M/S. SHOBIKA ATIRE versus NEW INDIA ASSURANCE CO. LTD. AND ANR.

Citation: [2006] SUPP. 6 S.C.R. 266 · Decided: 15-09-2006 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
MIS. SHOBIKA A TIIRE 
v. 
NEW INDIA ASSURANCE CO. LTD. AND ANR. 
SEPTEMBER 15, 2006 
[DR. AR. LAKSHMANAN AND AL TAMAS KABIR, JJ.) 
Insurance-Against damages from riots, strike, etc.---Stock-in-trade of 
textile items and garments in showroom-Looting by armed rioters-Claim 
C for damages-Allowed for stock on elevated ground and rejected in respect 
of stocks in two levels of basement of showroom-Correctness of-Held-It 
was established that showroom was attacked by a frenzied mob, which set 
fire to elevated ground floor and indulged in looting-Claimant had 
discharged initial burden and insurance company failed to establish that 
claim was unjustified and not covered by insurance policy-It was possible 
D that looting had taken place before police and fire fighting personnel arrived-
There was nothing to support the plea of insurance company that claimants 
themselves transported part of goods from the showroom of removed them 
from basement levels in anticipation of rioting-Claim allowed for stocks in 
basement levels especially in view of support thereof by bank with which 
stock was hypothecated-However, as insurance company was within its 
E rights to inquire into the incident and it partly approved the claim, claim 
in respect of compensation towards hardship, mental agony and harassment 
rejected. 
Appellant-firm had a showroom wherein all the stock-in-trade of textile 
F items and garments was insured by respondent expressly covering the said 
stock from damages caused due to riots, strike, malicious and terrorist 
damage. This stock in trade was also hypothecated with a bank, the second 
respondent, from whom the appellant had taken loan, and their value could 
not be less than Rs. 2 crores at any given point of time. The furnitures, 
fixtures, fittings and glass plates of the showroom were separately insured 
G with another insurance company. Consequent upon bomb blasts in the city, a 
group of armed rioters allegedly looted their showroom and set fire to it. 
According to appellant, the entire stock of goods was either looted or reduced 
to ashes. Respondent appointed surveyors to survey the loss. Consequent to 
receipt of information indicating that the appellants had themselves taken away 
H 
266 
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SHOBIKA ATTIRE''· NEW INDIA ASSURANCE CO. LTD. 
267 
some of the stock during the rioting, respondent ordered an inquiry into that A 
aspect by an investigator, VA. 
The insurance conipany which had separately insured the fixtures, 
fittings and furnitures approved the claim of the appellant. However, as 
regards their claim from respondent for compensation in respect of the stock 
in trade, the surveyors worked out damages excluding the stocks in the two B 
levels of the basement of showroom. Appellants asked the respondent that they 
· were entitled to whole of their elaim. Second respondent-bank supported the 
appellant in this regard. As there was no response from the respondent thereto, 
appellant filed a complaint-claim petition hefore the National Consumer 
Disputes Redressal Commission praying for a direction upon the respondent C 
to settle the balance of their claim, also claiming interest thereupon from the 
date of claim till realization, and a further sum towards hardship and mental 
agony caused to them due to deficiency of service on the part of the respondent 
The Commission, however, dismissed the complaint holding that there was 
remote possibility of the riotous mob having entered the first and second levels 
of basement as the only point of entry from the elevated ground floor was D 
blocked by fire, heat and smoke and particularly in the absence of any lights 
in the basement area. Hence the present appeal. 
Appellants contended that there was no way in which the frenzied mob 
of looters could be prevented from looting the stock in trade which was kept E 
in the entire showroom comprising of the ground floor and the two basement 
floors. 
Respondent contended that (i) soon after the mob set fire to the showroom 
on the.ground floor, the police and fire fighting personnel arrived at the scene 
and were present there up to mid-night, and in their presence no looting could F 
have taken place (ii) there was no evidence of damage by fire in both the 
basement levels and there was also no evidence of the stock in the two basement 
levels having been looted by the rioten (iii) surveyors concluded that the stock 
in the two basement levels had not looted and also indicated that nobody cou

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