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CASE NO.:

Appeal (civil) 6277 of 2004

PETITIONER:

United India Insurance Co.Ltd.

RESPONDENT:

M/s.Harchand Rai Chandan Lal

DATE OF JUDGMENT: 24/09/2004

BENCH:

S.N. Variava & A.K. Mathur

JUDGMENT:

J U D G M E N T

(Arising out of S.L.P.(c) No.19771 of 2003)

A.K. MATHUR, J.

Leave granted.

This appeal is directed against the order passed by the

National Consumer Disputes Redressal Commission, New Delhi in

Revision Petition No.2159 of 2002 confirming the order passed by the

State Consumer Disputes Redressal Commission, New Delhi as well as

the order passed by the Consumer Disputes Redressal Forum-II

(District Forum II), New Delhi.

The brief facts which are necessary for the disposal of the

appeal are as follows. The respondent took out a policy by the appellant

company for a sum of Rs.7 lacs against burglary and/or house breaking

policy with effect from September 22, 1991 to September 21,1992.

Necessary provisions of the policy 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 Housebreaking" has been defined in

terms of the policy also which reads as under.

" Burglary and/or Housebreaking' shall 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"

There are exceptions to it with which we are not concerned.

During the currency of the policy, the respondent had his stock of food

grains kept in godown No.48, Srinagar Colony, Bharat Nagar,New

Delhi. Shri Ashok Kumar Bansal, one of the partners of the respondent

visited his godown on July 2, 1992 and there he found out that 197

bags of gwar were stolen. An F.I.R. was lodged at Police Station Sarai

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Rohilla under Section 380 of the Indian Penal Code on July 24,1992.

Therefore, the respondent raised a claim against the appellant company

under the aforesaid policy for incurring the aforesaid loss by theft. The

appellant company repudiated the claim of the respondent on the

ground that theft is not covered by the insurance policy as no burglary

took place in the godown by use of force or violence. Therefore, the

respondent approached the Consumer Disputes Redressal Forum-II

(District Forum) and made a claim for the loss of 197 bags of gwar.

The appellant company contested the claim and took the stand that the

claim is not covered as per the insurance policy. However, the District

Forum overruled the objection and held that burglary includes theft

and by its order dated June 1, 1998 directed the appellant company to

release the claim of the respondent within two months with interest at

the rate of 15% per annum and also awarded cost quantified at

Rs.1,000/-.Aggrieved against the said order of the District Forum the

appellant company preferred an appeal before the State Consumer

Disputes Redressal Commission, New Delhi which was registered as

Appeal No.881 of 1998. The State Commission also by its order dated

June 19,2002 upheld the claim of the respondent taking the view that

notwithstanding the definition of the term 'burglary and/or

housebreaking' as defined in the policy, burglary includes theft also. It

also relied upon a decision of the National Consumer Disputes

Redressal Commission in the case of National Insurance Company

Ltd. v. Public Type College reported in II (2001) CPJ 26(NC). The

State Commission thus dismissed the appeal filed by the appellant

company. Aggrieved by the said order of the State Commission a

revision was filed before the National Consumer Disputes Redressal

Commission. The National Commission by its impugned order

affirmed the claim of the respondent and dismissed revision on May

20,2003. Hence, the present appeal by way of special leave.

The question before us is whether in terms of the policy,

the repudiation of the claim of the respondent by the appellant company

is justified or not. We have already reproduced the terms of the policy

as also the definition of burglary and/or housebreaking as defined in the

policy. The definition given in the policy is binding on both the

parties. 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 precede 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 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 Court

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 the statement of law as summarized in Halsbury's Laws

of England Fourth Edition ( 203 Reissue) Para 646. It reads as

under:

"646. Forcible and violent entry. The terms of a

burglary insurance may exclude liability in certain

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circumstances unless 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. "

In this connection, a reference may be made to an earlier

decision (Queen's Bench Division) in re George and the Goldsmiths

and General Burglary Insurance Association, Limited reported in

[1899] 1 Q.B.595. In this case, a policy was taken out for loss or

damage by burglary and housebreaking. A theft took place at premises

No.78, Strand, in a shop where the front door was shut but not locked

or bolted and access to the shop could be obtained by turning the

handle of the door. In the early morning before business hours, during

the temporary absence of a servant of the assured, some person opened

the front door, entered the shop, and breaking open a locked-up

compartment or show-case and certain properties were stolen.

Reversing the judgment of the Divisional Court, the Court of Appeal

held that the loss which has occurred as above mentioned was not

covered by the policy. Two propositions were advanced before the

Court The first that an entry effected by the exercise of any force,

however slight, was sufficient to constitute an entry within the meaning

of policy. The contention was advanced that pushing a door open, if it

were ajar, or turning the handle of a door, if the door were shut and

could be opened in that way, was sufficient force to satisfy the

language of the policy. The second proposition was that if that was so,

and therefore it could not be said that the original entry in the case was

effected by force within the meaning of the policy, yet nevertheless, the

language of the policy was satisfied by the fact that the thief, after

having entered the shop without force, proceeded to prise off an iron

plate to which a locked padlock was attached securing a show-case in

which valuables were placed. Their Lordships considered both the

propositions and after reproducing the definition, observed that as per

the plain reading of the expression used in terms of the policy violence

is a condition precedent. The Court of Appeal reversed the decision of

Queen's Bench. This view was reitereated subsequently in the case of

Dino Services Ltd. v. Prudential Assurance Co Ltd.. reported in [1989]

1 All ER 422. In this case also the proposition of law as enunciated in

the case of George and Goldsmith and General Burglary Insurance

Association Ltd. was reaffirmed. It was held as follows:

" In the context of a policy of insurance against theft

from premises by ' forcible and violent' means of

entry, the word 'violent' was to be construed according

to its ordinary meaning and meant entry by the use of

any force which was accentuated or accompanied by a

physical act which could properly be described as

violent in nature and character. In the context of such a

policy the word 'violent' accordingly referred to the

physical character of the means of entry and not merely

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to its unlawful character. It followed that the thieves, by

gaining entry to the premises simply by using the proper

keys to unlock the doors of the premises, had not

entered the premises by 'violent' means. Accordingly,

the plaintiff's loss was not covered by the policy. The

appeal would therefore be allowed."

