Conditions of a contract are ordinarily binding on the parties. Sometimes, however, policies contain a stipulation which is unrealistic and cannot be enforced.
Pune’s Mehta Jewellers had a Jeweller’s Block Policy issued by National Insurance (coverage of Rs 31 lakh). The policy covered the risk of burglary of ornaments kept in the shop. In June 2007, the shop was burgled and ornaments worth the cover were stolen. An FIR was lodged. But the police could not find the culprits. Eventually, the case was classified true but not detected.
The insurance company had appointed Sunil Vora & Associates as surveyor. The surveyor inspected the shop and gave report in five months. The insurer ultimately rejected the claim on April 16, 2009, saying the ornaments in the shop were kept in a locally made steel safe and not in a burglar-resistant vault.
The jeweller filed a consumer complaint before the Maharashtra State Commission. It was pointed out that the safe had been manufactured by Kolhapur's Raj Safe & Co, and it had many jambs and locks. The same safe had been in use since the inception of the shop in 1970. The policy had been first taken for the year 1991-92 and then renewed over the years. Before every renewal, the insurance officers would inspect the shop. They had never expressed any concerns about its security, or advised changing it. The jeweller claimed his bonafide claim had been arbitrarily rejected by the company, and after an enormous delay of two years.
The insurance company contested the complaint. It stated the claim had been correctly repudiated in accordance with the terms of the policy, as the jewellery had not been stored in a “burglar resistant safe”, but in an almirah of local make. Also, the policy stipulated that the insured premises were required to be protected by employment of watchman round the clock. The insurance company claimed the loss had occurred due to the jeweller's own negligence.
The Commission observed the Surveyor had assessed the loss at Rs 28.95 lakh. The insured premises were guarded by a common watchman patrolling in the jeweller's shop, as well as other premises in the vicinity.
According to the policy, all properties including cash and currency notes were required to be kept securely in a locked safe of standard make. The Commission observed the insurer had not defined “safe of standard make”. The insurance company explained the jeweller ought to have used a “burglar-proof safe”. The Commission did not agree with the insurer’s argument, and relied on the judgement of the National Commission in the case of Orient Treasures Pvt Ltd v/s United India Insurance Co [IV (2007) CPJ 146 (NC)], where it had been held that the insistence of the insurance company to keep the goods in a burglar-proof safe is apparently a vague condition, as till date a burglar-proof safe has not been invented. The State Commission pointed out the law is well settled that in case of ambiguity in the terms of a policy, the policy conditions have to be interpreted in favour of the insured.
Accordingly, the Commi-ssion held the objection to the safe was not correct and could not be raised, as the insurance company's officers had inspected the shop and never found any fault with the use of the locally manufactured safe. The Commission allowed the complaint and directed the insurance company to pay Rs 28.95 lakh, which was the loss as assessed by the surveyor. In addition, 10 per cent interest was granted as compensation for the delay in settlement of the claim.
The State Commission had earlier dismissed the complaint on the ground that the claim was time-barred, since it had not been filed within two years. The National Commission set aside this order, holding the starting point for limitation would be the date of repudiation of the claim and, hence, the complaint was not time-barred.
This judgment makes it clear that demand to have a burglar-proof safe cannot be enforced. Also, limitation begins from the date of rejection of the claim and not from the date of loss.
The write is a consumer activist
