Supreme Court of India· 18 August 2026
Does an insurer's acceptance of additional premium after the incident estop it from relying on Section 64VB of the Insurance Act, 1938?
THE NEW INDIA ASSURANCE COMPANY LIMITED & ORS v. M/S LOUIS DREYFUS COMMODITIES INDIA PVT. LTD
2026 INSC 876 · Civil Appeal Nos. 7687-7688 of 2025
Coram: Sanjay Karol; Nongmeikapam Kotiswar Singh
Answer
No. An insurer that takes the premium in instalments for its own convenience cannot hide behind Section 64VB, but that applies only where the amount paid was part of the original coverage for which payment in instalments was agreed. Where the payment links directly to a turnover that had already been surpassed when the incident took place, it is hit by Section 64VB, which provides no possibility for post facto regularisation, and the rule of estoppel cannot apply against or in contravention of a statute. The additional endorsement itself accepted the additional premium with effect only from 17.12.2010.
Headnote
Insurance Act, 1938 — s.64VB — Indian Contract Act, 1872 — ss.182, 188, 226, 237 — Marine Cargo Annual Turnover Policy — assumption of risk without premium — authority of an agent — estoppel against a statute —
Insurance Act, 1938 — s.64VB — statutory embargo on assuming risk before premium —
Held: Section 64VB places a statutory embargo on an insurer assuming risk before the premium is received or guaranteed to be paid, and sub-section (2) bars assumption of risk earlier than the date on which the premium has been paid. (¶10)
Insurance Act, 1938 — s.64VB — turnover-based policy — premium for the excess turnover —
Held further: Where the amount for which the insured stood insured is exceeded, it is incumbent upon the insured to extend the coverage by paying the amount based on estimated turnover, or at least guaranteeing to pay it, before the additional risk can attach. (¶11)
Indian Contract Act, 1872 — implied authority of an agent — internal directive of the principal —
Held further: A principal is liable for the actions of its agents only where done in accordance with the rules and regulations of the principal; a clear directive confining premium adjustment to downward revision leaves circumstances that do not permit such authority. (¶12)
Insurance Act, 1938 — s.64VB — estoppel and waiver against a statute — post facto regularisation —
Held further: Acceptance of additional premium after the incident works no estoppel, since estoppel cannot apply in contravention of a statute and Section 64VB provides no possibility for post facto regularisation; the endorsement operates only from the date of payment. Appeals allowed. (¶13, 14)
In the Court's own words
Paragraph 13Another argument must be dealt with that since the appellants had accepted the payment of additional premium, it is now estopped from refusing to cover the incident. This argument cannot be accepted for two reasons. It is a position in law that if an insurer does a particular act for their own convenience, such as taking the premium in instalments, they cannot hide behind Section 64VB but this situation would have been applicable to the present case if the additional amount paid was a part of the original coverage of INR 1200 Crores for which payments in instalments was agreed to be accepted by the appellants. But since this payment directly links to turnover and would in effect make the appellant liable for an incident that took place at a time when the coverage based on the turnover had already been surpassed, it has to be hit by Section 64VB, which provides no possibility for post facto regularisation. The rule of estoppel has been discussed in Shyam Telelink Ltd. v. Union of India,[^9] but it is well settled that the same cannot apply against or in contravention of a statute. [See: Electronics Corpn. of India Ltd. v. Secy., Revenue Deptt., Govt. of A.P.[^10] and State of W.B. v. Gitashree Dutta[^11]] As such, since the Section clearly enjoins the assumption of risk by insurance companies such as the appellants before the amount is paid, the statement by the employee of the appellants would not have any value. Furthermore, the additional endorsement issued by the appellants accepting the additional premium paid by the respondent on 17.12.2010 clearly states that the effect of such acceptance would accrue from the said date. Accordingly, the argument by the respondent that a condition for the benefit of the insurer (Section 64 VB) can be, and has been in the present case, waived by conduct has to be negated because the appellants have assumed the risk arising out of the payment of additional premium only from the date of its payment and not prior thereto.
Paragraph 13We accordingly hold that the email dated 17 May 2010 was issued in the course of the insurer’s business and is relevant to the contemporaneous understanding of the policy. It binds the insurer only to the extent that it concerned matters falling within the Divisional Manager’s actual or apparent authority. It cannot, however, operate as an independent source of additional or unlimited insurance, nor can the subsequent endorsement, expressly effective from 17 December 2010, retrospectively ratify such an undertaking. Therefore, the principle qui facit per alium facit per se applies to acts within the agent’s authority, however, it does not enable an agent to confer upon the Principal a liability which the agent was neither authorised nor legally competent to assume on its behalf.
Acts & Sections
s.64VB Insurance Act, 1938s.182 Indian Contract Act, 1872s.188 Indian Contract Act, 1872s.226 Indian Contract Act, 1872s.237 Indian Contract Act, 1872s.196 Indian Contract Act, 1872s.23 Consumer Protection Act, 1986One judgment a day. That's the whole habit.
Read the full text of THE NEW INDIA ASSURANCE COMPANY LIMITED & ORS v. M/S LOUIS DREYFUS COMMODITIES INDIA PVT. LTD — and get the Supreme Court's output as a five-minute daily read, with plain-language headnotes and the questions each judgment settles.
Create my free accountFree forever plan · 30 seconds · data stays in India
Open the full judgment →