UNITED INDIA INSURANCE CO. LTD.versusMIS ORIENT TREASURES PVT. LTD.

                          [2016] l S.C.R. I


             UNITED INDIA INSURANCE CO. LTD.                            A
                                    v.

              MIS ORIENT TREASURES PVT. LTD.
                (Civil Appeal No. 2140 of 2007 etc.)
                        JANUARY 13, 2016                                B
[J. CHELAMESWAR AND ABBAY MANOHAR SAPRE, JJ.]
      Insurance - Contract of insurance - Between insurance
company and the insured company - Insurance of the jewellery in
the shop of the insured - Burglary in the shop - Claim for C
compensation - Denial of, on the ground that the stolen articles·
were not covered under the insurance policy - Complaint before
National Consumer Disputes Redressal Commission - Commission
partly allowing the petition directed insurance company to pay a
sum of Rs.36,I0,2111- with interest @IO% p.a. - Insurance company
as well as insured filed appeal - Held: In view of the notes appended D
to the clauses 4 and 5 of the Proposal Form r!w clause 12 of the
insurance policy, the insurance company cannot be held liable to
indemnify the loss of the insured, as the articles were not covered
under the policy. '
      Interpretation of Statutes:                                       E
      Rule of interpretation - When words of a statute are clear.
plain or unambiguous i.e. susceptible to only one meaning, the courts
are bound to give effect to that meaning, irrespective of
consequences.
      Rule of interpretation - A Note appended to main section,         F
explanatory in nature, to the main section, has to be read in the
context of the main section - This analogy applies while interpreting
the words used in a contract - Contract.
      Principle - Principle of contra proferentem - Applicability of
- Discussed.                                                         G

      Allowing the appeal of the insurance company and
dismissing that of the insured, the Court
     HELD: 1.1 The Note appended to clause 4 of the Pro;>osal
Form would go to show that the appellant (Insurance Company)
2              SUPREME COURT REPORTS                     [2016] 1 S.C.R.



A   had made it clear in the Proposal Form itself that "window display
    of articles at night is not covered". This clearly meant that the
    insurance coverage was given to the articles kept in "window
    display during day time in business hours". Therefore, the insured
    was not entitled to claim any compensation for the loss of any
    such stolen articles. The insurance coverage was not extended
B
    to such stolen articles under the policy. [Paras 34 and 35] [13-B,
    D-E]
            1.2 Similarly, the Note appended to clause 5 would go to
    show that the appellant had made it clear in the Proposal Form
    itself to the respondent that "stock which is kept out of the safe
c   after business hours at night" is not covered under the policy.
    This clearly meant that "stock kept out of safe during business
    hours", if stolen, was insured and given coverage under the policy
    but if it was kept out of safe after business hours at night, then it
    was not covered under the policy and therefore, the appellant
D   was not liable to indemnify the loss sustained by the respondent
    of any such stolen articles. Thus, the respondent was not entitled
    to claim any compensation for the loss sustained in the burglary
    of any such stolen articles. [Paras 36 and 37] [13-E-F; 14-A]
           1.3 Since the burglary took place in the respondent's shop
E   during night hours, the jewellery (gold/silver ornaments) kept in
    display window and jewellery lying out of safe, the insurance
    company was justified in contending that the stolen articles were
    not covered under the policy by virtue of clauses 4, 5 of Proposal
    Form and Clause 12 of the policy and no liability could be fastened
    on them to indemnify the loss of such articles for awarding any
F   compensation to the respondent. Indeed clauses 4, 5 and 12 were
    clearly attracted in appellant's favour. [Para 43] [15-F-G]
         1.4 There is neither any ambiguity nor vagueness and nor
  absurdity in the language/wording of the Note appended to clauses
  4 or/and 5 in the Proposal Fom. That apart clause 12 of the policy,
G in clear terms, provides that the appellant would not be liable to
  indemnify any loss under the policy if such loss or damage to the
  insured property occurs while the insured property was kept in
  window display at night or while it was kept out of safe after
  business hours. [Para 38] [14-A-C]
H          1.5 The contra proferentem rule has no application to the
   UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                      3
                TREASURES PVT. LTD.

