SAURASHTRA CHEMICALS LTD. (PRESENTLY KNOWN AS SAURASHTRA CHEMICALS DIVISION OF NIRMA LTD.) versus NATIONAL INSURANCE CO. LTD.

Citation: [2019] 15 S.C.R. 24 · Decided: 13-12-2019 · Supreme Court of India · Bench: MOHAN M. SHANTANAGOUDAR · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 15 S.C.R.
SAURASHTRA CHEMICALS LTD. (PRESENTLY KNOWN AS
SAURASHTRA CHEMICALS DIVISION OF NIRMA LTD.)
v.
NATIONAL INSURANCE CO. LTD.
(C.A. No. 2059 of 2015)
DECEMBER 13, 2019
[MOHAN M. SHANTANAGOUDAR AND
KRISHNA MURARI, JJ.]
Consumer Protection – Loss of stock of goods insured – Claim
for – Appellant-company purchased a standard fire and special
perils policy from the respondent-insurer and further paid a
additional premium to cover the risk of loss of the stock on account
of spontaneous combustion – Thereafter, appellant was declared a
sick unit and its factory was closed for some time – After re-opening
it was noticed that some amount of stock of coal and lignite was
diminished/destroyed on account of spontaneous combustion,
causing loss and damage – Appellant demanded claim of Rs.1.4
crores on account of loss suffered by it from the respondent-insurer
– Pursuant to the claim, the respondent-insurer appointed a surveyor
– The surveyor submitted his report and assessed total loss to the
tune of Rs.63,43,679/- – However, respondent-insurer repudiated
the claim via letter solely on the ground that since spontaneous
combustion did not result into fire and loss was not caused by fire
as stipulated by policy conditions, there was no liability under the
policy – Appellant filed complaint before the NCDRC – Before
NCDRC, respondent-insurer alleged that appellant contravened
cl.6(i) of the General Conditions of Policy – The NCDRC rejected
the claim of the appellant and held that intimation of claim was sent
with considerable delay of over a month thereby violating cl.6(i) of
the General Conditions of Policy – On appeal, held: It is a settled
position that an insurance company cannot travel beyond the
grounds mentioned in the letter of repudiation – If the insurer has
not taken delay in intimation as a specific ground in letter of
repudiation, they cannot do so at the stage of hearing of the
consumer complaint before NCDRC – In the instant case, admittedly
there was no reference of delay in intimation or lodging of the claim
 [2019] 15 S.C.R. 24
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as stipulated in cl.6(i) of the General Conditions of Policy in the
repudiation letter – Therefore, order of the NCDRC set aside – The
respondent-insurer directed to make payment of Rs.63,43,679/- as
assessed by the surveyor.
Allowing the appeal, the Court
HELD : Whether the respondent-insurer had waived the
condition relating to delay in intimation and lodging of the claim,
by appointing a surveyor.
1. In view of the law laid down by the three Judge Bench in
the Sonell Clocks and Gifts Ltd. v. New India Assurance Company
Ltd, the argument that by appointing a surveyor the respondent-
insurer is estopped from raising the plea of violation of condition
prescribing a time limit for intimation/lodging of the claim, has
no legs to stand. Thus, issue is answered accordingly. [Para
18][34-E-F]
Sonell Clocks and Gifts Ltd. v. New India Assurance
Company Ltd (2018) 9 SCC 784 : [2018] 10 SCR 35 –
relied on.
Galada Power and Telecommunication Ltd. v. United
India Insurance Company Ltd & Another (2016) 14
SCC 161 – referred to.
Whether in the absence of any mention, of aspect of delay
in intimation and violation of conditions of Clause 6(i) of General
Conditions of Policy, in the repudiation letter, the same could be
taken as defence before the NCDRC.
2. Insofar as this issue is concerned it is undisputed that
the letter of repudiation did not even remotely mention anything
about violation of duration clause stipulated in Clause (6) (i) of
the General Conditions of Policy. The Respondent-insurer
repudiated the claim solely on the ground that  since spontaneous
combustion did not result into fire and loss had not been caused
by fire as stipulated by policy conditions, there was no liability
under the policy. It was for the first time the respondent-insurer
raised the issue of delayed intimation of claim and violation of
stipulation of Clause 6(i) of the General Conditions of Policy in
its reply filed before NCDRC. [Para 19][34-G-H]
SAURASHTRA CHEMICALS LTD. v. NATIONAL
INSURANCE CO. LTD.
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SUPREME COURT REPORTS
[2019] 15 S.C.R.
3. Undoubtedly, this Court in Sonell Clocks has distinguished
Galada Power on facts and held that the appointment of a surveyor
cannot, as a matter of law, be construed as a waiver of the terms
and conditions of the insurance policy. However, in Sonell Clocks,
the insurer had taken a spe

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