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Supreme Court of India (Division Bench (DB)- Two Judge)

Appeal (Civil), 2140 of 2007, Judgment Date: Jan 13, 2016

                                                                  Reportable
                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION
                        CIVIL APPEAL No.2140 OF 2007

United India Insurance Co. Ltd.                               ……Appellant(s)


                                    VERSUS


M/s Orient Treasures Pvt. Ltd.                               ……Respondent(s)

                                     WITH

                       CIVIL APPEAL No.5141 OF 2007


M/s Orient Treasures Pvt. Ltd.                                 ……Appellant(s)


                                    VERSUS


United India Insurance Co. Ltd.                               ……Respondent(s)


                               J U D G M E N T

Abhay Manohar Sapre, J.
C.A. No. 2140 of 2007
1)    This appeal under Section 23 of the Consumer Protection Act,  1986  is
filed against the order dated 19.03.2007 of the National  Consumer  Disputes
Redressal Commission (hereinafter referred  to  as  “the  Commission”),  New
Delhi in Original Petition No. 375 of 1999 whereby the   Commission  allowed
the petition filed by the respondent  herein  and  directed  the  appellant-
insurance company to pay a sum of Rs.36,10,211/-  with  interest  @10%  p.a.
from 03.12.1995 till  date  of  payment  and  also  directed  the  insurance
company to pay costs assessed at Rs.50,000/- to  the  respondent-Complainant
herein.
2)    In order to appreciate the issue involved in this appeal,  which  lies
in a narrow compass, it is necessary to set out the relevant facts in  brief
infra.
3)    The appellant herein is an insurance  company incorporated  under  the
Companies Act having its registered office at No. 24, Whites Road,  Chennai.
 The respondent herein is also a company incorporated  under  the  Companies
Act, 1956 having its registered office at Oceanic Buildings, Quilon,  Kerala
and its branches inter alia at Janpriya Centre No.34, Sir  Thyagaraya  Road,
Pondy Bazar, Chennai.
4)    The respondent herein is the complainant.  They  are  engaged  in  the
business of sale of various kinds of Jewellery.  The  respondent  is  having
their jewellery shop  known  as  “Kanchana  Mahal”  which  is   situated  at
Janpriya Centre No.34, Sir Thyagaraya Road, Pondy Bazar, Chennai.
5)    The respondent had insured their jewellery kept  in  their  shop  with
the appellant under successive “Jewellers Block Policies” with  effect  from
02.07.1993 onwards.  The procedure followed  was  that  the  respondent  was
required to submit proposal form.  On receipt  of  the  proposal  form,  the
officials of the appellant-insurance company used to  inspect  the  shop  to
verify the security and storage particulars.
6)    The respondent filled up the  insurance  proposal  form  by  providing
necessary information as mentioned in the form. On the  basis  of  the  said
proposal form, the appellant issued an insurance policy  in  favour  of  the
respondent from 02.07.1993 to 01.07.1994. It was then  subsequently  renewed
for further one year, i.e. from 02.07.1994 to 01.07.1995.
7)    On 02.06.1995, the respondent alleged that there  was  a  burglary  in
their Jewellery  shop.   According  to  the  respondent,  on  the  night  of
02.06.1995, burglars broke open the locks of shutters, entered the shop  and
decamped with the gold and silver ornaments valued at  Rs.40,63,735.53.  The
respondent accordingly  lodged  FIR  at  the  concerned  Police  Station  on
03.06.1995.  The respondent also informed the appellant on 03.06.1995  by  a
telegraphic communication about this incident.  By letter dated  05.06.1995,
the appellant informed the respondent that a Surveyor has been appointed  to
assess the loss suffered by the respondent in  the  burglary.  The  surveyor
then inspected the site and also examined all the relevant material,  books,
inventory etc. with a view to assess the actual loss alleged  to  have  been
suffered by the respondent  and  accordingly  assessed  the  total  loss  at
Rs.36,10,211/.  Thereafter he submitted  his  report.  After  investigation,
the police  also  submitted  a  final  investigation  report  on  24.06.1995
treating the case as untraceable.
8)     The respondent then submitted their claim with the appellant  on  the
basis of the Insurance Policy and claimed that they are entitled to  receive
the value of Jewellery which they lost in burglary committed in  their  shop
on 02.06.1995. On  19.01.1998,  the  Divisional  Manager  of  the  Insurance
Company, Tuticorin after examining the respondent’s claim for loss of  their
Jewellery repudiated the claim inter alia on  the  ground  that  the  stolen