facts of the present case. It is for the reason because there is no   A
ambiguity in the language/wording used in clauses 4 and 5 and
the same carry only one meaning. Secondly, in the absence of any
ambiguity, the respondent is not entitled to invoke the principle
underlined in the rule of contra proferentem for interpreting the
clauses of the policy and lastly, presence of ambiguity in the
                                                                      B
language of policy being sine qua non for invocation of the contra
proferentem rule, which is not in the present case, the rule cannot
be applied for deciding the issue involved in case. [Para 41] [15-
B-C]
      1.6 A contract of insurance is one of the species of
commercial transaction between the insurer and insured. It is C
for the parties (insurer/insured) to decide as to what type of
insurance they intend to do to secure safety of the goods and
how much premium the insured wish to pay to secure insurance
of their goods as provided in the tariff. If the insured pays
additional premium to the insurer to secure more safety and D
coverage of their insured goods, it is permissible for them to do
so. In the present case, the respondent did not pay any additional
premium to get the coverage of even two instances to avoid rigour
of Note of clauses 4, 5 and clause 12. [Para 50] [16-H; 17-A-B]
      General Assurance Society Ltd. vs. Chandumull Jain &            E
      Anr. AIR 1966 SC 1644 : 1966 SCR 500 - followed.
      United India Insurance Co. Ltd. vs. Harchand Rai
      Chandan Lal 2004 (4) Suppl. SCR 662: (2004) 8
      SCC 644; Oriental Insurance Co. Ltd. vs. Sony Cheriyan
      1999 (1) Suppl. SCR 622:(1999) 6 SCC 451; Rahee                 p
      Industries Ltd. vs. Export Credit Guarantee
      Corporation of India Ltd. & Anr. 2008 (14) SCR 556:
      (2009) 1 SCC 138; Sikka Papers Ltd. vs. National
      Insurance Co. Ltd. &    Ors. (2009) 7 SCC 777;
      Vikram Greentech India Ltd. & Anr. vs. New India
      Assurance Co. Ltd. 2009 (5) SCR 437:(2009) 5 SCC                G
      599;New India Assurance Co. Ltd. vs. Zuari Industries
      Ltd. & Ors. (2009) 9 SCC 70; Amravati         District
      Central Cooperative Bank Ltd. vs. United India Fire
      and General Insurance Co. Ltd. 2010 (4) SCR661;
      (2010) 5 SCC 294; Suraj Mal Ram Niwas Oil Mills P.              H
4              SUPREME COURT REPORTS                    [2016] I S.C.R.


A         Ltd. vs. United India Insurance Co. Ltd. & Anr. 2010
          (13) SCR 138:(2010) 10 SCC 567; Deokar Exports P.
          Ltd. vs. New India Assurance Co. Ltd.2008 (14)
          SCR 1:(2008) 14 SCC 598; Export Credit Guarantee
          Corp. of India Ltd. vs. Garg Sons International 2013
          (1) SCR 336: (2014) 1 SCC 686 - referred to.
B
          Rust vs. Abbey Life Assurance Co. Ltd. & Anr. (1979)
          Vol.2 Lloyd's Law Reports 334 - referred to.
          2.1 It is a settled rule of interpretation that when the words
    of a statute are clear, plain or unambiguous, i.e., they are
c   reasonably susceptible to only one meaning, the courts are bound
    to give effect to that meaning irrespective of consequences. [Para
    42] [15-D]
         2.2 Equally well-settled rule of interpretation is that
    whenever the NOTE is appended to the main Section, it is
D   explanatory in nature to the maiu Section and explains the true
    meaning of the main Section, it has to be read in the context of
    main Section. This analogy equally applies while interpreting the
    words used in any contract. [Para 42] [15-E]
          G.P. Singh - Principle of Statutory Interpretation 13th
E         Edition - referred to.
                        Case Law Reference
    2004 (4) Suppl. SCR 662        referred to.            Para 22
    1999 (1) Suppl. SCR 622        referred to.            Para 22
    2008 (14) SCR 556              referred to.            Para 22
F   (2009) 7 sec 111               referred to.            Para 22
    2009 (5) SCR 437               referred to.            Para 22
    (2009) 9 sec 10                referred to.            Para 22
    2010 (4) SCR661                referred to.            Para 22
    2010 (13) SCR 138              referred to.            Para 22
    (2010) 10 sec 567              referred to.            Para 22
G   2008 (14) SCR 1                referred to.            Para 22
    2013 (1) SCR 336               referred to.            Para 22
    1966 SCR 500                   followed                Para 30

         CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2140
H   of2007.
    UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                             5
                 TREASURES PVT. LTD.

