Insurance is a
contract – the essence of the contract is that Insurers upon receipt of
consideration (premium) offers to protect (indemnify) the policy holder for
loss or damage to subject matter insured lost, damaged or destroyed by an
insured peril during the policy period.
Insurance has evolved over the years and yet insuring terms, its
exceptions and conditions can be put to tests of understanding / interpretation
and more.
Here is an
interesting case arising out of a claim for damage to a Motor vehicle and the
way the Madhya Pradesh High Court decided the same.
This was a suit
filed by an individual for recovery of
Rs.16000/- from the Insurer with whom he had taken a comprehensive policy for
his Studebaker Commander Land Cruiser. The vehicle suffered an accident at Morena
on 8-11-1947. The vehicle was being driven by a licensed driver, and at
about 5 p.m., a young boy was unfortunately knocked down by the motorcar. The injured boy was removed to the house of
the nearest medical practitioner immediately after the accident; but, in spite
of all possible medical aid that was given to him, he did not survive for long.
Getting the news of the death of the boy, a crowd of about 100 to 200 persons,
which included the relations of the boy and their sympathisers, gathered round
the motor-car and, without waiting to enquire whether the driver was at fault,
began to throw stones at it. The plaintiff was removed from the scene of
occurrence under police protection, and subsequently the motor-car was found so
extensively burnt and damaged as to be beyond repairs.
According to the plaintiff,
the motor-car was damaged and burnt by the relatives and sympathisers of the
deceased boy on account of private revenge and that he was entitled to
compensation from the Company under his policy of insurance. It was further
alleged that, under the terms of the policy, the question of the defendant's
responsibility ought to have been referred to arbitration but the defendant Insurer
unreasonably did not agree to it. It was, therefore, prayed that a decree for
Rs. 16,000/-, the value of the motor-car, be passed against the defendant
Company; or, in the alternative, the matter in dispute be referred to
arbitration as per Clause 7 of the policy of insurance through the intervention
of the Court.
The Insurers contended that as the accident, loss, damage
or liability in question, directly or indirectly, proximately or remotely, was
occasioned by, or arose out of, or in connection with, a 'riot' or a 'civil
commotion', the risk of the company was expressly excepted under the
terms of the policy of insurance; that under Clause 7 of the policy of
insurance, as the dispute was not referred to arbitration Within twelve
calendar months from the date of the defendant's disclaimer of its liability,
the claim of the plaintiff was deemed to have been abandoned and he was not
en-titled to claim any damages under his policy of insurance.
The trial Court dismissed
the suit of the plaintiff, inter alia, holding:
(a) that the plaintiff's motor-car was burnt down as a result of a
'riot' and 'civil commotion', and as such, according to the terms of the policy
of insurance, the defendant Company was not liable; and (b) that Clause 7 of
the policy of insurance did not debar or disentitle the plaintiff from filing
the suit.
The most important issue in
this case is, whether the liability of the defendant Company for damages is
excepted in cases where loss or damage is the result of, or occasioned by a 'riot'
or a 'civil commotion'. For, if it is so excepted, the defendant Company
would not be liable and the other questions raised would not necessarily arise
for consideration.
The clause in the policy of insurance
containing the term excepting the defendant Company from liability in case of a
'riot' or a 'civil commotion' is in these terms:
"The Company shall not
be liable in respect of any accident, loss, damage, and/or liability, directly
or indirectly, proximately or remotely, occasioned by, contributed to by, or
traceable to, or arising out of, or in connection with, flood, typhoon,
hurricane, volcanic eruption, earthquake or other convulsions of nature, war,
invasion, the act of foreign enemies hostilities or warlike operations (whether
before or after declaration of war), civil war, strike, riot, civil commotion, mutiny, rebellion,
military or usurped power, or by any direct or indirect consequence of any of
the said occurrences, and except under Section 11-1(a) of this Policy whilst
the insured or any person driving with the general knowledge and consent of the
insured is under the influence of intoxicating liquor or drugs, and in the
event of any claim hereunder the Insured shall prove that the accident, loss,
damage and/or liability arose independently of and was in no way connected
with, or occasioned by, or contributed to by, or traceable to, any of the said
occurrence or any consequence thereof and in default of such proof the Company
shall not be liable to make any payment in respect of such a claim."
