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Tuesday, August 23, 2016

Burglary and House Breaking Policy. - not applies - no compensation as It is clear from the facts of the present case that the Appellant has made out a case of theft without a forcible entry. =“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 detected that some parts of the plant and machinery were missing from the factory premises = 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.= 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. = This court in General Assurance Society Ltd. v. Chandmull Jain and Anr., reported in [1966] 3 SCR 500 held that there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberima fides, i.e., good faith on the part of the insured and the contract is likely to be construed contra proferentes, i.e., against the company in case of ambiguity or doubt. It was further held in the said judgment that the duty of the Court is to interpret the words in which the contract is expressed by the parties and it is not for the Court to make a new contract, however reasonable. In United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd. (supra) cited by the Counsel for the Appellant, it was held that there is no ambiguity in the insurance policy and so the rule of contra proferentem was not applicable. A standard policy of insurance is different from other Contracts and in a claim under a standard policy the rule of contra proferentem is to be applied. The Policy in this case is in a standard form. The policy for Burglary and House Breaking in United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd. (supra) and the policy in this case are identical. If there is any ambiguity or doubt the clause in the Policy should be interpreted in favour of the insured. For the aforementioned reasons, we uphold the order of the MRTP Commission and dismiss the Appeal with no order as to costs.

                                                              Non-Reportable

                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 1130 of 2007

M/s. INDUSTRIAL PROMOTION & INVESTMENT CORPORATION OF ORISSA LTD.
                                                           .... Appellant(s)
                                   Versus

NEW INDIA ASSURANCE COMPANY LTD. & ANR.

                                                            …. Respondent(s)

                               J U D G M E N T
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
commercial contract and has to be construed strictly.   Mr.  Paul  submitted
that a forcible entry and/or exit is compulsory  for  maintainability  of  a
claim under the policy.
7.    Having considered the submissions made on both sides, we  are  of  the
opinion that  there  is  no  error  committed  by  the  MRTP  Commission  in
rejecting the Claim of the Appellant.  It is clear from  the  facts  of  the
present case that the Appellant has made out  a  case  of  theft  without  a
forcible entry.  The case of the Appellant is that  forcible  entry  is  not
required for a claim to be made  under  the  policy.   Following  the  well-
accepted principle that a contract of insurance  which  is  like  any  other
commercial contract should be interpreted strictly, we are  of  the  opinion
that the policy covers loss or damage by burglary or  house  breaking  which
have been explained as theft  following  an  actual,  forcible  and  violent
entry from the premises.  A plain reading of the policy would  show  that  a
forcible entry should precede the theft, and unless  they  are  proved,  the
claim cannot be accepted.  The provisions of  the  policy  in  United  India
Insurance Co. Ltd. v. Harchand Rai Chandan Lal (supra) read as under:
            “THE COMPANY HEREBY AGREES subject to the terms  and  conditions
contained herein endorsed/or otherwise expressed hereon that if,
the property hereinafter described or any part thereof be  LOST  or  DAMAGED
by BURGLARY and/or HOUSE BREAKING, or
ANY DAMAGE be caused to the premises to be made good  by  the  insured  from
BURGLARY and/or HOUSE BREAKING or any attempt thereat.”

            The term burglary and/or house  breaking  has  been  defined  in
terms of the policy which are as follows:
“ ‘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 to the members of his family.”

8.    A comparison of the above terms as defined in the policy in  the  case
of United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal  (supra)  and
the scope of cover in the proposal form in the  instant  case  are  similar.
This Court in the said judgment  of  United  India  Insurance  Co.  Ltd.  v.
Harchand Rai Chandan Lal (supra) considered the scope of a policy  involving
burglary and house breaking and held as follows:
“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”,
followed with violence, makes it clear that if any  theft  is  committed  it
should necessarily be preceded with violence i.e. entry  into  the  premises
for committing theft should 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
housebreaking. 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 something.  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 term “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. This expression appearing  in  the  insurance  policy
came up for interpretation before the English Courts 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  may  be  made  to  the  statement  of  law  as
summarized in Halsbury’s Laws of England Fourth Edition (2003 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  turning  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 picking the lock or forcing  back  the
catch by means of  an  instrument  involves  the  use  of  violence  and  is
therefore covered. The policy may be so framed as to apply only  to  violent
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."”

