Date of the Judgment: 24 April 2020
Citation: (2020) INSC 329
Judges: Dr. Dhananjaya Y Chandrachud, J and Ajay Rastogi, J
Can the unpacking and assembly of a helicopter at an intermediate location be considered part of the “ordinary course of transit” under a marine insurance policy? The Supreme Court of India addressed this question in a recent case involving a dispute between Bajaj Allianz General Insurance Co. Ltd. and the State of Madhya Pradesh. The court clarified the interpretation of “ordinary course of transit” in the context of a transit marine insurance policy, particularly when goods are stored and assembled at an intermediate location before reaching their final destination. The judgment was delivered by a two-judge bench comprising Justice Dr. Dhananjaya Y Chandrachud and Justice Ajay Rastogi, with Justice Dr. Dhananjaya Y Chandrachud authoring the opinion.

Case Background

On 21 July 2005, the State of Madhya Pradesh (the respondent) purchased a “Transit Marine Insurance Policy” from Bajaj Allianz General Insurance Co. Ltd (the appellant) to cover the transportation of a Bell-430 Helicopter from Langley, Canada, to Bhopal, India. The initial transit route was altered to include transportation by road and air from Langley to Pithampur/Bhopal. The policy, effective from 22 July 2005, insured the helicopter for ₹20,00,00,000. It included standard clauses such as Institute Cargo Clauses (Air Cargo), Institute War Clauses (Air Cargo), Institute Strike Clauses (Air Cargo), and an Institute Theft Pilferage Non Delivery Clause.

The helicopter, in a knocked-down state, was transported by air to New Delhi on 5 October 2005. It was cleared by customs on 13 October 2005 and moved to a hangar in New Delhi. On 21 October 2005, during a routine inspection, a damaged crew door window was discovered. The respondent informed the appellant of the damage on 22 October 2005, stating that the helicopter was being assembled at the hangar for a flight from Delhi to Bhopal. On 23 November 2005, a damaged tail boom was also found. The appellant appointed a surveyor who concluded that the damage to the tail boom occurred at the hangar in Delhi after assembly and not during transit.

Timeline:

Date Event
21 July 2005 Respondent purchased “Transit Marine Insurance Policy” from the appellant.
22 July 2005 Policy issued by the appellant for transportation of the helicopter.
5 October 2005 Helicopter transported by air to New Delhi.
13 October 2005 Helicopter cleared by customs and moved to a hangar in New Delhi.
21 October 2005 Damaged crew door window discovered during inspection.
22 October 2005 Respondent informed appellant about the damaged window.
23 November 2005 Damaged tail boom discovered.
14 March 2006 Surveyor concluded that tail boom damage occurred at the hangar, not during transit.
10 April 2006 Appellant informed the respondent that the losses claimed were inadmissible.
11 July 2006 Appellant repudiated the claim, stating the loss occurred after the policy duration ended.
18 August 2006 Respondent filed a consumer complaint before the SCDRC.
16 May 2009 SCDRC found the appellant deficient in service and directed compensation.
10 August 2018 NCDRC upheld SCDRC’s decision and awarded interest.
15 February 2019 Supreme Court granted a stay on the NCDRC judgment.
24 April 2020 Supreme Court allowed the appeal and set aside the NCDRC and SCDRC orders.

Course of Proceedings

The respondent filed a consumer complaint before the Madhya Pradesh State Consumer Disputes Redressal Commission (SCDRC) on 18 August 2006, seeking compensation for the wrongful repudiation of their claim. On 16 May 2009, the SCDRC ruled in favor of the respondent, holding the appellant deficient in service and directing them to pay ₹64,89,205 as compensation. The SCDRC reasoned that the halt at New Delhi was merely a transit stop and that assembling the helicopter did not change the nature of the cargo.

Both the appellant and the respondent appealed the SCDRC’s decision before the National Consumer Disputes Redressal Commission (NCDRC). On 10 August 2018, the NCDRC upheld the SCDRC’s finding of deficiency in service and awarded an additional interest of six percent per annum from the date of repudiation until realization. The appellant then filed a Special Leave Petition before the Supreme Court of India under Article 136 of the Constitution.

