Whether the loss of goods sustained by the insured, fall within the meaning of burglary as stated in insurance policy

National Consumer Disputes Redressal
Mono Industries vs New India Assurance Co. Ltd.
Dated: 10th March, 2008

SUBJECT

Whether the loss of goods sustained by the insured, fall within the meaning of 'burglary' as stated in the insurance policy?

BRIEF FACTS

1. the Complainant is engaged in manufacturing of Polythene rolls, bags, and tubes.
2. It had obtained an insurance policy from the New India Assurance Co. Ltd. for a sum of Rs. 4 lakhs, for the period from 10.4.1992 to 9.4.1993 on payment of Rs. 1,140/- towards the premium.
3. On the intervening night of 31st August and the 1st of September 1992, a burglary took place in the insured premises and information to that effect was given to the Police and the Insurance Company.
4. As the claim was not settled, the Complainant filed Case No.TC/826/98 before the District Forum, New Delhi, claiming a sum of Rs. 2,37,500/- towards the value of the goods stolen; and Rs. 2,00,000/- towards compensation, with interest at the rate of 18% p.a. and costs.
5. The stand taken by the Insurance Company before the District Forum was that : (i) on survey being conducted, it was found that there was no burglary, but that it was only a case of theft, which was not covered under the insurance policy; and, (ii) the Complainant did not furnish any proof of burglary, and hence the claim of the Complainant was not tenable.
6. THE DISTRICT FORUM after hearing both the parties and taking into consideration that the Complainant had shown to the investigator the broken roofing sheet which might have been removed by the miscreants to enter the premises, directed the Insurance Company to pay to the Complainant the value of the stolen goods to the tune of Rs. 2,37,500/- with interest at the rate of 18% p.a. from 1.9.1992, i.e., the date of the occurrence of the loss, till the date of payment. Rs. 2,000/- was also awarded by way of costs
7. Feeling aggrieved, the Insurance Company went in appeal to the State Commission, Delhi, by filing Appeal No.A-01/2001.
8. THE STATE COMMISSION vide its order dated 29.9.2005, while upholding the order of the District Forum, modified the order to the limited extent of deleting the direction of payment of interest, and, instead, awarded a lump sum of Rs. 25,000/- towards compensation and costs.
9. Against that order, both the parties have filed revision petitions before us.
10. The Insurance Company filed Revision Petition No.251 of 2006 for dismissal of the complaint and setting aside the order of the District Forum.
11. Revision Petition No.3049 of 2005 is filed by the Complainant praying that interest on the amount as awarded by the District Forum requires to be confirmed.
12. As both the revision petitions arise out of the same judgment and order of the State Commission, we dispose of both of them by a common order.
13. In the revision petition filed by the Insurance Company, the learned Counsel Mr. Seth contended that:

• no burglary occurred in the premises of the Complainant, hence, the loss or damage caused to the Complainant is not covered by the policy, as it is only a case of theft as registered by the Police under Section 380IPC;
• there is no evidence on record to establish that the Complainant suffered loss of Rs. 2.37,500/-.

FINDINGS  OF NCDRC

14. Whether it is a case of burglary or theft?
15. The learned Counsel Mr. Seth appearing on behalf of the Insurance Company heavily relied upon the decision of the Apex Court in the case of United India Insurance Co. Ltd. v. Harichand Rai Chandanlaland contended that in case of theft Insurance Company is not liable to reimburse.
16. In our view, the aforesaid judgment is misunderstood by the Insurance Company.
17. In the aforesaid case it is clearly held that if the entry is affected by exercise of any force, however slight, it was sufficient to constitute an entry within the meaning of the policy. Such entry can be described as violent in nature and character. For this purpose, the Court referred to Queen's Bench decision in the case of George and Goldsmiths and General Burglary Insurance Assn. Ltd.(1989) 1 All ER 422 : (1989) 1 Lloyd's Rep 379 (CA), wherein it has been held as under:
18. 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 to its unlawful character.
19. In the same context, the Court also referred to the passage from the Halsbury's Laws of England, 4th Edn., para 646 wherein it has been observed that 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.
20. Thereafter, the Court held that:

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 dependent upon the particular facts involved in relation to the 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.

