/2022 INSC 0935/
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.  7630  OF 2022
          (Arising out of SLP (C) No. 21524 of 2018)
JSK INDUSTRIES PVT. LTD.            …APPELLANT(S)
VERSUS 
ORIENTAL INSURANCE COMPANY 
LIMITED   ...RESPONDENT(S)
J U D G M E N T
ANIRUDDHA BOSE, J.
Leave granted.
2. The repudiation of a claim  in respect of a “Marine Cargo­
Open Policy” gives rise to this appeal and the appellants are the
claimants   before   us.     The   policy,   initially   covered   a   sum   of
rupees   two   hundred   crores.   Under   the   heading   “Risk   Details”,
against   Sl.No.1   of   the   policy   document,   next   to   the   column
“Voyage”, it was indicated “from anywhere in India to anywhere
in   India”.     Period   of   Insurance   was   from   29 th
  October   2009   to
Midnight on 28 th
 October 2010. There   was   subsequent   addition
of   terms   and   raising   of   insurance   coverage   as   well.   Fresh
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endorsement schedules were issued incorporating the changes.
These endorsement schedules, however, carried the expression
“Attached   to   and   forming   part   of   policy
No.12012/21/2010/876”   (that   being   the   original   policy
number). The endorsement schedule dated 25 th
 November 2009
described   the   policy   as   “On   the   Sales   Turnover   basis”.     This
endorsement became effective from 14:50 hrs on 25 th
 November
2009.   The next endorsement was made on 8 th
  April 2010, also
attached   to   the   original   policy,   by   which   sum   insured   was
raised by a further rupees two hundred crores.
3. The   appellants   are   traders   and   manufacturers   of
aluminium   products.   They   claim   to   have   purchased,   by   high
seas sale agreement dated 22 nd
  June 2010, eight containers of
aluminium   ingots.  These  containers  had   arrived  at   Jawaharlal
Nehru Port Trust (JNPT) and from there, they  were sent to the
appellants’   factory   unit   at   Silvassa   by   a   transporter   by   road.
The appellants’ case is that out of the eight containers, one was
stolen   and   the   incident   of   theft   took   place   on   2 nd
  July   2010.
According   to   the   appellants,   value   of   stolen   goods   was   rupees
thirty­four   lakhs   ninety   two   thousand   and   eighty   one.     Their
claim was lodged with the respondent on 18 th
  March 2011 but
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this   was   repudiated   by   the   latter.   The   appellants   then
approached   the   State   Consumer   Disputes   Redressal   Forum
(Maharashtra)   against   the   insurance   company.     We   shall
henceforth refer to the said forum as the State Commission.
4. The   appellants’   initial   Complaint   Case   no.   CC/12/177
was   rejected   by   the   State   Commission,   by   an   order   passed   on
27 th
  July   2012   and   the   appeal   against   that   dismissal   order
registered   as   Appeal   No.   700   of   2012,   was   also   dismissed   by
the   National   Consumer   Disputes   Redressal   Commission
(“National   Commission”)   by   an   order   pronounced   on   15 th
January 2018.  This decision is under appeal before us.  
5. As   we   have   already   narrated,   the   policy   underwent   some
changes.     Clause   3   of   the   endorsement   schedule   dated   25 th
November 2009 specified:­
“3.   The   supplies   made   from   the   following   two   works
locations   are   held   covered   under   the   locations   mentioned
below.
a) JSK Industries Private Limited,
     Survey No. 369/1/1/2, 
Behind Siyaram Silk Mills, 
Village Sayil, 
Slivassa­396230, 
UT of Dadra and Nagar Haveli.
b) JSK Industries Private Limited, 
126/1­8   Rakholi   High   School   Road,   Rakholi   Village,
Slivassa­396240 
     UT of Dadra and Nagar haveli.
Other terms and conditions of the policy remain unaltered.
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(quoted verbatim from the paperbook)
6. After   the   appellants   lodged   the   claim,   the   insurance
company by a communication dated 7 th
 September 2011, raised
certain queries.  These included:­
“ 1.   The   above   stock   turn   over   policy   was   issued   on
29.10.2009 for a sum  insured  of  Rs. 200  crores. As  per the
documents and statements submitted the above sum insured
has   exhausted   as   on   22.12.2009   &   no   balance   was
available to cover further declarations.
