Case Title: JSK Industries Pvt Ltd vs Oriental Insurance Company Limited | 2022 LiveLaw (SC) 884 | CA 7630 OF 2022 | 18 October 2022 | Justices Dinesh Maheshwari and Aniruddha Bose
Summary
The Supreme Court has stated that an insurance company cannot defend against a claim presented by the insured before a consumer commission that does not constitute a repudiation of the claim. In this case, the National Consumer Disputes Redressal Commission denied the appeal against the order of the State Consumer Disputes Redressal Commission, which dismissed the complaint on different grounds. The appellants argued that the insurance company was unable to oppose a claim petition on grounds other than those they cited in rejecting the claim. The court determined that the insurance company’s adoption of a defense that did not constitute a rejection of the claim was impermissible in that particular context. The court remanded the case to the State Commission for reconsideration based on repudiation grounds and ascertaining an adequate balance to cover the claim.
About the case
As stated by the Supreme Court, an insurance company is precluded from raising a defense against a claim presented by the insured before a consumer commission that does not constitute a repudiation of the claim. Absence of an adequate balance to cover the declaration and/or loss constituted the repudiation of the insurance claim in this instance. The National Consumer Disputes Redressal Commission denied the appeal against the order of the State Consumer Disputes Redressal Commission, which had dismissed the complaint on a different ground—that they had converted the policy that permitted transportation of goods “from anywhere in India to anywhere in India” into a sales turnover policy that only covered two locations.
The appellants argued before the Apex Court that the insurance company was unable to oppose a claim petition on grounds other than those they cited in rejecting the claim. They placed their reliance on a Supreme Court ruling in the case of Saurashtra Chemicals Ltd. v. National Insurance Co. Ltd. (19 SCC 70, 2019). “In that case, it was a claim pertaining to standard fire and special perils policy,” the bench of Justices Dinesh Maheshwari and Aniruddha Bose stated, citing the decision in Saurashtra Chemicals Ltd. The only ground for repudiation was that loss and damage were not attributable to the fire, contrary to what was required by policy conditions, and that a spontaneous combustion did not lead to fire. The insured individual had initiated contact with the National Commission.
The overabundance of one month in the notification of the claim was one of the defenses raised by the insurance company before the Commission. As per the insurance company’s assessment, this delay rendered void condition 6(i) of the policy’s general conditions, which was relevant in that particular instance. The insured filed an appeal with the National Commission, which was heard and decided by a Coordinate Bench. The insurance company prevailed. The central issue that occupied the Bench’s attention was the insurance company’s adoption of a defense that did not constitute a rejection of the claim. “With reference to the facts of the case, the court determined that this was impermissible in that particular context.”
The court noted that the National Commission should not have delved into the intricacies of coverage beyond the grounds of repudiation. The bench added that each of these terms of art is applicable to the insurance industry. The bench, in granting the appeal, remanded the case to the State Commission so that it could reconsider the insured’s claim based on the grounds that formed the basis of repudiation and ascertain whether there was an adequate balance at the relevant moment to cover the claim as stated in the declaration regarding the insured’s loss.
