Indrayani Paper Products Pvt. Ltd., Nagpur vs National Insurance Co. Ltd.

THE appellant-Indrayani Paper Products Pvt. Ltd., Nagpur had taken a fire policy ''C'' in respect of their premises. THE policy amongst others covered the risk of Riot, Strike, Malicious and Terrorist Damage clause.

THE State Commission awarded compensation of Rs. 15.00 lakh taking into consideration probably the observations made in the order passed by the High Court and also the survey report and the order passed the Supreme Court. In terms of partition decree the Civil Court issued warrant of possession in respect of a piece of land of the appellant''s factory premises. It is claimed that in order to execute the partition decree in pursuance of the directions of the Civil Court 300-400 persons came down on the premises, drove away the workers and Managers from the factory and thereafter pulled down the entire structure of the mill, uprooted the machinery, destroyed the stock in trade and virtually caused the total destruction to the complainant mill. The operation of the demolition commenced at about 5.30 p.m. on 26.11.1996 and it ended in the dawn of 27.11.1996. According to the complainant, it was riot and a high-handed act of the terrorists resulting in colossal loss to the premises of the factory and production paper. They preferred claim under the policy with the National Insurance Co. Ltd.

A Surveyor was appointed. He assessed the damage caused to the complainant to the extent of 14,75,744/-. But, by the letter dated 21.11.1997, the Insurance Co. repudiated the claim. According to them, the entire instance was occasioned on account of the exercise of legal process by the Court bailiff in consonance with the order passed in the Special Darkhast No. 414 of 1996 arising out of Civil Suit No. 238 of 1997. This was sequel to the M.J.C. No. 237 of 1978 and hence, under the Policy Clause (C) risk for loss due to Riot, Strike, Malicious and Terrorist Damage clause was not attracted to indemnify the complainant for the loss under the policy.

THE State Commission had gone into the question of jurisdiction of Civil Court in issuing the order on Special Darkhast No. 414 of 1996 and took the view that the Civil Court had no jurisdiction. THE State Commission also noticed that after issuing the directions to the Collector, the jurisdiction of the Civil Court came to an end. However, the Civil Court again revived the above M.J.C. proceedings on the basis of the report of the Tehsildar that the land over which the factory is constructed and other adjoining land could be allotted to the share of the original plaintiffs and that the Civil Court should pass necessary orders accordingly. THE Civil Court issued warrant of possession of the above lands. Learned State Commission also took exception to the exercise of jurisdiction while issuing warrant of possession which was allegedly not vested with the Civil Court and the learned State Commission held the Insurance Co. should not be allowed to take shelter against above exclusion clause and passed the award as said hereinabove. It may be mentioned that the claim of the complainant under Insurance Policy could be covered in either Clause ''C'' or Clause ''D'' of the policy under the heading Riot, Strike, Malicious and Terrorist Damage clause. It reads as under: "The insurance does not cover loss or damage occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority."

In item II Loss of or damage to the property insured by explosion or otherwise directly caused by- (h) An act of terrorism committed by a person or persons acting on behalf of or in connection with any organisation. (i) The action of any lawfully constituted Authority in suppressing or attempting to suppress any such act of terrorism or in minimising the consequences thereof. For the purpose of this clause "Terrorism" shall mean the use of violence for political ends and shall include any use of violence for the purpose of putting the public or any section of the public in fear. (j) Loss or damage, occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority. (k) Loss or damage occasioned by permanent or temporary dispossession of any Building or Plant or Unit or Machinery resulting from the unlawful occupation by any person of such Building or Plant or Unit or Machinery in prevention of access to the same: Provided nevertheless that the company is not relieved under (c) or (d) above of any liability to the Insured in respect of physical damage to the property insured occurring before dispossession or during temporary dispossession.

THERE is no dispute about the fact that the High Court had set aside the order passed by the Civil Court. In para 17 of the judgment of the High Court, the High Court while granting restitution in respect of possession of the land considered the question of awarding compensation for the loss but apart from restoration of the land, the High Court rejected contention of the complainant to compensate for loss caused by demolition of factory structure, etc. The matter went up to the Supreme Court and the Supreme Court dismissed the appeal filed by both the parties against the order of the High Court, in limine. Now, it is submitted that in that civil suit matter the Insurance Co. was not a party. Once, the complainant has lost the case against the person who could have been made liable to pay compensation for the loss occurred and that person is exonerated by the High Court in respect of the said loss the complainant would not be justified to pursue the matter against the Insurance Co. for the Insurance Co. has been rendered remediless. It may be mentioned that there was no riot for the possession was being taken under the orders of the Civil Court. Nor, it could be said to be loss was caused maliciously and by terrorists. Nor, it is possible to say that the complainant/appellant suffered loss or damage occasioned by permanent or temporary dispossession resulting from confiscation, commandeering or requisition by any lawfully constituted authority nor it would be loss or damage occasioned by permanent or temporary dispossession resulting from the unlawful occupation. There was a partition decree. Only on the report of Tehsildar, the warrant of possession was issued under that partition decree. One could not be oblivious to the fact that a person who complies with an order of a Civil Court acts in compliance of the order of the Civil Court. He would not commit riot for, in good faith, he would believe in the correctness of the order passed by the Civil Court and he would further believe that it would be binding and which could be enforced. If we expect any person to desist from the order of the Civil Court then it would be another extreme. The best course would then appear to be not to comply with any order of the Civil Court and rush to the High Court for seeking approval first before implementing the order. Neither of the two extremes one pointed out by the learned State Commission and the other which we are pointing out could be said to be proper from the point of view of implementation of orders of the Civil Court or any other authority. Consequently, we feel that the action in compliance of the orders of the Civil Court could not be said to be unwarranted. It is only for the Appellate Authority to say about its illegality or otherwise on filing an appeal. Further, in terms of Section 144 of the CPC only restitution could be claimed after the decree was set aside and not before that date. If in such circumstances it could not be said that on the date, the possession was delivered the order was beyond jurisdiction, particularly, in the light of the report submitted by the Tehsildar, it would be difficult to sustain the view taken by the learned State Commission.

IT may further be mentioned that these questions relating to the alleged wrongful exercise of jurisdiction of a Civil Court could not be looked into in the proceedings before us. The question is whether the repudiation is bona fide or not. In the present circumstances, the claim of the complainant was rightly repudiated in the aforementioned circumstances and, as such, there was no deficiency in service on the part of the Insurance Co.

FOR the aforesaid reasons, the impugned order is hereby set aside. Complaint is dismissed. First Appeal No. 183 dismissed. First Appeal No. 202 allowed.