M/s. INDUSTRIAL PROMOTION & INVESTMENT CORPORATION OF ORISSA LTD. Versus NEW INDIA ASSURANCE COMPANY LTD. & ANR.
The Supreme Court has ruled that a person or an entity can't seek compensation on insured goods if theft happened without violence.
Citing a 2004 SC judgment, Justice Rao said, "In the absence of violence or force, the insured cannot claim indemnification against the insurance company. The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy, we cannot take liberalism to the extent of substituting the words which are not intended. "...in common parlance, the term 'burglary' would mean theft but it has to be preceded with force or violence. If the element of force or violence is not present, then the insured cannot claim compensation."
The ruling came in case where an Odisha PSU had claimed insurance amount of Rs 34.40 lakh in addition to the cost of litigation it incurred by fighting its case till the apex court. Industrial Promotion and Investment Corporation of Orissa, a public sector undertaking, had advanced a loan of Rs 40.74 lakh to Josna Casting Centre Orissa Pvt Ltd. On default of repayment, the PSU took over the assets of the private company and insured its assets in 1996 for Rs 46 lakh under 'burglary and housebreaking policy' with New India Assurance Company. The seized assets were put to auction in January 1997 and it was detected that some parts of the plant and machinery were missing from the factory premises. An FIR was registered in Remona police station, Balasore, regarding theft of the machinery.
The PSU lodged an insurance claim for an amount of Rs 34.40 lakh under 'burglary and housebreaking policy'. The insurance firm rejected the claim saying theft did not come under the purview of the policy as there was no evidence to show someone had forcibly broken into the factory premises or threatened employees before making away with the goods. The bench dismissed the PSU's petition.
The Supreme Court has ruled that a person or an entity can't seek compensation on insured goods if theft happened without violence.
Citing a 2004 SC judgment, Justice Rao said, "In the absence of violence or force, the insured cannot claim indemnification against the insurance company. The terms of the policy have to be construed as it is and we cannot add or subtract something. Howsoever liberally we may construe the policy, we cannot take liberalism to the extent of substituting the words which are not intended. "...in common parlance, the term 'burglary' would mean theft but it has to be preceded with force or violence. If the element of force or violence is not present, then the insured cannot claim compensation."
The ruling came in case where an Odisha PSU had claimed insurance amount of Rs 34.40 lakh in addition to the cost of litigation it incurred by fighting its case till the apex court. Industrial Promotion and Investment Corporation of Orissa, a public sector undertaking, had advanced a loan of Rs 40.74 lakh to Josna Casting Centre Orissa Pvt Ltd. On default of repayment, the PSU took over the assets of the private company and insured its assets in 1996 for Rs 46 lakh under 'burglary and housebreaking policy' with New India Assurance Company. The seized assets were put to auction in January 1997 and it was detected that some parts of the plant and machinery were missing from the factory premises. An FIR was registered in Remona police station, Balasore, regarding theft of the machinery.
The PSU lodged an insurance claim for an amount of Rs 34.40 lakh under 'burglary and housebreaking policy'. The insurance firm rejected the claim saying theft did not come under the purview of the policy as there was no evidence to show someone had forcibly broken into the factory premises or threatened employees before making away with the goods. The bench dismissed the PSU's petition.
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