Supreme Court of India ruling in The New India Assurance Co. Ltd. v. Louis Dreyfus Commodities India Pvt. Ltd. (2026 INSC 876, decided 18 August 2026):
Headnotes
Marine Cargo Annual Turnover Policy Insurance cover extended to ₹1200 crores turnover; fire incident occurred when turnover had already exceeded insured limit; insurer repudiated claim. (Paras 3–5)
Section 64VB Insurance Act – Premium payment Statutory embargo: insurer cannot assume risk unless premium received in advance; post‑facto payment cannot regularise coverage. (Paras 9–11)
NCDRC ruling – Liability imposed NCDRC directed insurer to pay assessed damages, relying on email assurance that coverage continued despite turnover exceeding insured amount. (Paras 6–7)
Supreme Court – Section 64VB mandatory Court held Section 64VB attracted; turnover exceeded coverage by July 2010; additional premium paid only on 17.12.2010, after incident; insurer not liable. (Paras 11–12)
Agent’s authority – Limits Divisional Manager’s assurance email lacked authority; agent cannot enlarge risk or waive statutory precondition; apparent authority doctrine inapplicable. (Paras 12, Kotiswar Singh concurring paras 2–6)
Estoppel – Not against statute Acceptance of premium after incident does not estop insurer; estoppel cannot override statutory mandate of Section 64VB. (Paras 13)
Principal–agent relationship – Contract Act Court analysed Sections 182, 186–188, 226, 237 of Contract Act; agent’s authority confined to acts necessary and usual; cannot create new risk without principal’s manifestation. (Kotiswar Singh, paras 2–6)
Appeals allowed – Claim repudiation upheld Supreme Court set aside NCDRC order; insurer not liable for fire loss; appeals allowed. (Paras 14)
This judgment is significant because it reaffirmed the strict statutory bar under Section 64VB of the Insurance Act, holding that risk cannot be assumed without advance premium, and clarified that agents cannot bind insurers beyond their authority or waive statutory requirements.