2. Endorsement  for increase in sum insured was passed on
08.04.2010   for   Rs.   200   crores   which   was   fully   utilized   to
cover   declarations   for   the   period   08.04.2010   till   May   2018
as per the documents and statements submitted.
3.   The   above   loss   has   occurred   between   10.07.2010   &
12.07.2010   and   as   per   1   %   2   above   there   is   no   sufficient
balance to cover the above declarations and/ or loss. 
However   you   being   given   one   more   opportunity   to
substantiate your claim in view of the grounds of repudiation
mentioned   before   a   final   decision   is   taken   of   cure   end   your
representation/   clarification   must   reach   us   within   2   weeks
from the date of receipt of this letter, Please note that in case
we have response from you within 2 weeks from the date of
receipt of this letter the claim shall stand repudiated for the
reasons indicated above without further advices from us.”
(quoted verbatim from the paperbook)
7. As it would be evident from the aforesaid communication,
the appellants were given an opportunity to explain their stand
4  |  P a g eSCHEDULE OF PREMIUM
Cover 
Descriptio
n Origina
l Sum 
Insure
d Endorsemen
t Sum 
Insured Revise
d Sum 
Insure
d  Endorsemen
t Premium
Total Amount in figures and works: 0 (INDIAN RUPEED 
only)

in   the   light   of   the   preliminary   view   of   the   insurance   company
that their claims were not tenable.  The appellants took a stand
that   their   insurance   coverage   was   enhanced   to   Rs.400   crores
and in a table contained in their response dated 20 th
 September
2011,   it   was   explained   by   them   that   the   aforesaid   coverage   of
Rs.400   crores   was   not   exhausted.   The   insurance   company,
however,   stuck   to   their   stand   and   formally   repudiated   their
claim by a letter issued on 24 th
  January 2012.   The ground for
repudiation   was   that   there   was   no   sufficient   balance   to   cover
the declaration and/or loss. The repudiation letter recorded:­ 
“The   reply   submitted   by   you   have   been   examined   and   the
Competent   Authority   has   concluded   that   no   new   facts   have
been   brought/furnished   by   you   which   could   satisfactorily
answer the issues raised in our above letter.
Your   claim   therefore   has   been   repudiated   for   the   reason
mentioned   in   our   above   letter   i.e.   “there   is   no   sufficient
balance to cover the above declaration and/or loss”
(quoted verbatim from the paperbook)
8. The   State   Commission   rejected   the   claim   of   the
appellants,   taking   into   account   the   fact   that   their   policy   was
subsequently converted into Sales Turnover basis to cover sale
transaction   up   to   Rs.400   crores   in   a   given   time   and   though
their   policy   coverage   had   been   enhanced,   the   same   did   not
cover   the   loss   on   which   their   claim   was   raised.   It   was,   inter­
alia, held by the State Commission:­ 
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“5.   On   the   date   of   occurrence   i.e.   cause   of   action
(02/07/2010)   insurance   cover   under   the   policy   though
earlier   increased   with   sum   assured   of   400   crores   but   such
contingency   was   not   covered   as   admittedly,   the   sales
transactions   taken   place   were   not   covered   for   lack,   of
balance of sales transaction to cover under insurance policy.
Even   during   the   course   of   argument,   Ld.   counsel   for   the
complainant company conceded to this position, yet he tried
to press for admission of this complaint. Interestingly, survey
report   of   the   authorized   surveyor   available   on   record   to
assess   the   loss   due   to   theft   of   the   container   with   material
therein states that such a cover under insurance policy is not
extended   and   rightly   so   on   going   through   the   policy   terms
and conditions. Complainant  company has not made carrier
as a party against whom possibly the  complaint could have
been processed. We do not find any merit in complaint and,
therefore,   complaint   is   rejected   in   limine   at   the   admission
stage itself.”
(quoted verbatim from the paperbook)
9. As we have already indicated, the National Commission, in
appeal,   also   rejected   the   appellants’   contention.   The   National
Commission   in   its   decision   under   appeal   construed   the
implication of Sales Turnover and held:­
“8. I have thoroughly examined the record and have given a
thoughtful consideration to the arguments advanced by both
the sides. It is true that the order of the State Commission is
very   cryptic   and   does   not   clearly   state   the   details   of   the
reasons   on  which   the   complaint   has  been  dismissed.  Prima
facie, the State Commission has dismissed the complaint on
the basis of the facts mentioned in the repudiation letter that
the   insurance   limit   was   exhausted   before   the   claim   arose.
