Summary
The Supreme Court upheld rejection of a flood-loss claim under a ₹60 lakh insurance policy that expressly excluded storm, tempest, flood and inundation risks. Changing the insured location resulted in a new policy, and the corresponding premium had been refunded into the borrowers’ account. Having received the policy and refund without protest, the borrowers could not deny knowledge of the exclusion. The Court declined to rewrite the contract or restore the award against the bank.
Issues
- Whether the changed-location policy could exclude flood-related risks and whether the borrowers could deny knowledge of that exclusion.
Provisions considered
- Section 64VB, Insurance Act, 1938The provision on advance premium and refund following cancellation or alteration was considered alongside the refunded premium and express exclusion. (¶¶ 22, 23)
Held
- Courts must give effect to the insurance terms rather than create a different contract. The new policy at the changed location expressly excluded the disputed risks, and the premium for those risks was refunded; the proposal alone did not conclude a contract for wider cover. (¶¶ 20, 21, 22, 23)
- The borrowers did not specifically deny receiving the policy or the refunded premium in their account. Their failure to protest either the initial exclusion or the subsequent renewal prevented them from disavowing knowledge when the loss occurred. (¶¶ 24, 26)
- Biman Krishna Bose concerned arbitrary refusal to renew a mediclaim policy and was distinguishable. Here a changed location occasioned a new policy with altered risk obligations; the insurer could commercially exclude the specified perils, and the borrowers could have sought additional cover. (¶¶ 25, 26)
Result
Appeal dismissed without costs, leaving the National Commission’s rejection of the claim and reversal of the award against the bank in force.