gold ornaments and silver articles were found to had been  kept  on  display
window and in the sales counters at the time of burglary  which  took  place
in the night of 02.06.1995, which according to appellant,  was  contrary  to
the terms of the policy and, therefore, not covered in the policy. In  other
words, such items were not insured. It was further stated  that  the  policy
was issued subject  to  the  terms,  conditions,  warranties  and  exclusion
printed in the proposal form which was  a  part  of  policy.  The  appellant
relied on clause 12 of the policy and stated that since the burglary in  the
shop took place during night and stolen articles  kept  in   window  display
and lying out of safe in the shop were stolen, the appellant  could  not  be
made liable to indemnify  such  loss  which,  according  to  them,  was  not
insured and specifically excluded from the insurance policy.
9)    Being aggrieved by the decision of  the  appellant-Insurance  Company,
the Respondent sent letters and reminders pointing out therein the terms  of
the proposal form and policy and insisted that the loss  was  fully  covered
by the policy and hence they were entitled to claim the value  of  the  lost
articles from the appellant on the basis of Insurance  Policy.   As  nothing
was done, the respondent filed a  complaint  before  the  National  Consumer
Disputes Redressal Commission, New Delhi (hereinafter referred  to  as  “the
Commission”) being Original Petition No. 375  of  1999  claiming  a  sum  of
Rs.1,32,06,786.30.
10)    By  order  dated  19.03.2007,   the  Commission  partly  allowed  the
petition filed  by  the  respondent  and  directed  the  appellant-Insurance
Company to pay a sum  of  Rs.36,10,211/-  with  interest  @  10%  p.a.  from
03.12.1995 till date of payment and also directed the Insurance  Company  to
pay costs assessed at Rs.50,000/- to the respondent.
11)   Aggrieved by the  said  order,  the  appellant-Insurance  Company  has
filed this appeal.
12) Dissatisfied with the claim awarded by the  Commission,  the  respondent
has filed C.A. No. 5141 of  2007  seeking  enhancement  in  the  quantum  of
claim. According to the respondent, they are entitled  to  claim  a  sum  of
Rs.1,32,06,786.30 as against Rs. 36,10,211/- awarded by the Commission.
13)   Heard Mr. P.P. Malhotra, learned senior counsel for the appellant  and
Mr. H. Ahmadi, learned senior counsel for the respondent.
14)   Shri P.P.Malhotra, learned senior counsel appearing for the  appellant
while assailing the legality and correctness of the  impugned  order  mainly
urged two points in support of his submissions.
15)   In the first place, learned senior counsel urged that  the  Commission
erred in partly allowing the complaint filed by  the  respondent  herein  by
passing the impugned award  against  the  appellant.  According  to  learned
counsel, had the Commission properly interpreted clauses  4  and  5  of  the
proposal form, which was part of the policy along  with  clause  12  of  the
policy then in such event, the  respondent's  complaint  was  liable  to  be
dismissed in its entirety.
16)   Elaborating the aforementioned  submission,  learned  counsel  pointed
out that the plain reading of clauses 4  and  5  (b)  with  their  note  and
clause 12 of the  policy  clearly  show  that  the  respondent's  claim  was
excluded from the policy issued by the appellant because it was in  relation
to the items which were kept in display window and out of safe at  the  time
of burglary.
17)   In other words, the submission was that  the  respondent's  claim  was
not covered under the  policy  and  was  expressly  excluded  by  virtue  of
clauses 4 and 5(b) read with clause 12 of the policy  because  firstly,  the
burglary in the shop took place in night  hours  and  secondly,  the  stolen
articles were kept in display window and outside the safe.
18)   Learned counsel, therefore, urged  that  due  to  these  two  admitted
facts, the note appended to  clauses  4  and  5  read  with  clause  12  was
attracted rendering the respondent's complaint as not maintainable.
19)    Learned counsel further  pointed  out  that  the  respondent  despite
knowing these clauses of the proposal form/policy  instead  of  seeking  any
clarification regarding meaning of the clauses  paid  the  premium  pursuant
thereto  the  appellant  issued  the  Insurance  policy  on  the  terms  and
conditions  set  out  therein  which  are  binding  on  both  parties  while
adjudicating their rights against each other arising out of the policy.
20)   Learned counsel, in the second place, submitted that the  language  of
clauses 4, 5 and 12 being plain, clear and unambiguous  conveying  only  one
meaning, the appellant had every right to  rely  upon  these  clauses  while
