Repudiation Of Claim Due To Lack Of Financial Coverage: SC Remands Matter To State Commission For Reconsideration

The Supreme Court has observed, "In our opinion, 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. Thus, following the ratio of the decision of the Coordinate Bench in the case of Saurashtra Chemicals Ltd. (supra), the National Commission ought not to have gone beyond the grounds of repudiation and into the nature of coverage..."

The Bench of Justice Dinesh Maheshwari and Justice Aniruddha Bose set aside the decisions of the National Commission and State Commission and remanded the matter to the State Commission for taking afresh on the claim of the appellants.

Senior Advocate Gopal Shankarnarayan appeared on behalf of the appellants whereas, Advocate S.M. Suri appeared for the respondent i.e., the insurance company.

Facts of the case –

The appellants were traders and manufacturers of aluminium products and had purchased a policy from the respondent. The policy initially covered a sum of Rs. 200 crores and under the heading "Risk Details", it was indicated "from anywhere in India to anywhere in India".

There was subsequent addition of terms and a raising of insurance coverage as well. The endorsement schedule dated 25th November 2009 described the policy as "On the Sales Turnover basis". The sum insured was raised by a further 100 crore rupees in the year 2010.

The appellants claim to have purchased 8 containers of aluminum ingots by a high seas sale agreement. Those containers had arrived at JNPT airport and from there, they were sent to the appellants' factory. Out of the 8 containers, one was stolen and the value of the stolen goods was Rs. 34,99,081/-.

The claim lodged with the respondent by the appellants was repudiated and therefore, they approached State Commission (Maharashtra). The appeal was rejected by State Commission and afterward by the National Commission as well.

The appellants approached the Apex Court for the same.

The Court relying upon the case of Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. [(2019) 19 SCC 70] stated that the State Commission did not come to a specific finding as to whether the goods otherwise remained insured from the JNPT port to the appellants' factory.

The Court also observed that the National Commission mainly rejected the appeal of the appellant on the ground that they had converted the "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 made on 25th November 2009.

Accordingly, the Court allowed the appeal and set aside the decision of the National Commission.

Cause Title – JSK Industries Pvt. Ltd. v. Oriental Insurance Company Limited

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