd. Office-4654/21,

Ansari Road, Darya Ganj,

New Delhi-110002….Complainant

 

VERSUS

 

M/s Oriental Insurance Co. Ltd.

Divisional Office No. 10 (Code No. 21220)

15-16, Scindia House,

K.G. Marg, New Delhi-1                                                 ….Opposite Party

 

 

HON’BLE  SH. ANIL SRIVASTAVA, MEMBER                            

                                 

 1.   Whether reporters of local newspaper be allowed to see the judgment?            Yes     

 2.   To be referred to the reporter or not?                                                                   Yes

 

Present:       Sh. Vipin Chander Belwal Director of the complainant company present in person

                   Sh. Amandeep Singh, Counsel for the OP

                  

ANIL SRIVASTAVA, MEMBER

 

JUDGEMENT

1.           Repudiation of the claim by the Insurance Company led to filing of this complaint before this Commission under Section 17 of the Consumer Protection Act 1986 by M/s Belwal spinning Mills Ltd., New Delhi, for short complainant against M/s Oriental Insurance Company Ltd., hereinafter referred to as OPs, praying for the relief as under:-

 

1. To pay Rs. 71,09,387/- as the amount of claim/losses.
2. To award costs and expenses through out.
3. To pass any other order(s) or direction(s) as this Hon’ble Commission may deem fit and proper under the facts and circumstances of the case.

 

2.           Facts of the case necessary for the adjudication of the two complaints, being disposed of by a common order, facts and law point involved being identical, are these.
3.           The complainant’s factory including plant and machinery and goods/stock were insured by the OPs from the day one i.e. 1984-85 and OP insured the plant and machinery for a sum of Rs. 39,433,432.50 vide cover note no. 99 dated 29.11.03 effective from 02.12.03 to 01.12.04. The OP issued the policy no. 2004/602 insuring plant and machinery of the complainant. The policy type as per the policy issued by OP was Burglary. The OP was paid a sum of Rs. 10,647/- towards the premium. The Policy was renewal policy and covered the entire plant and machinery of the complainant in its factory situated at Ram Nagar, Nainital, Uttranchal. The factory of the complainant however remained locked due to financial crisis. Consequently no regular activity was carried on in the factory premises. But, periodical inspection of the factory was carried out by the Delhi Office Executives.
4.           On 24^th June 2004, when an official of the complainant visited the factory premises, he found number of components stolen from Speed Frame and Ring Frame and soon thereafter he lodged a complaint with P.S. Ram Nagar, District Nainital and FIR No. 328/04 under Section 380 IPC was registered at P.S. Ram Nagar. However on 25.06.04, thieves were apprehended alongwith some stolen goods/articles and another FIR No. 337/04 under Section 379/411 IPC was registered at P.S. Ram Nagar.
5.           The complainants have stated that the thieves entered in the factory from back side after widening the hole meant for five hydrant. Further they admitted in the court that they have stolen components from the complainant’s factory and were sentenced to imprisonment. On 29.06.04, the complainant after carrying out the inspection, prepared a list of stolen articles from the Mill and submitted the same to the P.S. Ram Nagar. On 29.06.04 the complainant informed IDBI about the theft in the factory and also gave the details of stolen articles/goods.
6.           IDBI and the Surveyor appointed by the OPs to make the assessment of the loss thereafter sought for the copies of the FIRs and other necessary documents from the complainants to enable them to process the claim of Rs. 71,093,87/-. On examining the insured claim,  and after verification of the documents received, the insured claim was assessed by the Surveyor as under:-

 

Assessment of loss (as per Annexure-VI) 35,87,975/-

Less: Value of 163 spindles recovered 71,394/-

Less: Depreciation @ 80% 28,70,380/-

The value of items lost. Rs. 6,46,201/-

 

Amount after adjustment for under

insurance (69.15%)4,46,848/-

 

7.           Finally after a lot of correspondence the claim preferred by the complainant was repudiated by the OPs (vide their letter dated 31.03.2005 reportedly received at the end of the complainant in the later part of April 2005) on the following grounds, namely,

 

1. Our policy covers Burglary or house breaking of property following upon felinous entry of the premises by violent and forcible means. However our surveyor could not find any mark of violence establishing the forcible entry into the premises.
2. The exact date of loss is not known. The items were reportedly removed over a period of time.
3. The security arrangements were not adequate.
4. There is no system of taking out inventory of parts on a periodical basis.

