Naqash Royal Arts vs United India Insurance Co.

J.P. Singh, J.—M/s. Naqash Royal Arts, the appellant, had insured its Pashmina, Woolen Handkerchiefs, shawls, and finished/semi finished

embroidery products stocked in his house/showroom situated at Sheikh Mohalla Maharaj Gunj, Srinagar, for an amount of Rs. 30.00 lacs with the

United India Insurance Co. Ltd., the respondent, in terms of Fire Policy ""C"" issued by the company in this behalf which had to remain operative

from January 13, 1997 to January 12, 1998.

Some unidentified gunmen are stated to have broken open the premises of the appellant's showroom on March 15, 1997. They made forcible

entry into the premises where the stocks, covered by the Insurance Policy, had been stored. The inmates of the house and the neighbours could

not resist because of the threat of the intruders who therefore succeeded in 'decamping with the stocks. FIR No. 34/1997 was registered with the

Police Station M.R. Gunj Srinagar u/s 392 of the Ranbir Penal Code and 7/25 of the Arms Act in this behalf.

A claim was thereafter lodged by the appellant with the Respondent-company seeking payment of Rs. 15.00 lacs, the loss which the appellant is

stated to have suffered because of the robbery committed by the unidentified gunmen who had taken away the stocks.

Holding the appellant's claim not covered by the Insurance Policy, the respondent-company accordingly informed the appellant, who thereafter

approached the J. & K. State Consumer Protection Commission with his complaint seeking a direction against the respondent company to pay it

an amount of Rs. 15.00 lacs along with interest @ 18%.

Accepting company's plea that the damage caused to the appellant's property was not covered by the Insurance Policy, the J.&K. State

Consumer Protection Commission Srinagar, dismissed appellants complaint vide its order of July 22, 2004.

Aggrieved by the J. & K. State Consumers Protection Commission Srinagar's order of July 22, 2004, the appellant has approached this Court

invoking its appellate jurisdiction to set-aside the Commission's order (sic) appellant which resulted in depriving it of its insured stock would be an

act of terrorism in terms of the relevant clause of the Insurance Policy?

In order to address the question canvassed, reference needs to be made to the relevant clause which appears in bold type hereunder, appearing

in the Fire Policy ""C"", in terms whereof the appellant claims reimbursement of the damage suffered by it, and the Insurance Company avoids its

liability to pay for the damage caused to the insured stock. Various clauses of Fire Policy ""C"" with the relevant clause shown in the bold read thus:

Fire Policy 'C

In consideration of the insured named in the schedule hereto having paid to United India Insurance Company Limited (hereinafter called the

Company) the premium mentioned in the said schedule THE COMPANY AGREES, (subject to the conditions and exclusive contained herein or

endorsed or otherwise expressed hereon) that if after payment of the premium the property insured described in the said schedule or any part of

such property be destroyed or damaged by:

Fire

Lightning

Explosion/Implosion but excluding loss of or damage to boilers, (other than domestic boilers) economizers or other vessels, machinery or

apparatus in which steam is generated or their contents resulting from their own explosion/implosion.

Impact by any Rail/Road vehicles or animal or other vessels, machinery or apparatus in which steam is generated or their contents resulting from

their own explosion/implosion.

Impact by any Rail/Road vehicles or animal

Aircraft and other aerial and/or space devices and/or articles dropped therefrom, excluding destruction or damage occasioned by pressure

waves caused by such devices.

Riot, Strike and Malicious Damage as per clause printed hereon.

During the period of insurance named in the said schedule or of any subsequent period in respect of which the insured shall have paid and the

Company shall have accepted the premium required for the renewal of the policy, the company will pay to the insured the value of the property at

the time of the happening of its destruction or the amount of such damage or at its option reinstate or replace such property or any part there of....

Exclusions

b. Loss by theft during or after the occurrence of any insured peril except as provided for in Riot, Strike and Malicious Terrorist Damage Clause....

RIOT STRIKE. MALICIOUS & TERRORIST DAMAGE CLAUSE

(i) Loss of or visible physical damage by external violent means to the property insured directly caused by:

The act of any person taking part together with others in any disturbance of the public peace (whether in connection with a strike or lockout or

not) not being an occurrence mentioned in Exclusion h (iii), (iv).

The action of any lawfully constituted authority in suppressing or attempting to suppress any such disturbance or in minimizing the consequences

of any such disturbances.

The wilful act of any strike or locked-out-worker done in furtherance of strike or in resistance to a lockout resulting in visible physical damage

by external violent means.

The action of any lawfully constituted in preventing or attempting to prevent any such act or in minimizing the consequences of any such act.

Any malicious act but excluding any omission of any kind of any person (whether or not such acts is committed in the course of a burglary,

housebreaking theft or larceny or any attempt by any person taking part therein.

(ii) Loss of or damage to the property by explosion or otherwise directly caused by:

An act of terrorism committed by a person or persons acting on behalf of or in connection with any organization.

The action of any lawfully constituted authority in suppressing or attempting to suppress any such act of terrorism or in minimizing the

consequences thereof. For the purpose of this clause 'terrorism' shall mean the use of violence for the political endsand shall include any use of

violence for the purpose of putting the public or any section of the public in fear.

Perusal of the above clauses demonstrate that Fire Policy ""C"" covers not only the risk of damage to the insured property by Fire, Lightening,

Explosion etc. but also the loss of or damage to the insured property by Explosion or otherwise directly caused, inter alia, by an act of terrorism

committed by a person or persons acting on behalf of or in connection with any organization.

The expression ""terrorism"" appearing in the clause has been explained to mean the use of violence for political ends including any use of violence

for the purpose of putting the public or any section of the public in fear. Reading the clause in light of the definition of the expression ""terrorism"" it

becomes explicit that in order to attract the clause, the damage must be shown to have been caused by an act of terrorism committed by a person

or persons acting on behalf of or in connection with any organization, meaning thereby, that the terrorist act must have the backing of an

organization.

Any other act of terrorism by a person or persons without having any connection with any organization formed to achieve political ends may

not be covered by the clause, in that, the Company's intention not to cover the loss or damage arising out of, or in the course of house-breaking,

theft or larceny, in Fire Policy ""C"" is empty demonstrated by what is contained in Clause 1(v) of the Fire Policy ""C"".

We, therefore, do not find substance in appellant's counsel's submission that the expression ""shall include any use of violence for the purpose of

putting the public or any section of public in fear"" appearing in the definition clause of the emphasized clause covers the incident in which the

appellant is stated to have suffered loss of the insured goods. This is so because the definition clause where the expression ""terrorism"" has been

defined needs to be understood in the light of the doctrine flowing from the Latin maxim ""ejusdem generis"". The expression ""any use of violence for

the purpose of putting the public or any section of public in fear"" cannot be read in isolation and as a separate clause, in that, such a construction

would destroy the intention contemplated by the emphasized clause.

We are, therefore, of the view that the occurrence in which the appellant is stated to have suffered the loss of his insured goods cannot be

construed to be an act of terrorism in terms of the emphasized clause appearing in Fire Policy ""C"". The findings recorded by the J & K State

Consumers Protection Commission Srinagar cannot thus be faulted.

For all what has been said above, we do not find any substance in this Civil Miscellaneous Appeal, which is accordingly dismissed.