The Supreme Court has dismissed a civil appeal filed by M/s Bengani Food Products Pvt. Ltd., upholding the repudiation of an insurance claim by National Insurance Co. Ltd. The Court held that an insurance contract must be interpreted strictly according to its terms, and that policyholders cannot claim coverage beyond what is expressly provided.
The judgment was delivered by a Bench comprising Chief Justice B. R. Gavai and Justice Augustine George Masih on July 24, 2025.
Background
M/s Bengani Food Products Pvt. Ltd., a company engaged in the export of poultry and cattle feed, had obtained a Marine Open Transit Insurance Policy from National Insurance Co. Ltd., with a coverage limit of ₹200 crores for the period from January 25, 2007, to January 24, 2008.
A consignment of 24,700 quintals of maize was unloaded at the Shalimar Railway Yard in Howrah on February 7, 2007. Of this, 2,627 quintals were immediately sold to a third party. The rest remained stored in the open siding. On the evening of February 7 and again on February 8, the area experienced heavy rainfall, which damaged the maize and caused fungal contamination.
The insured informed the insurer about the incident on February 9, 2007. A surveyor appointed by the insurer initially estimated the loss at ₹62.25 lakh, but later revised it to ₹36.17 lakh after discovering that a significant portion of the stock had been shifted to a private warehouse without informing the insurer.
On September 7, 2007, the insurer rejected the claim, citing Clauses 5 and 8 of the Inland Transit (Rail/Road) Clause A, asserting that the loss occurred after the termination of transit and due to the insured’s failure to take reasonable care.
Proceedings Before NCDRC and the Supreme Court
After the insurer reaffirmed its repudiation, the insured filed a consumer complaint before the National Consumer Disputes Redressal Commission (NCDRC) seeking compensation of ₹3.06 crore. The NCDRC dismissed the complaint on February 18, 2016, holding that the transit had ended and the insurer’s liability had ceased.
Challenging that decision, the insured approached the Supreme Court.
Counsel for the appellant argued that the policy provided warehouse-to-warehouse coverage, including up to seven days after the arrival of the consignment at its final destination, and that the railway yard did not mark the end of the transit. It was also submitted that the insurer failed to act promptly despite timely intimation.
However, the Bench rejected these contentions. Referring to Clause 5 of the policy, the Court noted:
“It has not been shown by the Appellants that the Shalimar Railway Yard was declared as the final warehouse or the named destination under the Insurance Policy… In the absence of any declaration followed by arrangement to that effect, the conclusion that the coverage ceased upon unloading is, in our view, fully justified.”
The Court quoted from its earlier ruling in Vikram Greentech India Ltd. v. New India Assurance Co. Ltd. (2009) 5 SCC 599:
“An insurance contract, is a species of commercial transactions and must be construed like any other contract to its own terms and by itself.”
It further observed:
“The insured cannot claim anything more than what is covered under the Insurance Policy, and that policy terms must be construed as they stand without adding or subtracting words.”
Breach of Duty and Non-Disclosure
The Court also held that the insured had failed to meet its obligations under Clause 8 of the policy, which requires taking reasonable measures to avert or minimise loss. The surveyor’s report noted that the maize was stored in old and torn gunny bags, inadequately protected by plastic sheets, and left exposed to weather conditions despite sufficient opportunity to take preventive steps.
Additionally, the Court noted that 10,910.40 quintals of maize were shifted from the railway yard to a warehouse at Rishra between February 14 and 15, 2007 — a fact that was not disclosed in the original claim. This omission, the Court held, breached the principle of uberrima fides (utmost good faith), which is central to insurance contracts.
Decision
Rejecting the argument that the policy clauses were ambiguous, the Court said:
“Clause 5 is worded with clarity and precision. There is no ambiguity in the manner of termination of coverage… Therefore, the said principle [of contra proferentem] has no application.”
The Court concluded that the NCDRC had rightly upheld the insurer’s repudiation of the claim. Finding no merit in the appeal, the Supreme Court dismissed it without costs.
