The Supreme Court of India allowed the appeals filed by the insurance company, setting aside the final judgment and order of the National Consumer Disputes Redressal Commission (NCDRC). The dispute arose from the repudiation of a marine cargo insurance claim following a fire incident that destroyed a large quantity of cotton bales stored at a Container Freight Station. The insurer rejected the claim on the grounds that the respondent’s actual turnover had far exceeded the initial insured sum of INR 1200 Crores prior to the fire, and additional premium had not been paid in advance, thereby hitting a statutory bar under Section 64VB of the Insurance Act, 1938. While the NCDRC had ruled in favor of the insured based on an email clarification issued by a Divisional Manager stating that coverage would continue even if the turnover exceeded the limit, the Supreme Court held that statutory mandates cannot be overridden by agent representations or post-facto regularizations. The Court ruled that Section 64VB strictly prohibits the assumption of risk unless premium is received in advance, and an agent cannot confer a liability on the principal that is legally barred by statute.

Factual Background: The respondent secured a Marine Cargo Annual Turnover Policy extending up to INR 1200 Crores for the year 2010, payable in two half-yearly installments. On November 7, 2010, a fire broke out at the Container Freight Station, damaging a large stock of cotton bales. The insurer repudiated the claim on the ground that the turnover had already crossed INR 1200 Crores months before the incident, and no additional premium had been paid to cover the excess risk prior to the loss.
Application of Section 64VB of the Insurance Act, 1938:
The Court emphasized that Section 64VB imposes a strict statutory embargo preventing insurers from assuming any risk unless the corresponding premium has been received in advance or guaranteed within a prescribed time.
Because the insured’s actual turnover surpassed the insured sum by July 2010, the active coverage ceased to apply to excess volumes in the absence of advance payment or extension.
Limits of Agency and Officer Assurances:
The NCDRC had relied on an email dated May 17, 2010, where a Divisional Manager of the insurance company stated that transits remain covered even if the turnover crosses INR 1200 Crores.
The Supreme Court, referencing principles of agency law (Sections 182, 188, 237 of the Contract Act) and precedents like Harshad J. Shah v. LIC and Dilawari Exporters v. Alitalia Cargo, held that an agent’s authority is limited to lawful acts within the scope of their duty.
A managerial designation does not grant an agent the authority to override statutory requirements or bind the principal to liabilities that the statute explicitly forbids.
Inapplicability of Estoppel and Post-Facto Regularization:
The additional premium paid by the respondent on December 17, 2010, and the corresponding endorsement explicitly took effect prospectively from that date.
The doctrine of estoppel cannot be invoked against or in contravention of a mandatory statute. Consequently, payment made weeks after the accident cannot retrospectively regularize coverage for an incident that occurred when no valid premium was in force.

2026 INSC 876

The New India Assurance Company Limited & Ors. v. M/s Louis Dreyfus Commodities India Pvt. Ltd. (D.O.J. 18.08.2026)