Narsingh Ispat Ltd. vs Oriental Insurance Co. Ltd. and Anr.

M/s. Narsingh Ispat Ltd. has filed the instant complaint against the opposite party Insurance Company alleging that complainant purchased a Standard File and Special Peril Policy from the opposite party Insurance Company. The period of insurance was 28.6.2009 to 27.6.2010 and sum assured was rupees twenty six crores. The insurance policy covered the risk including fire, riot, malicious damage and allied perils. 2. That on the night of 27th January, 2009, a group of miscreants broke into the factory premises and threatened the executives that they should convey message to the owner of the factory that if they want to run the factory without any trouble, they would have to pay protection money in cash on regular basis and give employment to few villagers. The insured lodged FIR in this regard with the concerned PS on 28.1.2010 under Sections 323,373 read with Section 120-B, IPC. 3. That on the night intervening 22nd and 23rd March, 2010 at around 12.30 in the night, about 120 miscreants armed with weapon entered into the factory premises through the back door of the factory and vandalized the factory resulting in huge damage to the extent of Rs. 2,50,00,000. FIR in this regard was lodged with the PS Sarai Killa on 23.3.2010 being FIR No. 16 of 2010. The intimation was also given to the Insurance Company and insurance claim was filed. The Insurance Company appointed one Mr. Mitra as surveyor who after the survey submitted a final report assessing the damage caused to the insured in the incident to the extent of Rs. 89,43,4.22. Surveyor, however, recommended repudiation of the claim on the ground that loss was caused on account of terrorist attack and as such claim was not payable in view of exclusion clause of the insurance contract. 4. Insurance Company on receipt of final report, instead of waiting the final outcome of the police investigation into the FIR, issued a repudiation letter on 23.12.2010 repudiating the claim under the shelter of Exclusion Clause with regard to the damage caused due to terrorist attack. The complainant protested against the repudiation, pointing out that police investigation was not yet concluded. Subsequent to the protest letter, final report was submitted by the police before the concerned Magistrate which was accepted. Thereafter, Insurance Company issued another repudiation letter dated 14.11.2011 repudiating the insurance claim on the same ground. 5. The opposite party in its written statement filed in response to the complaint has not disputed the facts relating to the incident resulting in damage to the insured property. The opposite party, however, took the plea that loss has been caused by a terrorist attack and, therefore Insurance Company was justified in repudiating the insurance claim in view of the Exclusion clause. 6. It is pertinent to note that quantum of damage assessed by the surveyor in the final report is disputed by the complainant and according to the complainant, the loss suffered was much more but he has restricted the claim to Rs. 1,51,35,780. 7. Both the parties have filed affidavit evidence in support of their contention. 8. Learned Arvind Gupta, Advocate for the opposite party has justified the repudiation on the ground that loss to the insured premises has been caused in a terrorist attack which falls under the Exclusion clause to the insurance contract. In support of this contention, Counsel has argued that it was not a single incident. Actually as per the FIR lodged by the complainant earlier on 28.1.2010, group of people had allegedly visited the complainant''s factory and demanded extortion money by telling the executives of the company to inform the owner that if they wanted to run the factory smoothly, they would have to pay the extortion money and also give employment to villagers in the factory. It is argued that it would be seen that director of the insured company had written a letter to the DGP wherein it was mentioned that 20-25 activist of MCC had visited the factory on 27.1.2010 and demanded ransom money. It is contended that aforesaid incident was thereafter followed by the incident which resulted in loss and damage to the property of the insured and even in the said FIR, rioters were described ''ugarwadts'', which means terrorists. Thus, it is clear that alleged loss caused to the insured is the result of terrorist attack, which is covered under the Exclusion Clause. 9. Learned Counsel for the complainant on the contrary has contended that relevant incident resulting in loss to the insured property is only act of miscreants and cannot be termed as a terrorist activity to bring the insurance claim of the complainant within the Exclusion Clause. It is argued that undisputedly the factory of the complainant was vandalised by about 120 miscreants but this does not mean that those persons were terrorists or the wrong committed by them was an act of terrorism. It is further contended that the mala fide of the Insurance Company in repudiating the claim is evident from the fact that despite of their being an FIR relating to the incident, which was under investigation, the Insurance Company instead of waiting for the outcome of the investigation hurriedly repudiated the claim in the garb of the Exclusion Clause. In support of his contention that loss caused to the insured was not as a consequence of terrorist act, the complainant has relied upon the judgments of the Supreme Court in the matter of Madan Singh v. State of Bihar, III (2004) SLT 528 : II (2004) CCR 306 (SC) : (2004) 4 SCC 622, State of West Bengal v. Committee for Protection of Democratic Rights, II (2010) SLT 136 : (2010) 3S 571, Rabindra Kumar Pal Alias Dara Singh v. Republic of India, I (2011) DLT (Crl.) 339 (SC) : I (2011) SLT 595 : (2011) 2 SCC 490 and the judgment of Guwahati High Court in the Writ Petition titled Oriental Insurance Co. Ltd. v. Silk Point, AIR 2014 Guwahati 73. 