In Brief
Narsingh Ispat Ltd held a fire and special perils insurance policy covering property damage. When armed intruders damaged the factory in March 2010, the insurer denied the claim citing a 'Terrorism Damage Exclusion Warranty'. The Supreme Court held that an exhaustion clause's definition of terrorism is binding on both parties and cannot be supplemented by penal statutes. Since the exclusion requires a 'political, religious, ideological or similar purpose' (not proven here), and the policy explicitly covers violent destruction, the exclusion did not apply. The Court remanded the case to assess compensation, directing the insurer to deposit approximately Rs.89 lakhs pending final determination.
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