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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

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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

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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

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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

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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

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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,  (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 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

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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

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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

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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

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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 Law1 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)

1 MACGILLIVRAY ON INSURANCE LAW (9th ed., 1997) (Nicholas Legh-Jones et al, eds.) at p. 280.

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Colinvaux’s  Law  of  Insurance2propounds  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

2 COLINVAUX’S LAW OF INSURANCE (6th ed., 1990) (Robert and Merkin, eds.) at p.42.

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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

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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.

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