/2022 INSC 0342/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.10671 of 2016 
Narsingh Ispat Ltd. …..Appellant
                                Versus
Oriental Insurance Company Ltd. & Anr.   …..Respondents
J U D G M E N T
Abhay S. Oka, J.
1. This is an appeal under Section 23 of the Consumer Protection
Act,   1986.     The   appellant   has   challenged   the   judgment   and   order
dated   18 th
  October   2016   of   the   National   Consumer   Disputes
Redressal   Commission   (for   short,   ‘the   Commission’).   By   the   said
Judgment,   the   Commission   dismissed   the   Consumer   Complaint
No.165 of 2012 filed by the appellant. 
2. The   appellant   had   taken   Standard   Fire   and   Special   Perils
Policy   from   the   respondent­insurance   company   for   the   period   from
28 th
  June   2009   to   27 th
  June   2010.     The   policy   was   in   respect   of
Engineering Workshop and Plant at Village Khunti District Saraikela,
Jharkhand.     The   total   sum   assured   was   Rs.26,00,00,000/­   under
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different   headings.     The   appellant   paid   a   premium   of   Rs.2,20,462/­.
According  to the  appellant,  the policy  covered the  loss caused to  the
property of the appellant on account of fire, lightning, explosion, riots,
strike etc.
3. The   appellant   lodged   a   claim   on   the   basis   of   the   said   policy,
based on the incident of 23 rd
  March 2010.   As per the claim made by
the   appellant,   after   midnight   of   22 nd
  March   2010,   about   50­60   anti­
social people with arms and ammunition entered the factory premises
of   the   appellant   at   Village   Khunti,   District   Saraikela   in   Jharkhand.
According to the appellant’s case, the mob demanded money and jobs
for   local   people.     According   to   the   case   of   the   appellant,   substantial
damage   was   caused   to   its   factory,   machinery   and   other   equipment.
According to the appellant, the object of the incident was to terrorise
the   management   of   the   appellant   and   workers   in   the   factory   by
forcing them to pay a ransom to the miscreants.   A First Information
Report   was   also   registered  at  the  instance   of  the  appellant  based  on
the   said   incident.     The   appellant   lodged   a   regular   claim   with   the
respondent   company   on   the   basis   of   the   policy.     According   to   the
appellant’s   case,   a   surveyor   appointed   by   the   respondent­insurance
company   carried   out   the   survey   and   assessed   the   loss   at
Rs.89,43,422/­.     However ,   by  addressing  a  letter   on  21st  December
2010, the appellant claimed that the respondent­insurance company
was liable to make an interim payment of Rs.1.5 crores.
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4. By   the   letter   dated   23 rd
  December   2010,   the   respondent­
insurance   company   repudiated   the   appellant’s   claim   by   placing
reliance   on   the   Exclusion   Clause   in   the   policy   regarding   loss   or
damage caused by the acts of terrorism.  Therefore, the appellant filed
the   complaint   mentioned   above   before   the   Commission   complaining
about   deficiency   in   the   service   offered   by   the   respondent­insurance
company.     In   the   complaint,   a   prayer   was   made   for   the   grant   of
monetary relief of Rs.1,51,35,780/­ on account of the loss suffered by
the appellant.   A separate amount of Rs.25,00,000/­ was claimed on
account   of   agony   and   harassment   caused   to   the   appellant   due   to
illegal   repudiation   of   the   policy   by   the   respondent­insurance
company.     The   appellant   claimed   interest   at   the   rate   of   18%   p.a   on
the amounts mentioned above and cost amount of Rs.10,00,000/­.
5. By   the   impugned   judgment   and   order,   the   Commission   held
that   because   of   the   “Terrorism   Damage   Exclusion   Warranty”   (for
short,  ‘the  Exclusion   Clause’),  the  respondent  company   was  justified
in   repudiating   the   claim   of   the   appellant   based   on   the   policy   of
insurance.     It   was   held   that   the   damage   caused   to   the   factory   and
equipment of the appellant was due to an act of terrorism.
