NARSINGH ISPAT LTDversusORIENTAL INSURANCE COMPANY LTD. & ANR.

                         [2022] 3 S.C.R. 151                            151


                     NARSINGH ISPAT LTD.                                A
                                 v.
      ORIENTAL INSURANCE COMPANY LTD. & ANR.
                  (Civil Appeal No. 10671 of 2016)
                           MAY 02, 2022                                 B
         [AJAY RASTOGI AND ABHAY S. OKA, JJ.]
      Insurance – Insurance policy – Exclusion Clause –
Applicability of insurance cover – Appellant had taken an insurance
policy from respondent-insurance company in respect of its’ factory
                                                                        C
– 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    D
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
                                                                        E
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   F
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            G
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
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                                151
152            SUPREME COURT REPORTS                      [2022] 3 S.C.R.


A     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
B     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
C     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
D     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
E     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
F     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]
G           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
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       NARSINGH ISPAT LTD. v.ORIENTAL INSURANCE                             153
                 COMPANY LTD. & ANR.

caused by violent means. The policy covers explicitly a liability           A
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.
                                                                            B
[Paras 14, 15, 16][159-B; 160-C-D]
                        Case Law Reference
[2007] 2 SCR 1014                relied on                 Para 7
      CIVIL APPELLATE JURISDICTION : Civil Appeal No.10671
of 2016.                                                                    C

     From the Judgment and Order dated 18.10.2016 of the National
Consumer Disputes Redressal Commission in Consumer Complaint
No.165 of 2012.
      Santosh Kumar-I, Shashwat Singh, Advs. for the Appellant.             D
     Santosh Paul, Sr. Adv., Vedant Mishra, Sriharsh N. Bundela, M.
J. Paul, Ms. Maithreya Shetty, Akshay Kumar, Advs. for the
Respondents.
      The Judgment of the Court was delivered by
      ABHAY S. OKA, J.                                                      E

       1. This is an appeal under Section 23 of the Consumer Protection
Act, 1986. The appellant has challenged the judgment and order dated
18 th 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            F
by the appellant.
       2. 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 at Village Khunti District Saraikela, Jharkhand. The     G
total sum assured was Rs.26,00,00,000/- under 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.
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154            SUPREME COURT REPORTS                          [2022] 3 S.C.R.


A             3. The appellant lodged a claim on the basis of the said policy,
      based on the incident of 23rd March 2010. As per the claim made by the
      appellant, after midnight of 22nd March 2010, about 50-60 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
B
      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
C     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
      respondent-insurance company carried out the survey and assessed the
      loss at Rs.89,43,422/-. However, by addressing a letter on 21st December
      2010, the appellant claimed that the respondent-insurance company was
D
      liable to make an interim payment of Rs.1.5 crores.
             4. By the letter dated 23 rd 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
E     mentioned above before the Commission complaining about deficiency
      in the service offered by the respondent-insurance 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
F     and harassment caused to the appellant due to illegal repudiation of the
      policy by the respondent-insurance 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/-.
             5. By the impugned judgment and order, the Commission held that
G     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.

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       NARSINGH ISPAT LTD. v.ORIENTAL INSURANCE                                155
        COMPANY LTD. & ANR. [ABHAY S. OKA, J.]

      6. For the sake of convenience, we are reproducing the said              A
Exclusion Clause, which reads thus:
      “Terrorism Damage Exclusion Warranty :
      Notwithstanding any provision to the contrary within this insurance
      it is agreed that this insurance excludes loss, damage cost or
      expense of whatsoever nature directly or indirectly caused by,           B
      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              C
      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              D
      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         E
      any act of terrorism.”
                                                         (emphasis added)
       7. Shri Santosh Kumar, the learned counsel appearing for the
appellant, submitted that the police had registered a First Information
Report against unknown persons. After completing the investigation, the        F
police filed a closure report recording that the accused could not be
traced. He 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 pointed out that after this Court issued a specific
                                                                               G
direction, a copy of the 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
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156               SUPREME COURT REPORTS                         [2022] 3 S.C.R.


A     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. 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
B
      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
      appellant-insurer. In support of this proposition, he relied upon a decision
      of this Court in the case of National Insurance Co. Ltd. v. Ishar Das
C     Madan Lal1.
             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
D     aside the impugned judgment and order, 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.
E            9. Shri Santosh Paul, the learned senior counsel appearing for the
      respondent-insurance company, invited our attention to the allegations
      made in the First Information Report regarding the incident of 23rd 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
F     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
G     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
      1
H         (2007) 4 SCC 105
       NARSINGH ISPAT LTD. v.ORIENTAL INSURANCE                                157
        COMPANY LTD. & ANR. [ABHAY S. OKA, J.]

that liability arises under the said policy. He submitted that the appellant   A
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
the rival parties. In its letter dated 23rd March 2010 addressed to the
respondent, the version of the appellant of the incident which occurred        B
around 12:30 a.m. on 23rd 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    C
      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.
                                                                               D
      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.
                                                                               E
      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.                                                          F
      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.30-45 lakhs so that Co-operative Housing Society Limited
      people took immediate steps for damaged control in main blast
      furnace.                                                                 G
      You are requested to kindly look into the matter very seriously
      and appoint Surveyors who can visit the site at the earliest possible
      manner.”
       In the subsequent letter dated 15th April 2010, the appellant stated
that the purpose of the anti-social persons was to create terror so that       H
158             SUPREME COURT REPORTS                           [2022] 3 S.C.R.


A     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.
B
             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
C     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 respondent that it is not conclusively proved
      that the persons involved in the incident belonged to Maoist or similar
D     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.
            12. In paragraph 8 in the case of Ishar Das Madan Lal1, this
E     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
F           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]”
G
                                                               (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
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       NARSINGH ISPAT LTD. v.ORIENTAL INSURANCE                                 159
        COMPANY LTD. & ANR. [ABHAY S. OKA, J.]

of the parties. Therefore, the parties cannot rely upon the definitions of      A
‘terrorism’ in various penal statutes since the Exclusion Clause contains
an exhaustive definition of acts of terrorism.
       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           B
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                                 C

          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            D
                 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
                                                                                E
                 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
                                                                                F
                 (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.”
                                                                                G
                                                         (emphasis added)
       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. Under
the insurance policy, there are different limits prescribed for various         H
160             SUPREME COURT REPORTS                         [2022] 3 S.C.R.


A     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.
      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
      respondent-company has valued the loss caused to the appellant at
B
      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
C     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
D     further evidence, the Commission shall decide the complaint filed by the
      appellant in accordance with law and in the light of what 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
E     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
F     today and the same shall be deposited in the interest-bearing 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.
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            18. Accordingly, the appeal is allowed in the above terms with no
      order as to costs.

      Bibhuti Bhushan Bose                                        Appeal allowed.


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