Bajaj Allianz General Insurance Co. Ltd. v. The State of Madhya Pradesh
Background
The State of Madhya Pradesh had insured a helicopter being transported in a packaged, knocked-down condition from abroad to Bhopal, with transit insurance covering the journey. The helicopter was assembled at New Delhi so it could be flown the rest of the way under its own power, rather than being transported fully assembled by road, and it suffered damage. The insurer refused the claim on the ground that the policy's coverage window had expired by the time of the loss, but the State's consumer complaint succeeded before the State Consumer Disputes Redressal Commission and the National Consumer Disputes Redressal Commission (NCDRC), both of which read the policy as covering the risk all the way to Bhopal including the Delhi assembly stop.
Decision Breakdown
The Supreme Court held that the NCDRC's interpretation was incorrect: a court cannot rewrite or substitute the terms of an insurance contract, and must give effect to the words the parties actually used. Since the policy covered a helicopter being transported in "packaged knocked-down condition," the risk of assembling it at New Delhi and flying it onward (rather than transporting it by road in its packaged form) fell outside the scope of what was insured and did not qualify as "storage in the ordinary course of transit." Because the NCDRC's approach altered the character of the insured risk beyond what the parties had actually agreed, the orders of the NCDRC and State Commission were set aside, the appeals were allowed, and the underlying consumer complaint was dismissed.
Lesson Learnt
Insurance coverage is strictly defined by the actual words of the policy: if goods are insured in a specific condition or mode of transit (e.g., "packaged knocked-down"), a claim arising from a different mode of handling (such as assembling and flying the item) falls outside the policy, however reasonable it may otherwise seem.