Tuesday, September 1, 2020

Motor car insurance claim ~ definition of Riot & Civil Commotion

 

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.

 

studebaker - representational image

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.

 

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