 

8.           OPs were noticed by this Commission and in response thereto they have filed their reply resisting the complaint both on the technical ground and on merit, stating that the complainant having transacted in the matter for commercial purpose is not a consumer within the meaning of Section 2(1)(d) of the Consumer Protection Act 1986 and thus not entitled to raise a consumer dispute. Secondly the complainant not having taken the policy, policy having been obtained by the Industrial Development Bank of India, have no locus standi to press the complaint. Thirdly, claim having been filed after 12 months of the incident, the OPs have taken objection that the claim preferred is time barred, relying on sub clause 11 of the general terms and conditions of the policy, mandating to prefer the claim within 12 months whereafter it would be deemed to have abandon the claim which shall for all the purposes not be recoverable. Fourth the OPs have not approached this Commission with clean hands. Fifth as observed in the surveyor’s report the element of force since missing the claim preferred is not permissible in terms of the policy. The shutters of the factory were found intact. No broken locks were found. As per version of the insured the thieves had taken the material from the hole near the fire hydrant. He has stated that thieves have entered from back side after widening the hole and the material has continuously been whisked away from there. No such mark etc. were found. The forcible entry has thus remained unestablished. Sixth, the complainant is not entitled for the claim as per the exclusions clause 8 (a) of the policy since the premises insured was left uninhabited and there was no security arrangements. Seventh the claim preferred is exaggerated. Eighth in the given case complicated question of law being the issue, the issues contained in the complaint cannot be adjudicated by the consumer forum in summary proceedings. Finally the OPs have denied the averments contained in the complaint.
9.           The facts in the complaint case no: C-173/2008 are same and the law points are also identical except that in that complaint the claim preferred is at variance. The prayer made in that complaint is as under:

 

1. To pay Rs. 21,47,690/- as the amount of claim/losses;
2. To avoid costs and expenses through out;
3. To pass any other order(s) or direction(s) as this Hon’ble Commission may deem fit and proper under the facts and circumstances of the case.

 

10. The defence of the OPs, among others, is same and identical inasmuch as in this case also the argument of the OP is that no case made out since ingredients of the burglary were missing and thus not covered under the policy in which case not entitled for the claim.
11. The complainants had thereafter filed rejoinder rebutting the contentions raised by the OPs in their reply and reiterating their averments contained in the complaint. Evidence by way of affidavit have also been filed in support of the pleadings. Written submissions are also on record.
12. These matters were listed before this Commission for final hearing on 05.07.2019 when the counsel for both sides appeared and advanced their arguments, the complainant for approval of their claim preferred consequent upon the alleged burglary in their insured premises and the OPs for the dismissal of the complaints as according to them no case made out for the acceptance of the claim and it merits no consideration.
13. So far, so good.
14. Point for adjudication in these two complaints is whether repudiation done by the OPs can withstand the judicial scrutiny.
15. In the first instance, before examining the claim, I may deal with defence of the OPs. Their first objection that the complainants having transacted in the matter for commercial purpose are not consumers within the meaning of Section 2(1)(d) of the Act, is overruled outrightly relying on the judgment of the Hon’ble NCDRC in the matter of Harsolia Motors versus National Insurance Company Ltd. as reported in I [2005] CPJ 27 (NC) which lays down that commercial activities are covered for insurance. Their defence on the point of locus standi of the complainant to maintain this complaint cannot be accepted since in the subject matter the complainant company is the concerned authority. The IDBI Bank had financed the company. But the sufferer is the complainant and thus they are the authority to maintain the complaint. Their third objection is with regard to limitation. Reliance is placed on sub clause 11 of the General terms and conditions. Reliance of the said clause before this Consumer Commission is misplaced. That may have reference if the claim is taken up with the OPs. In the matter before this Commission the point of limitation has to be examined in terms of the provisions contained under Section 24(A) of the Consumer Protection Act 1986. Under that provision the complaint is maintainable if filed within a period of two years from the date the cause of action arose. Applying that provision in the given case, the complaint having been filed within two years of the cause of action is within time and thus the argument of the OP to this effect fails. The objection of the OP that the issue in the given case being of complicated nature cannot be disposed of by the consumer forum/Commission in summary procedure cannot sustain as the point at issue in the given case is deficiency of service which based on the material on record can be adjudicated by this Commission. Their next allegation that adequate number of security personnel were not deployed to ensure proper security to the insured property has been considered but as per the averment of the complainant and their records, security personnel were deployed but less in number owing to the financial crunch the company was facing and also on the ground that the company was not functional at the given point of time. There exists nothing on record laying the parameter about the adequacy of the personnel deployed in the insured property.
16. Point for consideration remains now is whether in the burglary there was of force condition precedent for establishment of the case to this effect.
17. The terms burglary and/or house-breaking” is taken to mean as under:

 

“Burglary and/or house-breaking shall mean theft involving entry to or exit from the premises stated therein by forcible and violent means or following assault or violence or threat thereof to the insured or to his employees or members of his family”

 

