Insurance Ombudsman Awards Quashed and Remitted: Raj HC

Insurance Ombudsman Must Examine Whether Cover Was Taken After Goods Reached US: Rajasthan High Court Quashes 24 Awards

Published: 22 October 2026 · NyayVidhan

The Rajasthan High Court quashed 24 awards of the Insurance Ombudsman, Jaipur, which had allowed an exporter's marine cargo claims for silver jewellery consignments lost in post to New York, and remitted them for fresh decision (paras 2, 41-42). The Ombudsman had not examined whether the insurance certificates were obtained after the parcels had reached the US Import Office, a question going to the existence of the insured risk; the Court made no finding of suppression (paras 30, 32, 36).

Key holdings

An insurer’s plea emerging from the insured’s own disclosures is not a new ground barred by the repudiation letter (paras 20-21, 23).

Insurance is a contract of utmost good faith; materiality is judged by the prudent-insurer test under Section 20 of the Marine Insurance Act (paras 25-26).

Whether the risk still existed when the certificate was issued is an anterior question to coverage under an open cover (paras 28, 30).

The deposited award amount stays with the Registrar General until the Ombudsman decides afresh (para 39).

Judgment digest by NyayVidhan: a summary of the court's judgment, not its text. The judgment itself is the authoritative version.

Brief Facts

The respondent, proprietor of an export firm, held an open cover marine cargo policy from Oriental Insurance for silver jewellery shipments during 2022-23 (para 3). Twenty-four consignments sent by registered post from Jaipur to New York were not delivered; the insurer repudiated the claims for delayed intimation, failure to preserve recovery rights and other breaches (paras 2, 5). The Insurance Ombudsman allowed the claims (para 12). The insurer then correlated the dates disclosed in the complaints and found, for example, a parcel dispatched on 18.05.2022 that reached the US Import Office on 21.05.2022, with the certificate issued on 27.05.2022 (paras 6, 8, 29).

Court's Findings

Mindful that Article 227 confers limited supervisory jurisdiction (para 17), the Court accepted that an insurer cannot ordinarily add grounds not taken in the repudiation letter, as Galada Power and JSK Industries hold, but held the objection could not be applied absolutely here (paras 18-19). The arrival dates came from the respondent's own complaints, so no new fact was introduced, and the insurer could not have pleaded a date it did not know (paras 20-21). A new factual circumstance emerging from the existing record differs from a new ground (para 23). Under Sections 19 and 20 of the Marine Insurance Act, 1963, insurance rests on utmost good faith and material circumstances must be disclosed (paras 25-26). The anterior question was whether the risk still existed when the certificate was obtained, which the Ombudsman did not address while treating the dispatches as within the open cover (paras 28, 30). The Court drew no conclusive finding on suppression or liability; the omission of a material circumstance called for remand, not adjudication by the writ court (paras 32, 34, 36).

Legal Principle

Where an Insurance Ombudsman has not considered a material circumstance appearing from the record, such as insurance being obtained after the goods had reached their destination, the writ court may quash the award and remit the matter, leaving liability to be decided afresh on the facts (paras 23, 32, 34, 37).

Precedents Relied Upon

Shalini Shyam Shetty and Another v. Rajendra Shankar Patil (2010) 8 SCC 329
Applied Discussed at ¶ 14, 17
Article 227 confers limited supervisory, not appellate, jurisdiction, to be used sparingly to correct jurisdictional errors or grave injustice.
Sadhana Lodh v. National Insurance Company Ltd & Anr. AIR 2003 SC 1561
Referred To Discussed at ¶ 15, 17
Relied on by the respondent on the limits of supervisory jurisdiction; noted as taking a similar view.
M/s Garment Craft v. Prakash Chand Goel 2022 (1) Civil Court Cases 662
Referred To Discussed at ¶ 15, 17
Relied on by the respondent on the limits of supervisory jurisdiction; noted as taking a similar view.

View all precedents (11)

Galada Power and Telecommunication Limited v. United India Insurance Company Limited & Another (2016) 14 SCC 161
Distinguished Discussed at ¶ 18, 19, 20, 21
An insurer cannot raise a ground different from that in the repudiation letter; not applied in absolute form where the fact emerged from the insured's own complaints.
JSK Industries Private Limited v. Oriental Insurance Company Limited 2022 SCC OnLine SC 1451
Distinguished Discussed at ¶ 18, 19, 20, 21
Reiterated that an insurer cannot go beyond the repudiation letter; not applied in absolute form on these facts.
United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal AIR 2004 SC 4794
Referred To Discussed at ¶ 14, 31
Policy terms are construed strictly; applicability deferred until the suppression issue is decided.
Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR 1999 SC 3252
Referred To Discussed at ¶ 14, 31
The insurer's liability cannot extend beyond the policy's coverage and conditions; applicability deferred.
Sonell Clocks and Gifts Ltd. v. New India Assurance Co. Ltd. AIR 2018 SC 4146
Referred To Discussed at ¶ 14, 31
Policy conditions such as prompt notice of loss must be complied with; applicability deferred.
New India Assurance Co. Ltd. v. Hira Lal Ramesh Chand and Others AIR 2008 SC 2620
Referred To Discussed at ¶ 14, 31
Liability depends on contractual coverage and proved facts; applicability deferred.
R. Rama Rao v. P. Nirmala & Others AIR 1997 SC 1923
Referred To Discussed at ¶ 14, 31
Notice under Section 10 of the Carriers Act, 1865 must be given within time; applicability deferred.
Oriental Insurance Co. Ltd. v. Samayanallur Primary Agricultural Coop. Bank AIR 2000 SC 10
Referred To Discussed at ¶ 14, 31
Policy terms are construed strictly; applicability deferred until the suppression issue is decided.

Statutory Provisions