Consumer Protection – Insurance Policy – Exclusion clause exempting the insurer from liability – When attracted – Municipal Corporation demolished the front portion of the building owned by the insured – Claim of the insured that it was carrying on the business of sanitaryware in the premises and as a result of the demolition, it suffered damage of Rs.19.55 lacs – Insurer contested the claim on a policy of insurance obtained by the insured which contained exclusion exempting the insurer from liability for loss arising from the destruction of property caused “by order of the government or any lawful authority” – Claim allowed by the State Commission – Affirmed by the High Court – On appeal, held: Clause V of the insurance policy contains an exclusion, where the destruction of the property has been caused “by order of the government or any lawfully constituted authority” – Expression “by order of” means under the authority of government or of a lawfully constituted authority – Municipal Corporation is indeed a lawfully constituted authority, being a statutory authority under the 2000 Act – There is no dispute that the demolition was carried out by the Municipal Corporation – Hence the basis on which the claim was allowed was fundamentally flawed – Since, the destruction was by order of lawfully constituted authority, thus, exclusion under the policy of insurance was attracted – Impugned judgment of the High Court set aside – Complaint filed by the insured before the State Commission stands dismissed – Jammu and Kashmir Municipal Corporation Act 2000 – s.229.
Disposing of the appeals, the Court
HELD: 1.1 There was no dispute about the fact that the demolition was carried out under the authority of the Municipal Corporation. As the averments in the consumer complaint indicate, the insured proceeded on the basis that the Municipal Corporation had carried out the work of demolition. There could be no dispute about the factual position since, as a matter of fact, the insured instituted a suit for diverse reliefs including a challenge to the action of the Municipal Corporation. Hence the basis on which the claim was allowed is fundamentally flawed. [Para 11][1187-E-F]
1.2 Clause V of the insurance policy contains an exclusion, where the destruction of the property has been caused “by order of the government or any lawfully constituted authority”. The expression “by order of” means under the authority of government or of a lawfully constituted authority. There can be no dispute about the position that the Municipal Corporation is indeed a lawfully constituted authority, being a statutory authority under the Jammu and Kashmir Municipal Corporation Act, 2000. From the records as well as from the pleadings before the State Commission, there is no dispute about the fundamental position that the demolition was carried out by the Municipal Corporation. The destruction was hence by order of a lawfully constituted authority. Once this be the position, there can be no manner of doubt that the exclusion under the policy of insurance was attracted. [Paras 14][1188-E-G]
1.3 Both the State Commission and the High Court were in error in allowing the claim under the policy of insurance. The impugned judgment of the High Court which has affirmed the decision of the State Consumer Disputes Redressal Commission is set aside. The complaint filed by the insured before the State Commission stands dismissed. [Para 16][1191-B-D] National Insurance Company v. Irshad (2007) 4 SCC
105 : [2007] 2 SCR 1014 – referred to.
Cornish v. Accident Insurance Co Ltd (1889) 23 Q.B.D. 453, 456 ; Impact Funding Solutions Ltd v. Barrington Support Services Ltd [2016] UKSC 57 ; Crowden and Crowden v. QBE Insurance (Europe) Ltd QC : [2017] EWHC 2597 (Comm) – referred to.
AW Baker Welford : The Law Relating to Accidental Insurance (Butterworth & Co., 1923) at page 126 – referred to.
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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