Full Judgment Text
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.10671 of 2016
Narsingh Ispat Ltd. …..Appellant
Versus
Oriental Insurance Company Ltd. & Anr. …..Respondents
J U D G M E N T
Abhay S. Oka, J.
1. This is an appeal under Section 23 of the Consumer Protection
Act, 1986. The appellant has challenged the judgment and order
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dated 18 October 2016 of the National Consumer Disputes
Redressal Commission (for short, ‘the Commission’). By the said
Judgment, the Commission dismissed the Consumer Complaint
No.165 of 2012 filed by the appellant.
The appellant had taken Standard Fire and Special Perils
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Policy from the respondentinsurance company for the period from
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28 June 2009 to 27 June 2010. The policy was in respect of
Engineering Workshop and Plant at Village Khunti District Saraikela,
Signature Not Verified
Digitally signed by
Jayant Kumar Arora
Date: 2022.05.02
17:25:58 IST
Reason:
Jharkhand. The total sum assured was Rs.26,00,00,000/ under
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different headings. The appellant paid a premium of Rs.2,20,462/.
According to the appellant, the policy covered the loss caused to the
property of the appellant on account of fire, lightning, explosion, riots,
strike etc.
3. The appellant lodged a claim on the basis of the said policy,
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based on the incident of 23 March 2010. As per the claim made by
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the appellant, after midnight of 22 March 2010, about 5060 anti
social people with arms and ammunition entered the factory premises
of the appellant at Village Khunti, District Saraikela in Jharkhand.
According to the appellant’s case, the mob demanded money and jobs
for local people. According to the case of the appellant, substantial
damage was caused to its factory, machinery and other equipment.
According to the appellant, the object of the incident was to terrorise
the management of the appellant and workers in the factory by
forcing them to pay a ransom to the miscreants. A First Information
Report was also registered at the instance of the appellant based on
the said incident. The appellant lodged a regular claim with the
respondent company on the basis of the policy. According to the
appellant’s case, a surveyor appointed by the respondentinsurance
company carried out the survey and assessed the loss at
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Rs.89,43,422/. However by addressing a letter on 21st December
2010, the appellant claimed that the respondentinsurance company
was liable to make an interim payment of Rs.1.5 crores.
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4. By the letter dated 23 December 2010, the respondent
insurance company repudiated the appellant’s claim by placing
reliance on the Exclusion Clause in the policy regarding loss or
damage caused by the acts of terrorism. Therefore, the appellant filed
the complaint mentioned above before the Commission complaining
about deficiency in the service offered by the respondentinsurance
company. In the complaint, a prayer was made for the grant of
monetary relief of Rs.1,51,35,780/ on account of the loss suffered by
the appellant. A separate amount of Rs.25,00,000/ was claimed on
account of agony and harassment caused to the appellant due to
illegal repudiation of the policy by the respondentinsurance
company. The appellant claimed interest at the rate of 18% p.a on
the amounts mentioned above and cost amount of Rs.10,00,000/.
By the impugned judgment and order, the Commission held
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that because of the “Terrorism Damage Exclusion Warranty” (for
short, ‘the Exclusion Clause’), the respondent company was justified
in repudiating the claim of the appellant based on the policy of
insurance. It was held that the damage caused to the factory and
equipment of the appellant was due to an act of terrorism.
6. For the sake of convenience, we are reproducing the said
Exclusion Clause, which reads thus:
“Terrorism Damage Exclusion Warranty :
Notwithstanding any provision to the contrary within this
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insurance it is agreed that this insurance excludes loss,
damage cost or expense of whatsoever nature directly or
indirectly caused by, resulting from or in connection with
any act of terrorism regardless of any other cause or
event contributing concurrently or in any other sequence
to the loss.
For the purpose of this endorsement an act of
terrorism means an act, including but not limited to
the use of force or violence and/or the threat thereof,
of any person or group(s) of persons whether acting
alone or on behalf of or in connection with any
organization(s) or government(s), committed for
political, religious, ideological or similar purpose
including the intention to influence any government
and/or to put the public, or any section of the public
in fear.
The warranty also excludes loss, damage, cost or
expenses of whatsoever nature directly or indirectly
caused by, resulting from or in connection with any
action taken in controlling, preventing, suppressing or in
any way relating to action taken in respect of any act of
terrorism.”
