Full Judgment Text
2025 INSC 453
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2323 OF 2021
SOHOM SHIPPING PVT. LTD. …APPELLANT(S)
VERSUS
M/S. THE NEW INDIA
ASSURANCE CO. LTD. & ANR. …RESPONDENT(S)
J U D G M E N T
SATISH CHANDRA SHARMA, J.
1. The present dispute hinges on the phrase “voyage should
commence & complete before monsoon sets in” contained in the
contract for insurance between the parties, and raises questions
regarding its validity, interpretation and materiality.
2. The appeal before us has been preferred by the Appellant
under Section 67 of the Consumer Protection Act, 2019
(hereinafter “ COPRA ”) against the final judgement and order
Signature Not Verified
Digitally signed by
BORRA LM VALLI
dated 13.04.2021 (hereinafter " Impugned Order ”) passed by the
Date: 2025.04.07
17:34:06 IST
Reason:
C.A. NO. 2323 of 2021 Page 1 of 17
National Consumer Disputes Redressal Commission, New Delhi
(hereinafter “ NCDRC ”) dismissing the consumer complaint
filed by the Appellant herein on account of the doctrine of
Uberrima Fidei being compromised.
3. Factual Background
3.1. The Appellant is engaged in the shipping business
and has its offices at Sougor Road Kulpi, Diamond
Harbour, Haldia and Kolkata. The Appellant
purchased a newly built barge ‘Srijoy II’
(hereinafter “ the Vessel ”) and sought to undertake
its maiden voyage from Mumbai to Kolkata.
3.2 In pursuance of the same, the Appellant applied for
a ‘single voyage permit’ to the Director General of
Shipping (hereinafter “ DGS ”), wherein the Vessel
was expected to sail from Mumbai on 30.04.2013
and arrive at Kolkata on 15.05.2013. The DGS
directed the Indian Register of Shipping (hereinafter
“ IRS ”) to carry out a detailed inspection.
3.3 The Appellant sought to insure its voyage and the
Vessel, and submitted its insurance proposal to the
Respondent. Thereafter, an insurance contract was
entered into between the parties for the period
between 16.05.2013 to 15.06.2013 (hereinafter “ the
Insurance Contract ”). The Insurance Contract
C.A. NO. 2323 of 2021 Page 2 of 17
contained a special condition that the “voyage
should commence & complete before monsoon sets
in”. Further, it contained Special Warranties, inter
alia that the “Vessel to depart in local weather
condition not exceeding Beaufort Scale No. 4…”.
3.4 The IRS granted clearance to the Appellant to
undertake its voyage in accordance with MS
Circular No. 03 of 2008. Thereafter, the DGS issued
a “No objection” with respect to the same.
3.5 The Vessel undertook the voyage on 06.06.2013.
Unfortunately, on the very next day it was anchored
off near Ratnagiri Port due to bad weather and
engine failure. Ultimately, the Vessel ran aground.
3.6 The Appellant sought assistance from the
Respondent for towing and salvaging the Vessel
after the Insurance Contract had expired. On
25.07.2013, the Appellant issued a ‘Notice of
Abandonment’ to the Respondent claiming total loss
on the ground that repair of the Vessel would be
more expensive than the amount insured for.
3.7 On 12.09.2013, the Respondent issued a
‘Repudiation Notice’ rejecting the claim of the
Appellant on the ground that the Vessel set sail after
‘monsoon set in’ breaching the special condition in
C.A. NO. 2323 of 2021 Page 3 of 17
the Insurance Contract. Subsequently, the surveyor
appointed by the Respondent issued its final report
concluding that the Appellant was in wilful breach
of the condition.
3.8 Aggrieved by the repudiation of the insurance
claim, the Appellant herein filed a consumer
complaint under Section 21 of COPRA before the
NCDRC. Vide Impugned Order dated 13.04.2021,
the NCDRC dismissed the complaint on the ground
that the Appellant suppressed material facts by not
disclosing all its plans to the Respondent, and did
not conduct itself in good faith.
4. Submissions by the Appellant
4.1 Mr. Huzefa Ahmadi, learned Sr. Counsel for the
Appellant has strongly urged before us that the
conclusion drawn by the NCDRC is contrary to law
and prays for the same to be set aside.
4.2 The primary contention of the Appellant is that the
Respondent knew or should have known that the
policy period covers the foul period, and therefore
the policy cannot stand repudiated on this ground.
4.3 That the special condition contained in the insurance
contract was non-material as the Respondent was
aware that the voyage was to be undertaken in foul
C.A. NO. 2323 of 2021 Page 4 of 17
weather. Further, in the event that the special
condition is to be taken into account, there has been
an implied waiver of the same at the time of entering
into the contract as the period of 1 month for which
the insurance cover was availed of, covers the foul
weather period as well, and the Respondent was
aware that the Vessel would be travelling from
Mumbai to Kolkata through Kerala, where the
st
monsoon sets in on June 1 .