As it happens
with most terminology - Neither 'riot' nor 'civil commotion' has been defined
in the policy of insurance. But, it is a settled rule of judicial construction
that where terms of legal art are used in a policy of insurance, they must be
given their technical meaning. Therefore, 'riot', when it occurs in 3
policy of insurance, is to be interpreted with the special meaning attached to
it by the 'criminal law'. London and Lanqashire Fire Insurance Co. v. Bolands
Ltd., 1924 AC 836 at p. 847. The exception of 'riot' in a policy of insurance
must be understood in its strict legal sense and not in its popular
signification: Field v. Receiver of Metropolitan Police, (1907) 2 KB 853. The principle is that where words are used in an
instrument which have a well-recognized legal connotation, it will be presumed
that they have been used in that sense, unless a contrary intention clearly
appears from the context or other relevant evidence. The word 'riot' is
a word which has a legal meaning, and in our opinion that is its primary meaning;
and before we can be persuaded to give it any other meaning, we must be fully
satisfied that from the instrument itself or from the circumstances of the
case, the parties intended to give it any other meaning. The word 'riot' in the
policy of insurance in this case shafi, therefore, have to be given its legal
meaning, which it has in the Indian Penal Code.
'Civil
commotion', on the other hand, has no such strict legal meaning, but yet it has
come to have a fixed meaning by recognized judicial interpretations. This
phrase was first introduced as an exception in the London Assurance
Fire-policies in 1720. Lord Mansfield in 'langdaie v. Mason, (1780) 2 Marshall
2nd Edn. 791 at p. 794 defined it as 'an insurrection of the people for general
purpose, though it may not amount to a rebellion'. Although a civil commotion
may, technically speaking, also constitute a riot as per Lord Birkenhead in
Motor Union Insurance Co. Ltd. v. Baggan, (1923) 130 LT 588 at p. 591 the
phrase is used to indicate a stage between a riot and a civil war: (see
Republic of Bolivia v. Indemnity Mutual Marines Insurance Co. Ltd., (1909) 1 KB
785 at p. 800).
9. Under Section
146 of the Indian Penal Code:
"Whenever
force" or violence is used by an unlawful assembly, or by any member thereof,
in prosecution of the common object of such assembly, every member of such
assembly is guilty of the offence of rioting." The essential ingredients
of the offence, therefore, are
(a) There must
be an assembly of five or more persons.
(b) It must have
for its common object one of the five unlawful objects specified in Section 141
of the Indian Penal Code, so that it becomes an 'unlawful assembly'.
(c) Force or
violence must be used by such an unlawful assembly or by any member of it, in
prosecution of the common object of such an assembly.
It was stated that immediately after the accident, there were about
20-25 persons near the motor-car. There was a larger crowd near the dispensary
where the boy victim of the accident was being attended to. Later, at the time
when the motor-car was burnt, the crowd near it had swelled to about 400
persons. According to eye-witnesses and the plaintiff himself, there was a
crowd surrounding the motor-car immediately after the accident, which had
pushed him about when he was being escorted to the police-station at the
instance of the Collector. We thus have no hesitation in holding that there was
an assembly of five or more persons at and near the motor-car immediately after
the accident.
The next question is whether that assembly had
for its common object one of the five unlawful objects specified in Section 141
of the Indian Penal Code. Now an assembly is said to have a common object when
the members composing it are aware of it and concur in it and the explanation
appended to the section says that 'an assembly, which was not unlawful when it
assembled may subsequently become an unlawful assembly'. Often,
it has to be inferred from the surrounding circumstances coupled with the overt
acts of its members. It is true that, in order to infer the common object of an
unlawful assembly, it is lot a legitimate method of enquiry to take all the
actual offences committed by it in the course of the riot and then to infer
that all these were originally the common object of the assembly.