opposing the respondent's complaint on merits.
21)   Learned counsel, therefore, submitted  that  in  the  light  of  these
facts, the  respondent  had  no  right  to  file  a  complaint  against  the
appellant seeking monetary compensation for the loss alleged  to  have  been
suffered by them arising out of  burglary  of  their  articles  stolen  from
their shop. Such claim, according to learned counsel, was barred  by  virtue
of clauses 4, 5 and 12 of  the  policy  and  was  therefore,  liable  to  be
dismissed as being untenable.
22)   In support of his submission, learned counsel placed reliance  on  the
decisions in General Assurance Society Ltd.  vs.  Chandumull  Jain  &  Anr.,
AIR 1966 SC 1644 = (1966) 3 SCR 500, United India  Insurance  Co.  Ltd.  vs.
Harchand Rai Chandan Lal (2004) 8 SCC 644, Oriental Insurance Co.  Ltd.  vs.
Sony Cheriyan, (1999) 6 SCC 451, Rahee Industries  Ltd.  vs.  Export  Credit
Guarantee Corporation of India Ltd. & Anr., (2009) 1 SCC 138,  Sikka  Papers
Ltd. vs. National Insurance Co. Ltd.  &  Ors.,  (2009)  7  SCC  777,  Vikram
Greentech India Ltd. & Anr. vs. New India Assurance Co. Ltd., (2009)  5  SCC
599, New India Assurance Co. Ltd. vs. Zuari Industries Ltd. &  Ors.,  (2009)
9 SCC 70, Amravati District Central Cooperative Bank Ltd. vs.  United  India
Fire and General Insurance Co. Ltd., (2010) 5 SCC 294, Suraj Mal  Ram  Niwas
Oil Mills P. Ltd. vs. United India Insurance Co. Ltd. & Anr., (2010) 10  SCC
567, Deokar Exports P. Ltd. vs. New India Assurance  Co.  Ltd.,   (2008)  14
SCC 598,  Export  Credit  Guarantee  Corp.  of  India  Ltd.  vs.  Garg  Sons
International, (2014) 1 SCC 686 and Rust vs. Abbey Life Assurance  Co.  Ltd.
& Anr., (1979) Vol.2 Lloyd’s Law Reports 334.
23)   In reply, Mr. H. Ahmadi,  learned senior  counsel  appearing  for  the
respondent while supporting the        impugned  order  contended  that  the
issue involved in this case  needs  to  be  decided  in  the  light  of  the
principle underlined in  the  rule  known  as   "contra  proferentem  rule”.
According to learned counsel, there is an ambiguity  in  the  language/words
of clauses 4 and 5 of the proposal form  and  since  the  ambiguity  noticed
created some confusion as to what these clauses actually provide and  expect
the respondent to comply at the  time  of  filling  the  proposal  form  for
obtaining the insurance policy, this Court should interpret the  clauses  by
applying the principle underlined in the aforesaid rule in such a  way  that
its benefit would go to the respondent rather than to the appellant. It  was
also his submission that the appellant being the author of the proposal  and
policy are not entitled to claim the benefit  of  the  clauses  of  proposal
form/policy in their favour thereby defeating the rights of  the  respondent
which they have got under the policy to enforce against  the  appellant  for
claiming the compensation.
24)   Learned counsel also contended that the  respondent  had  intended  to
insure all their articles kept in the shop regardless  of  timings  and  the
manner in keeping the articles in their shop. He also pointed out  that  the
respondent having paid the full premium for the articles which  were  valued
at Rs. 2 crore as disclosed by  the  respondent  in  clauses  4  and  5  and
therefore the respondent was entitled to claim compensation for the loss  of
the stolen items (jewelry) treating them as insured and  covered  under  the
policy, issued in their favour.
25)   So far as the connected appeal filed by the respondent-Complainant  is
concerned, the submission of the learned senior counsel for  the  respondent
was that the Commission  erred  in  not  allowing  their  complaint  in  its
entirety despite  availability  of  evidence  on  record.  Learned  counsel,
therefore, prayed for dismissal of the appellant's appeal and  allowing  the
appeal filed by the respondent by enhancing the quantum of  compensation  as
claimed by the respondent in the complaint.
26)   Learned senior counsel also placed  reliance  on  the  same  decisions
which were cited by learned senior counsel for the appellant  and  contended
that the law laid down therein also supports the respondent's case.
27)   Having heard the learned counsel for the parties  and  on  perusal  of
the record of the case including the written submissions, we find  force  in
the submissions of learned counsel for  the  appellant  (Insurance  company-
Insurer).
28)   The question which arises for consideration in this appeal is  whether
the Commission  was  justified  in  allowing  the  complaint  filed  by  the
respondent  against  the  appellant-Insurance  Company  in  part  and   was,
therefore, justified in awarding a sum of Rs.36,10,211/- to the  respondent.