6. For   the   sake   of   convenience,   we   are   reproducing   the   said
Exclusion Clause, which reads thus: 
“Terrorism Damage Exclusion Warranty :
Notwithstanding any provision to the contrary within this
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insurance   it   is   agreed   that   this   insurance   excludes   loss,
damage  cost  or   expense   of   whatsoever   nature  directly  or
indirectly caused by, resulting from or in connection with
any   act   of   terrorism   regardless   of   any   other   cause   or
event contributing concurrently or in any other sequence
to the loss.
For   the   purpose   of   this   endorsement   an   act   of
terrorism   means   an   act,   including   but   not   limited   to
the use of force or violence and/or the threat thereof,
of   any   person   or   group(s)   of   persons   whether   acting
alone   or   on   behalf   of   or   in   connection   with   any
organization(s)   or   government(s),   committed   for
political,   religious,   ideological   or   similar   purpose
including   the   intention   to   influence   any   government
and/or to put the public, or any section of the public
in fear.
The   warranty   also   excludes   loss,   damage,   cost   or
expenses   of   whatsoever   nature   directly   or   indirectly
caused   by,   resulting   from   or   in   connection   with   any
action taken in controlling, preventing, suppressing or in
any   way   relating   to   action   taken   in   respect  of   any   act   of
terrorism.”
                                     (emphasis added)
7. Shri   Santosh   Kumar,   the   learned   counsel   appearing   for   the
appellant,   submitted   that   the   police   had   registered   a   First
Information   Report   against   unknown   persons.   After   completing   the
investigation,   the   police   filed   a   closure   report   recording   that   the
accused   could   not   be   traced.     He   submitted   that   though   the
respondent­insurance   company   relied   upon   the   Investigation   Report
in the letter of repudiation, neither a copy thereof was supplied to the
appellant   nor   was   it   produced   before   the   Commission.     He   pointed
out   that   after   this   Court   issued   a   specific   direction,   a   copy   of   the
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Investigation   Report   was   filed   on   record   by   the   respondent,   which
records   that   it   was   not   conclusively   proved   that   Maoist   activists   or
any such activists made the attack.   He submitted that on a conjoint
reading   of   the   First   Information   Report,   closure   Report   filed   by   the
police   and   Investigation   Report   submitted   by   the   Investigator
appointed by  the respondent­insurance company, it is apparent that
it   was   not   a   case   of   a   terrorist   act   within   the   meaning   of   the
Exclusion Clause.  The learned counsel tried to rely upon the concept
of   ‘terrorism’   under   various   enactments   such   as   the   Unlawful
Activities   (Prevention)   Act,   1967   and   the   National   Investigation
Agency   Act,   2006.     He   submitted   that   the   burden   was   on   the
insurance company to prove that the Exclusion Clause was attracted
in the facts of the case.  He submitted that if there was any ambiguity
about   whether   the   Exclusion   Clause   was   attracted,   the   insurance
contract will have to be construed in favour of the appellant­insurer.
In support of this proposition, he relied upon a decision of this Court
in the case of  National Insurance Co. Ltd.  v.  Ishar Das Madan Lal 1
.
8. The learned counsel appearing for the appellant submitted that
even   according   to   the   report   of   the   surveyor   appointed   by   the
respondent   company,   the   damage   caused   to   the   machinery   and
equipment has been quantified at approximately Rs.89,00,000/­.   He
submitted   that   by   setting   aside   the   impugned   judgment   and   order,
1   (2007) 4 SCC 105
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the   respondent   company   may   be   directed   to   pay   a   sum   of
Rs.89,00,000/­   to   the   appellant   along   with   interest,   and   the
Commission may be directed to consider the case of the appellant for
grant of additional amount based on the evidence on record.
