LI Network
Published on: October 8, 2023 at 18:27 IST
The Supreme Court emphasized that insurance claims should not be denied based on ambiguous policy terms. The Court’s Division Bench, comprising Justices Hima Kohli and P.S. Narasimha, noted that insurance policies cannot repudiate claims on the grounds of ambiguity in the policy itself.
The case revolved around an insurance policy purchased by Mehta Jewelers (the appellant) from the National Insurance Company Limited (the respondent) to cover the ornaments in its Pune showroom. In 2007, a burglary occurred, resulting in the theft of numerous gold ornaments from the shop. However, the insurance claim was rejected, citing that the ornaments were kept in a locally made steel safe, not a burglar-resistant safe.
The appellant challenged the denial of its claim before the State Consumer Disputes Redressal Commission, which ruled in their favor and directed the respondent to pay ₹28,95,600 along with interest. The National Commission subsequently allowed the respondent’s appeal, overturning the State Commission’s findings.
The Supreme Court, in its verdict, upheld the appellant’s claim, stating that it was unjustified for the respondent to repudiate the claim based on the policy’s ambiguity.
The Court concluded that the appellant was not obligated to place the jewelry in a specific type of safe, as the policy did not define “locked safe” or specify its standard make. The amount awarded by the State Commission in favor of the appellant was upheld.
The Court’s decision underscores the importance of clarity in insurance policies and the principle that ambiguous policy terms should not be used to deny legitimate claims.
Ilam Paridi, Advocate, represented the appellant in the case.
CASE TITLE: M/S. MEHTA JEWELLERS V. NATIONAL INSURANCE COMPANY LTD., CIVIL APPEAL NO. 6178/202
