Abhilash Jewellery Vs The New India Assurance Co. Ltd

4/30/2009

Abhilash Jewellery vs The New India … Main Search

Forums

Advanced Search

Disclaimer

Abhilash Jewellery vs The New India Assurance Co. Ltd. on 15 March, 2002 Cites 3 docs The Employees' State Insurance Act, 1948 Section 25 in The Consumer Protection Act, 1986 Section 27 in The Consumer Protection Act, 1986

Consumer Disputes Redressal Commission Abhilash Jewellery vs The New India Assurance Co. Ltd. on 15/3/2002 ORDER D.P. Wadhwa, J.(President) 1. This petition is by the complainant who had alleged deficiency in service by the respondent-insruance company. Petitioner-complainant has its business establishment at Vellappad in Trissur District in the State of Kerala. It took a Jeweller's Block Policy for Rs. 1,15,00,000/-. During the currency of the policy complainant lodged a claim with the respondent for loss of gold ornament weighting 587.870 grams which was being carried by one of its employees in the State of Kerala itself. The claim under the policy was repudiated by the respondent holding that loss of the gold occasioned as it was in the custody of an apprentice and he being not an employee it was not covered under the policy and as such claim was repudiated. 2. This is what letter dated 22.7.97 of the respondent reads: "To MR. T.A. JOY, M/s. Abhilash Jewellery, Bnishop Jerome Nagar, Kollam-1. Sir, Re: Theft claim under Jewellers Block Insurance under Policy No. 4676090101063 -Insured - Mr. T.A. Joy. ........ With reference to the above said claim you are aware that the alleged theft occurred while the insured property was in the custody of an apprentice, Mr. Ajit. As per our policy coverage (a) under http://indiankanoon.org/doc/1109450/

1/4

4/30/2009

Abhilash Jewellery vs The New India …

secII (Transit) property in the custody of an employee is covered but not under the custody of an apprentice. In view of the above reason, we are constrained to repudiate the claim. Yours faithfully, Sd/(BRANCH MANAGER)" 3. Complainant, therefore, approached the District Forum seeking the value of the gold. District Forum dismissed the complaint holding that the apprentice could not be covered under the definition of an employee and moreover, clause X of the policy was violated which required that insured shall use due diligence and shall do everything reasonably possible to avoid or diminish any loss under the policy. It was held by the District Forum that the complainant entrusted insured gold to a person with "exceptionally careless behaviour" which violated the mandatory condition clause X of the policy. 4. Aggrieved by the order of the District Forum complainant went in appeal to the State Commission. It challenged the order of the District Forum on both the counts which were held against it by the District Forum. State Commission, however, after reading clause-II of the policy observed that apprentice was covered under the policy and gold could have been entrusted to him. However. State Commission concurred with the view of the District Forum that clause X of the policy had been violated. Both these clause-II and X are as under: "S.II(a) Property insured whilst in the custody of the insured, his partners or his employees. (b) Property insured excluding cash and currency notes whilst in the custody of persons not in regular employment of the insured such as brokers or agents or cutters or goldsmiths. X The insured shall use due diligence and do and concur in doing everything reasonably to avoid or diminish and loss under the policy." 5. It is not disputed that the business establishment of the complainant comes within the purview of the Kerala Shops and Commercial Establishment Act. Clause (6) of Section 2 of this Act gives the definition of `employee'. Here `employee' means "a person wholly or principally employed in and in connection with, any establishment and included an apprentice." In spite of clear definition of the term `employee' which includes apprentice as well clause II of the policy, Mr. Paul, learned counsel for the respondent strenuously argued that apprentice could not be an employee under the policy in question. His argument was that term of the policy covers whole of the country and http://indiankanoon.org/doc/1109450/

2/4

4/30/2009

Abhilash Jewellery vs The New India …

the definition of employee which though includes apprentice under the Kerala Shops and Commercial Establishments Act could not be applicable to the policy issued to the complainant. We are unable to agree to any such contention. The policy of insurance was taken by the complainant who is based in Kerala and the loss of gold ornaments also took place there. Business establishment of the complainant is covered under the local Kerala Shops and Commercial Establishment Act and when the policy was taken it must be presumed that the Insurance Company was well aware of the provisions of that Act where the employee included apprentice as well. Moreover, clause II of the policy quoted above squarely covers the case of an apprentice. Mr. Paul then referred to two decisions of the Supreme Court in support of his contention. In the Employees' State Insurance Corporation and another v. the Tata Engineering & Co., Locomotive Co. Ltd. And another [AIR 1976 SC 66] the question before the Court was if an apprentice could be an `employee' under the provisions of Employees State Insurance Act, 1948. The Court held that word `apprentice' was not defined in the Act, nor was it specifically referred to in the definition of `employee' by either inclusion or exclusion. The Court therefore said that it was unable to hold that in ordinary acceptation of the term `apprentice' a relationship of master and servant was established under the law. In State of Haryana and Ors. Vs. Rani Devi and another [(1996) 5 SCC 308] a compassionate employment was given to the widow of the apprentice Canal Patwari on the ground that she was dependent on the deceased employee. Relevant Government circular provided for employment of an dependent on the death of "deceased government employee'. Court held that an apprentice could not be an employee to whom the government circular would apply. Both these judgments in our view are not relevant in the present case either on law or on facts. 6. In view of the clear definition of the term `employee' as given in the Kerala Shops and Commercial Establishments Act and clause II of the policy it has to be held that apprentice would be covered under the policy. Then both the District Forum and State Commission have held that clause X of the policy has been violated that would relieve the insurance company of its liability. In our view, this approach was not correct. In the letter repudiating the claim of the complainant only ground given was that apprentice was not covered under the policy he being not an employee. This letter we have quoted in extenso above. In a consumer dispute like this District Forum should not have allowed the Insurance Co. to take up the plea of violation of clause-X of the policy which was not a ground for repudiation. Such a ground was clearly an afterthought and advanced for the first time in the written version. Perhaps insurance company became wiser on advice received subsequently to deny the valid claim on every possible ground. This itself would amount to deficiency in service. Accordingly, we set aside the orders of the State Commission and District Forum, allow this revision petition and hold that loss was squarely covered under the policy. http://indiankanoon.org/doc/1109450/

3/4

4/30/2009

Abhilash Jewellery vs The New India …

7. In the letter of repudiation the insurance company did not question the loss of the amount of gold ornaments which loss occurred in January, 1995. Complaint is allowed. Respondent will be entitled to the value of the gold as in January, 1995 with interest @ 10% per annum till payment. Value of the gold ornaments are published in National dailies from where it could be found out the value of the gold ornaments at the relevant time. The amount shall be payable within one month from the date of receipt of this order. In case of default the complainant shall be entitled to invoke the jurisdiction of District Forum under Sections 25 and 27 of Consumer Protection Act, 1986 when District Forum will be fully authorised to go into the value of the gold ornaments at the relevant period. Complainant shall be entitled to cost which we assess at Rs. 2000/-.

http://indiankanoon.org/doc/1109450/

4/4