M/s. Sonell Clocks and Gifts Ltd. v. The New India Assurance Co. Ltd.
Background
Sonell Clocks and Gifts Ltd. had an insurance policy on its factory, plant and machinery, which suffered flood damage in August 2004. It intimated the loss to the insurer, New India Assurance, nearly four months later, well beyond the time limits set by the policy's Clause 6. The insurer appointed a surveyor, who recommended rejecting the claim for breach of this intimation clause, and the insurer repudiated the claim accordingly. The National Consumer Disputes Redressal Commission dismissed the company's complaint, and a subsequent review, permitted by the Supreme Court specifically to examine whether appointing a surveyor amounted to a "waiver" of the delay condition, was also rejected.
Decision Breakdown
The Supreme Court held that merely appointing a surveyor to assess a loss does not, by itself, amount to an insurer waiving its right to reject a claim for breach of a policy condition like late intimation. It distinguished its earlier ruling in Galada Power and Telecommunication vs. United India Insurance, explaining that in Galada the insurer's repudiation letter had not even raised the duration/delay issue and other circumstances pointed to a conscious waiver, whereas here the insurer's repudiation letter explicitly and consistently relied on the breach of Clause 6. The Court also noted that appointing a surveyor is itself a statutory obligation under the 2000 Surveyors Regulations, so it cannot automatically be read as abandoning the right to reject the claim. Since there was no conscious, intentional relinquishment of the insurer's rights, the appeals were dismissed and the lower forum's findings were upheld.
Lesson Learnt
Policyholders must report losses to their insurer within the time limits specified in the policy; an insurer sending a surveyor to inspect the damage does not automatically forgive a late or incomplete claim, unless the insurer's own conduct, such as a repudiation letter that ignores the delay issue, clearly shows it chose not to rely on that condition.