Contra proferentem in insurance contracts: ambiguous policy terms are construed against the insurer, not overridden by external guidelines.

An ambiguous insurance clause in a commercial cover must be read as a whole and in light of its commercial purpose, and any remaining ambiguity is construed against the insurer under contra proferentem. External DGFT guidelines could not be used to defeat the insured's reasonable construction of the policy where the cover was directed at non-payment risk rather than in-transit risk, and the relevant documents did not make initial loading decisive. The claim therefore could not be rejected on the basis of the date of despatch or shipment, and the insured was entitled to the contractual benefit with consequential relief.

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Issues: (i) Whether the date of despatch or shipment under the insurance policy had to be construed by reference to the DGFT guidelines so as to deny the insured claim. (ii) Whether, on the true construction of the policy, the ambiguous expression had to be interpreted against the insurer under the rule of contra proferentem.

Issue (i): Whether the date of despatch or shipment under the insurance policy had to be construed by reference to the DGFT guidelines so as to deny the insured claim.

Analysis: The policy was intended to cover the risk of non-payment by the foreign buyer, not in-transit risk. The relevant policy language did not make the commencement date of loading decisive. The surrounding commercial context, the Mate's Receipt, the Bill of Lading, and the purpose of the cover showed that the claim could not be rejected merely because loading had begun before the policy became effective. The DGFT material, even if considered, did not support denial of the claim on the facts because the relevant procedural provision pointed to the Bill of Lading and the containerised-cargo exception was not attracted.

Conclusion: The claim could not be denied on the basis of the DGFT guidelines or the date of initial loading.

Issue (ii): Whether, on the true construction of the policy, the ambiguous expression had to be interpreted against the insurer under the rule of contra proferentem.

Analysis: Insurance contracts must first be read as a whole and in light of the commercial purpose of the cover. If ambiguity survives that exercise, the term must be construed against the drafter and in favour of the insured. The policy language was not sufficiently clear to justify the insurer's restrictive reading, and the external guideline could not override the insured's reasonable construction of the contract.

Conclusion: The ambiguity had to be resolved in favour of the insured and against the insurer.

Final Conclusion: The rejection of the claim was unsustainable, and the insured was entitled to the contract benefit with consequential relief.

Ratio Decidendi: An ambiguous insurance clause in a commercial contract must be construed by reading the contract as a whole and in light of its commercial purpose, and if ambiguity persists it must be interpreted against the insurer and in favour of the insured; external guidelines cannot be used to defeat that construction unless they clearly govern the contract.

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