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2015 (7) TMI 1161
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....ncern dealing in handicraft goods, being desirous of exporting its goods to a buyer, namely, M/s Treasures of India, Atlanta, USA took insurance cover from the first respondent on 15.6.1999 and accordingly the appellant was issued a Shipment Comprehensive Risk Policy on the same date. The maximum liability of the respondent-insurer under the policy was Rs. 30 lakhs. The insurer had initially granted provisional credit limit of Rs. 8 lakhs on 14.7.1999 in respect of M/s Treasures of India which was enhanced to Rs. 10 lakhs on 20.7.1999 and later on enhanced to Rs. 20 lakhs. The appellant had sent one consignment of Rs. 6,50,000/- to M/s Treasures of India on 15.7.1999 and a declaration to that effect was duly sent to the respondents. Be it noted, the appellant has arrayed the Export Credit Guarantee Corporation Limited, Nariman Point, Mumbai through its Managing Director and the same corporation at Suryakant Complex, Ludhiana through its Branch Manager as respondents 1 and 2 respectively. As averred, the appellant had obtained further orders from the aforesaid buyer and the shipments were required to be sent immediately. The appellant kept writing to the respondents to send the appr....
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....ed by the authorised person. The State Commission, appreciating the factual matrix in entirety came to hold that the complaint had been filed by a properly authorised person but it was barred by limitation. However, the State Commission proceeded to deal with the matter on merits and in that regard came to hold that:- "27. The shipment made on 20.8.99 vide invoice No.006 for Rs. 4,76,139/-, whose copy is annexure P-13 cannot be taken into consideration because complainant had changed the terms of payment which had been mentioned as 60 days DA i.e. payment after 60 days of delivery while it is mentioned to be 90 days DA in annexure P-9 i.e. payment on acceptance of documents within 90 days from the date of shipment and not 60 days. It has been stated in the insurance policy under the terms and conditions, whose copy is annexure P-4 under heading "General" in conditions 28 and 29 that due performance and observance of each term and condition contained herein or in the proposal or declaration shall be a condition precedent to any liability of the Corporation hereunder and if the insured fails to comply with the condition, then policy shall be deemed to have been waived. Since, comp....
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.... of payment, the non-taking of steps by the appellant for retrieving the goods and accordingly opined that there had been violation of the terms of the policy and the appellant had not been diligent to protect the shipment. Being of this view, it dismissed the appeal. 6. We have heard Mr. Nidhesh Gupta, learned senior counsel for the appellant and Mr. Bharat Sangal, learned counsel for the respondents. 7. On a scrutiny of facts, it is clear as crystal that one consignment of Rs. 6,50,000/- was sent to M/s. Treasures of India on 15.7.1999 and a declaration to that effect was also communicated to the respondents. Similarly, on 20.8.1999, the appellant made another shipment of Rs. 4,76,139/- to the same buyer i.e. M/s. Treasures of India and declaration was sent to the Corporation. It is also undisputed that the appellant had sent two shipments amounting to Rs. 2,77,732/- and Rs. 1,00,512/- on 20.8.1999. The stand of the appellant is that as the earlier two transactions covered the credit limit of Rs. 10 lakhs and as the Corporation was causing undue delay in granting the limit, the latter two consignments were sent at the risk of the appellant. As the buyer refused to accept th....
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....vately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, "similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured"." Regard being had to these principles, the authorities cited by Mr. Gupta, learned senior counsel for the appellant are to be seen. 10. In Amalgamated Electricity Co. v. Ajmer Municipality (1969) 2 SCR 430 = AIR 1969 SC 227 , though in a different context, it has been held that:- "In construing the true nature of the contract entered into between the parties, the contract has to be read as a whole and if so read it is clear that what the plaintiff undertook was to pump water from the wells in question and not to supply any electrical energy. Hence we are in agreement with the learned Judges of the High Court that the plaintiff's case in this regard should fail." 11. In Bay Berry Apartments (P) Ltd. and Another v. Shobha and others (2006) 13 SCC 737 , the Court has observed that in construing a document, the Court cannot assi....
