Failed Export Goods Insurance Claim Upheld – Bombay HC says no Re-Reading of Policy Terms
Judgment dated 15.10.2025 of the High Court of Bombay in Comm. Arbitration Petition No.2 of 2025 (OS) of ECGC Limited Vs. Baco Metallic Industries
The petitioner issued Shipment Comprehensive Risk Policy to the Respondent Baco for 2016 to 2017. In terms of the policy, the respondent was to apply for a credit limit approval before making shipment of its leather footwear to an Italian buyer.
Baco effected shipments during policy period. Buyer raised disputes over quality of the products. Baco denied the quality issues but agreed for deductions of $45,000 in current invoices. However, the Buyer defaulted in payments.
Baco raised insurance claim for the value of exported goods not paid by the buyer.
The Arbitral claim was allowed with interest from the date of cause of action, pendente lite and post-award with costs of Rs.9.95 lakhs.
AT held that the deductions by ECGC on the ground of quality disputes are not tenable and also held that the quality issue raised by the Buyer appeared to be afterthought to wriggle out of the liability.
ECGC was in a binary position and could have either taken a view that the quality dispute was untenable (to honour the claim) or that it was meritorious (to deny the claim as being entirely excluded). It was not open to ECGC to bargain its way through the proceedings, offering different amounts at different stages of the proceedings.
