“Insurance is a contract of indemnification, being a contract for a specific purpose1, which is to cover defined losses2. The courts have to read the insurance contract strictly. Essentially, the insurer cannot be asked to cover a loss that is not mentioned. Exclusion clauses in insurance contracts are interpreted strictly and against the insurer as they have the effect of completely exempting the insurer of its liabilities.3”
“In Texco Marketing P. Ltd. v. TATA AIG General Insurance Company Ltd., 4 while dealing with an exclusion clause, this Court has held that the burden of proving the applicability of an exclusionary clause lies on the insurer. At the same time, it was stated that such a clause cannot be interpreted so that it conflicts with the main intention of the insurance. It is, therefore, the duty of the insurer to plead and lead cogent evidence to establish the application of such a clause5. The evidence must unequivocally establish that the event sought to be excluded is specifically covered by the exclusionary clause. 6 The judicial positions on the nature of an insurance contract, and how an exclusion clause is to be proved, shall anchor our reasoning in the following paragraphs.”
“We are inclined to accept the appellant’s submission that there is sufficient evidence to justify repudiation of the claim on the basis of the exclusion clause. On the other hand, there is absolutely no evidence on behalf of the respondents. His argument is only that the Surveyor/Committee report is not clinching, it is open ended and does not hold that the respondents no. 1 and 2 are responsible for the negligence.”
Link to the judgement here