The Supreme Court in the case JSK Industries Pvt Ltd vs Oriental Insurance Company Limited observed that in a claim made by the insured before a consumer commission, the defense cannot be taken by the insurance company from the basis of repudiation of the claim.
In the present case, the insurance claim ground for repudiation was that there was no sufficient balance to cover the declaration and/or loss. The appeal was dismissed by National Consumer Disputes Redressal Commission against the State Consumer Disputes Redressal Commission order dismissing the complaint on a different ground that they had converted “from anywhere in India to anywhere in India” policy into the sales turnover policy which is covering transportation of goods only from two locations.
It was contended by the appellant before the Apex Court that the insurance company could not have resisted a claim petition on grounds beyond those cited by them while repudiating a claim. The court relied on a decision of the Supreme Court in the case Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd.
The bench comprising of Justice Dinesh Maheshwari and Justice Aniruddha Bose observed and has referred to a decision in Saurashtra Chemicals Ltd and observed that it being a claim relating to standard fire and special perils policy. The repudiation was solely on the ground that a spontaneous combustion did not result into fire and loss had not been caused by the fire as stipulated by policy conditions. However, the insured had approached the National Commission. Once the insurance company took a defence in the Commission was that the intimation of claim was with delay for over a month. According to the insurance company, the delay caused vitiated condition 6(i) of the general conditions of the policy, as applicable in that case. Before the National Commission, the insurance company was successful. An appeal was preferred by the insured which was heard and decided by a Coordinate Bench. Thus, the main point on which the case was that the insurance company was taking a defense which did not form the basis of repudiation of the claim and this being in the context this Court held this was impermissible.
The court while observing the facts and circumstances observed that the National Commission ought not to have gone beyond the grounds of repudiation and into the nature of coverage. These all are being the terms of art which is applicable to the insurance trade.
While allowing the appeal, the bench remanded the matter to the State Commission for taking a decision afresh on the claim of the insured on the grounds which formed the basis of repudiation and for determining 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 insured.