       From the Judgment and Order dated 19.03.2007 of the National           A
Consumer Disputes Redressal Commission, New Delhi in Original
Petition No. 375 of 1999.
                                     WITH
      C. A. No. 5141of2007
                                                                              B
      P. P. Malhotra, Huzefa Ahmadi, Vineet Malhotra, Shailendra
Sharma, Yasir Rauf, V. D. Khanna, Manoj V. George, Siju Thomas,
Shilpa M. George, Rohit Adlakha, Mohd. Irshad Hanif for the Appellant.
      Naresh Bakshi for the Respondent.
      The Judgment of the Court was delivered by                              c
      ABHAY MANOHAR SAPRE, J.
      C. A. No. 2140 of 2007
       I. This appeal under Section 23 of the Consumer Protection Act,
1986 is filed against the order dated 19 .03 .2007 of the National Consumer   D
Disputes Redressal Commission (hereinafter referred to as "the
Commission"), New Delhi in Original Petition No. 375 of 1999 whereby
the Commission allowed the petition filed by the respondent herein and
directed the appellant-insurance company to pay a sum ofRs.36,10,211/
- with interest @10% p.a. from 03.12.1995 till date of payment and also
directed the insurance company to pay costs assessed at Rs.50,000/- to        E
the respondent-Complainant herein.
       2. In order to appreciate the issue involved in this appeal, which
lies in a narrow compass, it is necessary to set out the relevant facts in
brief infra.
                                                                              F
      3. The appellant herein is an insurance company incorporated
under the Companies Act having its registered office at No. 24, Whites
Road, Chennai. The respondent herein is also a company incorporated
under the Companies Act, 1956 having its registered office at Oceanic
Buildings, Quilon, Kerala and its branches inter alia at Janpriya Centre
No.34, SirThyagaraya Road, Pondy Bazar, Chennai.                              G
      4. The respondent herein is the complainant. They are engaged in
the business of sale of various kinds of Jewellery. The respondent is
having their jewellery shop known as "Kanchana Mahal" which is
situated at Janpriya Centre No.34, Sir Thyagaraya Road, Pondy Bazar,
Chennai.                                                                      H
6               SUPREME COURT REPORTS                         [2016] l S.C.R.



A          5. The respondent had insured their jewellery kept in their shop
    with the appellant under successive "Jewellers Block Policies" with effect
    from 02.07. l 993 onwards. The procedure followed was that the
    respondent was required to submit proposal form. On receipt of the
    proposal form, the officials of the appellant-insurance company used to
    inspect the shop to verify the security and storage particulars.
B
          6. The respondent filled up the insurance proposal form by providing
    necessary information as mentioned in the form. On the basis of the said
    proposal form, the appellant issued an insurance policy in favour of the
    respondent from 02.07.1993 to 01.07.1994. It was then subsequently
    renewed for further one year, i.e. from 02.07.1994 to 01.07.1995.
c
           7. On 02.06.1995, the respondent alleged that there was a burglary
    in their Jewellery shop. According to the respondent, on the night of
    02.06.1995, burglars broke open the locks of shutters, entered the shop
    and decamped with the gold and silver ornaments valued at
    Rs.40,63,735.53. The respondent accordingly lodged FIR at the concerned
D   Police Station on 03.06.1995. The respondent also informed the appellant
    on 03.06.1995 by a telegraphic communication about this incident. By
    letter dated 05.06.1995, the appellant informed the respondent that a
    Surveyor has been appointed to assess the loss suffered by the respondent
    in the burglary. The surveyor then inspected the site and also examined
E   all the relevant material, books, inventory etc. with a view to assess the
    actual loss alleged to have been suffered by the respondent and
    accordingly assessed the total loss at Rs.36, 10,211/. Thereafter he
    submitted his report. After investigation, the police also submitted a final
    investigation report on 24.06.1995 treating the case as untraceable.

F          8. The respondent then submitted their claim with the appellant
    on the basis of the Insurance Policy and claimed that they are entitled to
    receive the value of Jewellery which they lost in burglary committed in
    their shop on 02.06.1995. On 19.01.1998, the Divisional Managerofthe
    Insurance Company, Tuticorin after examining the respondent's claim
    for loss of their Jewellery repudiated the claim inter alia on the ground
G   that the stolen gold ornaments and silver articles were found to had been
    kept on display window and in the sales counters at the time of burglary
    which took place in the night of 02.06.1995, which according to appellant,
    was contrary to the terms of the policy and, therefore, not covered in the
    policy. In other words, such items were not insured. It was further stated
H   that the policy was issued subject to the terms, conditions, warranties
   UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                              7
   TREASURES PVT. LTD. [ABHAY MANOHAR SAPRE, J.]

