Narsingh Ispat Ltd.
vs.
Oriental Insurance Company Ltd. and Others.
Civil Appeal No. 10671 of 2016
The insured had taken a Standard Fire and Special Perils Policy from the insurer. The policy covered the loss caused to the property of the insured on account of fire, lightning, explosion, riots, strike etc. A claim was lodged by the insured on account of 50-60 antisocial people with arms and ammunition, who entered the factory premises of the insured and caused substantial damage to factory, machinery and other equipment. According to the insured, the object of the incident was to terrorise the management of the insured. Insurer repudiated the insured’s claim by placing reliance on the exclusion clause in the policy regarding loss or damage caused by the acts of terrorism, which was defined under the policy. The Supreme Court held that the insurer had failed to discharge the burden of bringing the case within the four corners of the exclusion. 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. Since 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, therefore, there was no warrant for applying the Exclusion Clause. Accordingly, the Insurer’s decision to repudiate the policy was held to be unsustainable.
