Kopargaon Sahakari Sakhar Karkhana Ltd Vs National Insurance Co. Ltd. & Anr. (Supreme Court of India)
SC: Boiler Blast Claim Wrongly Repudiated — Exclusion Clause Cannot Defeat Insurance Cover When Explosion Is Not Denied
The Supreme Court allowed the appeals filed by Kopargaon Sahakari Sakhar Karkhana Ltd. & set aside the NCDRC order, holding that the insurer wrongly repudiated the boiler-blast insurance claim by mechanically invoking Exclusion Clause 5.
The appellant’s boiler (GT-23), duly registered & certified fit under the Boilers Act, suffered an accident on 12.05.2005 during the currency of both the fitness certificate & the insurance policy. The insurer rejected the claim on grounds of corrosion, wear-& -tear, & aged tubes, relying on survey reports.
The Supreme Court found this repudiation unjustified because:
- The appellant had specifically pleaded an explosion, & the insurer never denied this in its written statement.
- Survey reports did not rule out an explosion; they merely noted slipped tubes & corrosion, which could occur because of the blast.
- The boiler was inspected, registered, & certified under the Boilers Act; therefore, during the validity of that certificate, the boiler is presumed fit for use, shifting a heavy burden on the insurer to prove suppression or breach — a burden not discharged.
- No misrepresentation, non-disclosure, or fraud by the insured was pleaded or proved.
- Corrosion or latent defects discovered after dismantling the boiler cannot be used to defeat a claim arising from an unforeseen accident.
- Exclusion Clause 5 itself does not apply when defects or failures occur as a result of an explosion.
- The insurer introduced the survey report belatedly before the NCDRC, & it did not conclusively support repudiation.
The Court held that the State Commission was right in awarding compensation & that NCDRC erred in reversing it. The appeals were allowed, & the matter was remanded back to NCDRC only to determine quantum, with all other findings closed.
Thus, the insurer’s liability stands established, & the repudiation was held unsustainable in law.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
