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SUPREME COURT OF INDIA
ANIL R. DAVE, L. NAGESWARA RAO, JJ.
M/s. INDUSTRIAL PROMOTION & INVESTMENT CORPORATION OF ORISSA LTD. – Appellant(s)
Versus
NEW INDIA ASSURANCE COMPANY LTD. & ANR. – Respondent(s)
CIVIL APPEAL No. 1130 of 2007
Decided On : 22-08-2016
(b) Insurance law – Claim – Theft and burglary – Means, in terms of the policy, theft following an actual, forcible and violent entry from the premises – Appellant’s claim of theft without a forcible entry rightly rejected by MRTP. (Para 7)
(2016) 3 SCC 49; (2004) 8 SCC 644 – Referred
(c) Contra proferentem – “Verba chartarum fortius accipiuntur contra proferentem” – Ambiguity in the wording of the policy is to be resolved against the party who prepared it – Rule should be applied to resolve ambiguity and not to create one. (Para 10)
(d) Insurance law – Insurance policy – It is like any other commercial contract except for requirement of uberima fides, i.e., good faith on the part of the insured – It is however to be construed ‘contra proferentes’, i.e., against the company in case of ambiguity or doubt – A policy cannot be construed against the company if there is no ambiguity. (Para 11)
[1966] 3 SCR 500; (2016) 3 SCC 49 – Relied upon
Facts of the case:
The Appellant extended a term loan of Rs. 40,74,000/-to M/s. Josna Casting Centre Orissa Pvt. Ltd. As the loan amount was not repaid, the Appellant took over the assets of M/s. Josna Casting Centre Orissa Private Limited on 14-02-1992.
On 23-01-1996, the Appellant insured the said assets with Respondent No. 1 for a sum of Rs. 46,00,000/-under the Miscellaneous Accident Policy, Rs. 60,40,000/-under the Fire Policy and Rs. 46,00,000/-under the Burglary and House Breaking Policy.
The seized assets were put to auction by the Appellant on 22-01-1997 and at that time it was detected that some parts of the plant and machinery were missing from the factory premises. The Appellant registered an FIR on 25-01-1997.
On 07-02-1997, the Appellant informed Respondent No. 1 about the theft and requested for issuance of a claim form. A claim was lodged with Respondent No. 1 on 16-12-1997 for an amount of Rs. 34,40,650/-under the Burglary and House Breaking Policy.
The claim of the Appellant was repudiated by Respondent No. 1 on 31-03-1998 on the ground that the alleged loss did not come within the purview of the insurance policy.
The Appellant filed compensation application which was rejected by the MRTP Commission, New Delhi.
Finding of the Court:
MRTP rightly rejected the claim of the appellant.
Result: Appeal dismissed.
Key Points: - The policy requires forcible and violent entry/exit for burglary/house breaking claims, as interpreted against the insured’s claim of theft without forcible entry (!) (!) (!) (!) . - Insurance contracts are construed strictly like commercial contracts; ambiguity should be resolved against the drafter (contra proferentem) when there is real ambiguity, especially in standard form policies (!) (!) (!) . - The MRTP Commission’s rejection of the appellant’s claim was upheld because the loss involved theft without forcible entry, which does not fall within the defined scope of burglary/house breaking as per the policy (!) (!) (!) (!) . - The decision cites United India Insurance Co. v. Orient Treasures and United India Insurance Co. v. Harchand Rai Chandan Lal to illustrate the interpretation of burglary definitions requiring forcible entry (!) (!) . - The policy defines burglary/house breaking as theft involving forcible and violent means or threats/violence, tying indemnity to those criteria (!) (!) . - The court reiterates uberima fides (good faith) in insurance contracts but notes the overall strict construction of terms (!) . - The rule contra proferentem is not applicable if there is no ambiguity in a standard policy (!) . - The appraisal of evidence and policy terms in this case led to the conclusion that the loss did not meet the policy’s forcible-entry condition (!) (!) (!) . - The appellant’s argument relying on broader interpretations of burglary was rejected in favor of the policy’s explicit conditions (!) (!) . - The MRTP Commission’s order was sustained, denying compensation for the burglary/house breaking claim (!) .
JUDGMENT
L. NAGESWARA RAO, J.
The Appellant is a wholly owned Public Sector Undertaking of the Government of Orissa. The Appellant finances medium and large scale industries within the State of Orissa and is also involved in setting up joint sector industries with private entrepreneurs. The Appellant extended a term loan of Rs. 40,74,000/-to M/s. Josna Casting Centre Orissa Pvt. Ltd. As the loan amount was not repaid, the Appellant exercising its power under Section 29 of the State Finance Corporation Act, 1951, took over the assets of M/s. Josna Casting Centre Orissa Private Limited on 14-02-1992. On 23-01-1996, the Appellant insured the said assets with Respondent No. 1 for a sum of Rs. 46,00,000/-under the Miscellaneous Accident Policy, Rs. 60,40,000/-under the Fire Policy and Rs. 46,00,000/-under the Burglary and House Breaking Policy.
2. The seized assets were put to auction by the Appellant on 22-01-1997 at which point of time it was detected that some parts of the plant and machinery were missing from the factory premises. The Appellant registered an FIR on 25-01-1997 in the Remona Police Station, Balasore regarding the theft/burglary of the plant and machinery. On 07-02-1997, the Appellant informed Respondent No. 1 about the theft and requested for issuance of a claim form. A claim was lodged with Respondent No. 1 on 16-12-1997 for an amount of Rs. 34,40,650/-under the Burglary and House Breaking Policy. The valuation reports given by GEC, Calcutta, the machines supplier and Alpha Transformer Ltd., Bhubaneswar were relied upon by the Appellant/Claimant. The claim of the Appellant was repudiated by Respondent No. 1 on 31-03-1998 on the ground that the alleged loss did not come within the purview of the insurance policy.
3. The Appellant filed compensation application No. 45 of 2001 under Section 12-B read with Section 36-A of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, which was rejected by the MRTP Commission, New Delhi by its Order dated 17-08-2005. Aggrieved by the said Order, the Appellant has preferred the present Appeal.
4. Mr. Raj Kumar Mehta, counsel for the Appellant took us through the proposal form for Burglary and House Breaking Insurance (Business) Premises. The scope of cover in the said proposal form is as follows:
“SCOPE OF COVER
This Insurance Policy provides cover against loss or damage by Burglary or House breaking i.e. (theft following an actual, forcible and violent entry of and/or exit from the premises) in respect of contents of offices, warehouses, shops, etc. and cash in safe or strong room and also damage caused to the premises, except as detailed below:”
It was further submitted by Mr. Mehta that the rule of contra proferentem would be applicable to the present case and he relied upon the judgment of this Court in United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd. reported at (2016) 3 SCC 49.
5. Mr. Mehta submitted that the words ‘theft following an actual forcible and violent entry/or exit from the premises’ are with reference only to house breaking and not burglary. According to him, forcible and violent entry is not necessary for making a valid claim under the policy. It would be sufficient that there is theft of certain goods from the factory premises, which fact has been proved by the Appellant. Mr. Mehta referred to a judgment of this Court in United India Assurance Co. Ltd. v. Harchand Rai Chandan Lal reported in (2004) 8 SCC 644 which related to a claim pertaining to a theft and attempted to distinguish it. He submitted that the clause in the policy in that case is different from that involved in the present case. He urged that the Commission committed an error in relying upon the said judgment to reject the Claim Application for the Appellant.
6. Mr. Salil Paul, Advocate for Respondent No.1 submitted that there is no difference in the policies involved in the case cited supra and the instant case. He also urged that an insurance policy is akin to a comme
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