Insurance company cannot go beyond grounds mentioned in letter of repudiation of claim: SC

JSK Industries Pvt. Ltd.  Vs  Oriental Insurance Company Limited (Supreme Court of India)

Conclusion: Hon’ble Supreme Court observed that National Commission ought not to have gone beyond the grounds of repudiation of the claim and the matter was remanded to the State Commission for taking a decision afresh on the claim of the appellants on the grounds which formed the basis of repudiation and determine as to whether at the material point of time there was sufficient balance to cover the claim on account of declaration made as regards loss suffered by the appellants.

Facts: The repudiation of a claim in respect of a “Marine Cargo­Open Policy” gives rise to this appeal and the appellants were the claimants before Hon’ble Supreme Court. The policy, initially covered a sum of rupees two hundred crores. Under the heading “Risk Details”, against Sl.No. 1 of the policy document, next to the column “Voyage”, it was indicated “from anywhere in India to anywhere in India”. Period of Insurance was from 29^th October 2009 to Midnight on 28^th October 2010.There was subsequent addition of terms and raising of insurance coverage as well. Fresh endorsement schedules were issued incorporating the changes. These endorsement schedules, however, carried the expression “Attached to and forming part of policy No.12012/21/2010/876” (that being the original policy number). The endorsement schedule dated 25^th November 2009 described the policy as “On the Sales Turnover basis”. This endorsement became effective from 14:50 hrs on 25^th November 2009. The next endorsement was made on 8^th April 2010, also attached to the original policy, by which sum insured was raised by a further rupees two hundred crores.

The appellants were traders and manufacturers of aluminium products. They claim to have purchased, by high seas sale agreement dated 22^nd June 2010, eight containers of aluminium ingots. These containers had arrived at Jawaharlal Nehru Port Trust and from there, they were sent to the appellants’ factory unit at Silvassa by a transporter by road. The appellants’ case is that out of the eight containers, one was stolen and the incident of theft took place on 2^nd July 2010. According to the appellants, value of stolen goods was rupees thirty­ four lakhs ninety two thousand and eighty one. Their claim was lodged with the respondent on 18^th March 2011 but this was repudiated by the latter. The appellants then approached the State Consumer Disputes Redressal Forum (Maharashtra) against the insurance company which was dismissed. The Appellant then appealed to National Commission, wherein again the Appeal was dismissed.

The appellants submitted the insurance company cannot resist a claim petition on grounds beyond those cited by them while repudiating a claim. In support of this argument, a decision of this Court in the case Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. [(2019) 19 SCC 70] has been cited. In this judgement, it has been held:

Please become a Premium member. If you are already a Premium member, login here to access the full content.