Sc Upholds Insurance Policy Time Bar

The Supreme Court has held that a condition in the insurance policy barring claims after a certain period was not void under the Contract Act.

A division bench thus reversed the judgment of the Kerala high court and allowed the appeal of National Insurance Company.

The company had insured a cashew exporter against riot and strike. Large amounts of the companys goods were exposed to damage during a strike. The exporter informed the insurer about the damage, but the company denied any liability. The exporter then filed a suit for recovery of the claim after a year.

The insurance company contested the suit on the ground that it was barred by a condition in the policy which specified that all claims must be made within 12 months of the happening of the loss or damage.

 

The exporter argued that this condition was void under the Contract Act.

Under Section 28 of the Contract Act, an agreement by which a party is restricted absolutely from enforcing his rights under a contract would be invalid.