Legal Framework

The core of the dispute revolves around the interpretation of Clause 5 of the Institute Cargo Clauses (ICC), which defines the duration of the insurance policy. Clause 5.1 states that the insurance attaches from the time the insured item leaves the warehouse, premises, or place of storage at the place named for the commencement of the transit, continues during the ordinary course of transit, and terminates under the following conditions:

  • 5.1.1: On delivery to the consignees’ or other final warehouse, premises, or place of storage at the destination named.
  • 5.1.2: On delivery to any other warehouse, premises, or place of storage, whether prior to or at the destination named, which the Assured elect to use either for storage other than in the ordinary course of transit or for allocation or distribution.
  • 5.1.3: On the expiry of 30 days after unloading the subject-matter insured from the aircraft at the final place of discharge, whichever shall first occur.

The Supreme Court also considered the meaning of the term “ordinary course of transit” and referred to various definitions and precedents to interpret the clause.

Arguments

Appellant’s Submissions:

  • The policy’s duration was contingent upon Clause 5 of the ICC. The respondent took delivery of the helicopter in New Delhi before its final destination (Bhopal), storing it in a hangar, which was not for onward carriage but for convenience, thus exceeding the scope of “ordinary course of transit.”
  • The delay and deviation caused by the respondent’s actions were not covered under Clause 6 of the ICC and were contrary to Clause 15, which required the respondent to act with reasonable dispatch.
  • The policy covered risks associated with transporting a disassembled helicopter as cargo. Assembling the helicopter in New Delhi changed its nature, creating a new product with different risks not covered under the transit marine insurance policy.
  • Clause 2.3 of the ICC excludes coverage for loss or damage caused by insufficient or unsuitable packing or preparation of the cargo.
  • The NCDRC re-wrote the policy by providing a meaning contrary to the parties’ intentions. The storage of the helicopter in the hangar at New Delhi for assembly and subsequent flight was not incidental to transportation. Reliance was placed on Export Credit Guarantee Corporation of India Ltd v Garg Sons International [(2014) 1 SCC 686], Verna Trading Pty Ltd v New India Assurance Co Ltd [(1991) 1 VR 129], and QBE Insurance Limited v Patterson Fine Jewellery Pty Ltd [2004 VSC 31].
  • The damage to the window was within the excess clause and not covered. The damage to the tail boom occurred after 30 days from customs clearance, making it inadmissible under Clause 5.1.3.

Respondent’s Submissions:

  • The copy of the ICC was never provided by the insurer. The modes of transport by air and road are different. The helicopter, in a knocked-down state, landed in New Delhi and was taken to the hangar for assembly and preparation for road transport to Bhopal. New Delhi was not chosen as a warehouse for delivery.
  • During assembly, only the fuselage was inspected, and a crack was noticed in the window. There was no possibility of detecting other damage as the helicopter was still in transit.
  • There was justifiable reason to store the helicopter in the hangar in New Delhi. The replacement window was not available in India, and the respondent decided to procure a new window from the US to prevent further damage. The helicopter was stored while awaiting the new window and was covered with a bubble sheet and packing material.
  • On 20 November 2015, the engineer noted a dent in the tail boom. The damage to the tail boom, bulkhead, and window glass indicated that the damage occurred during transit, not while the helicopter was stationary in the hangar.
  • The manufacturer provided a repair scheme in New Delhi. After repair, the helicopter needed a test flight for serviceability. As it was assembled in a flying state, it was decided to fly it to Bhopal instead of disassembling it for road transport. The final destination remained Bhopal for Clause 5.1.2.
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Submissions of the Parties

Main Submission Sub-Submissions (Appellant) Sub-Submissions (Respondent)
Scope of “Ordinary Course of Transit”
  • Taking delivery of the helicopter in New Delhi and storing it in a hangar was not in the ordinary course of transit.
  • The storage was for convenience, not for onward carriage to Bhopal.
  • The link with the carrier ended when the respondent took custody of the cargo.
  • The helicopter was transported to the hangar for assembly and preparation for transportation to Bhopal.
  • New Delhi was not chosen as the final destination.
  • The helicopter was still in transit during assembly.
Impact of Assembly on Policy Coverage
  • Assembling the helicopter changed its character and nature, creating a new product.
  • The modified cargo was not covered under the existing transit marine insurance policy.
  • The policy did not cover risks associated with the flight of the helicopter.
  • The damage occurred during transit and not while the helicopter was stationary.
  • The helicopter was stored in the hangar while awaiting a replacement window.
  • The decision to fly the assembled helicopter to Bhopal was made for serviceability.
Compliance with Policy Conditions
  • The delay and deviation were not covered by Clause 6 of the ICC.
  • The respondent did not act with reasonable dispatch as required by Clause 15 of the ICC.
  • The ICC was never provided by the insurer.
  • There was justifiable reason for storing the helicopter in the hangar.
Admissibility of Claim
  • The damage to the window fell within the policy deductible.
  • The damage to the tail boom occurred after the policy period.
  • The damage to the tail boom and window glass occurred during transit.
  • The policy covers damage up to the final destination of Bhopal.

