Case Note & Summary
The case involves a dispute between Bajaj Allianz General Insurance Co Ltd (appellant) and the State of Madhya Pradesh (respondent) regarding a transit marine insurance policy covering a Bell-430 helicopter transported from Langley, Canada to Bhopal, India. The policy was issued on 21 July 2005 for transportation by air, sea, and road. The helicopter arrived in New Delhi on 5 October 2005 in a knocked-down state, was cleared by customs on 13 October 2005, and stored in a hangar for assembly. During assembly, damage to the crew door window and tail boom was discovered. The appellant repudiated the claim, arguing that the transit cover ended upon delivery at New Delhi, as the helicopter was stored and assembled there, which was beyond the 'ordinary course of transit'. The respondent filed a consumer complaint. The State Commission and National Commission both held the appellant deficient in service and awarded compensation. The Supreme Court upheld these decisions, holding that the halt at New Delhi was a transit halt incidental to the journey, and the assembly did not change the nature of the cargo. The court found that the policy covered the entire transit from Langley to Bhopal, and the damage occurred during the period of cover. The appeal was dismissed with costs.
Headnote
A) Insurance Law - Marine Insurance - Transit Cover - 'Ordinary Course of Transit' - Clause 5 of Institute Cargo Clauses (Air Cargo) - The issue was whether storage and assembly of a helicopter at New Delhi, an intermediate point, before onward journey to Bhopal terminated the transit cover. The court held that the halt at New Delhi was a transit halt and assembly did not change the nature of cargo; the policy covered the entire journey from Langley to Bhopal. (Paras 3-8) B) Consumer Law - Deficiency in Service - Repudiation of Insurance Claim - The appellant insurance company was held deficient in service for wrongfully repudiating the claim. The NCDRC and SCDRC orders directing compensation and interest were upheld. (Paras 7-8) C) Insurance Law - Interpretation of Policy - Contra Proferentem - The court applied the principle that insurance policies are to be interpreted in favor of the insured in case of ambiguity. The policy covered transit up to Bhopal, and the intermediate halt was incidental. (Paras 9-10)
Issue of Consideration
Whether storage, unpacking and assembly of a helicopter at an intermediate point (New Delhi) before onward journey to final destination (Bhopal) falls outside the scope of 'ordinary course of transit', thereby terminating coverage under a transit marine insurance policy.
Final Decision
The Supreme Court dismissed the appeals with costs, upholding the orders of the NCDRC and SCDRC directing the appellant to pay compensation of ₹64,89,205 with interest at 6% per annum from the date of repudiation till realisation.
Law Points
- Interpretation of insurance policy
- ordinary course of transit
- termination of transit cover
- Clause 5 Institute Cargo Clauses (Air Cargo)
- deficiency in service under Consumer Protection Act
