Insurance Company Cannot Raise Delay As Ground For Repudiation For The First Time Before Consumer Forum: SC [Read Judgment]

The Supreme Court has observed that an insurance company cannot raise delay as a ground for repudiation for the first time before the consumer forum, if it has not taken delay in intimation as a specific ground in letter of repudiation.

Two issues were considered by the Apex Court in this case [Saurashtra Chemicals Ltd. vs. National Insurance Co. Ltd]. One, whether the respondent-insurer had waived the condition relating to delay in intimation and lodging of the claim, by appointing a surveyor. Two Whether in the absence of any mention, of aspect of delay in intimation and violation of conditions of Clause 6(i) of General Conditions of Policy, in the repudiation letter, the same could be taken as defence before the NCDRC.

Relying on Galada Power and Telecommunication Ltd. vs. United India Insurance Company Ltd , it was contended that since the letter of repudiation does not even remotely refer to delayed intimation or delayed claim, as postulated in Clause 6(i), the said ground cannot be taken as a defence to the claim.

The bench of noted that the three judge bench in Sonell Clocks and Gifts Ltd. v/s New India Assurance Company Ltd. has distinguished Galada Power on facts and held that the appointment of a surveyor cannot, as a matter of law, be construed as a waiver of the terms and conditions of the insurance policy. Therefore, on the 2nd issue, the bench observed:

"This Court in Sonnel Clocks did not have the occasion to consider whether the insurance company could have raised delay as a ground for repudiation for the first time before the consumer forum. . Hence we are of the considered opinion that the law as laid down in 'Galada' 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" 

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