SILK POINT Vs. ORIENTAL INSURANCE CO. LTD

JUDGEMENT

(1.) The legality of the repudiation made by the insurer-respondent in respect of the claim for indemnification of the damage caused to the shop of the petitioner and the entire goods stocked therein due to the impact created by an explosion, on the ground that such an act of terrorism was not covered by the insurance policy, is under challenge in this writ petition. The facts giving rise to this writ petition, as pleaded by the petitioner, may be briefly noted before proceeding further. The petitioner is the proprietor of the cloth shop under the name and style of "M/s Silk Point", which is located at H.B. Road, Kamarpatty, Guwahati, and is engaged in selling Assamese cloth such as Pat, Muga, Assam Silk, etc. with the loan taken from the respondent No. 3 (Punjab National Bank, Guwahati) in the year 2005. As required by Bank-respondent, the petitioner duly insured his shop and the goods stocked therein with the respondent No. 1 in accordance with the tie-up arrangement made between the Bank and the respondent No. 1: Insurance Policy bearing No. 321100/48/2009/836 being risk against fire and special perils, burglary and house breaking and money in transit was issued to him covering the period from 26.9.2008 to 25.9.2009. The petitioner already had Shopkeepers Insurance Coverage from the date of establishment of the shop i.e. from 2005 onwards. The case of the petitioner is that the respondent Nos. 1 and 2 neither in the Shopkeepers' Insurance Policy Proposal Form-cum-Policy Schedule nor the Shopkeepers' Insurance Policy ever informed if the need to pay extra premium for availing a cover against an act of terrorism and/or classified terrorism as a special peril. On 30.10.2008 at about 11.25 AM, a powerful bomb exploded in front of the shop of the petitioner instantly killing one of its employees and damaging the entire goods stocked in its shop together with the shop due to the impact created by such explosion.

(2.) The petitioner further states that it duly informed the insurer-respondents about the incident for assessing the damage sustained by it to claim damages/indemnification thereof Similarly, the respondent No. 3 also wrote to them to that effect Much to the consternation of the petitioner, the insurer-respondents by their letter dated 9.2.2009 repudiated the claim on the ground that no terrorism cover had been taken by it by paying additional premium and that the FIR lodged by it, the police report, investigation report and survey report revealed that the damage had been caused by bomb blast, which is an act of terrorism and is not included among the perils thus insured, and the same was, accordingly, treated as "No Claim". According to the petitioner, the question of not taking terrorism-cover could never arise when the insurer never offered to insure an act of terrorism by payment of additional premium: neither was it aware of the need for taking such cover. It is the specific case of the petitioner that when there was no terrorism cover in existence or the same having not been offered to it by the insurer at the time of taking the insurance policy by it, the insurer-respondents cannot be permitted to repudiate the claim of the petitioner. The fact that the insurance policy issued by the insurer-respondents was a comprehensive policy covering all kinds of risks including the act of terrorism is evident from the letter dated 29.1.2009 issued by the respondent No. 3 with whom the insurer had a tie-up arrangement. In fact, subsequent to this incident, the insurer-respondents issued to one Nilamani Malakar a new policy or renewal providing for terrorism cover without any additional premium. It is, therefore, prayed that the impugned letter of repudiation of the claim of the petitioner is liable to be quashed, and the insurer-respondents be directed to entertain the claim of the petitioner and settle the same in accordance with law.

(3.) The writ petition is opposed by the insurer-respondents, who, in their affidavit-in-opposition, have taken the stance that the option of availing cover against act of terrorism as a separate peril vested with the petitioner and not with them: such offer has to come from the petitioner. As the petitioner did not choose to take insurance cover against act of terrorism as a separate peril, they are not liable to indemnify it for the loss incurred by such act of terrorism. While taking the shopkeepers' Insurance Policy, the petitioner could have asked for providing terrorism coverage had it really wanted, in which case, they would have allowed it to take insurance cover for act of terrorism on payment on payment of additional premium. It was only after the occurrence of the incident that it sought to claim indemnification by blaming them of not offering terrorism cover. The letter dated 20.1.2009 issued by the respondent No. 3 to the respondent No. 2 was in the nature of a request to settle the claim of the petitioner on sympathetic considerations: no assistance can be taken by the petitioner from this letter. The mere fact that the proposal form formulated by the insurer-respondents did not have separate clause for terrorism cover does not mean that there was no provision for terrorism cover. The proposal form of United India Insurance do contain provision for terrorism cover, but some Insurance Companies do not have such provision in their proposal form, but that is merely incidental and has no bearing on the case of the petitioner. According to the answering respondents, while the loss incurred by the petitioner in that incident is not disputed, the same cannot, however, be compensated by them as it did not opt for terrorism cover. It is, therefore, contended that the writ petition has no merit, and is liable to be dismissed.