Bharat Watch Company Through Its Partner vs National Insurance Co Ltd Through Its Regional Manager

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(S). 3912 OF 2019 (@SLP(C) No. 25468/2016)

BHARAT WATCH COMPANY THROUGH ITS PARTNER Appellant(s)

VERSUS

NATIONAL INSURANCE CO. LTD. THROUGH ITS REGIONAL MANAGER Respondent(s)

JUDGMENT

Dr. Dhananjaya Y. Chandrachud, J.

Leave granted.

The National Consumer Disputes Redressal Commission1 by

its judgment dated 16 April 2015 reversed the concurrent

findings arrived at by the District Consumer Disputes Redressal

Forum, Solapur2 and by the Consumer Disputes Redressal

Commission, Maharashtra3.

The appellant has a showroom at Solapur in which watches

are sold. The appellant had insured its stock of watches with

the respondent. During the course of the night on 3 August

2001, after the shop had closed for the day, a theft occurred Signature Not Verified in the premises. The theft was detected at about 9 A.M. on the Digitally signed by MANISH SETHI Date: 2019.04.16 16:53:25 IST Reason: next day after the shop opened for business.

1 “NCDRC” 2 “District Forum” 3 “SCDRC” 2

A First Information Report was lodged with the Police and

a claim under the insurance policy was made. The surveyor

submitted a preliminary report on 4 September 2001 indicating a

loss of approximately Rs 3,86,395. The surveyor recorded that

they were informed by the partner of the firm that the theft

may have taken place by utilising duplicate keys. The

surveyor, however, found empty watch stands on which the strips

of the model numbers were lying behind the counters. There was

no sign of forcible entry. This was followed by a surveyor’s

report dated 30 November 2001.

After the claim was repudiated by the insurer, the

appellant filed a consumer complaint. By an order dated 26

April 2007, the District Forum allowed the claim in the amount

of Rs. 3,04,000. The decision of the District Forum was

affirmed, in appeal, by the SCDRC on 19 April 2010.

The NCDRC reversed the above decisions in its revisional

order dated 16 April 2015, relying upon a decision of this

Court in United India Insurance Co. Ltd. vs. Harchand Rai

Chandan Lal4 . Construing the terms of the exclusion in a

policy of insurance against burglary and/or house breaking,

this Court had held that where the loss or damage was caused

without forcible and violent entry to and/or exit from the

premises, the claim could not be maintained. The terms of the

policy in the above decision of this Court read as follows:

“’Burglary and/or housebreaking’ shall mean theft involving entry to or exit from the premises stated therein by forcible and

4 (2004) 8 SCC 644 3

violent means or following assault or violence or threat thereof to the insured or to his employees or to the members of his family.”

Construing the above condition, this Court held:

“15….we are of the opinion that theft should have been 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.”

In the present case, the NCDRC in the course of its

decision adverted to “clause 8” of the insurance policy which

was in the following terms:-

“Loss of money and / or other property abstracted from safe following the use of the key to said safe or any duplicate thereof belonging to the insured unless such key has been obtained by assault or any threat”

This was in any event not applicable, since the loss was

not from a safe.

Clause (a) of the policy as extracted in the above

judgment reads thus:

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

Since clause (a) was pari materia with the clause which

was construed by this Court in the above decision of this Court

in United India Insurance (supra), the NCDRC reversed the

decisions of the District Forum and the SCDRC. 4

The basic issue which has been canvassed on behalf of the

appellant before this Court is that the conditions of exclusion

under the policy document were not handed over to the appellant

by the insurer and in the absence of the appellant being made

aware of the terms of the exclusion, it is not open to the

insurer to rely upon the exclusionary clauses. Hence, it was

urged that the decision in Harchand Rai (supra) will have no

application since there was no dispute in that case that the

policy document was issued to the insured.

This submission is sought to be answered by the learned

counsel appearing on behalf of the insurer by adverting to the

fact that the SCDRC construed the terms of the exclusion. The

SCDRC, however, did not notice the decision of this Court, and

hence, the NCDRC was (it was urged) justified in correcting the

error having regard to the law laid down by this Court.

Learned counsel urged that the appellant has been insuring its

goods for nearly ten years and it is improbable that the

appellant was not aware of the exclusion.

We find from the judgment of the District Forum that it

was the specific contention of the appellant that the

exclusionary conditions in the policy document had not been

communicated by the insurer as a result of which the terms and

conditions of the exclusion were never communicated. The fact

that there was a contract of insurance is not in dispute and

has never been in dispute. The only issue is whether the

exclusionary conditions were communicated to the appellant.

The District Forum came to a specific finding of fact that the 5

insurer did not furnish the terms and conditions of the

exclusion and special conditions to the appellant and hence,

they were not binding. When the case travelled to the SCDRC,

there was a finding of fact again that the conditions of

exclusion were not supplied to the complainant.

Having held this, the SCDRC also came to the conclusion

that the exclusion would in any event not be attracted. The

finding of the SCDRC in regard to the interpretation of such an

exclusionary clause is evidently contrary to the law laid down

by this Court in Harchand Rai (supra). However, the relevance

of that interpretation would have arisen provided the

conditions of exclusion were provided to the insured. The

NCDRC missed the concurrent findings of both the District Forum

and the SCDRC that the terms of exclusion were not made known

to the insured. If those conditions were not made known to the

insured, as is the concurrent finding, there was no occasion

for the NCDRC to render a decision on the effect of such an

exclusion.

In the circumstances, the NCDRC was in error in reversing

the decisions of the District Forum and the SCDRC which were

grounded on a pure finding of fact that the terms of exclusion

were not made known to the insured.

We clarify that in a situation where the terms of

exclusion as noted earlier apply, the law laid down by this

Court in Harchand Rai (supra) would undoubtedly stand

attracted. This case is, however, distinguishable on facts,

since the terms of exclusion were not communicated. 6

We accordingly, allow the appeal and set aside the

impugned judgment and order of the NCDRC. The order passed by

the District Forum shall accordingly, stand restored. There

shall be no order as to costs.

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

...............................J. (DR. DHANANJAYA Y. CHANDRACHUD)

...............................J. (HEMANT GUPTA)

NEW DELHI APRIL 12, 2019 7

ITEM NO.44 COURT NO.11 SECTION XVII

S U P R E M E C O U R T O F I N D I A RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (C) No(s). 25468/2016

(Arising out of impugned final judgment and order dated 16-04-2015 in RP No. 3836/2010 passed by the National Consumers Disputes Redressal Commission, New Delhi)

BHARAT WATCH COMPANY THROUGH ITS PARTNER Petitioner(s)

VERSUS

NATIONAL INSURANCE CO. LTD. THROUGH ITS REGIONAL MANAGER Respondent(s)

Date : 12-04-2019 This petition was called on for hearing today.

CORAM :

HON'BLE DR. JUSTICE D.Y. CHANDRACHUD HON'BLE MR. JUSTICE HEMANT GUPTA

For Petitioner(s) Mr. Sudhanshu S. Choudhari, AOR Ms. Surabhi Guleria, Adv.

Mr. Yogesh Kalte, Adv.

Ms. Nandini Singla, Adv.

For Respondent(s) Mr. Vishnu Mehra, Adv.

Mr. Anant Mehrotra, Adv.

Ms. Sakshi Mittal, AOR

UPON hearing the counsel the Court made the following O R D E R

Leave granted.

The appeal is allowed in terms of the signed order.

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

(MANISH SETHI) (SAROJ KUMARI GAUR) COURT MASTER (SH) BRANCH OFFICER

(Signed reportable judgment is placed on the file)