2007 (2) TMI 720 - SC - Indian Laws

Insurance company cannot deny jewelry theft claim when thief was unknown person, exclusion clause requires entrustment

National Insurance Co. Ltd. Versus Ishar Das Madan Lal

The SC dismissed an appeal regarding an insurance claim for theft of jewellery. The insurer denied coverage citing an exclusion clause for theft by ... Interpretation of exclusion clause in an insurance policy regarding theft of jewellery - applicability of insurance cover - term 'entrustment' in the context of insurance coverage - HELD THAT:- It is not in dispute that an insurance cover against theft was granted by the appellant. The insurance policy, thus, covered the risk of theft also. An insurer determines the extent of its risk. It floats the policy knowing fully well the risk it seeks to cover. Having regard to the determination of the risk only he fixes the quantum of premium. The insured while entering into a contract of insurance must precisely know the extent of his cover so that he may take out additional insurance if it is so required. Clause 8 of the contract of insurance would be attracted only where the offences specified therein are committed by any of the persons mentioned therein. For defeating the claim of the respondent, it was, thus, obligatory on the part of the appellant to establish that the conditions prescribed therein were satisfied. Keeping in view the aforementioned legal aspect of the matter, we may advert to the meaning of the word 'entrust'. Its ordinary meaning, would mean 'to charge or invest with a trust; to commit to another with a certain confidence regarding his care' For the purpose of arriving at a conclusion as to whether the exclusion clause is attracted or not, loss or damage must be occasioned, inter alia, by a customer in respect of the property entrusted to him. The word 'customer' contained in Clause 8 (c) of the Insurance Policy must be read ejusdem generis. A customer contemplated thereunder must have to be one who would be a man of trust. If a customer is not a man of trust or the property had not been entrusted to him, the exclusion clause would not apply. The customer who committed theft of jewellery was an unknown person. It was so categorically stated in the First Information Report. There was, thus, no occasion for the respondent to entrust the jewellery to him. We, therefore, are clearly of the opinion that the view taken by the High Court was correct. The High Court's judgment is upheld. The appeal is dismissed. Issues Involved:- Interpretation of exclusion clause in an insurance policy regarding theft of jewellery.- Determination of whether the loss was covered by the insurance policy.- Application of the term 'entrustment' in the context of insurance coverage.- Examination of legal definitions of theft and breach of trust in relation to the case.Summary:The appellant insurer challenged a judgment regarding a theft claim under a Jeweller Block Policy. The dispute centered on the exclusion clause in the policy, which the insurer argued precluded coverage for the loss. The State Consumers Protection Commission initially ruled against the claim, citing the exclusion clause. However, the High Court disagreed, emphasizing the lack of entrustment in the theft incident. The court analyzed the meaning of 'entrust' and the legal distinctions between theft and breach of trust. It was concluded that the exclusion clause did not apply in this case, as the customer who stole the jewellery was not entrusted with the property. The High Court's decision was upheld, and the appeal was dismissed with costs awarded to the respondent.