M/s. Industrial Promotion & Investment Corporation of Orissa Ltd. v. New India Assurance Company Ltd. & Anr.
Background
The appellant, a Orissa government finance corporation, had taken over the assets of a defaulting borrower company and insured those assets, including under a Burglary and House Breaking policy. When some plant and machinery went missing before an auction, the appellant filed an FIR and lodged an insurance claim, which the insurer repudiated on the ground that the loss was outside the policy's scope. The appellant's compensation claim before the MRTP Commission was also rejected, leading to this appeal.
Decision Breakdown
The Supreme Court held that under the policy's own definition, "burglary and/or house breaking" required theft to be preceded by actual forcible and violent entry into or exit from the premises: mere theft without forced entry was not covered. Relying on its own earlier decision in United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal and treating insurance policies like any other commercial contract to be construed strictly, the Court found the appellant's case was one of theft without forcible entry, so it fell outside the policy. The Court also rejected the argument that the rule of contra proferentem (interpreting ambiguous policy wording against the insurer) should apply, holding there was no genuine ambiguity in this standard-form policy's wording. It accordingly upheld the MRTP Commission's rejection of the claim and dismissed the appeal with no costs.
Lesson Learnt
A burglary/theft insurance claim can fail even where goods are genuinely stolen, if the policy's own definition requires proof of forcible or violent entry: policyholders should read the precise wording of "burglary" or "theft" coverage clauses closely, since courts will enforce clear policy language strictly rather than reading it liberally in the insured's favour.