Case: M/s. Industrial Promotion &amp; Corporation of Orissa Ltd Vs. New India Assurance Company Ltd. &amp; Another

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 on6, 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 onat 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 onin the Remona Police Station, Balasore regarding the theft/burglary of the plant and machinery. Onthe Appellant informed Respondent No. 1 about the theft and requested for issuance of a claim form. A claim was lodged with Respondent No. 1 onfor 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 onon 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 Sectionread with Sectionof the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, which was rejected by the MRTP Commission, New Delhi by its Order datedAggrieved by the said Order, the Appellant has preferred the present Appeal.

Court's reasoning:
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 theprinciple 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 asCOMPANY HEREBY AGREES subject to the terms and conditions contained herein endorsed/or otherwise expressed hereon that if, (a) the property hereinafter described or any part thereof be LOST or DAMAGED by BURGLARY and/or HOUSE BREAKING, or (b) ANY DAMAGE be caused to the premises to be made good by the insured from BURGLARY and/or HOUSE BREAKING or any attemptterm burglary and/or house breaking has been defined in terms of the policy which are as‘Burglary and/or houseshall 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.led 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 constructionchartarum fortius accipiuntur contrameans that ambiguity in the wording of the policy is to be resolved against the party who prepared it. MacGillivray on Insurance Law (MACGILLIVRAY ON INSURANCE LAW (9th ed., 1997) (Nicholaset al, eds.) at p. 280) deals with the rule of contra proferentem ascontra 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.must not use the rule to create the ambiguity – one must find the ambiguityThe 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 surroundings Law of InsuranceLAW OF INSURANCE (6th ed., 1990) (Robert and Merkin, eds.) at p.42) propounds the contra proferentem rule asapart 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 construed1. 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.