(emphasis added)
Shri Santosh Kumar, the learned counsel appearing for the
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appellant, submitted that the police had registered a First
Information Report against unknown persons. After completing the
investigation, the police filed a closure report recording that the
accused could not be traced. He submitted that though the
respondentinsurance company relied upon the Investigation Report
in the letter of repudiation, neither a copy thereof was supplied to the
appellant nor was it produced before the Commission. He pointed
out that after this Court issued a specific direction, a copy of the
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Investigation Report was filed on record by the respondent, which
records that it was not conclusively proved that Maoist activists or
any such activists made the attack. He submitted that on a conjoint
reading of the First Information Report, closure Report filed by the
police and Investigation Report submitted by the Investigator
appointed by the respondentinsurance company, it is apparent that
it was not a case of a terrorist act within the meaning of the
Exclusion Clause. The learned counsel tried to rely upon the concept
of ‘terrorism’ under various enactments such as the Unlawful
Activities (Prevention) Act, 1967 and the National Investigation
Agency Act, 2006. He submitted that the burden was on the
insurance company to prove that the Exclusion Clause was attracted
in the facts of the case. He submitted that if there was any ambiguity
about whether the Exclusion Clause was attracted, the insurance
contract will have to be construed in favour of the appellantinsurer.
In support of this proposition, he relied upon a decision of this Court
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in the case of National Insurance Co. Ltd. v. Ishar Das Madan Lal .
8. The learned counsel appearing for the appellant submitted that
even according to the report of the surveyor appointed by the
respondent company, the damage caused to the machinery and
equipment has been quantified at approximately Rs.89,00,000/. He
submitted that by setting aside the impugned judgment and order,
1 (2007) 4 SCC 105
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the respondent company may be directed to pay a sum of
Rs.89,00,000/ to the appellant along with interest, and the
Commission may be directed to consider the case of the appellant for
grant of additional amount based on the evidence on record.
9. Shri Santosh Paul, the learned senior counsel appearing for
the respondentinsurance company, invited our attention to the
allegations made in the First Information Report regarding the
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incident of 23 March 2010. He submitted that the fact that 120
people entered the factory premises of the appellant along with
weapons and carried out large scale destruction shows that it was an
act of terrorism to terrorise the workers of the appellant and its
management. He submitted that the police have applied Sections
147, 148, 149, 323, 307, 379, 427, 435 and 447 of the Indian Penal
Code read with Section 17 of the Criminal Law (Amendment) Act,
1908 (for short, ‘the Amendment Act of 1908’). He submitted that it
was a case of unlawful association as defined in Section 15 of the
Amendment Act of 1908. He submitted that under Section 17
thereof, the unlawful association is made an offence. He submitted
that the very fact that the provisions of the Amendment Act of 1908
have been applied shows that the loss caused to the appellant was
due to a terrorist act. He submitted that the burden was on the
appellant to show that liability arises under the said policy. He
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submitted that the appellant failed to discharge the burden. He
would, therefore, submit that no interference is called for with the
finding of the Commission.
10. We have given a careful consideration to the submissions of
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the rival parties. In its letter dated 23 March 2010 addressed to the
respondent, the version of the appellant of the incident which
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occurred around 12:30 a.m. on 23 March 2010 has been stated. The
relevant part of the letter reads thus:
“With reference to the above and continuation to verbal
information given to you over telephone, our submissions
are as follows :
Please note that in last midnight 12.30 A.M. around 50
60 antisocial peoples with arm ammunitions entered into
factory premises through back side door of the factory
premises.
Some of them marched towards DG Room and got fired
one DG and tried to destroy it.
Some of them moved towards control room of blast
furnace and damaged control system of Blast Furnace
available in control room and beaten the men working
there.
They have also damaged Security room, office room and
computers available there.
They have taken away around 15 Nos. of mobile phone,
walky talky sets and cash found in drawer of factory
office premises, materials particularly relating to PIG
Irons.
Company people informed immediately to the nearest
police station over telephone.
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Since blast furnace need continuous working and once it
is cooled and to get it reheated it would have been cost to
the Company for Rs.3045 lakhs so that Cooperative
Housing Society Limited people took immediate steps for
damaged control in main blast furnace.
You are requested to kindly look into the matter very
seriously and appoint Surveyors who can visit the site at
the earliest possible manner.”
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In the subsequent letter dated 15 April 2010, the appellant stated
that the purpose of the antisocial persons was to create terror so
that the appellant would be forced to pay a ransom. We have already
reproduced the Exclusion Clause, which defines the act of terrorism.
Given the definition, the actions can be termed as acts of terrorism
provided the same are committed for political, religious, ideological or
similar purposes. The words “similar purposes” will have to be
construed ejusdem generis .
11. In the present case, the repudiation of the policy made by the
respondent is based on the Preliminary Survey Report, Investigation
Report and the Final Survey Report. The Survey Reports cannot
throw any light on the question whether there was an act of
terrorism. The Survey Reports do not record any factual findings
regarding the incidents which caused the loss. Reliance was placed
on the Investigation Report in the letter of repudiation. A copy of the
said Report, placed on record along with I.A. No.38075 of 2022,
records a conclusion drawn by the Investigator appointed by the
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respondent that it is not conclusively proved that the persons
involved in the incident belonged to Maoist or similar groups. The FIR
and Closure Report do not refer to acts of terrorism as defined under
Exclusion Clause. The Final Report (Closure Report) shows that the
police had registered a First Information Report against 105
miscreants who could not be traced.
