SC – Agent Authority Cannot Override Section 64VB & Insurer as Principal
Judgment dated 18.8.2026 of the Supreme Court of India Nos.7687-7688 of 2025 of The New India Assurance Company Limited and others Vs. M/s ouis Dreyfus Commodities India Pvt Ltd.
Section 64VB of the Insurance Act that no risk to be assumed unless premium is received in advance & Conditions of the Insurance Policy
the turnover of the respondent was a central aspect in the functioning of the Marine Cargo Annual Turnover Policy insurance cover so provided. The agreement was extended to INR 1200 Crores and adjustable under the special conditions as per the actual turnover.
The amount for which the respondent stood insured was exceeded in terms of turnover on 10.07.2010 itself, well before the incident. It was, therefore, incumbent upon the respondent, in view of the clear stipulation under Section 64VB, to either extend the coverage by paying the amount based on estimated turnover or at least guaranteeing to pay the same within a particular time period.
Section 64VB itself places statutory restriction on the insurer itself.
Principal and Agent Relationship –
The present case stands differently insofar as the disputed portion of the email is relied upon not merely as an act of policy administration, but as authority for continuation of insurance risk beyond the extent which, for the reasons recorded in the main judgment, could lawfully attach without further compliance with Section 64VB of the Insurance Act, 1938.
It is not in dispute that the statutory command is directed to the insurer as principal. Consequently, for the reasons recorded in the main judgment, assumption or continuation of the additional risk required compliance with Section 64VB, an agent cannot, by invoking actual or ostensible authority, confer upon the insurer a capacity which the statute itself withholds.
We 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 Page 15 of 16 which the agent was neither authorised nor legally competent to assume on its behalf.