9.    It is well-settled law that there is no difference between a  contract
of insurance and any  other  contract,  and  that  it  should  be  construed
strictly without adding or deleting anything from  the  terms  thereof.   On
applying the said principle, we have no  doubt  that  a  forcible  entry  is
required for a claim to be  allowed  under  the  policy  for  burglary/house
breaking.
10.   We proceed to deal  with  the  submission  made  by  counsel  for  the
Appellant regarding the rule of contra proferentem. The Common Law  rule  of
construction “verba chartarum fortius accipiuntur contra proferentem”  means
that ambiguity in the wording of the policy is to be  resolved  against  the
party who prepared it. MacGillivray on Insurance Law[1] deals with the  rule
of contra proferentem as follows:
“The contra proferentem rule of construction arises only where  there  is  a
wording employed by those drafting the clause which leaves the court  unable
to decide by ordinary principles of interpretation which of two meanings  is
the right one. “One must not use the rule to  create  the  ambiguity  –  one
must find the ambiguity first.” The words should receive their ordinary  and
natural meaning  unless  that  is  displaced  by  a  real  ambiguity  either
appearing on the face of the policy or, possibly, by extrinsic  evidence  of
surrounding circumstances.” (footnotes omitted)

Colinvaux’s Law of Insurance[2]propounds  the  contra  proferentem  rule  as
under:
“     Quite apart from contradictory clauses in  policies,  ambiguities  are
common in them and it is often very  uncertain  what  the  parties  to  them
mean. In such cases the rule is that the policy, being drafted  in  language
chosen by the insurers, must be taken most  strongly  against  them.  It  is
construed contra proferentes, against those who  offer  it.  In  a  doubtful
case the turn of the scale ought to be given against  the  speaker,  because
he has not clearly and fully expressed himself. Nothing is easier  than  for
the insurers to express themselves in plain terms. The  assured  cannot  put
his own meaning upon a policy, but, where it  is  ambiguous,  it  is  to  be
construed in the sense in which he might reasonably have understood  it.  If
the insurers wish to escape liability under given circumstances,  they  must
use words admitting of no possible doubt.
But a clause is only to be contra proferentes in cases  of  real  ambiguity.
One must not use  the  rule  to  create  an  ambiguity.  On  must  find  the
ambiguity first. Even where a clause by itself is ambiguous if,  by  looking
at the whole policy, its meaning becomes clear, there is  no  room  for  the
application of the doctrine. So also where if one  meaning  is  given  to  a
clause, the  rest  of  the  policy  becomes  clear,  the  policy  should  be
construed accordingly.” (footnotes omitted)

11. This court in General Assurance  Society  Ltd.  v.  Chandmull  Jain  and
Anr., reported in [1966] 3 SCR 500 held that there is no difference  between
a contract of insurance and any other contract except that in a contract  of
insurance there is a requirement of uberima fides, i.e., good faith  on  the
part of the insured and the  contract  is  likely  to  be  construed  contra
proferentes, i.e., against the company in case of  ambiguity  or  doubt.  It
was further held in the said judgment that the  duty  of  the  Court  is  to
interpret the words in which the contract is expressed by  the  parties  and
it is not for the Court to make a new contract, however reasonable.
12. In United India Insurance Co. Ltd. v. Orient Treasures (P) Ltd.  (supra)
cited by the Counsel for the  Appellant,  it  was  held  that  there  is  no
ambiguity in the insurance policy and so the rule of contra proferentem  was
not applicable.  A standard policy of  insurance  is  different  from  other
Contracts  and in a claim  under  a  standard  policy  the  rule  of  contra
proferentem is to be applied.  The Policy in this  case  is  in  a  standard
form.  The policy for Burglary and House Breaking in United India  Insurance
Co. Ltd. v. Orient Treasures (P) Ltd. (supra) and the policy  in  this  case
are identical.  If there is any ambiguity or doubt the clause in the  Policy
should be interpreted in favour of the insured.  But we see no ambiguity  in
the relevant clause of the policy and the rule of contra proferentem is  not
applicable.
13. For the  aforementioned  reasons,  we  uphold  the  order  of  the  MRTP
Commission  and  dismiss  the  Appeal   with   no   order   as   to   costs.



                      .…............................J.
                                                 [ANIL R. DAVE]




                     ................................J.
                                                     [L. NAGESWARA RAO]

New Delhi,
August 22, 2016.
-----------------------
[1]    MacGillivray on Insurance Law (9th ed., 1997) (Nicholas Legh-Jones
et al, eds.) at p. 280.

[2]    Colinvaux’s Law of Insurance (6th ed., 1990) (Robert and Merkin,
eds.) at p.42.

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