NARSINGH ISPAT LTD versus ORIENTAL INSURANCE COMPANY LTD. & ANR.

Citation: [2022] 3 S.C.R. 151 · Decided: 02-05-2022 · Supreme Court of India · Bench: AJAY RASTOGI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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   [2022] 3 S.C.R. 151
151
NARSINGH ISPAT LTD.
v.
ORIENTAL INSURANCE COMPANY LTD. & ANR.
(Civil Appeal No. 10671 of 2016)
MAY 02, 2022
[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
– 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
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SUPREME COURT REPORTS
[2022] 3 S.C.R.
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
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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 

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