18. The question before me is whether in terms of the policy, the repudiation of the claim of the respondent by the appellant company is justified or not. The terms of the policy as also the definition of burglary and/or house breaking as defined in the policy has already been examined. The definition given in the policy is binding on both the parties. The policy is a contract between the parties and both parties are bound by the terms of contract. As per the definition of the word burglary, entry into the premises for committing theft involve force or violence or threat to insurer or to his employees or to the members of his family. Therefore, the element of force and violence is a condition precedent for burglary and house breaking. The term burglary as defined in the English Dictionary means an illegal entry into the building with an intent to commit crime such as theft. But in absence of violence or force the insurer cannot claim indemnification against the Insurance Company. The terms of the policy have to be construed as it is and we cannot add or subtract anything. Howsoever liberally we may construe the policy but we cannot take liberalism to the extent of substituting the words which are not intended. It is true that in common parlance the terms ‘burglary’ would mean theft but it has to be preceded with force or violence. If the element of force and violence is not present then the insurer cannot claim compensation against theft from the Insurance Company since outside the scope of the policy. This expression appearing in the insurance policy came up for interpretation before the English Court and the English Courts in no uncertain terms laid down that burglary or theft has to be preceded with force or violence in order to be indemnified by the Insurance Company. In this connection reference is made to the statement of law as summarized in Halsbury’s Laws of England Fourth Edition (203 Reissue) para 646. It reads as under:

 

“646. Forcible and violent entry- The terms of a burglary insurance may exclude liability in certain circumstances unless there is forcible and violent entry into the premises. If so, the entry must be obtained by the use of both force and violence or the definition is not satisfied and the policy does not apply. An entry obtained by tuning the handle of an outside door or by using a skeleton key, though sufficient to constitute a criminal offence, is not within the policy since the element of violence is absent. However, an entry obtained by pocking the lock or forcing back the catch by means of an instrument involves the use of violence entry from the outside, or the violent entry into a room within the insured premises may be sufficient. In any case, the violence must be connected with the act of entry; if the entry is obtained without violence, the subsequent use of violence to effect the theft, as for instance where a show-case is broken open, does not bring the loss within the policy.”

 

19. Similarly, in the case of Oriental Insurance Co. Ltd. vs. Sony Cheriyan, reported in VI(1999) SLT 565= (1999) 6 SCC 451, an insurance was taken out under the Motor Vehicles Act, 1988 in which their Lordships observed:

 

“The insurance policy between the insurer and the insured represents a contract between the parties. Since the insurer undertakes to compensate the loss suffered by the insured on account of risks covered by the insurance policy, the terms of the agreement have to be strictly construed to determine the extent of liability of the insurer. The insured cannot claim anything more than what is covered by the insurance policy”.

 

20. Similarly, in the case of General Assurance Society Ltd. vs. Chandumull Jain and Anr., reported in (1966) 3 SCR 500, the Constitution Bench of the Hon’ble Apex Court is pleased to observe that the policy document being a contract has to be read strictly. It was observed:

 

“Interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the Court to make a new contract, however, reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for the fire and extended to cover flood, cyclone etc. had come into being”.

 

21. Therefore, it is settled law that the terms of the contract has to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous.
22. From the above discussion, I am of the considered opinion that theft should have preceded with force or violence as per the terms of insurance policy. In order to substantiate a claim an insurer has to establish that theft or burglary took place preceding with force or violence and if it is not, then the Insurance Company will be well within their right to repudiate the claim of the insurer.
23. The complainant present in person has relied on the judgment of the Hon’ble NCDRC in the matter of M/s Mono Industries versus New India Assurance Co. Ltd. as reported in 2008 NCJ 353 (NC) holding 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. He has also relied on another judgment in the matter of Paresh Mohanlal Pannar vs. New India Assurance Company Ltd. as reported in 2011 NCJ 75 (NC), holding the same view. Another judgment of the Hon’ble NCDRC in the matter of United India Insurance Co. Ltd. vs. Newar Metals Pvt. Ltd. as reported in II [2017] CPJ 29 (NC) holding that house breaking falls in the category of burglary has been relied by the complainant. But their Lordships in the Hon’ble Apex Court since observing that use of force is a condition precedent to reach to a conclusion that burglary took place, I would place my reliance on that judgment, which means the complainant could not establish his case.
24. In the result, having regard to the discussion done and the legal position explained, I am of the considered view that the claim preferred being not covered within the policy is not payable and thus the repudiation done by the OPs cannot be tinkered with since there exists no infirmity in the process. Accordingly the complaints cannot be allowed and it is ordered accordingly, leaving the parties to bear the cost.
25. C-173/2008 having same facts and involving identical law points is also disposed of on these lines.
26. A copy of this order be forwarded to the parties to the case free of cost as is statutorily required. Registrar of this Commission is requested to place on record of C-173/2008 the certified copy of this order.
27. Both the files be consigned to record.

 

 

(Anil Srivastava)

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