The complainant/respondent, who had taken a jeweller's block policy,
lodged a claim with the opposite party insurer for loss of gold ornaments.
The insurer repudiated the claim on the ground that the loss occurred when
the gold was in the custody of an apprentice, who was not an employee
(because the policy stipulated that for indemnification of the loss, the
property insured had to be "in the custody of the insured, his partner or
his employee"). The National Commission allowed the complaint holding that
an apprentice was an 'employee' since section 2(6) of the Kerala Shops and
Commercial Establishments Act (as well as some other statutes) defined an
'employee' to include an 'apprentice'. The Supreme Court, however, held
that the word 'employee' in the contract of insurance mentioned had to be
given the meaning in common parlance. The definition in the local Act,
including an 'apprentice' in the category of 'employee', was only a 'legal
fiction', which is a concept in law and could not be applied to an
insurance contract. The Court, therefore, allowed the appeal.