Shivram Chandra Jagarnath Cold Storage v. New India Assurance: Deterioration of Stock Insurance

What happened in the Shivram Chandra cold storage case?

Shivram Chandra Jagarnath Cold Storage held a Deterioration of Stock policy covering potatoes stored in its facility. The policy covered damage to the stored stock from contamination or deterioration caused by a rise in refrigeration-chamber temperature resulting from specified loss or damage to insured plant and machinery.

Every business has its own mechanism of loss. A cold-storage operator faces refrigeration failure, temperature change, machinery breakdown and deterioration of perishable stock — risks a standard fire policy is not designed around.

Cold storage case timeline

1. Policy

   A Deterioration of Stock policy covers potatoes held in the insured’s cold store.

2. Loss

   The stored potatoes deteriorate and a claim is made.

3. Dispute

   The insurer declines the claim on the policy wording.

4. 24 January 2022

   The Supreme Court rules in the insurer’s favour on the temperature exclusion.

Did the loss fit the deterioration of stock cover?

A deterioration-of-stock policy is narrow by design. It does not insure against all spoilage; it insures against spoilage caused in a particular way. The dispute required the Court to examine the policy wording, including its temperature exclusion, against the circumstances of the claimed deterioration.

What did the Supreme Court decide?

On 24 January 2022 the Supreme Court ruled in favour of New India Assurance. The claimed loss was caught by the policy’s temperature exclusion, so the policy did not respond.

Put simply, the policy paid only if deterioration followed the chain of events its wording described, and the claim did not meet that wording. A policy called “deterioration of stock” is not a promise to pay for all deterioration.

What should cold-storage and perishable-goods businesses learn?

• Design cover around how the business can actually lose money. For temperature-sensitive goods that means refrigeration systems, machinery condition, power supply and backup, monitoring and alarms.
• Read the trigger, not the title. Find the exact chain of events the policy requires, and the exclusions that cut it back.
• Close the gaps you find. If a likely cause of loss sits outside the cover, ask about endorsements or other specialist cover, or manage the risk operationally.
• Insure peak stock, not average stock. Seasonal peaks can change the amount at risk sharply.
• Let operational records support the claim. Temperature logs, maintenance records, equipment inspection reports, inventory records and incident reports are the evidence a claim will need.

Cold storage insurance checklist

• Policy trigger mapped against the most likely causes of spoilage
• Exclusions — temperature, gradual deterioration, power failure — reviewed with operations
• Temperature logs kept continuously and retained
• Refrigeration plant maintenance and inspection records up to date
• Backup power tested and its capacity documented
• Maximum seasonal inventory value declared
• Response steps for a temperature excursion written down

Why it matters for businesses in Bengaluru and across India

India’s cold chain — agricultural storage, food processing, pharmaceuticals and quick commerce — runs through every major business hub, from Bengaluru and Hyderabad to Pune, Ahmedabad, Delhi NCR and Kolkata. Operators often assume a stock or fire policy covers spoilage. This case shows why that assumption should be tested against the wording before a loss, not after.

How ClearCover helps with stock and cold-chain insurance

ClearCover helps Indian businesses evaluate insurance requirements around property, inventory, employee benefits, liability and other commercial risks — including specialist cover such as deterioration of stock and plant and machinery insurance for refrigeration equipment.

Key terms explained

Deterioration of stock cover

Specialist insurance for spoilage of stored goods caused by specified events, typically a temperature change that follows insured damage to refrigeration plant.

Exclusion

Policy wording that removes specified causes, property or losses from cover.

Policy trigger

The event, or chain of events, that must occur for a policy to respond.

Peak stock

The highest inventory value held during the policy period, which can be far above the average.