Thursday, December 20, 2012

Is Lunch Time out of Business hours - NCDRC rejects appeal of Insurers


Insurance contracts are subject to terms and conditions ~ some generic in nature, some expressly stated for that particular risk. Those incorporating such conditions / warranties must visualize the situation and reduce them in a writing in such a manner that they clearly illustrate the intentions ~ at all times words will be given their common meaning, unless expressly defined. 

Luncheon intervals, commonly Lunch breaks are the time in the middle of day usually between 1pm to 2pm when people have their food.  Conceptually, lunch is smaller than dinner, which is the main meal of the day ~ not in India; Indians generally have full-meals during mid-day; some even have their meals at breakfast.

Though could not relate to other games, in the game of Cricket, specifically Tests [and One dayers too…] – there is a break known as lunch and another for Tea too.  In Tests, lunch is usually taken 2 hours after the start and in ODI at the end of 50 overs; after one of the innings is complete….for the batting team, only two of their unbeaten batsmen would have been on field and generally they are served eateries ~ players may not have a full time many course meal during the game – there is no rigid protocol though. 

Fred Trueman during tea break
Photo courtesy : www.guardian.co.uk

At Office, it is a welcome break – some look forward to sharing the pleasure of different treats from the boxes of colleagues; some eat like a monk; some chat the entire course.  To some, food has always been a social lubricant of sorts. Whenever you are meeting someone new or after sometime, you go out and meet at a favourite restaurant or coffee shop.

Burglary Insurance covers property insured [and cash when specified]  against burglary occurring during office hours.  Generally, policies exclude loss of money in respect of ‘loss occurring on the premises after business hours, unless the money is in a locked safe or a strongroom’

Elsewhere under Insured’s duties, it is stated that ‘All locks, bolts, intruder alarm systems and other protective devices shall be in full operation during any time the Premises are left unattended or closed for business’.

Here is an interesting decision of the National Consumer Disputes Redressal Forum interpreting the term ‘business hours’ in respect of a complaint of New India Assurance  against  M/s Panchsheel Jewellers, against concurrent orders of the District Consumer Disputes Redressal Forum, Thane.

The cause of action arose from an incident of theft, which took place in the shop premises in May 2003  during the lunch hours. Gold ornaments allegedly worth over Rs.21 lakhs and some cash were stolen. The occurrence was not disputed; the Police could recover Rs.12.47 lakhs and loss was valued at 22.93 lakhs.  The claimant had a Jewellers Block insurance and the SI was Rs.21.51 lakhs. The act of burglary / forceful entry was clearly established.  

The Insurers rejected the claim for the remaining value of Rs.10,46,500/- with the repudiation solely resting on the contention that loss occurred during the lunch time which is not construed as ‘business hours’. 

The claimants contended that their shop was open from 10.00 am to 10.00 pm ~ the normal business practice, lunch hours are part of the working hours of the business.  They stated that it was not possible and practicable to take away the gold ornaments from the showcase every time and keep them in a locker / safe ~ other than during night time.  According to their business practice, the ornaments remained in the showcase during the luncheon break and were in tact in the shop which was properly and diligently locked. 

According to the Insurers, on the material day, the shop was closed locking the main gate and shutter @ 0130 noon – the gold ornaments displayed in the showcase remained where they had been kept ~ they had not been kept in safe, during the break.  The Policy warranted that ‘all property including cash currency shall be secured in the locked safe of standard make at all time out of business hours’.  In view of this, the claim lodged fell under the standard exclusion 12 of Jewellers’ block Insurance and hence the claim was not admissible.  

The Thane District Forum rejected the contention of the  Insurers that the lunch hours are to be excluded from the business hours. The State Commission too  agreed with the view taken by the District Forum.   The decision of the State Commission was challenged on the ground that the terms of the policy have to be strictly construed and no exception or relaxation can be made while interpreting the same. According to NCDRC, the law as laid down by the Apex Court is very clear. In the present case, as in any other case, the terms of the policy need to be strictly construed.

The Counsel for Insurers argued that under terms of the policy all property should necessarily be secured in locked safe and cannot be kept on display after business hours; during lunch time, if the shop is kept open for attending customers and if staff go out for lunch in turns, then the jewellery need not be shifted to safe ~ but when the shop remains closed for lunch, the ornaments must be shifted to a safe.   NCDRC however stated that there was no express provision in the policy which eased such an interpretation of lunch hours and in its absence their argument amounts to bringing a stipulation into the policy which is not expressly contained in it.  And on this ground, NCDRC rejected the contention of the Insured, dismissed the appeal for want of merit and ordered in favour of the claimants. 

That takes us to the basic premises that ‘warranties’ have to be reasonable and have to be clearly worded if any restrictive coverage was intended.  If not, the terms of the policy would be interpreted to mean their common ordinary meaning….  Learning for all of us.

Getting back, are you the one who ever wished lunchtime were longer ~ or you the one enjoying the ‘flexi-lunch’

With regards – S. Sampathkumar.
20th Dec 2012.

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