4.4 That the Court must apply the common law rule of
verba chartarum fortius accipiuntur contra
proferentem or simply put ‘ Contra Proferentum’
against the Respondent as the phrase is ambiguous
on account of extrinsic evidence of surrounding
circumstances (Reliance placed on General
Assurance Society Ltd. v. Chandumull Jain & Anr.
(1966) 3 SCR 500; Industrial Promotion and
Investment Corporation of Orissa Ltd. v. New
India Assurance Company Ltd. & Anr. (2016) 15
SCC 315; Dawsons Ltd. v. Bonnin [1992] 2 A.C.
413 .
4.5 The Appellant has also submitted that the
Respondent failed its duty to conduct reasonable
C.A. NO. 2323 of 2021 Page 5 of 17
due diligence as it provided the policy knowing the
circumstances.
4.6 That if the special condition is treated as a condition
precedent, it would result in absurd consequences as
any claim made would fall foul of the special
condition (Reliance placed on Ramji Karamsi v.
The Unique Motor and General Insurance Co.
Ltd. AIR 1951 Bom 347 .
5. Submissions by the Respondent
5.1 Mr. Devadatt Kamat, learned Sr. Counsel for the
Respondent has placed strong reliance on the
Impugned Order as a well-reasoned, valid and legal
order which ought not to be interfered with.
5.2 That the Appellant has breached the special
condition by setting sail after monsoon had set in.
Clause 3.1.2 of the Insurance Contract was also
breached by the Appellant inasmuch as it breached
the conditions imposed by the IRS, by sailing in
waters where the height of the wave is more than 2
metres.
5.3 The counsel for the Respondent submits that the
special condition is determinable and precise, which
dispels all arguments regarding its ambiguity and in-
C.A. NO. 2323 of 2021 Page 6 of 17
turn the applicability of the rule of Contra
Proferentum .
5.4 That the Appellant has committed forgery and
fabricated the policy it submitted to the authorities
as no amendment to the special condition has been
carried out between the parties.
5.5 That as per the DGS Notice No. 03/2008, the foul
st
weather season starts on 1 June, and the policy was
valid from 16.05.2013 to 15.06.2013.
5.6 That no statement was made in the application by
the Appellant regarding its intention to set sail in the
foul season.
5.7 The Respondent has also placed reliance on the
judgements of this Court, namely, Sea Lark
Fisheries v. United India Insurance Co. & Anr.
(2008) 4 SCC 131 ; Deokar Exports (P) Ltd. v New
India Assurance Co. Ltd. (2008) 14 SCC 598;
Contship Container Lines Ltd. v. D.K. Lall & Ors.
(2010) 4 SCC 256; Rajankumar & Brothers
(Impex) v. Oriental Insurance Co. Ltd. (2020) 4
SCC 364; and Hind Offshore (P) Ltd. v. Iffco-
Tokio General Insurance Co. Ltd. (2023) 9 SCC
407 .
C.A. NO. 2323 of 2021 Page 7 of 17
Discussion and Analysis
6. We have given our careful consideration to the
submissions made on both sides of the bar, and perused the
materials provided. The only question which falls for our
consideration is, whether, the special condition stands breached
justifying the de facto repudiation of the Appellant’s claim by the
Respondent.
7. At this juncture, it would be appropriate to consider the
conditions in the proposal, upon which the Respondent relies to
repudiate the claim of the Appellant. Firstly, the ‘Special
Conditions’ in the ‘Policy Schedule for Voyage Insurance’
provides that:
“ Subject to 1) institute voyage clause 01.08.1989
2) express 1% of S.I. with the warranty that the
voyage should commence & complete before
monsoon sets in. ”
8. Under ‘Voyage Details’ the Appellant mentions the voyage
to be undertaken from “ Mumbai to Kolkata ”. ‘Special
Warranties’ stipulates as under:
“Vessel to depart in local weather condition not
exceeding Beaufort Scale No. 4 & favourable
synoptic meterological situation. The master to
exercise his discretion to alter course & speed or to
enter port of refuge/shelter in case of adverse
weather sea conditions/weather warings
emergency/navigational hazard. The relevant
national & international regulations regarding
lights, ags & shapes should be complied with.”
C.A. NO. 2323 of 2021 Page 8 of 17
9. Further, Clause 3 of the Insurance Contract provides:
“ 3. CLASSIFICATION
3.1 It is the duty of the Assured, Owners and
Managers at the inception of and throughout the
period of this insurance to ensure that
3.1.1 the vessel is classed with a Classification
Society agreed by the Underwriters and that her
class within that Society is maintained,
3.1.2 any recommendations requirements or
restrictions imposed by the vessel’s Classification
Society which relate to the vessel’s seaworthiness
or to her maintenance in a seaworthy condition
are complied with by the dates required by that
Society.
