Case: United India Insurance Co. Ltd Vs. M/S. Harchand Rai Chandan Lal

Oriental Insurance Co. Ltd. vs. Samayanallur Primary Agricultural Co-op. Bank reported in AIR 2000 87 SC 10. In this case question came for interpretation of the similar policy, i.e. policy against burglary. The Bank had two insurance policies with the Oriental Insurance Company Ltd. out of which one was cash insurance policy for Rs.1 lakh and the second was a burglary insurance policy for Rs.25 lakhs. The relevant terms of the policy were "3(a) - Are all valuable secured in Burglary resistance safes when Premises are lockedyes(b) If so, state name or maker of safe and costTansi" 11. The answer to the question 3(a) was in positive. The question arose that according to the complaint burglary took place from the cashiers cash box. The surveyors report was that the stolen jewels had not been kept in safe locker an the theft was not covered under burglary insurance policy. Though the District Forum directed the insurance company to pay a sum of Rs.43,729.25 however, the State Commission observed that what is insured is not the contents of the cash box but the jewels kept in the safe which means a safety locker made by Tansi as agreed to in the proposal form. And it was observed that jewels kept in the cashiers cash box which were not covered by the policy. The State forum overruled the order passed by the District Forum. The order passed by the State Commission in revision was reversed by the National Commission. The matter came before this Court in Special Leave Petition by Insurance Company. Their Lordships observed that there was no necessity of referring to the dictionaries for understanding the meaning of the word safe which the parties in the instant case are proved to have understood while submitting the proposal and accepting the insurance policy. The cashiers box could not be equated with the safe within the meaning of the insurance policy. The alleged burglary and the removal of the jewellery from cash box, the cash box was not covered by the insurance policy between the parties. The insurance policy has to be construed having reference only to the stipulations contained in it and no artificial farfetched meaning could be given to the words appearing in it. And, therefore, they set aside the order of the National Commission. 12. Similarly, in the case of Oriental Insurance Co. Ltd vs. Sony Cheriyan reported in (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." 13. Similarly in the case of General Assurance Society Ltd vs. Chandumull Jain and Anr. reported in (1966) 3 SCR 500 the Constitution Bench had observed that the policy document being a contract and it has to be read strictly. It was observed, "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 the and extended to cover flood, cyclone etc. had come into being." 14. 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.15. From the above discussion, we are of the 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.16. However, all the three forums have already awarded compensation and the amount has been paid to the respondent, therefore, on the point of equity we would not like to disturb the payment which has already been made. However, in view of legal position stated by us, the orders of the District Forum, State Commission and the National Commission cannot be upheld.17. But before parting with the case we would like to observe that the terms of the policy as laid down by the Insurance Company should be suitably amended by the Insurance Company so as to make it more viable and facilitate the claimants to make their claim. The definition is so stringent in the present case that it gives rise to difficult situation for the common man to understand that in order to maintain their claim they will have to necessarily show evidence of violence or force. The definition of the word burglary should be given meaning, which is closer to the realities of life. The common man understands that he has taken out the Policy against theft. He hardly understands whether it should precede violence or force. Therefore, a policy should be a meaningful policy so that a common man can understand what is the meaning of burglary in common parlance. Though we have interpreted the present policy strictly in terms of the policy but we hope that the Insurance Companies will amend their policies so as to make them more meaningful to the public at large. It should have the meaning which a common man can easily understand rather than become more technical so as to defeat the cause of the public at large. 18.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Similarly in the case of General Assurance Society Ltd vs. Chandumull Jain and Anr. reported in (1966) 3 SCR 500  the Constitution Bench had observed that the policy document being a contract and it has to be read strictly. It wasinterpreting 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 and extended to cover flood, cyclone etc. had come into being.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.15. From the above discussion, we are of the 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.16. However, all the three forums have already awarded compensation and the amount has been paid to the respondent, therefore, on the point of equity we would not like to disturb the payment which has already been made. However, in view of legal position stated by us, the orders of the District Forum, State Commission and the National Commission cannot be upheld.17. But before parting with the case we would like to observe that the terms of the policy as laid down by the Insurance Company should be suitably amended by the Insurance Company so as to make it more viable and facilitate the claimants to make their claim. The definition is so stringent in the present case that it gives rise to difficult situation for the common man to understand that in order to maintain their claim they will have to necessarily show evidence of violence or force. The definition of the word burglary should be given meaning, which is closer to the realities of life. The common man understands that he has taken out the Policy against theft. He hardly understands whether it should precede violence or force. Therefore, a policy should be a meaningful policy so that a common man can understand what is the meaning of burglary in common parlance. Though we have interpreted the present policy strictly in terms of the policy but we hope that the Insurance Companies will amend their policies so as to make them more meaningful to the public at large. It should have the meaning which a common man can easily understand rather than become more technical so as to defeat the cause of the public at large.