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2026 Supreme(Online)(NCDRC) 327

IN THE NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION AT NEW DELHI

CONSUMER COMPLAINT NO. 897 OF 2016

RESERVED ON: 26.11.2025

PRONOUNCED ON: 07.04.2026

V. Mahesh

Liquidator for M/s. Nagarjuna Oil Corporation Ltd.

Having registered Office at

No.39/19, Aspen Court, 3rd Floor, 6th Main Road,

R.A. Puram, Chennai-600 028. … Complainant

Versus

1. New India Assurance Company Ltd.

The Insurer, with the registered Office at

New India Assurance Building, 87, MG Road,

Fort, Mumbai-400001.

2. M/s. K.M. Dastur Reinsurance Brokers Pvt. Ltd.

Registered Office at Cambata Building,

42, Maharshi Karve Road, Mumbai-400020.

3. ICICI Lombard Gen. Insurance Co. Ltd.

Having its registered Office at ICICI Lombard House,

414, Veer Savarkar Marg,

Near Siddhi Vinayak Temple,

Prabhadevi, Mumbai-400025.

4. IFFCO Tokyo Gen Insurance Co. Ltd.

Having its registered Office at

IFFCO Tower, 4th & 5th Floors,

Plot No.3, Sector-29,

Gurgaon-122001, Haryana.

5. HDFC Ergo General Insurance Company Ltd.

Having its Office at HDFC House,

1st Floor, 165-166, Backbay Reclamation,

H.T. Parekh Marg, Churchgate,

Mumbai-400 020.

6. National Insurance Company Ltd.

Having its Registered Office at

3, Middleton Street, Middleton Row,

Prafulla Chandra Sen Sarani,

Kolkata, West Bengal-700071. …Opposite Parties

BEFORE:

HONBLE MR. JUSTICE SUDIP AHLUWALIA, PRESIDING MEMBER

HON’BLE AVM J RAJENDRA AVSM VSM (Retd), MEMBER

For Complainant : Mr. Sanjeev Anand, Sr. Advocate

Ms. S. Ramamani, Advocate

For Opposite Parties : Mr. Abhishek Kumar Gola, Advocate for

OPs-1, 3 to 7

Mr. D. Varadarajan & Mr. Rajat Khattry,

Advocates for OP2

Advocates:
For the Appellants/Petitioners: Sanjeev Anand, S. Ramamani
For the Respondents: Abhishek Kumar Gola, D. Varadarajan, Rajat Khattry

A consumer who obtains insurance for asset indemnity is not considered to be acting for a commercial purpose. However, premiums paid for an insurance policy cannot be refunded after the contract period expires if the insurer has actively carried the risk during the subsistence of the policy.

Headnote:(A) Consumer Protection Act, 1986 - Section 2(1)(d) - Erection All Risks Insurance Policy - Refund of premium - Complainant being a corporate entity obtained insurance for its project - Insurance of assets for indemnity does not constitute hiring services for a commercial purpose - Complainant qualifies as a 'consumer' - Maintainability of complaint against insurers upheld. (Paras 22, 23)

(B) Contract of Insurance - Indemnity - Claim for refund of premium - Policy extensions granted at the request of the insured - Insured cannot resile from a concluded contract after enjoying coverage for the entire period without contemporaneous objection - Premium paid for risk already undertaken by the insurer is not refundable merely because no claim arose during the policy term. (Paras 24, 25, 27)

Facts of the case:
The complainant, a business entity, obtained an erection insurance policy for a large refinery project. Due to delays and project standstill, the policy was extended multiple times upon the request of the insured. After the expiry of the insurance period, the complainant sought a refund of the premiums paid for the extended periods, alleging the policy was non-est due to the absence of active erection work and that the insurer failed to provide appropriate 'silent risk' cover.

Findings of Court:
The court held that obtaining insurance for indemnity against asset loss is not for a commercial purpose, thus the complainant is a consumer. However, on merits, the court found that the insurance contract remained active and the insurer carried the risk throughout the period. The complainant, having voluntarily sought extensions and accepted terms without objection, could not reclaim premiums after the lapse of the contract.

Issues: The main issues were whether the corporate entity qualified as a consumer and whether the insurer was liable to refund premiums for a policy where the insured alleged there was no subsisting project risk, despite the policy being active and extended at the insured's request.

