LexM/S BENGANI FOOD PRODUCTS PVT LTD AND ANOTHER versus NATIONAL INSURANCE CO. LTD. AND OTHERS
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[2025] 7 S.C.R. 1756 : 2025 INSC 902 M/s Bengani Food Products Pvt Ltd and Another v. National Insurance Co. Ltd. and Others (Civil Appeal No. 6406 of 2016) 24 July 2025 [B.R. Gavai, CJI and Augustine George Masih,* J.] Issue for Consideration Whether the repudiation of the insurance claim by the first Respondent-Insurer was valid in light of the terms of the Marine Open Policy and the factual matrix of the case; construction of Clause 5 of the Inland Transit (Rail/Road) Clause A and the insured’s obligations under Clause 8 thereof. Headnotes† Insurance – Marine Transit Open (Declaration) Insurance Policy – Repudiation of insurance claim of the Appellant- Insured, by the Respondent-Insurer, owing to damage of goods while being in transit at the Shalimar Railway Godown at Howrah in West Bengal – Repudiation affirmed by NCDRC – Sustainability: Held: Impugned order upheld – Insured cannot claim anything more than what is covered under the Insurance Policy – Policy terms must be construed as they stand without adding or subtracting words – Clause 5 of the Inland Transit (Rail/Road) Clause A of policy is clear and unambiguous – No extended interpretation can be given to continue coverage once the goods were delivered and remained stored at the siding – The maize consignment arrived at the Shalimar Railway Yard on 07.02.2007 and was fully unloaded by that evening – A portion of the goods was promptly dispatched displaying the possession having been taken by the Appellant of the unloaded goods, although a substantial quantity remained stacked at the siding – On 07.02.2007 evening and afternoon 08.02.2007, there was heavy rainfall, resulting in damage to the consignment, allegedly rendering it unfit for poultry consumption – Admittedly, the consignment was unloaded and taken into possession by the Appellant on 07.02.2007 when the railway receipt was issued on delivery – Nothing on record to show that onward movement was * Author [2025] 7 S.C.R. 1757 M/s Bengani Food Products Pvt Ltd and Another. v. National Insurance Co. Ltd. and Others. scheduled or arranged within the next seven days – In the absence of any declaration followed by arrangement to that effect, the conclusion that the coverage ceased upon unloading is justified – The argument that the maize remained in the ‘course of transit’ not accepted – The consignment, once unloaded and lying at the open siding under the control of the insured, no longer retained the character of goods in movement – Mere logistical delay or the need to vacate wagons does not extend the policy coverage – Once goods are voluntarily stored post-delivery or the risk environment is altered, the Respondent-Insurer stands discharged. [Paras 19, 22-24, 30-32] Insurance – Marine Transit Open (Declaration) Insurance Policy – Clause 8 – Duty of the insured to exercise reasonable care – Insurance claim by Appellant-Insured repudiated by the first Respondent-Insurer also invoking Clause 8 – It was alleged that the Appellant had failed to exercise reasonable care to protect the goods as the consignment was stored in an open siding; and had also breached the packaging standards by packing the maize in second hand gunny bags violating the policy terms related to the duty of the Appellants to prevent and minimise the loss – Repudiation affirmed by NCDRC: Held: The damaged maize was stacked in old and torn gunny bags, inadequately covered by the HDPE sheets as the outer periphery was vulnerable to weather and human hazard – The consignment was left exposed in an open railway yard, despite sufficient opportunity to take protective steps – The rainfall began around 2:30 p.m. on 08.02.2007 and the Appellant had the entire morning and early afternoon to act but failed to do so – While it may be true that second-hand gunny bags are often used in the trade, such a practice cannot justify the absence of basic precautions, particularly in the face of an approaching weather event – It is not the use of second hand material per se that is in question, but the failure to ensure that such material was adequate under the circumstances – The plea that the surveyor acted arbitrarily or without application of mind is also devoid of substance. [Para 26] Insurance – Marine Transit Open (Declaration) Insurance Policy – Principle of contra proferentem – When not applicable – Insurance claim by Appellant-Insured repudiated by the first Respondent-Insurer citi
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