and exclusion printed in the proposal form which was a part of policy.        A
The appellant relied on clause 12 of the policy and stated that since the
burglary in the shop took place during night and stolen articles kept in
window display and lying out of safe in the shop were stolen, the appellant
could not be made liable to indemnify such loss which, according to
them, was not insured and specifically excluded from the insurance policy.
                                                                              B
       9. Being aggrieved by the decision of the appellant-Insurance
Company, the Respondent sent letters and reminders pointing out therein
the terms of the proposal form and policy and insisted that the loss was
fully covered by the policy and hence they were entitled to claim the
value of the lost articles from the appellant on the basis of Insurance
Policy. As nothing was done, the respondent filed a complaint before
                                                                              c
the National Consumer Disputes Redressal Commission, New Delhi
(hereinafter referred to as "the Commission") being Original Petition
No. 375of1999 claiming a sum ofRs.1,32,06,786.30.
       10. By order dated 19.03.2007, the Commission partly allowed
the petition filed by the respondent and directed the appellant-Insurance     D
Company to pay a sum of Rs.36,10,211/- with interest@ 10% p.a. from
03.12.1995 till date of payment and also directed the Insurance Company
to pay costs assessed at Rs.50,000/- to the respondent.
       11. Aggrieved by the said order, the appellant-Insurance Company
has filed this appeal.                                                        E

      12. Dissatisfied with the claim awarded by the Commission, the
respondent has filed C.A. No. 5141 of 2007 seeking enhancement in
the quantum of claim. According to the respondent, they are entitled to
claim a sum ofRs.1,32,06,786.30 as against Rs. 36,10,211/- awarded by
the Commission.                                                               F

     13. Heard Mr. P.P. Malhotra, learned senior counsel for the appellant
and Mr. H. Ahmadi, learned senior counsel for the respondent.
      14. Shri P.P.Malhotra, learned senior counsel appearing for the
appellant while assailing the legality and correctness of the impugned
                                                                              G
order mainly urged two points in support of his submissions.
       15. In the first place, learned senior counsel urged that the
Commission erred in partly allowing the complaint filed by the respondent
herein by passing the impugned award against the appellant. According
to learned counsel, had the Commission properly interpreted clauses 4
and 5 of the proposal form, which was part of the policy along with           H
8               SUPREME COURT REPORTS                          [2016] 1 S.C.R.


A   clause 12 of the policy then in such event, the respondent's complaint
    was liable to be dismissed in its entirety.
           16. Elaborating the aforementioned submission, learned counsel
    pointed out that the plain reading of clauses 4 and 5 (b) with their note
    and clause 12 of the policy clearly show that the respondent's claim was
B   excluded from the policy issued by the appellant because it was in relation
    to the items which were kept in display window and out of safe at the
    time of burglary.
           17. In other words, the submission was that the respondent's claim
    was not covered under the policy and was expressly excluded by virtue
c   of clauses 4 and 5(b) read with clause 12 of the policy because firstly,
    the burglary in the shop took place in night hours and secondly, the stolen
    articles were kept in display window and outside the safe.
          18. Learned counsel, therefore, urged that due to these two
    admitted facts, the note appended to clauses 4 and 5 read with clause 12
D   was attracted rendering the respondent's complaint as not maintainable.
          19. Learned counsel further pointed out that the respondent despite
    knowing these clauses of the proposal form/policy instead of seeking
    any clarification regarding meaning of the clauses paid the premium
    pursuant thereto the appellant issued the Insurance policy on the terms
E   and conditions set out therein which are binding on both parties while
    adjudicating their rights against each other arising out of the policy.
          20. Learned counsel, in the second place, submitted that the
    language of clauses 4, 5 and 12 being plain, clear and unambiguous
    conveying only one meaning, the appellant had every right to rely upon
F   these clauses while opposing the respondent's complaint on merits.
            21. Learned counsel, therefore, submitted that in the light of these
    facts, the respondent had no right to file a complaint against the appellant
    seeking monetary compensation for the loss alleged to have been suffered
    by them arising out of burglary of their articles stolen from their shop.
G   Such claim, according to learned counsel, was barred by virtue of clauses
    4, 5 and 12 of the policy and was therefore, liable to be dismissed as
    being untenable.
          22. In support of his submission, learned counsel placed reliance
    on the decisions in General Assurance Society Ltd. vs. Chandumull
    Jain & Anr., AIR 1966 SC 1644 = (1966) 3 SCR 500, United India
H   Insurance Co. Ltd. vs. Harchand Rai Chandan Lal (2004) 8 SCC
   UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                               9
   TREASURES PVT. LTD. [ABHAY MANOHAR SAPRE, J.]

