Insurance – Insurance policy – Exclusion Clause – Applicability of insurance cover – Appellant had taken an insurance policy from respondent-insurance company in respect of its’ factory – Claim lodged by appellant on basis of said policy, stating that about 50-60 people with arms and ammunition entered its factory premises and caused substantial damage to the factory, machinery and other equipment – Respondent-insurance company repudiated appellant’s claim placing reliance on the Exclusion Clause in the policy regarding loss or damage caused by the acts of terrorism – If warranted – Held: Wherever an Exclusion Clause is contained in an insurance policy, it would be for the insurer to show that the case falls within the purview thereof – On facts, respondent-insurer did not discharge the burden of bringing the case within the four corners of the Exclusion Clause in the insurance policy – When the policy itself defined the acts of terrorism in the Exclusion Clause, the terms of the policy being a concluded contract governed the rights and liabilities of the parties – Definitions of ‘terrorism’ in various penal statutes could not be relied upon, since the Exclusion Clause contained an exhaustive definition of acts of terrorism – Moreover, on facts, the policy explicitly covered a liability arising out of the damage to the property of the insured due to riots or use of violent means – Hence, the decision to repudiate the insurance policy cannot be sustained – There was no warrant for applying the Exclusion Clause contained in the insurance policy. Words and Phrases – Words “similar purposes” – Meaning
of.
Allowing the appeal, the Court
HELD:1. In the present case, the Exclusion Clause in the insurance policy in question 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. [Para 10][158-A-B]
2. The repudiation of the policy made by the respondent is based on the Preliminary Survey Report, Investigation Report and the Final Survey Report. However, 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 however records a conclusion drawn by the Investigator appointed by the 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) only shows that the police had registered a First Information Report against
105 miscreants who could not be traced. [Para 11][158-B-D]
3. Wherever 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. The respondent-insurer has not discharged the burden of bringing the case within the four corners of the Exclusion Clause in the insurance policy in question. 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. [Paras 12, 13][158-E-H; 159-A]
National Insurance Co. Ltd. v. Ishar Das Madan Lal (2007) 4 SCC 105 : [2007] 2 SCR 1014 – relied on.
4. The National Consumer Disputes Redressal 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. Hence, the decision to repudiate the policy cannot be sustained. As there was no warrant for applying the Exclusion Clause, the consumer complaint filed by the appellant before the Commission is restored to the file. [Paras 14, 15, 16][159-B; 160-C-D]
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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