4/30/2009 Abhilash Jewellery vs The New India …

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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
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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
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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.

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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/-.

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