2016 (8) TMI 1469 - SC - Indian Laws

Rule of contra proferentem - Burglary/Theft/house breaking - scope of insurance cover - case of the Appellant is that forcible entry is not required for a claim to be made under the policy - HELD THAT - There is no error committed by the MRTP Commission in rejecting the Claim of the Appellant. It is clear from the facts of the present case that the Appellant has made out a case of theft without a forcible entry. The case of the Appellant is that forcible entry is not required for a claim to be made under the policy. Following the well-accepted principle that a contract of insurance which is like any other commercial contract should be interpreted strictly, we are of the opinion that the policy covers loss or damage by burglary or house breaking which have been explained as theft following an actual, forcible and violent entry from the premises. A plain reading of the policy would show that a forcible entry should precede the theft, and unless they are proved, the claim cannot be accepted. It is well-settled law that there is no difference between a contract of insurance and any other contract, and that it should be construed strictly without adding or deleting anything from the terms thereof - On applying the said principle, we have no doubt that a forcible entry is required for a claim to be allowed under the policy for burglary/house breaking. The order of the MRTP Commission upheld - appeal dismissed.

Summary

Issues:
Interpretation of insurance policy clauses regarding theft and forcible entry for a valid claim under the policy.

Analysis:
The case involved a dispute between the Appellant, a Public Sector Undertaking, and Respondent No. 1, an insurance company, regarding a claim under various insurance policies after theft of assets. The Appellant extended a term loan to a company and insured the assets with Respondent No. 1. When theft occurred, the Appellant made a claim under the Burglary and House Breaking Policy, which was repudiated by Respondent No. 1. The Appellant filed a compensation application under the MRTP Act, which was rejected, leading to the present appeal.

The main contention was whether a forcible entry was necessary for a valid claim under the policy. The Appellant argued that theft without forcible entry should be covered, relying on the scope of cover in the proposal form and the Rule of contra proferentem. The Appellant cited previous judgments to support their interpretation. On the other hand, Respondent No. 1 contended that a forcible entry was mandatory for a claim under the policy, emphasizing the strict construction of insurance policies as commercial contracts.

The Supreme Court analyzed the terms of the insurance policy and previous case law. It was established that a forcible entry was a prerequisite for a valid claim under the policy for burglary/house breaking. The Court emphasized the need to interpret insurance contracts strictly without adding or subtracting from the terms. The Rule of contra proferentem was discussed, highlighting that it applies in cases of real ambiguity in the policy wording, which was not found to be present in this case. Previous judgments were cited to support the interpretation of the policy terms.

Ultimately, the Court upheld the decision of the MRTP Commission, dismissing the appeal. The judgment emphasized the importance of interpreting insurance policies strictly and in line with the terms agreed upon by the parties. The Rule of contra proferentem was not applicable in this case due to the absence of ambiguity in the relevant policy clause.