NEW INDIA ASSURANCE COMPANY LIMITED versus RAJESHWAR SHARMA AND ORS.

Citation: [2018] 14 S.C.R. 1181 · Decided: 07-12-2018 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Disposed off

Cited by 3 judgment(s) · cites 1 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
1181
NEW INDIA ASSURANCE COMPANY LIMITED
v.
RAJESHWAR SHARMA AND ORS.
(Civil Appeal No. 11885 of 2018)
DECEMBER 07, 2018
[DR. DHANANJAYA Y CHANDRACHUD AND
M. R. SHAH, JJ.]
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
[2018] 14 S.C.R. 1181
1181
A
B
C
D
E
F
G
H
1182                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
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.
A
B
C
D
E
F
G
H
1183
AW Baker Welford : The Law Relating to Accidental
Insurance (Butterworth & Co., 1923) at page 126 –
referred to.
Case Law Reference
[2007] 2 SCR1014
referred to
Para 10
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 11885
of 2018.
From the Judgment and Order dated 28.07.2016 of the High Court
of J & K at Jammu in CIMA No. 249 of 2015.
With
Civil Appeal No. 11886 of 2018.
Mano

Excerpt shown. Read the full judgment & AI analysis in Lexace.