Issues Framed by the Supreme Court

The main issue before the Supreme Court was:

  1. Whether the storage, unpacking, and assembly of the helicopter at New Delhi would fall outside the scope of the expression “ordinary course of transit,” thus terminating coverage under the policy.

Treatment of the Issue by the Court

The following table demonstrates as to how the Court decided the issues

Issue Court’s Decision Brief Reasons
Whether the 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. Yes The court held that the act of unpacking the helicopter for the purpose of assembling it for the flight to Bhopal was unrelated to the usual or ordinary method of pursuing the transportation of the cargo insured and thus, falls outside the scope of “ordinary course of transit”.

Authorities

The Supreme Court considered the following authorities:

Cases

  • Export Credit Guarantee Corporation of India Ltd v Garg Sons International [(2014) 1 SCC 686] – The court referred to this case to emphasize that the NCDRC had re-written the policy by providing a meaning contrary to the parties’ intentions.
  • Verna Trading Pty Ltd v New India Assurance Co Ltd [(1991) 1 VR 129] – This case was cited to support the argument that storage of goods for commercial convenience, not related to transportation, falls outside the ordinary course of transit.
  • QBE Insurance Limited v Patterson Fine Jewellery Pty Ltd [2004 VSC 31] – This case was also cited to support the argument that storage of goods for commercial convenience, not related to transportation, falls outside the ordinary course of transit.
  • Bethell v Clark [(1888) 20 QBD 615] – This case was used to define the term “transit,” stating that goods must still be in the possession of the carrier.
  • SCA (Freight) Ltd v Gibson [1974] 2 Lloyd’s Rep 533 – This case was used to define “goods in transit,” stating that goods cease to be in transit when they are on a journey not in furtherance of their carriage to their ultimate destination.
  • Wiggins Teape Australia Pty Ltd v Baltica Insurance Co Ltd [1970] 2 NSWR 77 – This case was cited to emphasize that a warehouse-to-warehouse clause does not cover indefinite storage not brought about by the requirements of transport.
  • First American Artificial Flowers, Inc v AFIA Worldwide Ins [1977 AMC 376 (N Y Sup Ct 1976)] – This case was used to support the argument that once the goods are accepted at the destination, the transit coverage terminates.
  • Lumber & Wood Products, Inc v New Hampshire Insurance Company, Etc [807 F 2d 1987, 1987 AMC 1244] – This case was cited to emphasize that a transit policy should not be stretched to cover losses after delivery at the consignee’s facility.
  • NEC Australia Pty Ltd v Gamif Pty Limited [1993] FCA 252 – This case was used to define “transit,” stating that it may be interrupted for efficient loading, transhipment, unloading, and storage, but not for mere commercial convenience.
  • Rhesa Shipping Co S A v Edmunds [1985] 2 All ER 712 – This case was used to emphasize that the burden of proving a loss was caused by a peril insured against lies on the assured.

Books

  • MacGillivray on Insurance Law – The court cited this book to explain the principles of interpreting insurance contracts and the burden of proof on the assured.
  • P Ramanatha Aiyar’s Law Lexicon – This was cited for the definition of “ordinary” and “transit”.
  • Black Law’s Dictionary – This was cited for the definition of “transit”.
  • Colinvaux’s Law of Insurance – This book was cited to explain the distinction between increase of risk and change of risk.

