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A division Bench of Supreme Court comprising of Justice D Y Chandrachud and Justice Hemant Gupta declared that “if the terms of exclusion of policy are not communicated to the insured, the insurer cannot rely on them to repudiate a claim.”
In an appeal before the SC from the National Consumer Disputes Redressal Commission (NCDRC), the apex court heard the claim arose out of policy for theft insurance. In the present matter, a theft occurred in the showroom of Bharat Watch Company carried our using a duplicate key. However, the insurer repudiated the contract on the term that no force or violence is involved in the theft.
The NCDRC took the side of the insurer and held that theft was not covered under insurance since no house-breaking is involved by relying on the judgment of United Insurance Co Ltd v. Harchand Rai in which the SC held the same and claim was not maintained.
However, the SC overruled the judgment of NCDRC observed that as the terms of exclusion were not communicated to the company such terms cannot be relied upon to repudiate the claim. Court further explained that if the terms of exclusion were made known to the insured then in those conditions the decision of Harchand Rai would have applied.
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