Skip to main content

Grounds mentioned in the letter of repudiation by insurer while rejecting claim is final

In CIVIL APPEAL NO. 2059 OF 2015, Saurashtra Chemicals Ltd. (Presently known as Saurashtra Chemicals Division of Nirma Ltd.) vs National Insurance Co. Ltd, the appellant purchased a standard fire and special perils policy from the respondent National Insurance Company Ltd. thereby insuring the risk of loss/damage to the stock of coal and lignite stored in its factory compound. An additional premium of Rs. 59,200/- was paid by the appellant company so as to cover the risk of loss of the aforesaid stock on account of spontaneous combustion. The appellant was declared a Sick Unit and was accordingly registered under SICA. The factory remained closed from 17.02.2006 to 09.08.2006 and was re-opened on 10.08.2006. After re-opening it was noticed between the period from 11.8.2006 to 20.8.2006 that some amount of stock of coal and lignite has been diminished/destroyed on account of spontaneous combustion, causing loss and damage. Intimation in this regard was sent to the respondent-insurer on 12.09.2006.

Pursuant to the claim made, a surveyor was appointed who submitted his report. The claim repudiated by the respondent-insurer  on the ground that since spontaneous combustion did not result into fire thus, loss had not been caused by fire as stipulated in the relevant endorsement with respect to spontaneous combustion of the insurance policy. The appellant was further informed through the letter that unless spontaneous combustion results into fire, there is no liability under the policy. 

On denial of the claim the appellant approached the NCDRC on several grounds. The insurer resisted the claim under several grounds of which the NCDRC agreed with the contention that the claimant  contravened Clause 6(i) of the General Conditions of Policy. The NCDRC observed that under Clause 6(i) the intimation of loss and damage was required to be given in writing by way of notice within 15 days of the occurance thereof. It is an admitted case between the parties that intimation of loss/damage was given by the appellant to the respondentinsurer for the first time on 12.09.2006 and a claim for loss for a sum of Rs. 1.4 Crores to 1.5 Crores was made vide letter dated 14.09.2006.

On appeal, the Supreme Court observed that  it is undisputed that the letter of repudiation did not even remotely mention anything about violation of duration clause stipulated in Clause (6) (i) of the General Conditions of Policy. The Respondent-insurer repudiated the claim solely on the ground that since spontaneous combustion did not result into fire and loss had not been caused by fire as stipulated by policy conditions, there was no liability under the policy. It was for the first time the respondent-insurer raised the issue of delayed intimation of claim and violation of stipulation of Clause 6(i) of the General Conditions of Policy in its reply filed before NCDRC. 

Referring to the judgment in Galada Power and Telecommunication Ltd. vs. United India Insurance Company Ltd & Another., the Supreme Court held that it is a settled position that an insurance company cannot travel beyond the grounds mentioned in the letter of repudiation. If the insurer has not taken delay in intimation as a specific ground in letter of repudiation, they cannot do so at the stage of hearing of the consumer complaint before NCDRC.

Comments

Post a Comment

Most viewed this month

Court approached in the early stages of arbitration will prevail in all other subsequent proceedings

In National Highway Authority of India v. Hindustan Steelworks Construction Limited, the Hon'ble Delhi High Court opined that once the parties have approached a certain court for relief under Act at earlier stages of disputes then it is same court that, parties must return to for all other subsequent proceedings. Language of Section 42 of Act is categorical and brooks no exception. In fact, the language used has the effect of jurisdiction of all courts since it states that once an application has been made in Part I of the Act then ―that Court alone shall have jurisdiction over arbitral proceedings and all subsequent applications arising out of that agreement and arbitral proceedings shall be made in that Court and in no other Court. Court holds that NHAI in present case cannot take advantage of Section 14 of the Limitation Act, 1963 for explaining inordinate delay in filing present petition under Section 34 of this Act in this Court.
Post a Comment
Read more

NCLT - Board meetings by video-conferencing

In Achintya Kumar Barua vs. Ranjit Barthkur, the NCLAT has held recently that if any director desires to attend board meetings by video conferencing, the company is bound to allow attendance in this manner. In other words, it is not up to the company or at the discretion of the Chairman/Company Secretary whether or not to allow attendance by video conferencing. The right and option is with any director who so desires. NCLAT has held that the words of Section 173(2) of the Companies Act, 2013 are clear on this. There are, of course, some specified resolutions which cannot be considered in a meeting held by video-conference. However, a proviso inserted to Section 173(2) by the Companies (Amendment) Act, 2017, though not yet brought into effect, says that even in respect of these matters, if the required quorum is physically present, other directors can attend and participate by video-conferencing.
Post a Comment
Read more

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more