United Insurance loses plea in Usha Intl case

The Delhi High Court today dismissed United India Insurance Company's petition seeking to quash its earlier order asking the insurer to pay Rs 1.38 lakh with 5 per cent interest per annum to Usha International for theft of its insured goods after the cyclone.

A division bench comprising Chief Justice Markendeya Katju and Justice Madan B Lokur, while dismissing the appeal, said: "It appears that the theft was committed after the cyclone in Orissa, but in our opinion it nevertheless remained a theft. The burglary and house-breaking policy clearly covers a case of theft in the house. No doubt that theft was subsequent to the cyclone, but it remains a theft."

The state-owned United India Insurance had contended that the policies issued by it didn't cover theft resulting out of a cyclone.

Earlier in its September order, Justice Vikramajit Sen had asked United India Insurance to pay Rs 1.38 lakh with interest at the rate of 5 per cent per annum to Usha International within four weeks for the theft of insured goods from its godown in Cuttack in the aftermath of super-cyclone between October 26 and 30, 1999.

The insurance company was also liable to pay the interest at the rate of 8 per cent per annum together with costs quantified at Rs 10,000. if the payments were not paid within four weeks from the date of claim.

Justice Sen had flayed the insurance companies for ambiguity and had observed that the laid down policy terms should be suitably amended by the insurance companies so as to make it more viable and facilitate the claimants to make their claims.

"The definition of burglary should be given meaning which is closer to the realities of life. The common man understands that he has taken the policy against theft... 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," the judge had stated.

Usha International Ltd had insured its godown at Cuttack, Orissa for a variety of natural calamities including covering risks inter-alia against fire, theft, burglary, riots, etc by paying Rs 1,44,398 between April 1, 1999 and March 31, 2000. The risks were covered for a total sum of Rs 47 crore.

While filing a claim before the insurance company for Rs 7.88 lakh including a claim of Rs 1.38 lakh on account of theft, the insurance company had paid the cyclonic damage claim and refused to pay for the theft saying that the theft was not covered under the policy of Fire and Loss.