Case BriefsSupreme Court

Supreme Court: In an insurance repudiation case the Division Bench of Ajay Rastogi and Abhay S. Oka*, JJ., held that where the insurance policy expressly defines a term the insurance company cannot rely on Statutory interpretation of the same to repudiate the insurance claim.  

The Court reversed National Consumer Disputes Redressal Commission’s (NCDRC) judgment by which it had held that the insurance company was justified in repudiating the claim.   

Factual Backdrop  

The appellant had taken Standard Fire and Special Perils Policy from the insurance company in respect of his Engineering Workshop and Plant. The total sum assured was Rs.26,00,00,000 under the policy covering the loss on account of fire, lightning, explosion, riots, strike etc.  

As per the claim made by the appellant, after midnight of 22-03-2010, about 50­60 antisocial people with arms and ammunition entered the factory premises of the appellant and caused substantial damage to the factory, machinery, and other equipment. The mob demanded money and jobs for local people. The appellant contended that 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. 

The appellant lodged a regular claim with the insurance company. The surveyor assessed the loss at Rs.89,43,422 while the appellant claimed that the insurance company was liable to make an interim payment of Rs.1.5 crores.   However, the insurance company repudiated the appellant’s claim relying on the Exclusion Clause of the policy regarding loss or damage caused by the acts of terrorism.  

Findings of NCDRC  

Therefore, the appellant approached NCDRC complaining about deficiency in the service offered by the insurance company. By the impugned judgment and order, the NCDRC held that because of the “Terrorism   Damage   Exclusion   Warranty”; i.e., the Exclusion Clause, the insurance company was justified in repudiating the claim of the appellant. The NCDRC held that the damage caused to the factory and equipment of the appellant was due to an act of terrorism. 

Analysis and Findings  

The Exclusion Clause of the policy defined the act of terrorism as—“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.” 

Noticeably, the repudiation of the policy was based on the Preliminary Survey Report, Investigation Report, and the Final Survey Report.   However, the Court noted that the Survey Reports could not throw any light on the question whether there was an act of terrorism, the Investigation Report did not conclusively prove that the persons involved in the incident belonged to Maoist or similar groups. Similarly, the FIR and Closure Report did not refer to acts of terrorism as defined under the Exclusion Clause, rather it showed that the police had registered a case against 105 miscreants who could not be traced. 

Therefore, the Court held that the insurance company had not discharged the burden of bringing the case within the four corners of the Exclusion Clause.  

The insurance company had argued that since the police had invoked Section 17 of the Criminal Law (Amendment) Act, 1908 against the miscreants for unlawful association, the very fact that the provisions of the Amendment Act of 1908 had been applied showed that the loss caused to the appellant was due to a terrorist act. The Court, rejecting the contention of the insurance company held, 

“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.” 

Conclusion 

Thus, the Court concluded that the NCDRC had committed an error by applying the Exclusion Clause. The policy specifically covered the damage caused by riots or violent means. Hence, the Court held that the decision to repudiate the policy could not be sustained.  

Resultantly, the impugned order was set aside. However, noting that adjudication would have to be made on the quantum of the amount payable to the appellant after appreciating the evidence on record, including the valuation reports, the Court remanded the matter to the NCDRC for reconsideration. Further, relying on the expected damage estimated by the insurance company’s valuer, the Court directed the insurance company to deposit a sum of Rs.89,00,000 with the NCDRC with liberty to the appellant to make an application for withdrawal. 

[Narsingh Ispat Ltd. v. Oriental Insurance Co. Ltd., 2022 SCC OnLine SC 535, decided on 02-05-2022] 


*Judgment by: Justice Abhay S. Oka 


Appearance by:  

For the Appellant: Santosh Kumar, Advocate  

For the Insurance company: Santosh Paul, Senior Advocate  


Kamini Sharma, Editorial Assistant has put this report together  

Case BriefsHigh Courts

Delhi High Court: The Division Bench of Siddharth Mridul and Anup Jairam Bhambhani, JJ., granted regular bail to activist Devangana Kalita and Natasha Narwal in the Delhi-Riots case.

Appellant’s who were arrested for participating in protests against the Citizenship Amendment Act, 2019 and in custody since 29-05-2020, preferred the appeal under Section 21(4) of National Investigation Agency Act, 2008 impugning order of Special Court rejecting her bail application registered under provisions of Penal Code following to the addition of provisions of Prevention of Damage to Public Property Act, 1984 and Unlawful Activities (Prevention) Act, 1967.