Ratio Decidendi: An insurance contract is a contract of indemnity. Where an insurer has provided coverage and assumed risk during a contractually agreed period upon the insured's request, the premium cannot be recovered after the contract concludes solely because no loss occurred or the insured identifies a more suitable alternative post-facto.

Result: Complaint dismissed.

JUDGMENT

AVM JONNALAGADDA RAJENDRA, AVSM VSM (Retd), MEMBER

1. The present Consumer Complaint has been filed under Section 21 of the Consumer Protection Act, 1986 (for short “the Act”) against the Opposite Parties seeking to direct the OPs:

“a) (i) Holding that the 2nd extension of the First EARI Policy and the issue of 2nd EARI policy as defective and non-est as was issued during the total cessation of work with the general exclusion of total cessation of work and refund the entire premium of Rs.29,75,53,310 collected by the respondents or in the alternative refund of Rs.19,69,98,310/- by subtracting the estimated premium for SFSP Policy Rs.10,05,55,000 from Rs.29,75,53,310 treating the risk as silent risk during the complete cessation of work.

(b) Interest @ 18% on the refund amount with effect from the date of receipt of last premium instalment till date of payment.

(c) Pay compensation Rs.1.50 Cr for the deficiencies in service rendered by the respondents as mentioned in para 125+ of the complaint.

(d) Cost of the proceedings before the Hon’ble Commission.

(e) Pass any other order as it deems fit under the circumstances of the case.”

2. Brief facts of the case, as per the complaint, are that the Complainant, Nagarjuna Oil Corporation Ltd. (NOCL) undertook the installation and commissioning of a 5.9 MMTPA petroleum refinery project at Thiruchopuram Village, Tamil Nadu. The project involved relocation of an existing 5.0 MMTPA Mobil refinery from Germany along with refurbishment and installation of new equipment. To cover risks during erection, testing and commissioning of the said project, the Complainant, through its insurance broker OP-2, obtained an Erection All Risks Insurance (EARI) Policy No. 710400/44/08/04/40000001 from OP-1 as the lead insurer, with OPs 3 to 6 as co-insurers. During pre-placement negotiations, OP-2 informed the Complainant on 19.07.2007 that reinsurers were required to be informed of any cessation of work beyond four weeks and that continuation of cover during such cessation would require negotiation. After reinsurance discussions, OP-2 sought advance premium to bind reinsurance and advised that risk would commence from the date of such advice vide communication dated 13.05.2008. OP-1 agreed to act as lead insurer on 21.05.2008. Pursuant to which, the Complainant paid a deposit of Rs.1,00,00,000 on 04.06.2008. The co-insurance arrangement was confirmed on 29.07.2008 and a written quotation dated 27.08.2008 was issued, separating “Cover” from “Conditions” and referring to multiple endorsements, though placing an aggregate limit of indemnity of Rs.200 crores for losses due to storm and flood under the “Conditions” section. The First EARI policy was reflected in a schedule signed on 24.12.2008 for the policy period from 10.12.2008 to 09.12.2011, with a Sum Insured of Rs. 3,273.59 Crores and total premium of Rs.31,96,28,430 (exclusive of service tax), payable in eleven instalments. The Complainant alleged that although the policy was presented as an “all risks” cover, a sub-limit of Rs.200 Cr was imposed for Storm, Cyclone, Flood and Inundation (STFI) risks, which substantially reduced the scope of coverage. Upon expiry of the original period, a short extension from 10.12.2011 to 09.03.2012 was granted on payment of additional premium.

3. On the intervening night of 30/31.12.2011, Tropical Cyclone “Thane” struck Cuddalore, causing extensive damage. Pursuant to orders of the District Collector, total cessation of work commenced from 01.01.2012. In view of the complete standstill, the Complainant sought “silent risk” cover for idle assets under a Standard Fire and Special Perils (SFSP) policy. However, OP-1 declined such cover and insisted that EARI cover be continued, representing that reinsurers would not support testing and commissioning if the project was shifted to SFSP cover. Relying on these representations and under pressure from lending banks, the Complainant sought a further 12-month extension b

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2026 Supreme(Online)(NCDRC) 327

A consumer who obtains insurance for asset indemnity is not considered to be acting for a commercial purpose. However, premiums paid for an insurance policy cannot be refunded after the contract period expires if the insurer has actively carried the risk during the subsistence of the policy.

Cases Referred (2)