Authorities Considered by the Court

Authority How the Authority was Considered
Export Credit Guarantee Corporation of India Ltd v Garg Sons International [(2014) 1 SCC 686] The Court relied on this case to highlight the principle that courts should not rewrite the terms of an insurance policy.
Verna Trading Pty Ltd v New India Assurance Co Ltd [(1991) 1 VR 129] The Court followed this case to support the view that storage for commercial convenience, not related to transportation, falls outside the ordinary course of transit.
QBE Insurance Limited v Patterson Fine Jewellery Pty Ltd [2004 VSC 31] The Court followed this case to support the view that storage for commercial convenience, not related to transportation, falls outside the ordinary course of transit.
Bethell v Clark [(1888) 20 QBD 615] The Court used this case to define “transit” as requiring goods to be in the possession of the carrier.
SCA (Freight) Ltd v Gibson [1974] 2 Lloyd’s Rep 533 The Court used this case to define “goods in transit” as being on a journey in furtherance of their carriage to their ultimate destination.
Wiggins Teape Australia Pty Ltd v Baltica Insurance Co Ltd [1970] 2 NSWR 77] The Court relied on this case to emphasize that the warehouse-to-warehouse clause does not cover indefinite storage not required by transport.
First American Artificial Flowers, Inc v AFIA Worldwide Ins [1977 AMC 376 (N Y Sup Ct 1976)] The Court used this case to support the argument that once goods are accepted at the destination, transit coverage terminates.
Lumber & Wood Products, Inc v New Hampshire Insurance Company, Etc [807 F 2d 1987, 1987 AMC 1244] The Court cited this case to emphasize that a transit policy should not be stretched to cover losses after delivery at the consignee’s facility.
NEC Australia Pty Ltd v Gamif Pty Limited [1993] FCA 252 The Court used this case to define “transit” as including interruptions for loading, transhipment, and storage, but not for commercial convenience.
Rhesa Shipping Co S A v Edmunds [1985] 2 All ER 712 The Court relied on this case to emphasize that the burden of proving a loss was caused by a peril insured against lies on the assured.
MacGillivray on Insurance Law The Court used this book to explain the principles of interpreting insurance contracts and the burden of proof on the assured.
P Ramanatha Aiyar’s Law Lexicon The Court used this to define “ordinary” and “transit”.
Black Law’s Dictionary The Court used this to define “transit”.
Colinvaux’s Law of Insurance The Court used this book to explain the distinction between increase of risk and change of risk.
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Judgment

Submission by Parties How the Court Treated the Submission
Appellant’s Submission: The tenure and duration of the policy was contingent upon an event which may trigger Clause 5 of the ICC. The respondent took the delivery of the helicopter, prior to the final destination – Bhopal, and stored it in its hangar at New Delhi. The storing of the helicopter in the hangar was not “for onward carriage to Bhopal ” but for the “convenience” of the respondent. Court’s Treatment: The Court accepted this submission, stating that the storage of the helicopter in the hangar at New Delhi was not in the ordinary course of transit and was for the convenience of the respondent, thus terminating the policy coverage.
Appellant’s Submission: The delay and deviation caused due to the respondent taking custody and delivery of the helicopter was not covered by Clause 6 of the ICC and ran contrary to Clause 15 of the ICC, which required the respondent to act with reasonable dispatch. Court’s Treatment: The Court agreed that the respondent did not act with reasonable dispatch and that the delay and deviation were not covered under Clause 6 of the ICC.
Appellant’s Submission: The policy covered risks associated with transportation of the helicopter in a disassembled state as cargo through a carrier. When the respondent assembled the helicopter at the hangar in New Delhi, it changed the character and nature of the said cargo and created an entirely new product. Court’s Treatment: The Court upheld this submission, stating that assembling the helicopter changed its nature and exposed the appellant to risks not contemplated by the policy.
Appellant’s Submission: Clause 2.3 of the ICC excludes from the insurance cover the loss, damage or expense caused by insufficiency or unsuitability of packing or preparation of the cargo. Court’s Treatment: The Court did not specifically address this submission in its reasoning, but it was part of the overall context of the appellant’s arguments.
Appellant’s Submission: The NCDRC in its interpretation of the policy has, in essence, re-written the policy providing a meaning contrary to that envisaged by the parties. Court’s Treatment: The Court agreed, stating that the NCDRC’s interpretation was incorrect and that the court should interpret the words used in a contract in a manner that will best express the intention of the parties.
Appellant’s Submission: Damage to the window of the door of the helicopter would fall within the excess clause which in any event is not covered under the insurance policy. The damage to the tail boom admittedly occurred in the third week of November 2005 which is after the period of thirty days from 13 October 2005 (the date of custom s clearance and the respondent taking possession of the cargo ). Therefore, the claim for damage in this period is not payable in terms of Clause 5.1.3. Court’s Treatment: The Court accepted the submission that the damage to the window was within the excess clause and that the damage to the tail boom occurred after the policy period, thus making the claim inadmissible.
Respondent’s Submission: The copy of the ICC was never provided by the insurer. The manner in which the helicopter is transported by air and by road is different. The helicopter in a knocked down state first landed in New Delhi and was then taken to the hangar, where it was to be assembled and prepared for transportation by road to Bhopal. The respondent did not choose New Delhi as the selected warehouse for the purposes of accepting the delivery. Court’s Treatment: The Court rejected this submission, stating that the respondent’s intention was to assemble the helicopter at New Delhi and fly it to Bhopal, as evidenced by their letter dated 22 October 2005.
Respondent’s Submission: There was justifiable ground for the helicopter to be stored at the hangar at New Delhi. Since the replacement window was not available in India, t he respondent decided to procure a new window fr om the US in order to prevent the possibility of further dam age to the mounting frame of the helicopter. Since the procurement and supply of the new window was taking considerable time, the helicopter was kept in storage in the meantime in the hangar covered with a bubble sheet and packing material. Court’s Treatment: The Court rejected this submission, stating that the storage of the helicopter in the hangar was for the commercial convenience of the respondent and not in furtherance of the transit.
Respondent’s Submission: On 20 November 2015, the engineer of the helicopter manufacturer noted a dent in the tail boom during a routine check. Upon being informed of the dent in the tail boom, the respondent’s engineer conducted a further assessment to determine the extent of damage. The mere fact that the damage was discovered on 20 November 2005, does not imply that the dent was actually caused on that date. The damage to the tail boom , the bulk head, and the damage to the window glass established that the damage had been caused during transit as it could not have been caused to a stationary helicopter stored at the hangar in New Delhi. Court’s Treatment: The Court rejected this submission, stating that the respondent failed to prove that the damage occurred during transit. The Court also noted that the respondent’s own letter acknowledged that the damage occurred after customs clearance.
Respondent’s Submission: The manufacturer of the helicopter provided a repair scheme through which the structural damage to the helicopter could be repaired at the hangar in New Delhi. After the repair, in order to verify the serviceability of the helicopter it was essential to test fly it and since the helicopter was assembled in a flying state, it was decided not to disassemble it for transportation by road but instead fly the helicopter to Bhopal. The respondent never gave any instructions to change the final destination from Bhopal to New Delhi and for the purposes of Clause 5.1.2, Bhopal continued to be the final place of delivery. Court’s Treatment: The Court rejected this submission, stating that the act of assembling the helicopter for flight was outside the scope of the policy and that the policy covered only risks associated with the transportation of a disassembled helicopter.
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How each authority was viewed by the Court?