644, Oriental Insurance Co. Ltd. vs. Sony Cheriyan, (1999) 6 SCC               A
451, Rahee Industries Ltd. vs. Export Credit Guarantee
Corporation of India Ltd. & Anr., (2009) I SCC 138, Sikka Papers
Ltd. vs. National Insurance Co. Ltd. & Ors., (2009) 7 SCC 777,
Vikram Greentech India Ltd. & Anr. vs. New India Assurance
Co. Ltd., (2009) 5 SCC 599, New India Assurance Co. Ltd. vs.
                                                                               B
Zuari Industries Ltd. & Ors., (2009) 9 SCC 70, Amravati District
Central Cooperative Bank Ltd. vs. United India Fire and General
Insurance Co. Ltd., (20 I 0) 5 SCC 294, Suraj Mal Ram Ni was Oil
Mills P. Ltd. vs. United India Insurance Co. Ltd. & Anr., (2010)
10 SCC 567, Deokar Exports P. Ltd. vs. New India Assurance Co.
Ltd., (2008) 14 SCC 598, Export Credit Guarantee Corp. oflndia                 c
Ltd. vs. Garg Sons International, (2014) I SCC 686 and Rust vs.
Abbey Life Assurance Co. Ltd. & Anr., (1979) Vol.2 Lloyd's Law
Reports 334.
       23. In reply, Mr. H. Ahmadi, learned senior counsel appearing for
the respondent while supporting the      impugned order contended that         D
the issue involved in this case needs to be decided in the light of the
principle underlined in the rule known as "contra proferentem rule".
According to learned counsel, there is an ambiguity in the language/
words of clauses 4 and 5 of the proposal form and since the ambiguity
noticed created some confusion as to what these clauses actually provide
and expect the respondent to comply at the time of filling the proposal        E
form for obtaining the insurance policy, this Court should interpret the
clauses by applying the principle underlined in the aforesaid rule in such
a way that its benefit would go to the respondent rather than to the
appellant. It was also his submission that the appellant being the author
of the proposal and policy are not entitled to claim the benefit of the        F
clauses of proposal form/policy in their favour thereby defeating the
rights of the respondent which they have got under the policy to enforce
against the appellant for claiming the compensation.
       24. Learned counsel also contended that the respondent had
intended to insure all their articles kept in the shop regardless of timings   G
and the manner in keeping the articles in their shop. He also pointed out
that the respondent having paid the full premium for the articles which
were valued at Rs. 2 crore as disclosed by the respondent in clauses 4
and 5 and therefore the respondent was entitled to claim compensation
for the loss of the stolen items (jewelry) treating them as insured and
covered under the policy, issued in their favour.                              H
10                SUPREME COURT REPORTS                            [2016] l S.C.R.


A           25. So far as the connected appeal filed by the respondent-
     Complainant is concerned, the submission of the learned senior counsel
     for the respondent was that the Commission erred in not allowing their
     complaint in its entirety despite availability of evidence on record. Learned
     counsel, therefore, prayed for dismissal of the appellant's appeal and
     allowing the appeal filed by the respondent by enhancing the quantum of
B
     compensation as claimed by the respondent in the complaint.
           26. Learned senior counsel also placed reliance on the same
     decisions which were cited by learned senior counsel for the appellant
     and contended that the law laid down therein also supports the
     respondent's case.
c
            27. Having heard the learned counsel for the parties and on perusal
     of the record of the case including the written submissions, we find
     force in the submissions of learned counsel for the appellant (Insurance
     company- Insurer).
o          28. The question which arises for consideration in this appeal is
     whether the Commission was justified in allowing the complaint filed by
     the respondent against the appellant-Insurance Company in part and
     was, therefore, justified in awarding a sum of Rs.36,10,21J/- to the
     respondent.
E           29. In order to answer the aforementioned question, clauses 4, 5
     of the proposal form and clause 12 of the policy need mention infra.
                               .    (I)

       4    WINDOW DISPl AY
            State the approximate value of any of arucle of
            Jewellery or Gem stock which will be displayed
F           in the window (A pad or tray containing a
            number of rings or other articles to be counted      Rs.3,50,500(}'-
            as one article).
            (Give separate answer for each location).
            Note : Window display at niRht is not covered.
       5    STOCK
            a. What was (i) the average daily total value of     (a)(i)New Shop
G·          your stock during the past 12 months?                (b)(iii)New shop
            (ii) Will the whole of your stock when on your       (b) All stocks of
            premises be kept in safe at night and at all times   Gold, Diamond.
            when the state value and class of stock which        Gems.Silver and
            will left outside safes.                             other      precious
            Note: We do not cover stocks kept out of the         stones-kept
H
            safe--business hours at night.                       outside the safe  -
                                                                 Rs.2,00,00,000
                                                                 (Two crores).
l UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                               11
~· TREASURES PVT. LTD. [ABHAY MANOHAR SAPRE, J.]
•
                          (2)                                                 A

          The company shall not be liable for under
 this policy in respect of

 1to11. ........... .
                                                                              B
 12.      Loss or damage to property, insured
 whilst in window display at night or whilst kept
 out of safe after business hours."

