Summary
The appellants held a marine cargo open policy covering transit anywhere in India, later endorsed to a sales turnover basis with the sum insured raised to Rs 400 crore. One container of imported aluminium ingots was stolen on the way from JNPT to their Silvassa factory. The insurer repudiated the claim only because the sum insured had been exhausted. The State Commission dismissed the complaint. The National Commission upheld the dismissal on a different ground: after the endorsement, the policy covered only supplies dispatched from the two Silvassa units. The Supreme Court set aside both orders. Following Saurashtra Chemicals, an insurer cannot go beyond the grounds stated in its letter of repudiation, so the National Commission should not have examined the nature of the coverage. The matter was remitted to the State Commission to decide whether enough balance cover remained.
Issues
- Whether a consumer forum may reject an insurance claim on a ground, the scope of policy coverage, that was not the basis of the insurer's letter of repudiation.
Held
- An insurance company cannot travel beyond the grounds mentioned in its letter of repudiation, as held in Saurashtra Chemicals following Galada Power. (¶¶ 10, 13)
- Since the sole ground of repudiation was exhaustion of the sum insured, the National Commission erred in deciding the case on its own view that the endorsement had limited cover to supplies from the two Silvassa units; it should instead have remanded for decision on the ground actually taken. (¶ 14)
- The State Commission must decide afresh, on the grounds of repudiation, whether at the material time sufficient balance remained to cover the declared loss. (¶ 15)
Result
Appeal allowed; orders of the National and State Commissions set aside and the matter remitted to the State Commission for fresh decision; no costs.