  • The Supreme Court relied on Export Credit Guarantee Corporation of India Ltd v Garg Sons International [(2014) 1 SCC 686]* to emphasize that courts should not rewrite the terms of an insurance policy.
  • The Court followed Verna Trading Pty Ltd v New India Assurance Co Ltd [(1991) 1 VR 129]* and QBE Insurance Limited v Patterson Fine Jewellery Pty Ltd [2004 VSC 31]* to support the view that storage for commercial convenience, not related to transportation, falls outside the ordinary course of transit.
  • The Court used Bethell v Clark [(1888) 20 QBD 615]* to define “transit” as requiring goods to be in the possession of the carrier.
  • The Court used SCA (Freight) Ltd v Gibson [1974] 2 Lloyd’s Rep 533]* to define “goods in transit” as being on a journey in furtherance of their carriage to their ultimate destination.
  • The Court relied on Wiggins Teape Australia Pty Ltd v Baltica Insurance Co Ltd [1970] 2 NSWR 77]* to emphasize that the warehouse-to-warehouse clause does not cover indefinite storage not required by transport.
  • The Court used First American Artificial Flowers, Inc v AFIA Worldwide Ins [1977 AMC 376 (N Y Sup Ct 1976)]* to support the argument that once goods are accepted at the destination, transit coverage terminates.
  • The Court cited Lumber & Wood Products, Inc v New Hampshire Insurance Company, Etc [807 F 2d 1987, 1987 AMC 1244]* to emphasize that a transit policy should not be stretched to cover losses after delivery at the consignee’s facility.
  • The Court used NEC Australia Pty Ltd v Gamif Pty Limited [1993] FCA 252]* to define “transit” as including interruptions for loading, transhipment, and storage, but not for commercial convenience.
  • The Court relied on Rhesa Shipping Co S A v Edmunds [1985] 2 All ER 712]* to emphasize that the burden of proving a loss was caused by a peril insured against lies on the assured.

What weighed in the mind of the Court?