      30. Before we examine the issue involved in the case, it is necessary
to take note of the law laid down on the subject by the Constitution
                                                                              c
Bench of this Court in General Assurance Society Ltd. vs.
Chandumull Jain & Anr., AIR 1966 SC 1644.
      31. The Constitution Bench in this case has explained the true
nature of contract relating to Insurance and laid down the relevant factors
which the courts should keep in mind while interpreting the contract of D
insurance.
       32. Justice Hidayatullah, J. (as His Lordship then was) speaking
for the Bench in his distinctive style of writing held in Para 11 as under:
        "11. A contract of insurance is a species of commercial E
        transactions and there is a well established commercial
        practice to send cover notes even prior to the completion
        of a proper proposal or while the proposal is being
        considered or a policy is in preparation for delivery. A cover
        note is a temporary and limited agreement. It may be self
       ·contained or it may incorporate by reference the terms and F
        conditions of the future policy. When the cover note
        incorporates the policy in this manner, it does not have to
        recite the term and conditions, but merely to refer to a
  ...
  . , . particular standard policy. If the proposal is for a standard
 ..,_. policy and the cover note refers to it, the assured is taken G
        to have accepted the terms of that policy. The reference to
        the policy and its terms and conditions may be expressed
        in the proposal or the cover note or even in the letter of
        acceptance including the cover note. The incorporation of
        the terms and conditions of the policy may also arise from a
        combination of references in two or more documents H
12        SUPREME COURT REPORTS                    [2016] I S.C.R.



A    passing between the parties. Documents like the proposal,
     cover note and the policy are commercial documents and
     to interpret them commercial habits and practice cannot
     altogether be ignored. During the time the cover note
     operates, the relations of the parties are governed by its
     terms and conditions, if any, but more usually by the terms
B
     and conditions of the policy bargained for and to be issued.
     When this happens the terms of the policy are incipient but
     after the period of temporary cover, the relations are
     governed only by the terms and conditions of the policy
     unless insurance is declined in the meantime. Delay in
c    issuing the policy makes no difference. The relations even
     then are governed by the future policy if the cover notes
     give sufficient indication that it would be so. In other
     respects there is no difference between a contract of
     insurance and any other contract except that in a contract
     of insurance there is a requirement of uberrima fides i.e.
D
     good faith on the part of the assured and the contract is
     likely to be construed contra proferentem that is against
     the company in case of ambiguity or doubt. A contract is
     formed when there is an nnqualified acceptance of the
     proposal. Acceptance may be expressed in writing or it may
E    even be implied if the insurer accepts the premium and
     retains it. In the case of the assured, a positive act on his
     part by which he recognises or seeks to enforce the policy
     amounts to an affirmation of it. This position was clearly
     recognised by the assured himself, because he wrote, close
     upon the expiry of the time of the cover notes, that either a
F
     policy should be issued to him before that period had
     expired or the cover note extended in time. In interpreting
     documents relating to a contract of insurance, the duty of
     the court is to interpret the words in which the contract is
     expressed by the parties, because it is not for the court to
G    make a new contract, however reasonable, if the parties
     have not made it themselves. Looking at the proposal, the
     letter of acceptance and the cover notes, it is clear that a
     contract of insurance under the standard policy for fire and
     extended to cover flood, cyclone etc. had come into being."

H    33. Keeping in view the aforesaid principle of law in mind and
   UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                              13
   TREASURES PVT. LTD. [ABBAY MANOHAR SAPRE, J.]

