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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  

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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  

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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.   

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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  

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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  

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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.  

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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  

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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.  

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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.

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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  

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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.  

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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,  

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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  

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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)  

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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  

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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  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  

Rs.3,50,5000/-

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each location). Note : Window display at  night is not covered.

5 STOCK a.  What  was  (i)  the  average  daily  total  value  of  your stock during the  past 12 months? (ii)  Will the whole of your  stock  when  on  your  premises be kept in safe  at night and at all times  when the state value and  class of  stock which will  left outside safes. Note :  We do  not cover  stocks  kept  out  of  the  safe---business  hours  at  night.

(a)(i)New Shop (b)(iii)New shop

(b) All stocks of  Gold, Diamond,  Gems,  Silver  and  other  precious  stones-kept  outside  the  safe- Rs.2,00,00,000  (Two crores).

(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  

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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  

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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  

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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"  

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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  

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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  

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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  

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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  

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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  

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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  

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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  

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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.

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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  

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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.   

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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  

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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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