9. Shri   Santosh   Paul,   the   learned   senior   counsel   appearing   for
the   respondent­insurance   company,   invited   our   attention   to   the
allegations   made   in   the   First   Information   Report   regarding   the
incident   of   23 rd
  March   2010.     He   submitted   that   the   fact   that   120
people   entered   the   factory   premises   of   the   appellant   along   with
weapons and carried out large scale destruction shows that it was an
act   of   terrorism   to   terrorise   the   workers   of   the   appellant   and   its
management.     He   submitted   that   the   police   have   applied   Sections
147, 148, 149, 323, 307, 379, 427, 435 and 447 of the Indian Penal
Code   read   with   Section   17   of   the   Criminal   Law   (Amendment)   Act,
1908 (for short, ‘the Amendment Act of 1908’).   He submitted that it
was   a   case   of   unlawful   association   as   defined   in   Section   15   of   the
Amendment   Act   of   1908.     He   submitted   that   under   Section   17
thereof,   the   unlawful   association   is   made   an   offence.     He   submitted
that  the  very  fact  that  the  provisions  of  the  Amendment  Act of  1908
have   been   applied   shows   that   the   loss   caused   to   the   appellant   was
due   to   a   terrorist   act.     He   submitted   that   the   burden   was   on   the
appellant   to   show   that   liability   arises   under   the   said   policy.     He
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submitted   that   the   appellant   failed   to   discharge   the   burden.     He
would,   therefore,   submit   that   no   interference   is   called   for   with   the
finding of the Commission.
10. We   have   given   a   careful   consideration   to   the   submissions   of
the rival parties.  In its letter dated 23 rd
 March 2010 addressed to the
respondent,   the   version   of   the   appellant   of   the   incident   which
occurred around 12:30 a.m. on 23 rd
 March 2010 has been stated. The
relevant part of the letter reads thus: 
“With   reference   to   the   above   and   continuation   to   verbal
information given to you over telephone, our submissions
are as follows :
Please  note  that  in  last midnight  12.30  A.M.  around  50­
60 antisocial peoples with arm ammunitions entered into
factory   premises   through   back   side   door   of   the   factory
premises.
Some   of   them   marched   towards   DG   Room   and   got   fired
one DG and tried to destroy it.
Some   of   them   moved   towards   control   room   of   blast
furnace   and   damaged   control   system   of   Blast   Furnace
available   in   control   room   and   beaten   the   men   working
there.
They   have   also   damaged   Security   room,   office   room   and
computers available there.
They   have   taken   away   around   15   Nos.   of   mobile   phone,
walky   talky   sets   and   cash   found   in   drawer   of   factory
office   premises,   materials   particularly   relating   to   PIG
Irons.
Company   people   informed   immediately   to   the   nearest
police station over telephone.
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Since blast furnace need continuous working and once it
is cooled and to get it reheated it would have been cost to
the   Company   for   Rs.30­45   lakhs   so   that   Co­operative
Housing Society  Limited  people took  immediate  steps for
damaged control in main blast furnace.
You   are   requested   to   kindly   look   into   the   matter   very
seriously and appoint Surveyors who can visit the site at
the earliest possible manner.”
In   the   subsequent   letter   dated   15 th
  April   2010,   the   appellant   stated
that   the   purpose   of   the   anti­social   persons   was   to   create   terror   so
that the appellant would be forced to pay a ransom. We have already
reproduced the Exclusion Clause, which defines the act of terrorism.
Given   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 .
11. In the present case, the repudiation of the policy made by the
respondent   is   based   on   the   Preliminary   Survey   Report,   Investigation
Report   and   the   Final   Survey   Report.     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,   placed   on   record   along   with   I.A.   No.38075   of   2022,
records   a   conclusion   drawn   by   the   Investigator   appointed   by   the
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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)  shows that the
police   had   registered   a   First   Information   Report   against   105
miscreants who could not be traced.
12. In paragraph 8 in the case of  Ishar Das Madan Lal 1
, this Court
held thus: 
“ 8.   However, there may be an express clause excluding the
applicability   of   insurance   cover.     Wherever   such   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 .     [See   United   India   Insurance   Co.   Ltd.   v.
Pushpalaya Printers  (2004) 3 SCC 694,  Peacock Plywood (P)
Ltd.   v.   Oriental   Insurance   Co.   Ltd.   (2006)   12   SCC   673   and
United India Insurance Co. Ltd.  v.  Kiran Combers & Spinners
(2007) 1 SCC 368]”
                                    (emphasis added)
13. The respondent has not discharged the burden of bringing the
case within the four corners of the Exclusion Clause.   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.