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....imself, because he wrote, close upon the expiry of the time of the cover notes that either a policy should be issued to him before that period had expired or the cover note extended in time. In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being." 14. Mr. Gupta, learned senior counsel for the appellant has also drawn our attention to Baj (Run Off) Ltd. v. Durham and others (2012) UKSC 14, wherein the Supreme Court of United Kingdom, while interpreting the contract of insurance has opined:- "To resolve these questions it is necessary to avoid over-concentration on the meaning of single words or phrases viewed in isolation, and to look at the insurance contracts more broadly. As Lord Mustill observed in Charter Reinsurance Co. Ltd. v. Fagan &nb....
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....ditions of the policy, for it has nowhere been prescribed in the policy that insured has to get the bill noted and protested at buyer's country in order to claim the amount under the policy. It is argued by him that the terms of the policy are to be construed strictly and neither any addition nor any subtraction from it is permissible. To substantiate the said stand, he has placed reliance on United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644 . 17. The aforesaid authorities being basically pronouncements pertaining to the construction to be placed on a policy, we shall proceed to deal with the terms and conditions of the policy. We may hasten to add that Mr. Bharat Sangal, learned counsel for the respondent-Corporation has basically urged that there has been gross violation of the terms and conditions of the policy and the clauses in policy have to be read as they are inasmuch as there is no ambiguity in any of the clauses. As regards the interpretation, he has placed reliance on Oriental Insurance Co. Ltd. v. Sony Cheriyan (1999) 6 SCC 451, wherein it has been held thus:- "The insurance policy between the insurer and the insured represents a c....
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....uld not be liable unless otherwise agreed to by the Corporation in writing. Clause 28 provides for observance of conditions which specifically states that due performance and observance of each term and condition contained in the policy or the declaration or the proposal or declaration shall be a condition precedent to fasten liability on the Corporation. Clause 29 deals with the failure to comply with the conditions. It says that no failure by the insured to comply with the terms and conditions of the policy would bee deemed to have been waived, excused or accepted by the Corporation unless there has been express waiver by the Corporation in writing. Clause 30 deals with uncovered risks and states that if any account or bill in respect of any shipment declared exceeds the limits provided under the policy, no acknowledgement of the declaration of the Corporation, no payment or tender of premium by the insured shall be deemed to bind the Corporation to undertake the liability. These are the basic components of the policy. 20. Learned counsel for the respondents has contended that the appellant has violated clauses 3, 7, 8, 19, 27, 28 and 29 of the policy. Relying on the authoriti....
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....s that the Commission has returned a finding that the appellant has not taken any steps to retrieve the goods and has not communicated anything to the Debt Collecting Agency. It is argued that there is no obligation under the policy conditions to do so and, in fact, the appellant had taken all requisite steps as suggested by the Corporation vide letter dated 11.1.2000. In any case, as per Clause 23 of the policy, there is a postulate that the respondent-Corporation has to make payment to the appellant of the amount due under the policy and only after payment of such amount, the Corporation could ask the insured to take steps as stipulated in the clause and, therefore, the finding recorded by the Commission is absolutely misconceived. As far as writing to the Debt Collecting Agency is concerned, learned senior counsel has seriously criticized the finding recorded by the Commission on the ground that there are documents to show that it had communicated as per the address given by the Corporation and there was a communication by the insured to the insurer that the address was incorrect and the registered letter sent by him had returned. The request sent at the correct address remained....
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.... any of the statements contained in the Proposal or the Declaration be untrue or incorrect in any respect, this Policy shall be void but the Corporation may retain any premium that has been paid. 2. Disclosure of facts: Without prejudice to any rule of law it is declared that this Policy is given on condition that the Insured has at the date of issue of this Policy disclosed and will at all times during the operation of this Policy promptly disclose all facts in any way affecting the risks injured. xxx xxx xxx 7. Obligations of the Insured: The Insured shall: (a) use all reasonable and usual care, skill and forethought and take all practicable measures, including any measures which may be required by the Corporation, (including if so required the institution of legal proceedings) to prevent or minimize loss. 8. Declarations: (a) Declarations of shipments: On or before the 15th day of each calendar month, the Insured shall deliver to the Corporation a declaration, in the form prescribed by the Corporation, of all shipments made by him during the previous month. If no shipment has been made during a month, a 'NIL' declaratio....