applying the same to the facts of the case, we proceed to examine the         A
issue involved in this appeal.
       34. Mere perusal of the note appended to clause 4 quoted above
would go to show that the appellant (Insurance Company) had made it
clear in the proposal form itself that "window display of articles at
night is not covered". This clearly meant that the insurance coverage         B
was given to the articles kept in "window display during day time in
business hours" whereas insurance coverage was not given to the articles
when they were kept in "window display at night".
       35. In other words, if the burglary had been committed during day
time in business hours and in that burglary, the articles kept in display     c
window were stolen then in such circumstances, the appellant was liable
to reimburse the loss to the respondent of such stolen articles as insured
articles under the policy. But if the burglary had been committed of the
articles kept in display window during night time (after business hours)
then in such circumstances the appellant having made it clear to the
respondent in the note in clause 4 that they would not be liable to           D
indemnify the loss of any such articles kept in display window after
business hours, the respondent was not entitled to claim any compensation
for the loss of any such stolen articles. In other words, the insurance
coverage was not extended to such stolen articles under the policy.
      36. Similarly, mere perusal of note appended to clause 5 quoted         E
above would go to show that the appellant had made it clear in the
proposal form itself to the respondent that "stock which is kept out of
the safe after business hours at night" is not covered under the
policy. This clearly meant that "stock kept out of safe during business
hours", if stolen, was insured and given coverage under the policy but if     F
it was kept out of safe after business hours at night, then it was not
covered under the policy and therefore, the appellant was not liable to
indemnify the loss sustained by the respondent of any such stolen articles.
       37. In other words, ifthe burglary had been committed during day
time in business hours then the appellant was liable to reimburse the loss
                                                                              G
to the respondent of the stolen articles treating them as insured articles
under the policy. But if the burglary had been committed of the stock/
articles kept out of safe after business hours at night then in such
circumstances the appellant was not liable to indemnify the loss of any
such stolen articles by virtue of note appended to clause 5. In these
circumstances, the respondent was not entitled to claim any compensation      H
14               SUPREME COURT REPORTS                         [2016) I S.C.R.



A    for the loss sustained in the burglary of any such stolen articles.
            38. In our considered opinion. there is neither any ambiguity nor
     vagueness and nor absurdity in the language/wording of note appended
     to clauses 4 or/and 5. On the other hand. we find that the language/
     wording of the note in both the clauses is plain, clear, unambiguous and
B    creates no confusion in the mind of the reader about its meaning. That
     apart clause 12 of the policy, in clear terms, provides that the appellant
     would not be liable to indemnify any loss under the policy if such loss or
     damage to the insured property occurs while the insured property was
     kept in window display at night or while it was kept out of safe after
     business hours.
c
            39. This takes us to the next submission of Mr. Ahmadi, learned
     senior counsel for the respondent that we should apply the rule of contra
     proferentum to interpret clauses 4 and 5 because according to him
     there is an ambiguity in the language/wording of clauses 4 and 5 and
     secondly, the appellant being the author of these clauses has no right to
D    take benefit of the ambiguity to defeat the rights of the respondent.
     Learned counsel maintained that the interpretation of the clauses should,
     therefore, be made in such a way that its benefit would go to the
     respondent (insured) for claiming compensation from the appellants. We
     cannot accept this submission of learned counsel for the respondent for
E    more than one reason.
           40. In Halsbury's Laws of England (fifth edition- Volume 60 Para
     105) principle of contra proferentem rule is stated thus :
           "Contra proferentem rule. Where there is ambiguity in the
           policy the court will apply the contra proferentem rule.
F          Where a policy is produced by the insurers, it is their
           business to see that precision and clarity are attained and,
           if they fail to do so, the ambiguity will be resolved by
           adopting the construction favourable to the insured.
           Similarly, as regards language which emanates from the
G          insured, such as the language used in answer to questions
           in the proposal or in a slip, a construction favourable to the
           insurers will prevail ifthe insured has created any ambiguity.
           This rule, however, only becomes operative where the
           words are truly ambiguous; it is a rule for resolving
           ambiguity and it cannot be invoked with a view to creating
H          a doubt. Therefore, where the words used are free from
    UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                                   15
    TREASURES PVT. LTD. [ABHAY MANOHAR SAPRE, J.]