29)   In order to answer the aforementioned question, clauses 4,  5  of  the
proposal form and clause 12 of the policy need mention infra.
                                     (1)
|4  |WINDOW DISPLAY               |                   |
|   |State the approximate value  |                   |
|   |of any of article of         |Rs.3,50,5000/-     |
|   |Jewellery or Gem stock which |                   |
|   |will be displayed in the     |                   |
|   |window (A pad or tray        |                   |
|   |containing a number 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.        |                   |
|5  |STOCK                        |                   |
|   |a. What was (i) the average  |(a)(i)New Shop     |
|   |daily total value of your    |(b)(iii)New shop   |
|   |stock during the past 12     |                   |
|   |months?                      |                   |
|   |(ii)  Will the whole of your |(b) All stocks of  |
|   |stock when on your premises  |Gold, Diamond,     |
|   |be kept in safe at night and |Gems, Silver and   |
|   |at all times when the state  |other precious     |
|   |value and class of stock     |stones-kept outside|
|   |which will left outside      |the                |
|   |safes.                       |safe-Rs.2,00,00,000|
|   |Note : We do  not cover      |(Two crores).      |
|   |stocks kept out of the       |                   |
|   |safe---business hours at     |                   |
|   |night.                       |                   |


                                     (2)

The company shall not be liable for under this policy in respect of

1 to 11………….

12.   Loss or damage to property, insured whilst in window display at  night
or whilst kept out of safe after business hours.”

30)   Before we examine the issue involved in the case, it is  necessary  to
take note of the law laid down on the subject by the Constitution  Bench  of
this Court in General Assurance Society Ltd. vs.  Chandumull  Jain  &  Anr.,
AIR 1966 SC 1644.
31)  The Constitution Bench in this case has explained the  true  nature  of
contract relating to Insurance and laid down the relevant factors which  the
courts should keep in mind while interpreting the contract of insurance.
32)   Justice Hidayatullah, J. (as His Lordship then was) speaking  for  the
Bench in his distinctive style of writing held in Para 11 as under:

