THE ORIENTAL INSURANCE CO. LTD. versus MALANA POWER COMPANY LTD.

Citation: [2021] 11 S.C.R. 937 · Decided: 15-11-2021 · Supreme Court of India · Bench: R. SUBHASH REDDY · Disposal: Dismissed

Judgment (excerpt)

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THE ORIENTAL INSURANCE CO. LTD.
v.
MALANA POWER COMPANY LTD.
(Civil Appeal No.5132 of 2019)
NOVEMBER 15, 2021
[R. SUBHASH REDDY AND HRISHIKESH ROY, JJ.]
Insurance: Insurance claim – Repudiation of – Non-disclosure
or fraud – On facts, claim raised by complainant as per the Special
Contingency Policy – Insurance Company’s case that there was
suppression or non-disclosure of hydrology data of previous year
by the complainant company – National Commission allowed the
complainant – Interference with – Held: Not called for – It is not a
case of suppression or non-disclosure of data – Whatever data was
available, the complainant has made known to the Insurance
Company – Insurance Company was aware of the earlier insurance
policy obtained from the previous insurance company by the
complainant, there was no reason for not asking for such hydrology
data of the previous year – Furthermore, cancellation of the subject
policy was also not on account of suppression or fraud played by
the complainant, but since the complainant has not acceded to the
request of the Insurance Company to modify the sum insured; and
insurance company were not able to re-insure the claim in the re-
insurance market for protection of their interest – Thus, there was
no non-disclosure or fraud, to repudiate the claim.
Dismissing the appeal, the Court
HELD: 1.1 There was no suppression or non-disclosure
by the respondent in suppressing any hydrology data of the
previous year, as pleaded by the appellant. The data of the years
1993 to 2002 could not be provided as the same was not available
with the respondent and it was also made known to the appellant.
[Para 10][943-D-E]
1.2 The Special Contingency Policy for the year 2001-02
was obtained from IFFCO - TOKIO and sum insured was only
Rs.5.00 Crores. When the respondent has requested to increase
the coverage to Rs.10.00 Crores, the same was agreed by the
937
[2021] 11 S.C.R. 937
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SUPREME COURT REPORTS
[2021] 11 S.C.R.
appellant and entered into an MoU with the similar terms and
conditions of the previous year policy which was with IFFCO-
TOKIO. Except the amount of coverage was increased from
Rs.5.00 Crores to Rs.10.00 Crores in the policy issued by the
appellant, all other terms and conditions were the same. The
appellant was aware of the earlier insurance policy entered into
by the respondent with the IFFCO-TOKIO prior to issuance of
the subject policy in favour of the respondent for the period
covering from 07.07.2002 to 06.07.2003. If they were to examine
the hydrology data of the previous year, it was well within the
knowledge of the appellant to ask for such data even before
entering into contract. It is not a case of suppression or non-
disclosure of data as pleaded, and whatever data was available,
the respondent has made known to the appellant. When the
appellant was aware of the earlier insurance policy obtained from
IFFCO-TOKIO by the respondent, there was no reason for not
asking for such hydrology data of the previous year. As such, it
cannot be said that there was non-disclosure of hydrology data or
any fraud from the side of the respondent, as is projected by the
appellant so as to repudiate the claim. [Para 11][943-E-H;
944-A-B
1.3 It is to be noticed that the cancellation of the subject
policy vide proceedings dated 25.11.2002 was also not on account
of suppression or fraud played by the respondent, but it was only
for the reason that the respondent has not acceded to the request
of the appellant to modify the sum insured from Rs.10.00 Crores
to Rs.5.00 Crores. Further, the cancellation of policy is on the
ground that they were not able to re-insure the claim in the re-
insurance market for protection of their interest. If there was
any suppression or non-disclosure, as pleaded, the appellant would
have cancelled only on such ground. No such ground was raised
at any point of time either at the stage of issuing notice dated
20.11.2002, or while issuing the proceedings dated 25.11.2002
cancelling the policy for the remaining period by refunding
premium on pro-rata basis. [Para 12][944-B-D]
1.4 The submission that the respondent has encashed the
cheque which was issued towards refund of pro-rata premium,
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will not make any difference as the claim was only for the period
for which the insurance policy was in force. [Para 13][944-E-F]
1.5 There was no non-disclosure or fraud, as pleaded by
the appellant to repudiate the claim. Whether the

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