Similarly, view has been expressed by American Courts also in

American Jurisprudence 2nd (Vol. 44) 1401 which is as follows:

"1401 \026 Provisions as to visible marks or

evidence, or use of force or violence

It is not uncommon for insurance companies to

include in their theft or burglary policies

provisions restricting their liability to cases where

there were some "visible marks" or "visible

evidence" of the use of force or violence. It is

generally competent for an insurer to insert such a

clause in the contract of insurance, and since such

a provision is unambiguous it does not justify the

applicable of the general principle that the

insurance policy will be construed most

favourable to the insured. However, the courts will

not read such a requirement into a policy and do

not require compliance with such clauses unless

the unmistakable language of the policy so

requires.

Such a policy requirement has been considered

either as a limitation on the liability of the insurer

or as a rule characterizing the evidence upon which

liability must be predicated, but in either event, the

validity of the requirement has been recognized

and rarely questioned, although in at least one

instance such a requirement has been held in

contravention of public policy under the particular

terms of the policy involved and the particular

circumstances.

Just as policies insuring against burglary of an

insured's premises commonly require visible

marks upon the insured's premises or upon the

exterior of the insured's premises, so also do safe-

burglary policies commonly require visible marks

either upon the insured's safe, or upon the exterior

of the insured's safe, or upon the exterior of the

doors of the insured's safe, and in some

instances the requirement of visible marks or

visible evidence has been imposed in policies

pertaining to theft of property from an insured's

automobile.

The determination of what constitutes visible

marks or visible evidence within the meaning of

such a provision, and of where such marks or

evidence must be located in order to satisfy the

policy requirement, is to a great extent depend

upon the particular facts involved in relation to the

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specific requirements imposed by the policy.

Where, for example, a burglary or theft policy

requires that there must be visible marks of force

or violence " at the place of entry" into the

premises, this requirement has been held complied

with if the visible marks are only on one of the

outer doors to the insured's premises, which the

burglars or thieves must have used to accomplish

their deed. However, under such a requirement, if

the only visible marks are those on inside doors

which are not at the entrance to the premises,

recovery will be denied. Similarly, a policy

providing against loss by burglary by felonious

entry into ;a safe by actual force evidenced by

visible marks made upon the exterior of all the

doors does not cover loss sustained by felonious

entry into the safe by a manipulation of the lock on

the outer door with no visible marks made thereon,

although the inner door of the safe did contain

such marks, although there is contrary authority.

The opening of a safe by manipulation of the

combination within the period covered by a policy

of burglary insurance which was made possible by

force applied to the safe before such period,

leaving visible marks upon the safe, was not within

the terms of the policy insuring against loss

through felonious entry into the safe by actual

force and violence, leaving visible marks upon the

safe and occurring within the policy period, with

an exemption from liability from loss effected by

opening the safe by manipulation of the lock."

It is possible that an insurer may sustain loss in technical terms

of the criminal law, but no relief can be given to him unless his case is

covered by the terms of the policy. It is not open to interpret the

expression appearing in policy in terms of common law; but it has to

give meaning to the expression as defined in the policy. The act that

causes the loss must fall within the definition in the policy and it cannot

take the cover and contents of the definition as laid down in the

criminal law. Therefore, when the definition of the word 'burglary' has

been defined in the policy then the cause should fall within that

definition. Once a party has agreed to a particular definition, he is

bound by it and the definition of criminal law will be of no avail. In this

connection, the decision of the National Consumer Disputes Redressal

Commission in the case of National Insurance Company Ltd. v. Public

Type College which has taken the colour and content of the definition

given in the criminal law does not lay down the correct proposition of

law. It is settled law that terms of the policy shall govern the contract

between the parties, they have to abide by the definition given therein

and all those expressions appearing in the policy should be interpreted

with reference to the terms of policy and not with reference to the

definition given in other laws. It is a matter of contract and in terms of

the contract the relation of the parties shall abide and it is presumed

that when the parties have entered into a contract of insurance with

their eyes wide open, they cannot rely on definition given in other

enactment. Thus, the decision of the National Consumer Disputes

Redressal Commission in the case of National Insurance Company

Ltd. v. Public Type College is not a good law and all the Tribunals i.e.

National Consumer Disputes Redressal Commission, State

Commission & District Forum having applied the ratio of that case; the

impugned order cannot be sustained.

Reference in this connection may be made to the decision of

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this Court in the case of 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 valuables secured in Burglary resistance

safes when Premises are locked Yes

(b) If so, state name or maker of safe and cost

Tansi"

The answer to the question 3(a) was in positive. The question

arose that according to the complaint burglary took place from the

cashier's cash box. The surveyor's report was that the stolen jewels

had not been kept in safe locker and 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 cashier's 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 cashier's 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.

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."

Similarly in the case of General Assurance Society Ltd. Vs.

Chandumull Jain and Anr. reported in (1966) 3 SCR 500 the

Constitution Bench has 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

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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."

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.

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.

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.

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.

In the result, we allow this appeal, set aside the order passed by

the National Consumer Disputes Redressal Commission, New Delhi

confirming the order of the State Commission & District Forum. But

the amount of compensation which has already been paid to the

respondent shall not be recovered in the facts and circumstances of the

present case. No order as to costs.