“11. A contract of insurance is a species  of  commercial  transactions  and
there is a well established commercial practice to  send  cover  notes  even
prior to the completion of a proper proposal or while the proposal is  being
considered or a policy is in preparation for delivery. A  cover  note  is  a
temporary and limited  agreement.  It  may  be  self  contained  or  it  may
incorporate by reference the terms and  conditions  of  the  future  policy.
When the cover note incorporates the policy in  this  manner,  it  does  not
have to recite the term and conditions, but merely to refer to a  particular
standard policy. If the proposal is for a  standard  policy  and  the  cover
note refers to it, the assured is taken to have accepted the terms  of  that
policy. The reference to the policy and its  terms  and  conditions  may  be
expressed in the proposal or the  cover  note  or  even  in  the  letter  of
acceptance including the cover note. The  incorporation  of  the  terms  and
conditions of the policy may also arise from a combination of references  in
two or more documents  passing  between  the  parties.  Documents  like  the
proposal, cover  note  and  the  policy  are  commercial  documents  and  to
interpret them commercial habits and practice cannot altogether be  ignored.
During the time the cover note operates, the relations of  the  parties  are
governed by its terms and conditions, if any, but more usually by the  terms
and conditions of the policy bargained for  and  to  be  issued.  When  this
happens the terms of the policy  are  incipient  but  after  the  period  of
temporary  cover,  the  relations  are  governed  only  by  the  terms   and
conditions of the policy unless  insurance  is  declined  in  the  meantime.
Delay in issuing the policy makes no difference.  The  relations  even  then
are governed by the  future  policy  if  the  cover  notes  give  sufficient
indication that it would be so. In other respects  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  uberrima  fides  i.e.  good
faith on the part of the assured and the contract is likely to be  construed
contra proferentem that is against the  company  in  case  of  ambiguity  or
doubt. A contract is formed when there is an unqualified acceptance  of  the
proposal. Acceptance may be expressed in writing or it may even  be  implied
if the insurer accepts the premium and  retains  it.  In  the  case  of  the
assured, a positive act on his part by  which  he  recognises  or  seeks  to
enforce the policy amounts to  an  affirmation  of  it.  This  position  was
clearly recognised by the assured himself, because he wrote, close upon  the
expiry of the time of the cover  notes,  that  either  a  policy  should  be
issued to him before that period had expired or the cover note  extended  in
time. In 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  fire
and extended to cover flood, cyclone etc. had come into being.”

33)   Keeping in view the aforesaid principle of law in  mind  and  applying
the same to the facts of the case, we proceed to examine the issue  involved
in this appeal.
34)   Mere perusal of the note appended to clause 4 quoted  above  would  go
to show that the appellant (Insurance Company) had  made  it  clear  in  the
proposal form itself  that  "window display of  articles  at  night  is  not
covered".  This clearly meant that the insurance coverage was given  to  the
articles kept in "window display during day time in business hours"  whereas
insurance coverage was not given to the articles  when  they  were  kept  in
"window display at night".
35)   In other words, if the burglary had been committed during day time  in
business hours and in that burglary, the articles  kept  in  display  window
were stolen  then  in  such  circumstances,  the  appellant  was  liable  to
reimburse the loss to the respondent of  such  stolen  articles  as  insured
articles under the policy. But if the burglary had  been  committed  of  the
articles kept in display window during night  time  (after  business  hours)
then in such circumstances  the  appellant  having  made  it  clear  to  the
respondent in the note in  clause  4  that  they  would  not  be  liable  to
