Order Name: SOHOM SHIPPING PVT. LTD. VERSUS M/S. THE NEW INDIA ASSURANCE CO. LTD. & ANR.
Citation: 2025 LiveLaw (SC) 403
In an important ruling, the Supreme Court has made it clear that insurance companies cannot turn down claims if the conditions in the contract are impossible to meet. This decision came from a case involving a marine insurance policy where the insured, Sohom Shipping Pvt. Ltd., faced a rejection from New India Assurance Co. Ltd. The insurance company denied the claim because the voyage was supposed to start and finish before the monsoon, even though the journey was planned during the monsoon season.
Here’s what happened: The insured owned a barge that needed insurance for its trip from Mumbai to Kolkata. The insurance policy was valid from May 16, 2013, to June 15, 2013, with a special condition that the voyage should be completed before the monsoon. However, the voyage began on June 6, 2013, after the monsoon had started in Kerala on June 1, 2013. As the barge reached the east coast, it faced engine issues, ran aground, and was declared a total loss. When the insured filed a claim, it was rejected due to the breach of the monsoon clause.
Dissatisfied with the National Consumer Disputes Redressal Commission’s (NCDRC) rejection of their complaint, the insured took the matter to the Supreme Court. The core question was whether the insurer could deny the claim solely based on the monsoon clause, despite the journey being scheduled during the monsoon.
The Supreme Court, led by Justice Satish Chandra Sharma, overturned the NCDRC’s decision. The court stated that the insurance condition could not invalidate the claim, as the policy’s purpose was to provide coverage during difficult weather conditions along the coasts. The court noted that such a condition was unfeasible and thus irrelevant.
The court further explained that interpreting the condition strictly would leave the insured without any remedy in case of a marine accident, defeating the insurance contract’s purpose. Moreover, the court dismissed the insurer’s argument that the insured breached the principle of utmost good faith, as the insured had disclosed the voyage details, and it was reasonable for the insurer to expect the voyage to overlap with the monsoon.
Ultimately, the Supreme Court ruled in favor of the insured, sending the case back to the NCDRC to determine the amount the insurer should pay. This decision underscores the importance of fairness in insurance contracts, ensuring policyholders are not left unprotected by impossible conditions.
