Insurance: Insurance Claim – Repudiation of – Appellants took insurance coverage – However, insurance company repudiated their claim on the ground that there was no sufficient balance to cover the declaration and/or loss – State Commission as also National Commission rejected the claim – Held: Insurance company took a defense which did not form the basis of repudiation of the claim – National Commission ought not to have gone beyond the grounds of repudiation and into the nature of coverage, which according to the National Commission had effectively changed from “anywhere in India to anywhere in India” to a sales turnover policy, limiting the policy coverage of the subject- goods from the points of departure at the two locations – Matter remanded to State Commission for taking decision afresh on the claim of the appellants on the ground which formed the basis of repudiation.
Allowing the appeal, the Court
HELD: 1.1 The National Commission rejected the appeal of the appellant on the ground that they had converted “from anywhere in India to anywhere in India” policy into the sales turnover policy covering transportation of goods only from two locations specified in the endorsement. The repudiation of the appellants’ claim was on the ground of exhaustion of insurance coverage and the State Commission also determined the issue primarily on that ground. Both the National Commission and the State Commission had referred to the nature of the policy but the State Commission did not come to a specific finding as to whether the goods otherwise remained insured from the port to the appellants’ factory. It was the finding of the National Commission on the other hand that the policy was only applicable on supplies made from the two locations. As regards financial limit of the policy, the appellants’ stand before the National Commission was that there was available coverage to accommodate their claim. On this count, the observation of the National Commission was that if exhaustion of the coverage limit was the sole reason for repudiation of the claim, the matter could have been remanded to the State Commission for the decision of the complaint on merits. That was the course which ought to have been directed by the National Commission because the only ground on which repudiation of the claim was made was lack of financial coverage. The National Commission ought not to have gone beyond the grounds of repudiation and into the nature of coverage. Thus, the order of the National Commission as also State Commission are set aside and the matter is 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. [Paras 14, 15][589-C-G; 590-B-C]
Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. (2019) 19 SCC 70 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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