This assertion has been disputed by the complainant and  it
has been claimed that there was still an insurance limit left
for   Rs.3.89   crores   and,   therefore,   it   was   not   correct   to   hold
that   the   total   insurance   limit   was   exhausted   and   that   too,
without getting the version of the OP. Had this been the only
reason,   the   matter   could   have   been   remanded   to   the   State
Commission, for the decision of the complaint on merits, but
the fact of the matter is that the nature of the policy after the
endorsement   dated   25.11.2009   became   such   that   only   the
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sold   material   was   covered   and   not   the   imported   material.
The State Commission has obliquely mentioned this fact, but
has  not  made  this  a point  for dismissal  of  the  complaint. In
fact,   the   complainant   should   have   taken   some   other
insurance   for   transport   of   the   goods   from   JNPT   to   Silvasa.
The complainant had neither taken any extra policy nor has
he made the transporter, a party in the complaint case.
9.  The  endorsement   of  25.11.2009   that  the  policy  would  be
on   "sales   turn­over   basis"   also   mentions   that   the   insurance
would be on "sales turn­over basis" on the material going out
from the two premises of the industry at Silvasa.
10.   Learned   counsel   for   the   Appellant   has   not   shown   any
document   to   controvert   this   assertion   of   the   insurance
company   that   the   policy   was   only   applicable   on   the   sales
supplies from the two premises of the industry at Silvasa.
11. It is a settled principle of law that the terms of the policy
are   to   be   construed   as   per   the   written   agreement   of   the
policy. It  could  not  be  shown  by the  learned  counsel  for the
Appellant that any imported material would also be included
in   the   covered   items   under   the   policy   even   after   the
endorsement  dated   25.11.2009  which   restricts  the  policy  to
only   on   "sales   turn­over   basis"   on   the   supplies,   from   two
locations of the industry at Silvasa.”
(quoted verbatim from the paperbook)
10. Mr. Gopal Shankarnarayan, learned senior counsel for the
appellants   has   argued   both   on   substantive   and   procedural
points   to   assail   the   aforesaid   orders.   His   first   submission   is
that   the   insurance   company   cannot   resist   a   claim   petition   on
grounds beyond those cited by them while repudiating a claim.
In support of this argument, a decision of this Court in the case
Saurashtra   Chemicals   Ltd.   v.   National   Insurance   Co.   Ltd.
[(2019)   19   SCC   70]   has   been   cited.   In   this   judgement,   it   has
been held:­
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“23.   Hence, we are of the considered opinion that the law, as
laid   down   in   Galada   [Galada   Power   &   Telecommunication
Ltd.   v.   United India Insurance Co. Ltd., (2016) 14 SCC 161 :
(2017) 2 SCC (Civ) 765] on Issue (2), still holds the field. 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.”
    As   regards   implication   of   the   Sales   Turnover   Policy,   his
argument   is  that  the  said  policy  cannot   be  construed  to   mean
to   cover   only   those   goods   which   are   already   sold.   His
submission on this count is that in such a situation the title of
the   goods   would   have   passed   on   to   the   buyer   and   the
appellants   would   not   have   any   insurable   interest   in   the   said
goods. 
11. He has further argued that the National Commission erred
in   interpreting   the   terms   of   the   policy.   According   to   him,   the
policy   endorsement   dated   25 th
  November   2009   did   not
withdraw   coverage   of   any   of   the   goods   named   in   the   policy
while  in transit “from  anywhere in India to  anywhere in  India”
and   the   implication   of   including   the   two   locations   specified
meant   that   as   per   the   ‘Sales   Turnover   policy’   the   appellants
were   required   to   declare   their   sales   made   from   the   mentioned
two work locations (factories) on monthly/quarterly basis to the
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respondent   only   for   the   purpose   of   computing   the   balance
cover.
12. Mr.   S.   M.   Suri,   learned   counsel   for   the   respondent­
insurance   company   submitted   that   the   main   case   of   the
insurance company is that the policy covered only those goods
within   the   coverage   which   left   the   two   units   which   have   been
specified in the earlier part of this judgment.
