New Delhi: The Supreme Court has decided to examine a case involving the repudiation by the insurer of an insurance claim of Rs 1.50 crore arising out of damage caused to the assets of Krishnapatnam Port Trust in Andhra Pradesh in the 2004 tsunami.
Admitting an appeal filed by the KPT, a bench of Justices Madan B. Lokur and A.K. Goel, after hearing senior counsel Shayam Divan and counsel Vipin Nair, said it would examine whether “tsunami” was an insurable risk or not under the terms of Marine Hull Insurance Policy which covers all risks pertaining to “perils of the sea”, but excludes “earthquake and volcanic eruption”.
On a petition from the KPT, the national consumer commission had held that tsunami was not specifically excluded from the list but created an additional exclusion by a deeming legal fiction.
The commission said, “Firstly, since earthquake, which is an excepted clause, was the proximate cause for tsunami, even tsunami gets excluded from the cover of the policy. Secondly, in fact (it was the) earthquake which led to the loss of the insured and not tsunami and therefore since earthquake is an excepted clause, the loss is not payable under the policy.”
In its appeal in the apex court, KPT contended that the commission made a serious error in including tsunami as an additional exclusion, although the policy excludes only “earthquake and volcanic eruption”.
KPT said it had been repeatedly held by the Supreme Court that an insurance policy had to be strictly construed, especially the exclusion clause, and any event which was not specifically excluded could not be brought within the exclusion clause by a legal fiction.
The KPT sought quashing of the commission’s order and a direction to the insurance company to pay Rs 1.50 crore as per its claim.
