Insurance Law - Storage, Unpacking, Assembly Of Helicopter Outside Scope Of 'Ordinary Course Of Transit' : SC Sets Aside Insurer's Liability To Compensate MP Government [Read Judgment]

The Supreme Court on Friday set aside the National Consumer Disputes Redressal Commission's order requiring Bajaj Allianz General Insurance to pay Rs. 64 lakh by way of compensation to Madhya Pradesh government for wrongful repudiation of a claim of damages to a helicopter in transit from Canada to Bhopal. The issue before the bench of Justices D. Y. Chandrachud and Ajay Rastogi whether storage, unpacking and assembly of the helicopter at New Delhi would fall outside the scope of the expression "ordinary course of transit", terminating coverage under the policy. Facts of the case The respondent government purchased a "Transit Marine Insurance Policy" from the appellant insurance company on 21 July 2005, to cover the transportation of a Bell – 430 Helicopter from Langley, Canada to Bhopal, India. By an acceptance letter, the appellant set out the transit route for the transportation of the helicopter by air, sea and road. Subsequently, the proposed route was altered as follows: "Transit Details: Langley to Pithampur/Bhopal (by road/ by air)." The policy schedule issued by the appellant indicated that the policy was issued from 22 July 2005 for transportation of the helicopter with standard packaging from Langley to Bhopal for a total sum insured of ₹ 20,00,00,000. The policy was to be governed by the accompanying clauses that included, inter alia, Institute Cargo Clauses (Air Cargo) , Institute War Clauses (Air Cargo), Institute Strike Clauses (Air Cargo), and an Institute Theft Pilferage Non Delivery Clause that listed out the terms and conditions of all damages and loss covered under the policy. The duration of the policy was to be governed in terms of Clause 5 of the ICC. On 5 October 2005, the helicopter was transported in a knocked down state by air to New Delhi. On 13 October 2005, the helicopter was cleared by the customs and was shifted to a hangar at New Delhi. On 21 October 2005, the helicopter was inspected by a representative of the manufacturer during routine inspection and the window of the crew door was reported to be damaged. The respondent sought the permission of the Director General of Civil Aviation to fly the helicopter to Bhopal but was denied permission on account of the damage to the window of the crew door. By a letter dated 22 October 2005, the respondent informed the appellant of the damage and stated that the helicopter was "being assembled at the Hangar of Indamer Co. located at Delhi so that the Helicopter can fly from Delhi to Bhopal". On 23 November 2005, the respondent informed the appellant that upon inspection, the tail boom of the helicopter was found to be damaged. A surveyor was appointed by the appellant to assess the alleged damage to the window of the crew door and the tail boom of the helicopter. By a report dated 14 March 2006, the surveyor concluded that "The damage to window glass of pilot seat and damage to tail boom of helicopter are two separate incidents not related to each other. The replacement cost of damaged window glass of pilot seat is below Rs 10,00,000 and hence would fall under the excess prescribed under the policy. The damage to the tail boom had occurred at Hangar #3, Bay 15/33 IGI Airport Delhi after substantial assembly but prior to test flight and not during transit and hence would not fall under the purview of marine insurance policy as issued to the insured." By a letter dated 10 April 2006, the appellant informed the respondent that the damage to the tail boom was not detected during transit or customs clearance and it was only detected in the third week of November 2005 before which multiple inspections had been carried out and no damage was reported earlier. The appellant further informed the respondent that the representatives of the manufacturer had also admitted that the loss to the tail boom was only noticed in the month of November. On 10 April 2006, the appellant informed the respondent that both the losses claimed were inadmissible. By a letter dated 11 April 2006, the respondent responded to the above letter stating that even though the damage was noticed after a month of customs clearance, the policy of transit was up to Bhopal and therefore, damage to the helicopter in the month of November 2005 would also be covered under "transit". The appellant repudiated the claim of the respondent by a letter dated 11 July 2006 on the ground that the loss that occurred to the helicopter was after the duration of the policy had ended as mentioned in Clause 5 of the ICC: "In the present case, the destination of the consignment of air transit was New Delhi Airport. The cargo [aircraft] was to be assembled at this location and then aircraft was to fly to Bhopal. The flight would be out of the Marine Transit scope of insurance. The named destination "Bhopal" of issued policy has no relevance in this context. Thus, insurance cover ended on delivery at the final warehouse, premises or place of storage..." The NCDRC by...

Insurance Law - Storage, Unpacking, Assembly Of Helicopter Outside Scope Of 'Ordinary Course Of Transit' : SC Sets Aside Insurer's Liability To Compensate MP Government [Read Judgment]

Mehal Jain

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