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12. In paragraph 8 in the case of Ishar Das Madan Lal , this Court
held thus:
“ 8. However, there may be an express clause excluding the
applicability of insurance cover.
Wherever such an
exclusionary clause is contained in a policy, it would be
for the insurer to show that the case falls within the
purview thereof. In a case of ambiguity, it is trite, the
contract of insurance shall be construed in favour of
the insured . [See United India Insurance Co. Ltd. v.
Pushpalaya Printers (2004) 3 SCC 694, Peacock Plywood (P)
Ltd. v. Oriental Insurance Co. Ltd. (2006) 12 SCC 673 and
United India Insurance Co. Ltd. v. Kiran Combers & Spinners
(2007) 1 SCC 368]”
(emphasis added)
13. The respondent has not discharged the burden of bringing the
case within the four corners of the Exclusion Clause. When the policy
itself defines the acts of terrorism in the Exclusion Clause, the terms
of the policy being a concluded contract will govern the rights and
liabilities of the parties. Therefore, the parties cannot rely upon the
definitions of ‘terrorism’ in various penal statutes since the Exclusion
Clause contains an exhaustive definition of acts of terrorism.
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14. Thus, the Commission committed an error by applying the
Exclusion Clause. Moreover, the policy specifically covers the damage
to the insured’s property caused by violent means. We are
reproducing the relevant clause in that behalf :
“V. Riot Strike and Malicious Damage
Loss of or visible physical damage or destruction
by external violent means directly caused to the
property insured but excluding those caused by
a) total or partical ( sic ) cessation of work or the
retardation or interruption or ( sic ) cessation or any
process or operations or omissions of any kind.
b) Permanent or temporary dispossession resulting
from confiscation, commandeering, requisition or
destruction by order of the Government or any
lawfully constituted Authority.
c) Permanent or temporary dispossession of any
building or plant or unit of ( sic ) machinery
resulting from the unlawful occupation by any
person of such building or plant or unit or
machinery or prevention of access to the same.
d) Burglary, housebreaking, theft, larceny or any
such attempt or any omission of any kind of any
person (whether or not such act is committed in
the course of a disturbance of public peace) in any
malicious act.
If the Company alleges that the loss/damage is not
caused by any malicious act, the burden of proving the
contrary shall be upon the insured.”
(emphasis added)
The policy covers explicitly a liability arising out of the damage to the
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property of the insured due to riots or the use of violent means.
Hence, the decision to repudiate the policy cannot be sustained.
Under the insurance policy, there are different limits prescribed for
various acts covered by the policy. In the impugned Judgment, it is
noted that the parties had filed affidavitsinlieu of evidence before
the Commission. An adjudication will have to be made on the
quantum of the amount payable to the appellant after appreciating
the evidence on record, including the valuation reports. However, the
valuer appointed by the respondentcompany has valued the loss
caused to the appellant at approximately Rs.89,00,000/. We,
therefore, propose to direct the respondent to deposit the said amount
with the Commission with liberty to the appellant to make an
application for withdrawal.
15. As there was no warrant for applying the Exclusion Clause, the
impugned judgment and order will have to be set aside, and by
restoring the complaint filed by the appellant, the same will have to
be ordered to be heard by the Commission afresh.
16. Accordingly, the impugned judgment and order is hereby set
aside. Consumer Complaint No.165 of 2012 filed by the appellant
before the Commission is restored to the file. After allowing parties to
lead further evidence, the Commission shall decide the complaint
filed by the appellant in accordance with law and in the light of what
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is held in this judgment. The Commission is requested to pass an
appropriate final order on the remanded complaint within four
months from today. We make it clear that we have not expressed a
definitive opinion on the quantum of the amount payable to the
appellant under the policy of insurance, and the said issue is left
open for the decision of the Commission in accordance with law.
17. As observed earlier, the respondent shall deposit the sum of
Rs.89,00,000/ in the Registry of the Commission within one month
from today and the same shall be deposited in the interestbearing
account on auto renewal basis. At the same time, the appellant will
be at liberty to file an application for withdrawal of the amount before
the Commission pending complaint. If such an application is filed by
the appellant, the Commission may examine on its own merits and
decide the same in accordance with law.
18. Accordingly, the appeal is allowed in the above terms with no
order as to costs.
………………………………..J.
[AJAY RASTOGI]
………………………………..J.
[ABHAY S. OKA]
New Delhi
May 02, 2022.
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