United India Insurance Co. Ltd. v. M/s Orient Treasures Pvt. Ltd.
Background
A Chennai jewellery shop insured its stock under a "Jewellers Block Policy." A night-time burglary in 1995 resulted in a loss of over Rs. 40 lakh, but the insurer repudiated the claim, pointing to policy clauses that excluded coverage for jewellery kept in window display or outside the safe after business hours: exactly where the stolen items had been kept. The National Consumer Disputes Redressal Commission partly allowed the shop's complaint anyway, awarding about Rs. 36 lakh; the insurer appealed that award, while the shop separately appealed for the full claimed amount.
Decision Breakdown
The Supreme Court held that the policy's exclusion clauses (clauses 4, 5, and 12) were plain, clear, and unambiguous, they expressly excluded coverage for items left in window display or outside the safe during non-business/night hours, so the "contra proferentem" rule (which resolves genuine ambiguity in favour of the insured) did not apply, since that rule only kicks in when real ambiguity exists. Since the burglary admittedly occurred at night and the stolen items were in the display window or outside the safe, the loss simply fell outside the insurance coverage. The Court allowed the insurance company's appeal, set aside the Commission's award, and dismissed the shop's complaint entirely; the shop's connected appeal for a higher amount was dismissed as having become infructuous.
Lesson Learnt
Read the fine print of an insurance policy carefully: if a policy clearly excludes coverage for property kept in specific conditions (like a display window at night, or outside a safe after hours), courts will enforce that exclusion exactly as written and will not stretch an unambiguous clause in the policyholder's favour merely because the insurer drafted it.