10. Learned Counsel for the complainant has further argued that as the opposite party has failed to discharge its burden that damage has been caused to the plant of the complainant as a result of terrorist attack, the complainant is entitled to compensation to the tune of Rs. 1,51,35,780, which amount has been spent by the complainant for replacement/repair of the damaged plant/machinery. 11. We have considered the rival contentions and perused the record. It is undisputed that factory of the complainant company was insured with the opposite party Insurance Company and that it was vandalized by a strong contigent resulting in huge damage to the plant and machinery of the complainant. It is also not in dispute that insurance claim of the complainant was repudiated vide letter dated 23.12.2010. The context of the repudiation letter is reproduced as under : "Ms. Nursing Ispat Limited 26, Ramlal Mukherjee Lane, 2nd Floor Salkia Howrah-711106 Dear Sir, Re: Your Material Damage under Claim No. 311700/11/2010/000013. Policy No. 3117001/11/2010/100 date of loss 23.3.2010 A/C M/s. Nursing Isoat Limited This has reference to the papers submitted to us for lodging your above claim under the policy, intimation letter dated 23rd March, 2010, Claim Form dated 24th March, 2010 and copy of your letter dated 23rd March, 2010 thereby FIR was lodged to the police. This also refers to the Preliminary Survey Report, Investigation Report, Final Survey Report dated 15th December, 2010 under Reference No. O1/RO/HWH/Fire/1425 and Status Report of the Court Proceedings, Certified Copy of FIR and Seizer List of Police as taken out from the respective statutory bodies on 25.11.2010. Based on the finding of Final Surveyor together with spot surveyor''s and the investigator report, copy of seizer list of police, copy of your letter dated 23d March, 2010 thereby FIR was lodged to the police and other papers relating the claim like news paper cuttings containing the news widely published in local as well as national dailies of terrorist attack in your said factory premises, it is established that her reported loss was caused by terrorist acts. Since the terrorist risk is not included in the policy, your claim is not tenable under the scope of the policy obtained at your proposal. Thanking you, Yours Faithfully Divisional Manager" 12. On reading of the above, it is clear that insurance claim preferred by the complainant was repudiated by the Insurance Company on the plea that reported loss was caused by terrorist act and since the terrorist risk is not included in the policy, the insurance claim was repudiated. Thus, the first question which needs consideration is whether or not, the loss caused to the insured factory was the result of a terrorist act ? 13. In order to find answer to the above question, it would be useful to have a look on the insurance contract. On perusal of the terms and conditions of the insurance policy, we find that it contains Terrorism Damage Exclusion Warranty. The relevant clause is reproduced as under : "Terrorism Damage Exclusion Warranty : Notwithstanding any provision to the contrary within this 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, including but limited to the use of force or violence and/of the threat thereof, of any person or group(s) of persons whether acting alone or on behalf of or in connection with any organisation(s) or government (s), committee 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." 14. On bare reading of the above, it is clear that insurance contract between the parties provides that insurance cover extended to the complainant excludes loss/damages of whatever nature caused directly or indirectly by, resulting from or in connection with any action with act of terrorism. Later part of the aforesaid clause defines the term ''terrorism'' for the purpose of insurance contract and provides that terrorism means an act including but not limited to the use of force or violence of any person or group of persons whether acting alone or on behalf of or in connection with any organisation(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. 15. As per the stand taken by the d complainant, earlier on 27.1.2009, a group of miscreants trespassed into the factory premises and threatened the executives of the complainant company that they should convey message to the owners of the factory that if they wanted to run the factory smoothly, they would e have to pay protection money in cash on regular basis and give employment to few of the villagers. Even FIR in respect of said incident was lodged at the Police Station. Undisputedly, the said incident was followed by the subject incident when almost 120 miscreants armed with weapon entered into the premises through the backdoor of the factory and vandalized the plant and machinery resulting in huge damage to the insured factory. From the above said two incidents, when incidents for demand for extortion followed by vandalizing of the factory, it can be safely inferred that incident on the night intervening 22nd and 23 March, 2010, resulting in loss to the plant and machinery of the complainant, was a terrorist act because it obviously was done with a view to put the owners of the factory as also several factory owners in the locality in fear with a view to extort money from them. It is pertinent to note that