IMPORTANT POINT
Demolition by Municipal Corporation attracted the exclusion in the policy.

JUDGMENT

Dr. D.Y. Chandrachud, J

1. Delay condoned in Civil Appeal @ SLP(C)@CC 5127 of 2017.

2. These appeals arise from a judgment of a Division Bench of the High Court of Jammu and Kashmir dated 28 July 2016. The High Court has affirmed the decision of the Jammu and Kashmir Consumer Disputes Redressal Commission [“The State Commission”] by which an insurance claim was allowed in the amount of Rs. 17.28 lacs. New India Assurance Company Limited, the insurer, failed in its challenge to the decision of the State Commission before the High Court. Cross-objections filed before the High Court by the insured for the grant of interest were also rejected. Hence, there are two appeals: one by the insurer and the second by the insured, against the judgment of the High Court.

3. The claim of the insured before the State Commission was that it owns a building known as Patel House which is situated at Akhnoor road, Jammu. The insured claimed that the building was constructed in 1984 with due permission of the municipality. In 1993, additional construction was raised, it is alleged, with the permission of the municipality. According to the insured, on a notice issued under Section 229 of the Jammu and Kashmir Municipal Corporation Act 2000, he had approached the Jammu and Kashmir Special Tribunal which compounded the infraction in 1996. The Municipal Corporation initiated a demolition drive. Apprehending action against his property, the insured instituted a suit in the Court of the First Civil Subordinate Judge, Municipal Magistrate, Jammu where an ad-interim injunction was granted, restraining the Corporation from proceeding, except in accordance with law. The Municipal Corporation demolished the front portion of the building. The insured was carrying on a business of sanitary ware in the premises. As a result of the demolition, the insured claimed that it suffered damage in the amount of Rs.19.55 lacs. 4 The claim before the State Commission was founded on a policy of insurance which was obtained by the insured. The insurance policy contained the following exclusion:

“V. Riot, Strike, Malicious and Terrorism Damage Loss of or visible physical damage or destruction by external violent means directly caused to the property insured but excluding those caused by:-

a) xxxx

b) Permanent or temporary dispossession resulting from confiscation, commandeering, requisition or destruction by order of the Government or any lawfully constituted Authority.”

Relying on the aforesaid exclusion, the insurer repudiated the claim on the ground that the action of demolition was carried out by the municipal authorities and was hence by order of a lawfully constituted authority.

5. The State Commission allowed the claim under the insurance policy in the amount of Rs.17.28 lacs. Litigation costs of Rs.10,000/-were awarded. The State Commission opined that the order of demolition passed by the Municipal Corporation had not been brought on the record and, in its absence, the exclusion would not operate. In appeal, the High Court affirmed the view of the State Commission, holding that it was incumbent on the insurer to establish that the exclusion contained in the policy of insurance was attracted by placing on record the orders of a lawfully constituted authority by which demolition was ordered. While affirming the view of the State Commission, the High Court held that in the absence of such an order being produced on the record, the insurer was liable to indemnify the loss sustained by the insured.

6. The principal basis on which the complaint was allowed by the State Commission has been called into question in these proceedings. The insurer has submitted that it was not in dispute that the demolition was caused by the Municipal Corporation. To substantiate this submission, the insurer relies upon the averments contained in the consumer complaint which are extracted below:

“5) That after the constitution of the Municipal Corporation, Municipal Corporation had star