UNITED INDIA INSURANCE CO. LTD. versus MIS ORIENT TREASURES PVT. LTD.

Citation: [2016] 1 S.C.R. 1 · Decided: 13-01-2016 · Supreme Court of India · Bench: JASTI CHELAMESWAR · Disposal: Disposed off

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Judgment (excerpt)

[2016] l S.C.R. I 
UNITED INDIA INSURANCE CO. LTD. 
v. 
MIS ORIENT TREASURES PVT. LTD. 
(Civil Appeal No. 2140 of 2007 etc.) 
A 
JANUARY 13, 2016 
B 
[J. CHELAMESWAR AND ABBAY MANOHAR SAPRE, JJ.] 
Insurance - Contract of insurance - Between insurance 
company and the insured company - Insurance of the jewellery in 
the shop of the insured - Burglary in the shop - Claim for 
C 
compensation - Denial of, on the ground that the stolen articles· 
were not covered under the insurance policy - Complaint before 
National Consumer Disputes Redressal Commission - Commission 
partly allowing the petition directed insurance company to pay a 
sum of Rs.36,I0,2111- with interest @IO% p.a. - Insurance company 
as well as insured filed appeal - Held: In view of the notes appended 
D 
to the clauses 4 and 5 of the Proposal Form r!w clause 12 of the 
insurance policy, the insurance company cannot be held liable to 
indemnify the loss of the insured, as the articles were not covered 
under the policy. ' 
Interpretation of Statutes: 
Rule of interpretation - When words of a statute are clear. 
plain or unambiguous i.e. susceptible to only one meaning, the courts 
are bound to give effect to that meaning, irrespective of 
consequences. 
Rule of interpretation - A Note appended to main section, 
explanatory in nature, to the main section, has to be read in the 
context of the main section - This analogy applies while interpreting 
the words used in a contract - Contract. 
Principle - Principle of contra proferentem - Applicability of 
E 
F 
- Discussed. 
G 
Allowing the appeal of the insurance company and 
dismissing that of the insured, the Court 
HELD: 1.1 The Note appended to clause 4 of the Pro;>osal 
Form would go to show that the appellant (Insurance Company) 
2 
A 
B 
c 
D 
E 
F 
SUPREME COURT REPORTS 
[2016] 1 S.C.R. 
had made it clear in the Proposal Form itself that "window display 
of articles at night is not covered". This clearly meant that the 
insurance coverage was given to the articles kept in "window 
display during day time in business hours". Therefore, the insured 
was not entitled to claim any compensation for the loss of any 
such stolen articles. The insurance coverage was not extended 
to such stolen articles under the policy. [Paras 34 and 35] [13-B, 
D-E] 
1.2 Similarly, the Note appended to clause 5 would go to 
show that the appellant had made it clear in the Proposal Form 
itself to the respondent that "stock which is kept out of the safe 
after business hours at night" is not covered under the policy. 
This clearly meant that "stock kept out of safe during business 
hours", if stolen, was insured and given coverage under the policy 
but if it was kept out of safe after business hours at night, then it 
was not covered under the policy and therefore, the appellant 
was not liable to indemnify the loss sustained by the respondent 
of any such stolen articles. Thus, the respondent was not entitled 
to claim any compensation for the loss sustained in the burglary 
of any such stolen articles. [Paras 36 and 37] [13-E-F; 14-A] 
1.3 Since the burglary took place in the respondent's shop 
during night hours, the jewellery (gold/silver ornaments) kept in 
display window and jewellery lying out of safe, the insurance 
company was justified in contending that the stolen articles were 
not covered under the policy by virtue of clauses 4, 5 of Proposal 
Form and Clause 12 of the policy and no liability could be fastened 
on them to indemnify the loss of such articles for awarding any 
compensation to the respondent. Indeed clauses 4, 5 and 12 were 
clearly attracted in appellant's favour. [Para 43] [15-F-G] 
1.4 There is neither any ambiguity nor vagueness and nor 
absurdity in the language/wording of the Note appended to clauses 
4 or/and 5 in the Proposal Fom. That apart clause 12 of the policy, 
G in clear terms, provides that the appellant would not be liable to 
indemnify any loss under the policy if such loss or damage to the 
insured property occurs while the insured property was kept in 
window display at night or while it was kept out of safe after 
business hours. [Para 38] [14-A-C] 
H 
1.5 The contra proferentem rule has no application to the 
UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT 
TREASURES PVT. LTD. 
facts of the present case. It is for the reason because there is no 
ambiguity in the language/wording used in clauses 4 and 5 and 
the same carry only one meaning. Secondly, in the absence of any 
ambi

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