1964 (9) TMI 73 - SC - Companies Law

Insurance policy termination upheld under Clause 10, costs awarded. Court rejects contra proferentem rule.

The appeal was dismissed with costs. The court affirmed that the insurance policy had been validly terminated by the respondent under Clause 10, which ... - Issues Involved:1. Termination of insurance policy.2. Interpretation of Clause 10.3. Application of contra proferentem rule.4. Repugnancy between clauses.5. Validity of conditional termination.6. Interest on judgment.Issue-wise Detailed Analysis:1. Termination of Insurance Policy:The primary issue was whether the insurance policy had been terminated by the respondent. The respondent contended that it had the power under Clause 10 of the policy to terminate the contract at will and had exercised this power through the letter dated August 7, 1947. The appellant argued against this, suggesting that termination should be for a reasonable cause and that the termination in this case was not reasonable.2. Interpretation of Clause 10:The court emphasized that it is the court's duty to give effect to the bargain of the parties according to their intention, which is to be looked for in the words used unless they do not convey the intention correctly. Clause 10 stated, 'This insurance may be terminated at any time at the request of the insured,' and 'the insurance may also at any time be terminated at the instance of the company.' The court found no ambiguity in these words, concluding that the clause clearly allowed either party to terminate the policy at will. The appellant's reference to various authorities, including Halsbury's Laws of England, did not assist in implying a term that termination could only be for a reasonable cause.3. Application of Contra Proferentem Rule:The appellant argued that the contra proferentem rule should be applied, which suggests that any ambiguity in a standard form contract should be interpreted in favor of the party that did not draft it. However, the court noted that this rule does not apply where there is no ambiguity in the words. Since Clause 10 was clear and unambiguous, there was no scope for applying the contra proferentem rule.4. Repugnancy Between Clauses:The appellant contended that in a deed where two clauses are repugnant to each other, the earlier prevails. The court found that there was no repugnancy between the clause fixing the term of the policy for one year and Clause 10, which allowed for termination at will. Both clauses could stand together, with Clause 10 effectively acting as a proviso to the one-year term. The court dismissed this argument, noting that it was not even raised in Hart's case, which had a similar clause.5. Validity of Conditional Termination:The appellant argued that the termination by the letter of August 7, 1947, was conditional upon the removal of goods to a safer locality, which was impossible due to prevailing circumstances. The court found no evidence that the condition was impossible to perform and noted that the letter clearly terminated the policy while offering an option to keep the policy active if certain actions were taken. The court concluded that the termination was valid and not conditional in a manner that would make it illegal.6. Interest on Judgment:The appellant claimed interest on the judgment for the looted goods, which the trial court allowed but the High Court set aside. The High Court noted that the respondent had deposited the amount of the decree in court soon after the trial court's judgment, and there was no evidence that the deposit was made long after the decree. The court found no material to show that the appellant could not withdraw the money without furnishing security. Consequently, the court did not find this a fit case to interfere with the High Court's order regarding interest on the judgment.Conclusion:The appeal was dismissed with costs, affirming that the insurance policy had been validly terminated by the respondent under Clause 10, which was clear and unambiguous in allowing termination at will. The court also upheld the High Court's decision on the issue of interest on the judgment.