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14. Thus,   the   Commission   committed   an   error   by   applying   the
Exclusion Clause.  Moreover, the policy specifically covers the damage
to   the   insured’s   property   caused   by   violent   means.   We   are
reproducing the relevant clause in that behalf :
“V.  Riot Strike and Malicious Damage
Loss   of   or   visible   physical   damage   or   destruction
by   external   violent   means   directly   caused   to   the
property insured  but excluding those caused by
a) total   or   partical   ( sic )   cessation   of   work   or   the
retardation or interruption or ( sic ) cessation or any
process or operations or omissions of any kind.
b) Permanent   or   temporary   dispossession   resulting
from   confiscation,   commandeering,   requisition   or
destruction   by   order   of   the   Government   or   any
lawfully constituted Authority.
c) Permanent   or   temporary   dispossession   of   any
building   or   plant   or   unit   of   ( sic )   machinery
resulting   from   the   unlawful   occupation   by   any
person   of   such   building   or   plant   or   unit   or
machinery or prevention of access to the same.
d) Burglary,   housebreaking,   theft,   larceny   or   any
such   attempt   or   any   omission   of   any   kind   of   any
person   (whether   or   not   such   act   is   committed   in
the course of a disturbance of public peace) in any
malicious act.
If   the   Company   alleges   that   the   loss/damage   is   not
caused   by   any   malicious   act,   the   burden   of   proving   the
contrary shall be upon the insured.”
(emphasis added)
The policy covers explicitly a liability arising out of the damage to the
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property   of   the   insured   due   to   riots   or   the   use   of   violent   means.
Hence,   the   decision   to   repudiate   the   policy   cannot   be   sustained.
Under   the   insurance   policy,   there   are   different   limits   prescribed   for
various acts covered by the policy.   In the impugned Judgment, it is
noted   that   the   parties   had   filed   affidavits­in­lieu   of   evidence   before
the   Commission.     An   adjudication   will   have   to   be   made   on   the
quantum   of   the   amount   payable   to   the   appellant   after   appreciating
the evidence on record, including the valuation reports.  However, the
valuer   appointed   by   the   respondent­company   has   valued   the   loss
caused   to   the   appellant   at   approximately   Rs.89,00,000/­.     We,
therefore, propose to direct the respondent to deposit the said amount
with   the   Commission   with   liberty   to   the   appellant   to   make   an
application for withdrawal.
15. As there was no warrant for applying the Exclusion Clause, the
impugned   judgment   and   order   will   have   to   be   set   aside,   and   by
restoring   the   complaint   filed   by   the   appellant,   the   same   will   have   to
be ordered to be heard by the Commission afresh.
16. Accordingly,   the   impugned   judgment   and   order   is   hereby   set
aside.   Consumer   Complaint   No.165   of   2012   filed   by   the   appellant
before the Commission is restored to the file.   After allowing parties to
lead   further   evidence,   the   Commission   shall   decide   the   complaint
filed by the appellant in accordance with law and in the light of what
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is   held   in   this   judgment.     The   Commission   is   requested   to   pass   an
appropriate   final   order   on   the   remanded   complaint   within   four
months   from  today.     We   make   it  clear  that  we  have  not  expressed   a
definitive   opinion   on   the   quantum   of   the   amount   payable   to   the
appellant   under   the   policy   of   insurance,   and   the   said   issue   is   left
open for the decision of the Commission in accordance with law.   
17. As   observed   earlier,   the   respondent   shall   deposit   the   sum   of
Rs.89,00,000/­  in  the  Registry  of  the  Commission  within   one  month
from   today   and   the   same   shall   be   deposited   in   the   interest­bearing
account on auto renewal basis.   At the same time, the appellant will
be at liberty to file an application for withdrawal of the amount before
the Commission pending complaint.  If such an application is filed by
the   appellant,   the   Commission   may   examine   on   its   own   merits   and
decide the same in accordance with law. 
18. Accordingly,   the   appeal   is   allowed   in   the   above   terms   with   no
order as to costs.
………………………………..J.
[AJAY RASTOGI]
………………………………..J.
         [ABHAY S. OKA]
New Delhi
May 02, 2022.
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