indemnify the loss of  any  such  articles  kept  in  display  window  after
business hours, the respondent was not entitled to  claim  any  compensation
for the loss of any such stolen articles.  In  other  words,  the  insurance
coverage was not extended to such stolen articles under the policy.
36)   Similarly, mere perusal of note appended  to  clause  5  quoted  above
would go to show that the appellant had made it clear in the  proposal  form
itself to the respondent that "stock which is kept out  of  the  safe  after
business hours at night" is not covered  under  the  policy.   This  clearly
meant that "stock kept out of safe during business hours",  if  stolen,  was
insured and given coverage under the policy but if it was kept out  of  safe
after business hours at night, then it was not covered under the policy  and
therefore, the appellant was not liable to indemnify the loss  sustained  by
the respondent of any such stolen articles.
37)   In other words, if the burglary had been committed during day time  in
business hours then the appellant was liable to reimburse the  loss  to  the
respondent of the stolen articles treating them as  insured  articles  under
the policy. But if the burglary had been  committed  of  the  stock/articles
kept out of safe after business hours at night then  in  such  circumstances
the appellant was not liable to  indemnify  the  loss  of  any  such  stolen
articles by virtue of note appended to clause  5.  In  these  circumstances,
the respondent was not entitled to  claim  any  compensation  for  the  loss
sustained in the burglary of any such stolen articles.
38)   In  our  considered  opinion,  there  is  neither  any  ambiguity  nor
vagueness and nor absurdity in the  language/wording  of  note  appended  to
clauses 4 or/and 5.  On the other hand, we find  that  the  language/wording
of the note in both the clauses is plain, clear, unambiguous and creates  no
confusion in the mind of the reader about its meaning. That apart clause  12
of the policy, in clear terms, provides that  the  appellant  would  not  be
liable to indemnify any loss under the policy if such loss or damage to  the
insured property occurs while  the  insured  property  was  kept  in  window
display at night or while it was kept out of safe after business hours.
39)   This takes us to the next submission of  Mr.  Ahmadi,  learned  senior
counsel for  the  respondent  that  we  should  apply  the  rule  of  contra
proferentum  to interpret clauses 4 and 5 because according to him there  is
an ambiguity in the language/wording of clauses 4 and 5  and  secondly,  the
appellant being the author of these clauses has no right to take benefit  of
the ambiguity to defeat the  rights  of  the  respondent.   Learned  counsel
maintained that the interpretation of  the  clauses  should,  therefore,  be
made in such a way that its benefit would go  to  the  respondent  (insured)
for claiming  compensation  from  the  appellants.  We  cannot  accept  this
submission of learned counsel for the respondent for more than one reason.
40)   In Halsbury's Laws of England (fifth edition- Volume  60  Para  105  )
principle of contra proferentem rule is stated thus :
“Contra proferentem rule.  Where there is ambiguity in the policy the  court
will apply the contra proferentem rule.  Where a policy is produced  by  the
insurers, it is their  business  to  see  that  precision  and  clarity  are
attained and, if they fail to do so,  the  ambiguity  will  be  resolved  by
adopting the construction favourable to the insured.  Similarly, as  regards
language which emanates from the insured,  such  as  the  language  used  in
answer to questions in the proposal or in a slip, a construction  favourable
to the insurers will prevail if  the  insured  has  created  any  ambiguity.
This rule, however,  only  becomes  operative  where  the  words  are  truly
ambiguous; it is a rule for resolving ambiguity and  it  cannot  be  invoked
with a view to creating a doubt.  Therefore, where the words used  are  free
from ambiguity in the sense that,  fairly  and  reasonably  construed,  they
admit of only one meaning, the rule has no application.”