Why was Devangana Kalita & Natasha Narwal in custody? | State against Devangana Kalita & Natasha Narwal. Why?

Larger Conspiracy

State essentially alleged that the appellant’s as a part of women’s rights group called Pinjra Tod and other activistic groups participated in a ‘larger conspiracy’ to commit certain offences which led to violence and rioting in the North-East Delhi between 22-02-2020 and 26-02-2020.

Findings and Analysis

  • Purported independent review of evidence by a purported independent authority; and the fact that the Central Government has, based thereupon, granted sanction of prosecution for offences under Chapters IV or VI of the UAPA, must never enter the consideration of the Court when deciding whether the ingredients of any offence under the UAPA are disclosed in the charge-sheet.
  • In Asif Iqbal Tanha v. State of NCT of Delhi in CRL. A. No. 39/2021, Court analysed the provisions engrafting ‘terrorist act’ and ‘conspiracy’ or ‘act preparatory’ to the commission of a terrorist act.
  • The phrase ‘terrorist act’ cannot be permitted to be applied in a cavalier manner to criminal acts or omissions that fall squarely within the definition of conventional offences.
  • Right to Protest: Contours of legitimate protest have been explained in the Supreme Court decision of Mazdoor Kisan Shakti Sangathan v. Union of India, (2018) 17 SCC 324. In the said decision it was expressed that: “legitimate dissent is a distinguishable feature of any democracy and the question is not whether the issue raised by the protestors is right or wrong or whether it is justified or unjustified, since people have the right to express their views; and a particular cause, which in the first instance, may appear to be insignificant or irrelevant may gain momentum and acceptability when it is duly voiced and debated.”
  • In the charge-sheet, Court did not find any specific or particularised allegation that would show the possible commission of a ‘terrorist act’ within the meaning of Section 15 UAPA or an act of ‘raising funds’ to commit a terrorist act under Section 17 or an act of ‘conspiracy’ or an ‘act preparatory’ to commit, a terrorist act within the meaning of Section 18 UAPA.
  • Bail Principles: The said principles were in detail discussed in the decision of Asif Iqbal Tanha v. State of NCT of Delhi in CRL. A. No. 39 of 2021, a brief reiteration of the same was done in the present matter.

Devangana Kalita | Conclusion

  1. Right to Protest is not outlawed and cannot be termed as a ‘terrorist act’ within the meaning of UAPA, unless ingredients of offences under Sections 15,17 and 18 of the UAPA are discernible from factual allegations.
  2. Shorn off the superfluous verbiage, hyperbole and the stretched inferences drawn from them by the prosecuting agency, the factual allegations made against the appellant do not prima facie disclose the commission of any offence under Sections 15, 17 and/or 18 of the UAPA.
  3. It appeared that in its anxiety to suppress dissent and in the morbid fear that matters may get out of hand, the State has blurred the line between the constitutionally guaranteed ‘right to protest’ and ‘terrorist activity. If such blurring gains traction, democracy would be in peril.

Appellant in view of the above discussion was granted regular bail subject to conditions.[Devangana Kalita v. State, 2021 SCC OnLine Del 3255, decided on 15-06-2021]

Natasha Narwal | Conclusion

  1. No specific, particularised or definite act was attributed to the appellant, apart from the fact that she engaged herself in organising anti-CAA and anti-NRC protests when riots and violence broke out in certain parts of North-East Delhi.
  2. State cannot thwart grant bail merely by confusing issues.
  3. Opinion: Allegations relating to inflammatory speeches, organising of chakka jaam, instigating women to protest and to stock-pile various articles and other similar allegations, at worst were evidence that the appellant participated in organising protests, but no conclusion of a specific or particularised allegation that appellant incited violence, what to talk of committing a terrorist act or a conspiracy or act preparatory to the commission of a terrorist act as understood in the UAPA.

The Appellant was granted regular bail subject to conditions.

[Natasha Narwal v. State (NCT of Delhi), 2021 SCC OnLine Del 3254, decided on 15-06-2021]


Advocates before the Court:

For the Appellant: Mr. Adit S. Pujari, Ms. Tusharika Mattoo & Mr. Kunal Negi, Advocates.

For the Respondent: Mr. Amit Mahajan, Mr. Amit Prasad and Mr. Rajat Nair, SPPs for the State along with Mr. Dhruv Pande & Mr. Shantanu Sharma, Advocates.


Also Read:

Del HC | Crucial aspects of ‘Terrorist Act’ and Right to Protest | Everything about Asif Iqbal Bail Order