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IFFCO-Tokio General Insurance Company Ltd. vs M/s New India Detergents Ltd.

Civil Appeal · 2022 INSC 525Decided 6 May 2022
Civil Appeal No. 3473 of 2022
Uday Umesh Lalit · S. Ravindra Bhat · Pamidighantam Sri Narasimha · Lalit

Background

The National Consumer Disputes Redressal Commission (NCDRC) had accepted a consumer complaint filed by New India Detergents Ltd. against its insurer, IFFCO-Tokio, and directed the insurer to pay about Rs. 80.19 lakh towards storage charges, with interest at 9% per annum if not paid within eight weeks. The insurance company filed a statutory appeal before the Supreme Court, arguing that Clause 6.1 of the insurance policy created a total exclusion that relieved it of liability for the claimed storage charges.

Decision Breakdown

The Supreme Court examined Clause 6.1 of the policy and agreed with the NCDRC's finding that the claim was not covered by the exclusion clause. Finding the appeal devoid of merit, the Court dismissed it and affirmed the Commission's order, while granting a further six weeks (beyond what the Commission had allowed) for the insurer to pay, after which interest would become due.

Lesson Learnt

Insurance companies cannot escape liability by loosely invoking a policy "exclusion clause" unless the clause squarely and clearly covers the loss in question; courts will read exclusion clauses narrowly against the insurer where the facts do not fit.

Official source (sci.gov.in)View Judgment (PDF)

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