BHARAT WATCH COMPANY THROUGH ITS PARTNER versus NATIONAL INSURANCE CO. LTD. THROUGH ITS REGIONAL MANAGER on 12 April 2019

1. Leave granted.

2. The National Consumer Disputes Redressal Commission[1] byits judgment dated 16 April 2015 reversed the concurrent findings arrivedat by the District Consumer Disputes Redressal Forum, Solapur[2] andby the Consumer Disputes Redressal Commission, Maharashtra[3].

3. The appellant has a showroom at Solapur in which watchesare sold. The appellant had insured its stock of watches with therespondent. During the course of the night on 3 August 2001, after theshop had closed for the day, a theft occurred in the premises. The theftwas detected at about 9 A.M. on the next day after the shop opened forbusiness.

4. A First Information Report was lodged with the Police and aclaim under the insurance policy was made. The surveyor submitted apreliminary report on 4 September 2001 indicating a loss of approximatelyRs 3,86,395. The surveyor recorded that they were informed by thepartner of the firm that the theft may have taken place by utilising duplicatekeys. The surveyor, however, found empty watch stands on which thestrips of the model numbers were lying behind the counters. There wasno sign of forcible entry. This was followed by a surveyor’s reportdated 30 November 2001.

5. After the claim was repudiated by the insurer, the appellantfiled a consumer complaint. By an order dated 26 April 2007, the DistrictForum allowed the claim in the amount of Rs. 3,04,000. The decision ofthe District Forum was affirmed, in appeal, by the SCDRC on 19 April2010.

6. The NCDRC reversed the above decisions in its revisional orderdated 16 April 2015, relying upon a decision of this Court in United 1 “NCDRC”

2 “District Forum”

3 “SCDRC”

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AIndia Insurance Co. Ltd.vs. Harchand Rai Chandan Lal4.Construing the terms of the exclusion in a policy of insurance againstburglary and/or house breaking, this Court had held that where the lossor damage was caused without forcible and violent entry to and/or exitfrom the premises, the claim could not be maintained. The terms of thepolicy in the above decision of this Court read as follows:B

“’Burglary and/or housebreaking’ shall mean theft involving entryto or exit from the premises stated therein by forcible and violentmeans or following assault or violence or threat thereof to theinsured or to his employees or to the members of his family.”

C7. Construing the above condition, this Court held:

“15….we are of the opinion that theft should have been precededwith force or violence as per the terms of insurance policy. Inorder to substantiate a claim an insurer has to establish that theftor burglary took place preceding with force or violence and if it isDnot, then the insurance company will be well within their right torepudiate the claim of the insurer.”

8. In the present case, the NCDRC in the course of its decisionadverted to “clause 8” of the insurance policy which was in the followingterms:-E“Loss of money and / or other property abstracted from safefollowing the use of the key to said safe or any duplicate thereofbelonging to the insured unless such key has been obtained byassault or any threat”

9. This was in any event not applicable, since the loss was notFfrom a safe.

10. Clause (a) of the policy as extracted in the above judgmentreads thus:

“Any loss of or damage to the property or any part thereof whilstcontained in the premises described in the schedule hereto due toGBurglary or Housebreaking (theft following upon an actual forcibleand violent entry to and / or exit from the premises and hold-up”

11. Since clause (a) was pari materia with the clause which wasconstrued by this Court in the above decision of this Court in United BHARAT WATCH CO. THR. ITS PARTNER v. NICL THR. ITSREG. MANAGER [DR. DHANANJAYA Y. CHANDRACHUD, J.]

India Insurance(supra), the NCDRC reversed the decisions of theDistrict Forum and the SCDRC.

12. The basic issue which has been canvassed on behalf of theappellant before this Court is that the conditions of exclusion under thepolicy document were not handed over to the appellant by the insurerand in the absence of the appellant being made aware of the terms ofthe exclusion, it is not open to the insurer to rely upon the exclusionaryclauses. Hence, it was urged that the decision in Harchand Rai(supra)will have no application since there was no dispute in that case that thepolicy document was issued to the insured.

13. This submission is sought to be answered by the learned counselappearing on behalf of the insurer by adverting to the fact that theSCDRC construed the terms of the exclusion. The SCDRC, however,did not notice the decision of this Court, and hence, the NCDRC was (itwas urged) justified in correcting the error having regard to the law laiddown by this Court. Learned counsel urged that the appellant has beeninsuring its goods for nearly ten years and it is improbable that the appellantwas not aware of the exclusion.

14. We find from the judgment of the District Forum that it wasthe specific contention of the appellant that the exclusionary conditionsin the policy document had not been communicated by the insurer as aresult of which the terms and conditions of the exclusion were nevercommunicated. The fact that there was a contract of insurance is not indispute and has never been in dispute. The only issue is whether theexclusionary conditions were communicated to the appellant. The DistrictForum came to a specific finding of fact that the insurer did not furnishthe terms and conditions of the exclusion and special conditions to theappellant and hence, they were not binding. When the case travelled tothe SCDRC, there was a finding of fact again that the conditions ofexclusion were not supplied to the complainant.

15. Having held this, the SCDRC also came to the conclusion thatthe exclusion would in any event not be attracted. The finding of theSCDRC in regard to the interpretation of such an exclusionary clause isevidently contrary to the law laid down by this Court inHarchand Rai(supra). However, the relevance of that interpretation would have arisenprovided the conditions of exclusion were provided to the insured. TheNCDRC missed the concurrent findings of both the District Forum and A

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Athe SCDRC that the terms of exclusion were not made known to theinsured. If those conditions were not made known to the insured, as isthe concurrent finding, there was no occasion for the NCDRC to rendera decision on the effect of such an exclusion.

16. In the circumstances, the NCDRC was in error in reversingBthe decisions of the District Forum and the SCDRC which were groundedon a pure finding of fact that the terms of exclusion were not madeknown to the insured.

17. We clarify that in a situation where the terms of exclusion asnoted earlier apply, the law laid down by this Court in Harchand RaiC(supra) would undoubtedly stand attracted. This case is, however,distinguishable on facts, since the terms of exclusion were notcommunicated.

18. We accordingly, allow the appeal and set aside the impugnedjudgment and order of the NCDRC. The order passed by the DistrictDForum shall accordingly, stand restored. There shall be no order as tocosts.

19. Pending application(s), if any, shall stand disposed of.

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Kalpana K. Tripathy

Appeal allowed.

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