Supreme Court of India was dealing with the petition filed under Section 23 of the Consumer Protection Act, 1986. The appellant has challenged the judgment and order dated 18th October 2016 of the National Consumer Disputes Redressal Commission. By the said Judgment, the Commission dismissed the Consumer Complaint filed by the appellant.
Brief Facts:
The appellant had taken Standard Fire and Special Perils Policy from the respondent insurance company for the period from 28th June 2009 to 27th June 2010. The policy was in respect of Engineering Workshop and Plant. As per the claim made by the appellant, after midnight of 22nd March 2010, about 5060 antisocial people with arms and ammunition entered the factory premises of the appellant. According to the appellant’s case, the mob demanded money and jobs for local people. Substantial damage was caused to its factory, machinery and other equipment. FIR was also registered. The appellant lodged a regular claim with the respondent company on the basis of the policy. However, by addressing a letter, the appellant claimed that the respondent insurance company was liable to make an interim payment of Rs.1.5 crores. 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 respondent insurance company.
Commission’s Decision:
By the impugned judgment and order, the Commission held that because of the “Terrorism Damage Exclusion Warranty”, 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.
Appellant’s Contention:
Learned counsel for the appellant submitted that though the respondent insurance 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 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 respondent insurance company, it is apparent that it was not a case of a terrorist act within the meaning of the Exclusion Clause. He submitted that the burden was on the insurance company to prove that the Exclusion Clause was attracted in the facts of the case.
Respondent’s Contention:
Learned Counsel for the respondent 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 it was a case of unlawful association as defined in Section 15 of the Amendment Act of 1908. 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 submitted that the appellant failed to discharge the burden.
SC’s Observations:
After hearing both the sides SC observed that 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.
SC also observed that the Survey Reports do not record any factual findings regarding the incidents which caused the loss. The FIR and Closure Report do not refer to acts of terrorism as defined under Exclusion Clause. The Final Report shows that the police had registered a First Information Report against 105 miscreants who could not be traced.
SC stated that 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. 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. 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. The policy covers explicitly a liability arising out of the damage to the property of the insured due to riots or the use of violent means.
SC Held:
After evaluating submissions made by both the parties the SC held that “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 affidavits in lieu of evidence before the Commission. 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.”
Case Title: Narsingh Ispat Ltd. v. Oriental Insurance Company Ltd. & Anr.
Bench: J. Ajay Rastogi and J. Abhay S. Oka
Citation: CIVIL APPEAL NO.10671 of 2016
Decided on: 2nd May 2022
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