Keeping the aforesaid principle in background we would first refer to the finding recorded by the State Commission on the basis of the evidence of the Complainant.

21. The State Commission after appreciating the evidence which was brought on record arrived at the conclusion that it was a clear case of burglary. For this purpose, the State Commission relied upon the version of the Complainant that at about 7.00 pm the office Supervisor of the factory locked the godown from inside and kept the key in the office. On the next day morning at about 9.30 a.m., the Operator, Mr.Jaganath, informed the Complainant on telephone that plastic granules lying in the godown had been stolen. On receipt of the said information at about 10.15 am, the Complainant came to the factory and found that the plastic items weighing 4,750 kgs had been stolen. For this purpose, undisputedly, an FIR was lodged with the Police. The Police registered the case under Section 380 of the IPC. It is also pointed out that for entering the godown premises a skilled person removed the plastic sheet from the ceiling of the roof, and thereby entered into the premises, opened the door, and took away large quantity of the granules.
22. Further, with regard to cause of incident, the surveyor appointed by the Insurance Company also stated to the same effect in the interim survey report dated 19.7.1993.
23. Despite this, the Insurance Company never bothered to verify from the Police Officers with regard to the incident.
24. The next question which requires consideration is whether the order passed by the District Forum directing the Insurance Company to pay the amount with interest at the rate of 18% p.a. requires to be restored or not?
25. The learned Counsel for the Complainant submitted that there was no justifiable reason for the State Commission in not awarding the interest on the amount of loss suffered by the Complainant and in awarding only Rs. 25,000/- in lump sum.
26. In our view, the aforesaid submission is also justifiable. Because the incident of burglary took place on the intervening night of 31st August and 1st September 1992. And, if the amount is withheld by the Insurance Company for years together, lump sum award of Rs. 25,000/- as compensation, covering both interest and costs, would not suffice. Hence, just compensation is required to be awarded. Just compensation would mean award of reasonable rate of interest in case of loss suffered in terms of Rupees. In other words, proper measure, or yard stick for granting compensation would be award of appropriate rate of interest on the amount which Complainant would have received, had the claim been settled at the right time. Hence, the Insurance Company is directed to pay the aforesaid amount with interest at the rate of 10% p.a. Revision Petition No.251 of 2006:
27. In view of the aforesaid discussion, the Revision Petition No. 251 of 2006 filed by the Insurance Company is dismissed.
28. In the result, the Revision Petition No.3049 of 2005, filed by the Complainant is partly allowed. The Insurance Company is directed to pay the sum of Rs. 2,37,500/- with interest at the rate of 10% from 1st March 1993, i.e.., after 6 months from the date of the occurrence of the incident, till the date of payment.
29. There shall be no order as to costs in both the Revision Petitions.

CONCLUSION

The Apex Court earlier in the case of United India Insurance Co. Ltd. v. Harichand Rai Chandan Lal held that that 'theft from the premises by forceful and violently' would mean entry by use of any force, however slight it may be. As such, an entry obtained by picking the lock or forcing back the catch by means of an instrument involves the use of violence. Whether it is burglary or not, depends upon the facts and circumstances of each case. In the present case, entry by the culprits was by removal of roof sheet which cannot be done without use of force. Hence, it would be a case of violent entry for committing theft/burglary. It means that removal of roof sheets by culprits is considered as forceful entry into premises and hence comes under definition of theft or burglary based on the circumstances of the case and hence insurance company is liable for payment of claim.

DISCLAIMER: The case law presented here is only for sharing information and knowledge with the readers. The views expressed are personal. In case of necessity do consult with insurance professionals for more clarity and understanding of subject matter.