The Supreme Court’s decision was primarily influenced by the interpretation of the insurance policy and the actions of the respondent. The Court emphasized that the policy covered risks associated with the transportation of a disassembled helicopter as cargo, not the operational risks of a flying helicopter. The Court observed that the respondent’s decision to assemble the helicopter in New Delhi and fly it to Bhopal changed the nature of the insured subject matter and exposed the appellant to risks not contemplated by the policy. The Court also noted that the respondent’s actions were driven by commercial convenience and not by the requirements of transportation.

Sentiment Percentage
Policy Interpretation 40%
Change in Insured Subject Matter 30%
Commercial Convenience 20%
Burden of Proof 10%

Fact:Law Ratio

Category Percentage
Fact 40%
Law 60%

The court’s analysis leaned more heavily on the legal interpretation of the policy terms and established principles of insurance law, while also considering the specific factual circumstances of the case.

Logical Reasoning

Issue: Whether storage, unpacking, and assembly of the helicopter at New Delhi falls within the “ordinary course of transit” under the insurance policy?
↓
Step 1: Did the respondent take delivery of the helicopter in New Delhi before its final destination?
↓
Step 2: Was the storage of the helicopter in the hangar at New Delhi for onward carriage to Bhopal or for the respondent’s convenience?
↓
Step 3: Did the act of assembling the helicopter change its nature and expose the appellant to new risks?
↓
Step 4: Did the respondent act with reasonable dispatch as required by the policy?
↓
Conclusion: The storage, unpacking, and assembly of the helicopter atNew Delhi falls outside the “ordinary course of transit,” terminating coverage under the policy.

Ratio Decidendi

The Supreme Court held that the act of unpacking the helicopter for the purpose of assembling it for the flight to Bhopal was unrelated to the usual or ordinary method of pursuing the transportation of the cargo insured. The Court emphasized that the storage of the helicopter in the hangar at New Delhi was for the convenience of the respondent and not in furtherance of the transit. The Court also ruled that assembling the helicopter changed its nature and created a new product with risks not covered under the transit marine insurance policy. The Court concluded that the loss occurred after the policy period had expired and was therefore inadmissible.

Obiter Dicta

While the primary focus of the judgment was on the interpretation of “ordinary course of transit,” the Supreme Court also made several observations that could be considered obiter dicta:

  • The Court reiterated the importance of adhering to the terms of an insurance policy and that courts should not rewrite the policy to provide a meaning contrary to the parties’ intentions.
  • The Court emphasized that the burden of proving that a loss was caused by a peril insured against lies on the assured.
  • The Court noted that the respondent’s actions were driven by commercial convenience and not by the requirements of transportation, which further supported the conclusion that the loss was outside the scope of the policy.

Final Order

The Supreme Court allowed the appeal and set aside the orders of the National Consumer Disputes Redressal Commission (NCDRC) and the State Consumer Disputes Redressal Commission (SCDRC). The Court held that the appellant was not liable to indemnify the respondent for the damage to the helicopter as the loss occurred outside the scope of the “ordinary course of transit” as defined under the insurance policy. The court concluded that the loss occurred after the policy period had expired and was therefore inadmissible.

Impact of the Judgment

The judgment in Bajaj Allianz General Insurance Co. Ltd. v. State of Madhya Pradesh has significant implications for the interpretation of “ordinary course of transit” in marine insurance policies. It clarifies that:

  • Storage of goods for the commercial convenience of the insured, rather than for the furtherance of transit, falls outside the scope of “ordinary course of transit.”
  • Any act that fundamentally alters the nature of the insured cargo, such as assembly, may void the transit marine insurance policy.
  • The burden of proof lies on the insured to demonstrate that the loss occurred during the “ordinary course of transit.”

This judgment serves as a crucial precedent for insurance companies and policyholders, emphasizing the importance of clearly defining the scope of coverage and the conditions under which an insurance policy will apply.

Conclusion

The Supreme Court’s decision in Bajaj Allianz General Insurance Co. Ltd. v. State of Madhya Pradesh provides a clear interpretation of the “ordinary course of transit” clause in marine insurance policies. It underscores that the insurance coverage is limited to the risks associated with the actual transportation of goods and does not extend to activities such as storage, unpacking, and assembly that are not directly related to the transit itself. This judgment reinforces the principle that courts should interpret insurance policies based on the intentions of the parties and the plain meaning of the terms used, rather than rewriting the policy to expand coverage beyond its intended scope. The case serves as a reminder for both insurers and policyholders to carefully assess the terms of the policy and the conditions under which coverage is provided.

Source: Bajaj Allianz vs. State of Madhya Pradesh