In New India Assurance Company Limited v. Rajeshwar Sharma and Others case, the Insured claimed that his business of sanitary wares suffered damages on account of illegal demolition by the Municipality in the premises. The Insured’s claim for insurance was repudiated by the insurance company on the ground that the Policy of Insurance provided for exclusion of loss on account of “destruction by order of the Government or any lawfully constituted authority”. The State Commission however allowed the claim, holding that the order of demolition passed by Municipal Corporation had not been brought on record and in its absence the exclusion would not operate. The High Court in appeal upheld the State Commission’s order and held that the insurer was liable to indemnify the loss sustained by the insured.
In view of the facts of the case, the Apex Court decided on the issue whether the exclusion clause under the Policy of Insurance was attracted? While making reference to Supreme Court’s verdict in National Insurance Co. Ltd. v. Ishar Das Madan Lal, the Court noted that where there is an exclusionary clause in an Insurance Policy, burden lies on the insurer to establish that the exclusion is attracted.
