MP govt loses Rs 65 lakh in SC on insurance for its helicopter

NEW DELHI: Madhya Pradesh government on Friday lost a 15 year-old litigation in the Supreme Court as well as Rs 65 lakh it had won in state and national consumer forums against Bajaj Allianz insurance company as compensation for damage to a Bell-430 chopper it had brought from Canada in 2005.
In July 2005 during Babulal Gaur's chief ministership, the MP government bought a Bell-430 helicopter and insured its transportation from Langley, Canada to Bhopal with a transit marine insurance policy with a cover of Rs 20 crore.The chopper in a knocked down state was airlifted to Delhi. At the time of customs clearance, all part were found intact.
Then MP government changed mind and decided to assemble the chopper in Delhi to fly it to Bhopal. It was during the assembling that the crew door was found to have developed a crack and the tail bow got damaged. The insurance company denied liability saying the insurance cover against damage was till customs clearance, when all parts were found intact. MP government moved State Consumer Disputes Redressal Commission, which ruled in favour of it and asked the insurance company to pay Rs 64.89 lakh for repair of the chopper while holding that the insurance was valid till the chopper reached Bhopal. National consumer forum upheld the state commission's finding. Bajaj Allianz appealed in the SC.
A bench of Justices D Y Chandrachud and Ajay Rastogi set aside the concurrent findings of the two consumer forums and said, "the specific act of unpacking the cargo at New Delhi in furtherance of the purpose of assembling it for the flight to Bhopal indicated that the transportation of the cargo in a knocked down state had come to an end."
"The act of unpacking the helicopter for the purpose of assembling it for undertaking the flight to Bhopal was unrelated to the usual or ordinary method of pursuing the transportation of the cargo insured. The policy covered only those risks that were associated with the transportation of the helicopter and did not cover the risks associated with the flight or operation of the helicopter," said Justice Chandrachud, writing the judgment for the bench.
The SC said, "Change in the character of the helicopter from a knocked down state to a ready to fly state exposed the appellant to risks not contemplated by the parties under the policy. The effect of the alteration of the subject-matter insured is outside the scope of the agreed cover and brings an end to the policy. Once the nature of the subject- matter was altered, the cargo cannot be said to be in transit and the appellant is absolved from any liability arising out of any subsequent damage to the consignment."
The bench said had the knocked down parts were transported to Bhopal by road, as was envisaged in the insurance policy, without being assembled at Delhi, then any damage during the course of transportation to the parts of chopper would have been part of the insurance cover. Since, the chopper was assembled at a hangar in Delhi, the liability of the insurance company came to an end the moment the MP government took charge of the chopper for flying purposes.