13. First,   we   shall   examine   the   ratio   of   the   decision   of   this
Court   in   the   case   of   Saurashtra   Chemicals   Ltd.   (supra).   In
that   case,   it   was   a   claim   relating   to   standard   fire   and   special
perils   policy.   Repudiation   was   solely   on   the   ground   that   a
spontaneous   combustion   did   not   result   into   fire   and   loss   had
not  been  caused by   the fire as stipulated  by  policy  conditions.
The insured had approached the National Commission. One of
the   defenses   taken   by   the   insurance   company   in   the
Commission was that the intimation of claim was with delay for
over a month. This delay, according to the insurance company
vitiated condition 6(i) of the general conditions of the policy, as
applicable in that case. The insurance company was successful
before   the   National   Commission.   The   insured   preferred   an
appeal   which   was   heard   and   decided   by   a   Coordinate   Bench.
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Before the Bench, the main point on which the case turned was
that   the   insurance   company   was   taking   a   defense   which   did
not   form   the   basis   of   repudiation   of   the   claim.   It   is   in   that
context  this   Court  held   this   was   impermissible.   The   reasoning
of the Court appeared in paragraph 23 of the report, which we
have quoted above. 
14. Addressing the merits of the present case, we find that the
National   Commission   mainly   rejected   the   appeal   of   the
appellant   on   the   ground   that   they   had   converted   “from
anywhere   in   India   to   anywhere   in   India”   policy   into   the   sales
turnover  policy   covering  transportation  of  goods  only  from   two
locations specified in the endorsement made on 25 th
  November
2009.   The   repudiation   of   the   appellants’   claim   was   on   the
ground   of   exhaustion   of   insurance   coverage   and   the   State
Commission   also   determined   the   issue   primarily   on   that
ground.   Both   the   National   Commission   and   the   State
Commission   had   referred   to,   in   their   respective   decisions,   the
nature of the policy but the State Commission did not come to
a   specific   finding   as   to   whether   the   goods   otherwise   remained
insured from the JNPT port to the appellants’ factory. It was the
finding of the National Commission on the other hand that the
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policy   was   only   applicable   on   supplies   made   from   the   two
locations   at   Silvassa.     We   have   quoted   this   passage   from   the
order   of   the   National   Commission   earlier   in   this   judgment.   As
regards financial limit of the policy, the appellants’ stand before
the National Commission was that there was available coverage
of Rs. 3.89 crores to accommodate their claim.   On this count,
the   observation   of   the   National   Commission   was   that   if
exhaustion   of   the   coverage   limit   was   the   sole   reason   for
repudiation of the claim, the matter could have been remanded
to   the   State   Commission   for   the   decision   of   the   complaint   on
merits. In our opinion, that was the course which ought to have
been   directed   by   the   National   Commission   because   the   only
ground on which repudiation of the claim was made was lack of
financial   coverage.   Thus,   following   the   ratio   of   the   decision   of
the   Coordinate   Bench   in   the   case   of   Saurashtra   Chemicals
Ltd.   (supra), the   National  Commission  ought  not  to   have  gone
beyond   the   grounds   of   repudiation   and   into   the   nature   of
coverage,   which   according   to   the   National   Commission   had
effectively   changed   from   “anywhere   in   India   to   anywhere   in
India” to a sales turnover policy, limiting the policy coverage of
the   subject­goods   from   the   points   of   departure   at   the   two
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locations at Silvassa. These are all terms of art applicable to the
insurance trade but we do not consider it necessary to dilate on
this aspect of the dispute having regard to the decision of this
Court in the case of  Saurashtra Chemicals Ltd.  (supra). 
15. Under  these  circumstances,  we  set   aside   the  decisions   of
the National Commission as also of that State Commission and
remand   the   matter   to   the   State   Commission   for   taking   a
decision   afresh   on   the   claim   of   the   appellants   on   the   grounds
which   formed   the   basis   of   repudiation   and   determine   as   to
whether   at   the   material   point   of   time   there   was   sufficient
balance   to   cover   the   claim   on   account   of   declaration   made   as
regards loss suffered by the appellants.
16. The appeal stands allowed in the above terms.
17. There shall be no order as to costs. 
18. Pending application(s), if any, shall stand disposed of.
……………………………….. J.
(DINESH MAHESHWARI)
……………………………….. J.
(ANIRUDDHA BOSE)
NEW DELHI;
18 th
 October 2022
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