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....subtracted. That apart, as has been held in Polymer India (P) Ltd. (supra), it is the duty of the Court to interpret the document as is understood between the parties and regard being had to the reference to the stipulations contained in it. 26. Keeping in view the aforesaid parameters of law, we are required to appreciate the stipulations in the policy pertaining to rejection on the said score. Clause 8(a) which deals with declarations, assumes significance. The said clause requires that before the 15th day of each calendar month, the insured shall deliver to the Corporation a declaration in the prescribed format of all shipments made by him during the previous month and if no shipment has been made during a month, a 'NIL' declaration shall nevertheless be submitted. Clause 9 deals with minimum premium and Clause 10 with incidence of premium and payment of additional premium. Clause 19(a), as has been indicated earlier, deals with exclusion of liability. Clause 19, the exclusionary clause, categorically states that unless otherwise agreed to by the Corporation in writing, the Corporation shall cease to have any liability in respect of gross invoice value of any shipment or part....
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.... all shipments to which this policy applies" occurring is clause 10. Clause 30, as Mr. Gupta would submit, deals with uncovered risks which are not in accordance with the policy. It is his submission that payment of premium in respect of uncovered risks shall not bind the Corporation to undertake the liability. The proponement propounded by Mr. Gupta, on a first blush, seems quite attractive, but on a keener scrutiny it has to pale into insignificance. Terms of the policy are to be strictly construed. There can be no cavil about the proposition of law that in case of ambiguity, the construction has to be made in favour of the insured. Clauses 8(a) and 19(a) deal with declarations and the exclusion of liability respectively. They are absolutely specific. Clause 2 deals with disclosure of facts. Clause 10 deals with incidence of premium and payment of additional premium and Clause 30 with uncovered risks. Clause 8(a) and 19(a), which we have reproduced hereinabove are absolutely clear as crystal and as per the stipulations therein the insured has been cast an obligation under the policy. He is obliged under the policy to deliver to the Corporation a declaration on or before 15th day ....
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....ng though is flawed, the ultimate conclusion, which is based upon our independent analysis, is correct. 28. Before parting with the case we must take note of another aspect which has been highlighted by Mr. Gupta relying upon the decision in ABL International Ltd. and another v. Export Credit Guarantee Corporation of India Ltd. and other (2004) 3 SCC 553 . In the said case the Export Credit Guarantee Corporation of India Ltd., an instrumentality of State, had repudiated the claim of the claimant against which a writ petition was filed before the learned Single Judge of the Calcutta High Court praying for quashment of the repudiation. The learned Single Judge after hearing parties came to the conclusion that the dispute between the parties arose out of a contract of insurance and the first respondent being a State for the purpose of Article 12, was bound by the terms of the contract and accordingly allowed the writ petition. In intra-court appeal the Division Bench opined that the claim of the writ petitioner involved disputed questions of fact and hence, could not be adjudicated in a writ proceeding under Article 226 of the Constitution. However, it proceeded to state that the l....
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....making the first respondent Corporation liable to pay for the insured risk, that is: (i) there should be a default on the part of the Kazak Corporation to pay for the goods received; and (ii) there should be a failure on the part of the Kazakhstan Government to fulfil their guarantee." After so stating the court ruled that there was no violation of the stipulations of the contract by the insured. While dealing with the grant of relief the court referred to the decision in Kumari Shrilekha Vidyarthi v. State of U.P. (1991) 1 SCC 212 and held thus:- "53. From the above, it is clear that when an instrumentality of the State acts contrary to public good and public interest, unfairly, unjustly and unreasonably, in its contractual, constitutional or statutory obligations, it really acts contrary to the constitutional guarantee found in Article 14 of the Constitution. Thus if we apply the above principle of applicability of Article 14 to the facts of this case, then we notice that the first respondent being an instrumentality of the State and a monopoly body had to be approached by the appellants by compulsion to cover its export risk. The policy of insurance covering th....