the complainant has filed on record copy of the letter dated 15.4.2010 addressed to the Surveyor as annexure C-12. The letter is reproduced as under : "Dear Sir, With reference to above and in response to your observations raised by you/our submissions are as follows : You may please note that our factory was in target of local anti social since beginning to take extortion money from the management of the Company. Threatening in various mode were given to pay the ransom with warning to bear the consequences in form of damage of plant and attacks on workers if not paid. The attack in our factory premises on night of 22nd March, 2010 was incident of similar but broader in nature which have been occurred previously on 27.1.2010 whose intimation has also been given to PS Chowka, Saraikhela for their necessary actions. The sole purposes of these incidents by antisocial people were to create terror among management and workers of the factory so that we are forced to pay ransom to them. Sir, we have intimated you time to time about progress of the repairing of blast furnace. Please note further that plant is likely to start by 1st week of May 2010. You may please note further that we are making the sincere efforts to keep minimize the cost of repair and replacement. As per engineers looking after the work has stated that they will try to start the furnace without replacing Valves which is looking in workable conditions if so then plant may start for the trial production by 22-23 April, 2010. As per your intimation by letter we are keeping salvage/garbage/residuals of all equipments for your necessary verifications and also taking the photographs relating to repairs of Mini Blast furnaces. If you need any further information in these regards, we will be pleased to submit the same." 16. On reading of the above, it is clear that even as per the stand taken by the complainant in the above noted letter, the sole purpose of the anti social elements participating in the incident dated 27.1.2010 as also vandalizing of the plant and machinery of the factory of the complainant on the night intervening 22nd and 23rd March, 2010 was to create terror in the mind of the management and the workers of the factory to force the complainant to pay ransom amount. Thus, it is clear that the loss to the insured factory on the night intervening 22nd and 23rd March, 2010, obviously is the result of the act of terrorism defined in the relevant "Terrorist Damage Exclusion Warranty". 17. Counsel for the complainant has taken us through the definition of Terrorism in Oxford Dictionary, Cambridge Dictionary and Black Law''s Dictionary (Eighth Edition) and submitted that in view of the aforesaid definition, the incident dated 22nd and 23rd March, 2010, does not fall within the definition of terrorism. We do not find merit in the contention for the reason that it is well settled that insurance contract is a species of commercial transaction and it must be construed strictly like any other contract to its own terms and by itself. In the matter of ikram Greentech India Ltd. & Anr. v. New India Assurance Co. Ltd., IV (2009) SLT 35 : II (2009) CPJ 34 (SC) : (2009) 5 SCC 599. Hon''ble Supreme Court held as under: "An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself. In a contract of insurance, there is requirement of uberimma fides i.e. good faith on the part of the insured. Except that, in other respects, there is no difference between a contract of insurance and any other contract. The four essentials of a contract of insurance are, (i) the definition of the risk, (ii) the duration of the risk, (iii) the premium and (iv) the amount of insurance. Since upon issuance of insurance policy, the insurer undertakes to indemnify the loss suffered by the insured on account of risks covered by the insurance policy, its terms have to be strictly construed to determine the extent of liability of the insurer. The endeavour of the Court must always be to interpret the words in which the contract is expressed by the parties. The Court while construing the terms of policy is not expected to venture into extra liberalism that may result in re-writing the contract or substituting the terms which were not intended by the parties. The insured cannot claim anything more than what is covered by the insurance policy. [ General Assurance Society Ltd. v. Chandumull Jain and another, Oriental Insurance Co. Ltd. v. Sony Cheriyan and United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal]. Document like proposal form is a commercial document and being an integral part of policy, reference to proposal form may not only be appropriate but rather essential." 18. On reading of the above it is clear that insurance contract like any other contract is binding on the parties and the endeavour of the Court must always be to construe the contract in the context of terms and conditions in the insurance policy. In the instant case, in the "Terrorism Damage Exclusion Warranty", the term terrorist act has been defined. Therefore, we have to go by the definition given in the contract irrespective of the dictionary meaning of the terrorism. 19. We have considered the judgments relied upon by the complainant and in our view the aforesaid judgments are of no avail to the complainant because the said judgments have been passed in the context of the entirely different facts. 20. In view of the discussion above, we are of the view that opposite party was justified in repudiating the claim in view of the ''Terrorism Damage Exclusion Warranty" and it has not committed any deficiency in service. Complaint is, accordingly dismissed. Complaint dismissed.