41)    The aforesaid rule, in our considered opinion, has no application  to
the facts of this case. It is for the reason  that  firstly,  we  find  that
there is no ambiguity in the language/wording used in clauses 4  and  5.  In
other words, as held above, the language/wording of clauses 4 and 5 and  the
note appended thereto is clear, plain and unambiguous and carries  only  one
meaning. Secondly, in the absence of any ambiguity, the  respondent  is  not
entitled  to  invoke  the  principle  underlined  in  the  rule  of   contra
proferentem for interpreting the clauses of the policy and lastly,  presence
of ambiguity in the language of policy being sine qua non for invocation  of
the contra proferentem rule, which is not present here, we cannot apply  the
rule for deciding the issue involved in case.
42)     It is a settled rule of interpretation that  when  the  words  of  a
statute  are  clear,  plain  or  unambiguous,  i.e.,  they  are   reasonably
susceptible to only one meaning, the courts are  bound  to  give  effect  to
that meaning irrespective of consequences. In other words, when  a  language
is plain and unambiguous and admits of only  one  meaning,  no  question  of
construction of a statue arises, for the  Act  speaks  for  itself.  Equally
well-settled rule of interpretation is that whenever the  NOTE  is  appended
to the main Section, it is explanatory in nature to  the  main  Section  and
explains the true meaning of the main Section and has  to  be  read  in  the
context  of  main  Section   (See  -  G.P.Singh  -Principle   of   Statutory
Interpretation  13th  Edition  page  50  and  172).  This  analogy,  in  our
considered opinion, equally applies while interpreting  the  words  used  in
any contract.
43)   Coming now to the facts of the case, it is not  in  dispute  that  the
burglary  took  place  in  the  respondent's  shop  during  night  hours  on
02.06.1995 when the burglars took away the jewelry  (gold/silver  ornaments)
kept in display window and jewelry lying out of  safe.  The  appellant  was,
therefore, justified  in  contending  that  the  stolen  articles  were  not
covered under the policy by virtue of clauses 4,  5  of  Proposal  Form  and
Clause 12 of the policy and no  liability  could  be  fastened  on  them  to
indemnify the loss of such articles for awarding  any  compensation  to  the
respondent.  Indeed  clauses  4,  5  and  12  were  clearly   attracted   in
appellant’s favour.
44)   We do not agree to  the  submission  of  Mr.  Ahmadi,  learned  senior
counsel  for  the  respondent  that  once  the  respondent  disclosed  their
intention to get their stock (ornaments) valued at Rs 2 Crores insured  with
the appellant by filling the details in Columns 4  and  5  of  the  proposal
form and once  they  paid  the  necessary  premium  to  the  appellant,  the
respondent became entitled to claim  loss  of  the  stolen  items  from  the
appellant treating the stolen items as insured under the  policy  regardless
of note contained in clauses 4 , 5 and clause  12  of  the  policy.  In  our
view, the submission has a fallacy.
45)   Firstly, as mentioned above, if the burglary had  taken  place  during
day time in business hours in respect of the items kept  in  display  window
or out of safe, the appellant was liable to compensate  the  respondent  for
the entire loss suffered by them treating the stolen items as insured  items
under the policy. In other words, if the burglary  had  taken  place  during
business hours then item kept in display window or those lying out  of  safe
were covered under the policy.
46)   Likewise, if the burglary had taken place during night in relation  to
the items  kept  in  the  safe,  then  also  the  appellant  was  liable  to
compensate the loss suffered by the  respondent  in  burglary  treating  the
stolen items as insured items under the policy.
47)   In both the category of cases mentioned above, the appellant  was  not
entitled to rely upon clauses 4, 5 and 12 to avoid their  liability  because
both the instances did not fall either in clause 4 or  clause  5  or  clause
12. However, this was not the case set up  by  the  respondent  against  the
appellant.
48)   On the other hand, it is the case of the respondent that the  burglary
took place at night and the insured items kept in display  window  and  some
lying out of safe were stolen. Due to these facts, clauses 4, 5 and 12  were
attracted against the respondent.
49)   In order to claim benefit of the policy, it was  obligatory  upon  the
respondent to have removed the insured items from  display  window  everyday
after business hours and keep them  inside  safe  during  night  hours  till
opening of the shop next day. Like wise all insured items in side  the  shop
should also have been kept in side the safe everyday  after  business  hours
till opening of the shop  next  day.  It  was,  however,  not  done  by  the
respondent.
50)    A  contract  of  insurance  is  one  of  the  species  of  commercial
transaction  between  the  insurer  and  insured.  It  is  for  the  parties
(insurer/insured) to decide as to what type of insurance they intend  to  do
to secure safety of the goods and how much premium the insured wish  to  pay
to secure insurance of their  goods  as  provided  in  the  tariff.  If  the
insured pays additional premium to the insurer to  secure  more  safety  and
coverage of their insured goods, it is permissible for them to  do  so.   In
this case, the respondent did not pay any  additional  premium  to  get  the
coverage of even two instances mentioned above to avoid rigour  of  note  of
clauses 4, 5 and clause 12.
51)   In view of foregoing discussion, we cannot concur with  the  reasoning
and the conclusion arrived at by the Commission. The  appeal  filed  by  the
insurance company, i.e., Civil Appeal No. 2140 of 2007, therefore,  deserves
to be allowed. It is accordingly allowed. Impugned order is set aside. As  a
consequence thereof, the complaint  filed  by  the  respondent  against  the
appellant out of which this appeal arises is dismissed. No costs.
Civil Appeal No. 5141 of 2007
In the light of the order passed in Civil Appeal No. 2140  of  2007,  it  is
not necessary to examine the merits of the claim filed by  the  Complainant,
which has been rendered infructuous. The appeal thus fails and is  dismissed
as having rendered infructuous.  No costs.


                                     .……...................................J.
                                                            [J. CHELAMESWAR]


                                      ………..................................J.
                                                       [ABHAY MANOHAR SAPRE]
      New Delhi,
      January 13, 2016.
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