Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 18 August 2026

Case Overview

  • Parties: Appellant – The New India Assurance Co. Ltd (and others); Respondent – M/s Louis Dreyfus Commodities India Pvt. Ltd.
  • The dispute stems from a Marine Cargo Annual Turnover Policy (Policy No. 350200/21/09/14/00000369) issued on 01 Jan 2010 covering a sum insured of INR 1200 crores for the period 01 Jan 2010 to 31 Dec 2010.
  • Premium was payable in two equal instalments; the first instalment was paid, the second was due on 01 July 2010.
  • Turnover of the respondent rose rapidly: INR 1016.35 crores as on 30 Jun 2010, crossed INR 1200 crores on 10 Jul 2010, and stood at INR 1724.12 crores on the date of loss (07 Nov 2010).
  • A fire broke out at a Container Freight Station on 07 Nov 2010, damaging 41,481 cotton bales. The insurer’s first surveyor assessed loss at Rs 22,01,29,271/‑.
  • The insurer appointed a second surveyor (without IRDA approval) and, via email dated 14 Dec 2010, requested an additional premium of Rs 86,86,125/‑ to raise coverage to INR 1500 crores. The respondent paid this premium on 17 Dec 2010.
  • The insurer repudiated the claim on 27 Jul 2012, citing that the turnover exceeded the insured amount and that premium for the excess had not been paid at the time of loss.
  • NCDRC had allowed the petition, holding that an email clarification dated 17 May 2010 indicated coverage would continue irrespective of turnover exceeding INR 1200 crores.
  • The Supreme Court examined the applicability of Section 64VB of the Insurance Act, 1938, which prohibits an insurer from assuming risk unless the premium is received in advance.
  • The Court noted that the turnover‑based coverage was exhausted on 10 Jul 2010, well before the loss, and that the additional premium paid on 17 Dec 2010 could only affect coverage prospectively, not retrospectively.
  • The Court evaluated the authority of the Divisional Manager who sent the 17 May 2010 email, concluding that while the manager had authority to explain policy terms, he lacked authority to enlarge the sum insured or waive statutory premium‑payment requirements.
  • Internal guidelines dated 16 Oct 2006 expressly limited premium adjustments to downward revisions only, reinforcing that the manager could not create additional coverage.
  • The Court rejected the respondent’s estoppel argument, stating that statutory provisions cannot be overridden by an agent’s conduct or post‑factum ratification.
  • The endorsement dated 17 Dec 2010 expressly stated that the additional premium and increased sum insured would be effective from that date, confirming the prospective nature of the coverage.

Final Outcome

  • Both civil appeals (Nos. 7687‑7688 of 2025) are allowed.
  • The NCDRC order directing the insurer to pay the loss amount is set aside.
  • The insurer is not liable for the fire loss because coverage was not in force at the time of the incident due to non‑payment of premium required under Section 64VB.
  • Any pending applications are disposed of.

Topics: Insurance, Agency Law, Consumer Protection