In the instant case, it may
be that at its inception the crowd, that had gathered round the motor-car, was
an assembly of idle and curious people who had no unlawful common object. But,
sometime afterwards, when some of the members of the assembly started pelting
stones at the motor-car, manhandling the driver and breaking the glass-panes of
the motor-car, while some others actively encouraged them to do so by their
shouts of encouragement and presence, it could safely be inferred that the
assembly had for its common object the committing of a 'mischief' within the
meaning of the third clause of Section 141 of the Indian Penal Code. According to him (the witness), some of the
members of the assembly were also shouting: beat them, burn them ! It cannot also be disputed that force or
violence was being used by some of the members of the unlawful assembly when
they pelted stones at the motorcar and broke its glass-panes by striking them
with stones and sticks.
There were no clear
evidences on how the car was set on fire though it was clear that the damage was indeed
caused by the riotous behaviour of the crowd. The Court averred that there
stood irrefutable evidence that the motor-car was burnt down in the
rioting. It was however, argued that the
loss was in consequence of the accident and that the mere fact that after the
occurrence of the accident some miscreants, more than five in number, caused
the loss by fire did not make any difference.
In insurance law,
where more than one cause operate to occasion the loss, the rule of proximity
is resorted to to determine what the proximate cause of the loss was. By
proximate cause is not meant the latest, but the direct, dominant, operative
and efficient one. In
determining the direct, dominant, operative and efficient cause, we must
distinguish between an accident facilitating the loss and an accident causing
the loss. In the instant case, the accident of striking against the unfortunate
boy did cause some loss to the vehicle insured, but fire was not certainly
caused by it. Thereafter, the death of the boy caused some people to take the
law into their own hands to cause a riot, in the course of which the vehicle
was set fire to, and all that can reason-ably be said is that the accident
furnished the occasion for causing the loss and not that it caused the loss.
Another principle
usually employed to determine the proximate cause is that where human
intervention, occurring after the peril insured against, causes the loss, that
intervention (unless its object was to mitigate the loss) and the insured peril
is the proximate cause. In the instant
case, there can be no dispute that the loss was because of nevus actus interveniens, and we have
further found that the human intervention could also be designated a 'riot' as
defined in the Indian Penal Code. Under the circumstances, we are of opinion
that the loss in question was caused by the riot and as that risk was expressly
excepted by the policy of insurance, the defendant Company was not liable.
It was then contended that
the insurance policy came to be issued after the accident end the loss had
occurred, and consequently the clause excepting the risk for riots, not being
in the contemplation of the parties nor mentioned in the cover note then governing
the rights of the parties, did not operate to disentitle the plaintiff from
claiming the damages in question.
The Court also held that the
question whether the suit was barred
because the claim should be deemed to have been abandoned as the dispute was
not referred to arbitration within twelve calendar months from the date of the
defendant's disclaimer of its liability does not arise for consideration and is
not decided.
Considering all aspects of
the case- the Court held that the plaintiff-appellant was rightly dismissed by
the trial Court. The Court stated that
the appeal failed and dismissed it with costs - Case citation : Madhya Pradesh
High Court : Damodardas Nagori Motilal
vs The Rubby General Insurance Co. ... 1962.
Though a very interesting one, would not be very relevant as the present
Package (Comprehensive) policies covers loss of or damage to vehicle insured
arising out of named perils which are :
1. By fire explosion self-ignition or lightning; 2. By burglary housebreaking or theft; 3. By riot and strike; 4. By earthquake (fire and shock damage); 5. By flood typhoon hurricane storm tempest inundation cyclone hailstorm frost; 6. By accidental external means; 7. By malicious act; 8. By terrorist activity; 9. Whilst in transit by road rail inland-waterway lift elevator or air; 10. By landslide rockslide.
With regards – S.
Sampathkumar
26.08.2020.
பிச்சு ஒதறிப்புட்டீரையா .. wonderful !
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