Pinnacle Court says that fire is not an act of God if no external natural force is involved

The Supreme Court delivered the judgement that only those fire accidents could be termed acts of God which is inevitable and caused by external natural force and not due to active or passive negligence of human beings.

A three-judge bench headed by Justice A M Khanwilkar and comprising other judges Dinesh Maheshwari and Krishna Murari made the observation while setting aside an Allahabad High Court order which had termed the fire in the warehouse of a company as an act of God' and exempted excise liability of the company engaged in the manufacture of liquor.

The apex court also said the fire in question had not taken place due to any mischief by any person.

Noticeably, the fire that started around 12:55 pm on April 10, 2003, could be brought under control by the firefighters only by 5 am the next day.

When all the relevant factors are cumulatively taken into account, we find it difficult to accept that the fire and the resultant loss had been beyond the control of human agency so as to be termed as an inevitable accident, the bench said.

A force majeure clause or act of God is one exception that releases the party of its contractual obligations to an extent when events beyond their control take place and leave them unable to perform their part of the contract.

The top court was hearing an appeal filed by the Uttar Pradesh Excise Department challenging an order of the high court which quashed the demand raised against McDowell company towards loss of excise revenue because of the destruction of liquor in fire.

The high court had said the order passed by the excise commissioner seeking Rs 6.39 crore as excise revenue was based on conjectures and without any cogent evidence about negligence on the part of the company and that the incident was nothing but an act of God.

The present bench said the observations of the high court in this regard do not appear sound and are required to be disapproved.

The court finally mentioned that the goods in question were not ordinary goods but had been containing alcohol which, by its very nature, is highly inflammable. Therefore, a particular nature of care which might be sufficient as regards ordinary goods may not be adequate or sufficient for the goods in question, it said. Hence, the Court held that the mishap cannot be termed as an "inevitable accident".