       ambiguity in the sense that, fairly and reasonably construed,               A
       they admit of only one meaning, the rule has no application."
       41. The aforesaid rule, in our considered opinion, has no application
to the facts of this case. It is for the reason that firstly, we find that there
is no ambiguity in the language/wording used in clauses 4 and 5. In other
words, as held above, the language/wording of clauses 4 and 5 and the              B
note appended thereto is clear, plain and unambiguous and carries only
one meaning. Secondly, in the absence of any ambiguity, the respondent
is not entitled to invoke the principle underlined in the rule of contra
proferentem for interpreting the clauses of the policy and lastly, presence
of ambiguity in the language of policy being sine qua non for invocation
of the contra proferentem rule, which is not present here, we cannot               c
apply the rule for deciding the issue involved in case.
      42. It is a settled rule of interpretation that when the words of a
statute are clear, plain or unambiguous, i.e., they are reasonably
susceptible to only one meaning, the courts are bound to give effect to
that meaning irrespective of consequences. In other words, when a                  D
language is plain and unambiguous and admits of only one meaning, no
question of construction of a statue arises, for the Act speaks for itself.
Equally well-settled rule of interpretation is that whenever the NOTE is
appended to the main Section, it is explanatory in nature to the main
Section and explains the true meaning of the main Section and has to be            E
read in the context of main Section (See - G P. Singh - Principle of
Statutory Interpretation 13th Edition page 50 and 172). This
analogy, in our considered opinion, equally applies while interpreting the
words used in any contract.
       43. Coming now to the facts of the case, it is not in dispute that the      F
burglary took place in the respondent's shop during night hours on
02.06.1995 when the burglars took away the jewelry (gold/silver
ornaments) kept in display window and jewelry lying out of safe. The
appellant was, therefore, justified in contending that the stolen articles
were not covered under the policy by virtue of clauses 4, 5 of Proposal
Form and Clause 12 of the policy and no liability could be fastened on             G
them to indemnify the loss of such articles for awarding any compensation
to the respondent. Indeed clauses 4, 5 and 12 were clearly attracted in
appellant's favour.
      44. We do not agree to the submission of Mr. Ahmadi, learned
senior counsel for the respondent that once the respondent disclosed               !-!
16               SUPREME COURT REPORTS                          [2016] 1 S.C.R.


A    their intention to get their stock (ornaments) valued at Rs 2 Crores insured
     with the appellant by filling the details in Columns 4 and 5 of the proposal
     form and once they paid the necessary premium to the appellant, the
     respondent became entitled to claim loss of the stolen items from the
     appellant treating the stolen items as insured under the policy regardless
     of note contained in clauses 4 , 5 and clause 12 of the policy. In our view,
B
     the submission has a fallacy.
           45. Firstly, as mentioned above, if the burglary had taken place
     during day time in business hours in respect of the items kept in display
     window or out of safe, the appellant was liable to compensate the
     respondent for the entire loss suffered by them treating the stolen items
c    as insured items under the policy. In other words, if the burglary had
     taken place during business hours then item kept in display window or
     those lying out of safe were covered under the policy.
           46. Likewise, if the burglary had taken place during night in relation
     to the items kept in the safe, then also the appellant was liable to
D    compensate the loss suffered by the respondent in burglary treating the
     stolen items as insured items under the policy.
           47. In both the category of cases mentioned above, the appellant
     was not entitled to rely upon clauses 4, 5 and 12 to avoid their liability
     because both the instances did not fall either in clause 4 or clause 5 or
E    clause 12. However, this was not the case set up by the respondent
     against the appellant.
           48. On the other hand, it is the case of the respondent that the
     burglary took place at night and the insured items kept in display window
     and some lying out of safe were stolen. Due to these facts, clauses 4, 5
F    and 12 were attracted against the respondent.
            49. In order to claim benefit of the policy, it was obligatory upon
     the respondent to have removed the insured items from display window
     everyday after business hours and keep them inside safe during night
     hours till opening of the shop next day. Like wise all insured items in side
G    the shop should also have been kept in side the safe everyday after
     business hours till opening of the shop next day. It was, however, not
     done by the respondent.
           50. A contract of insurance is one of the species of commercial
     transaction between the insurer and insured. It is for the parties (insurer/
H    insured) to decide as to what type of insurance they intend to do to
   UNITED INDIA INSURANCE CO. LTD. v. MIS ORIENT                              17
   TREASURES PVT. LTD. [ABHAY MANOHAR SAPRE, J.]

secure safety of the goods and how much premium the insured wish to           A
pay to secure insurance of their goods as provided in the tariff. If the
insured pays additional premium to the insurer to secure more safety
and coverage of their insured goods, it is permissible for them to do so.
In this case, the respondent did not pay any additional premium to get
the coverage of even two instances mentioned above to avoid rigour of         B
note of clauses 4, 5 and clause 12.
       51. In view of foregoing discussion, we cannot concur with the
reasoning and the conclusion arrived at by the Commission. The appeal
filed by the insurance company, i.e., Civil Appeal No. 2140 of 2007,
therefore, deserves to be allowed. It is accordingly allowed. Impugned
order is set aside. As a consequence thereof, the complaint filed by the      c
respondent against the appellant out of which this appeal arises is
dismissed. No costs.
      Civil Appeal No. 5141 of 2007
       In the light of the order passed in Civil Appeal No. 2140 of 2007,     D
it is not necessary to examine the merits of the claim filed by the
Complainant, which has been rendered infructuous. The appeal thus
fails and is dismissed as having rendered infructuous. No costs.
Kalpana K. Tripathy                                    Appeals disposed of.

                                                                              E