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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.