3.2 In the event of any breach of the duties set out in
Clause 3.1 above, unless the Underwriters agree to
the contrary in writing, they will be discharged from
liability under this insurance as from the date of the
breach provided that if the vessel is at sea at such
date the Underwriters’ discharge from liability is
deferred until arrival at her next port.”
(emphasis supplied)
10. The Respondent has relied upon Clause 3.1.2 and the
breach of the special condition contained in the policy to justify
the repudiation of the Insurance Contract.
11. It is trite to state that the interpretation of the Insurance
Contract falls upon the same principles as the interpretation of
any contract, except that there exists a requirement of uberrima
fides , i.e. good faith on part of the assured. It is therefore well-
C.A. NO. 2323 of 2021 Page 9 of 17
settled that the policy and all the terms therein ought to be
construed strictly, to the extent possible.
12. We now proceed to interpret the phrase “ before monsoon
sets in ” as contained in the ‘Special Conditions’ under the policy.
A literal interpretation reflects that this phrase refers to an event
occurring before monsoon commences or begins . In order to
assist us further, both parties have relied on a circular dated
25.04.2008 published by the DGS (hereinafter “ the DGS
Circular ”) delineating the foul weather period. The same is
reproduced below:
st
“ 3.1 During the period of foul weather, being 1
st
June till 31 August in the Arabian Sea along the
st
West Coast and 1 May till November in the Bay of
Bengal along the East Coast of the Indian
Peninsula.”
st
Accordingly, foul weather first arrives in the East Coast on 1
st
May and thereafter on the West Coast on 1 June. The correct
interpretation of the phrase would then entail that the requisite
st st
event is to occur before the 1 of May or the 1 of June
respectively, depending on the coast.
13. We straightaway deal with the argument of the Appellant
that the special condition is ambiguous leading to it being
construed contra proferentum . The common law rule of
interpreting the clause against the maker of the contract in case
of ambiguity has been well adopted into the Indian legal
C.A. NO. 2323 of 2021 Page 10 of 17
framework. In the case of Chandumull Jain (supra), the
Supreme Court observed:
“ 11. …In other respects there is no difference
between a contract of insurance and any other
contract except that in a contract of insurance there
is a requirement of uberrima fides i.e., good faith on
the part of the assured and the contract is likely to
be construed contra proferentem that is against the
company in case of ambiguity or doubt.”
14. It is the case of New India Assurance (2016) (supra) that
expounded on the principle and rejected its application in the
facts of that case. The relevant portion is extracted below:
“ 10. We proceed to deal with the submission made
by counsel for the Appellant regarding the rule of
contra proferentem. The Common Law rule of
construction “verba chartarum fortius accipiuntur
contra proferentem” means that ambiguity in the
wording of the policy is to be resolved against the
party who prepared it. MacGillivray on Insurance
Law deals with the rule of contra proferentem as
follows:
“The contra proferentem rule of
construction arises only where there is
a wording employed by those drafting
the clause which leaves the court
unable to decide by ordinary
principles of interpretation which of
two meanings is the right one. One
must not use the rule to create the
ambiguity – one must find the
ambiguity first. The words should
receive their ordinary and natural
meaning unless that is displaced by a
C.A. NO. 2323 of 2021 Page 11 of 17
real ambiguity either appearing on the
face of the policy or, possibly, by
extrinsic evidence of surrounding
circumstances.”
11. Colinvaux’s Law of Insurance propounds the
contra proferentem rule as under:
“Quite apart from contradictory
clauses in policies, ambiguities are
common in them and it is often very
uncertain what the parties to them
mean. In such cases the rule is that the
policy, being drafted in language
chosen by the insurers, must be taken
most strongly against them. It is
construed contra proferentes, against
those who offer it. In a doubtful case
the turn of the scale ought to be given
against the speaker, because he has not
clearly and fully expressed himself.
Nothing is easier than for the insurers
to express themselves in plain terms.
The assured cannot put his own
meaning upon a policy, but, where it is
ambiguous, it is to be construed in the
sense in which he might reasonably
have understood it. If the insurers wish
to escape liability under given
circumstances, they must use words
admitting of no possible doubt.
But a clause is only to be contra
proferentes in cases of real ambiguity.
One must not use the rule to create an
ambiguity. One must find the
ambiguity first. Even where a clause by
itself is ambiguous if, by looking at the
whole policy, its meaning becomes
C.A. NO. 2323 of 2021 Page 12 of 17
clear, there is no room for the
application of the doctrine. So also
where if one meaning is given to a
clause, the rest of the policy becomes
clear, the policy should be construed
accordingly .”
(emphasis supplied)
15. As per the aforementioned rule, we are unable to find that
the special condition contained in the policy is ambiguous per se .
As demonstrated above, the policy can be construed literally,
wherein the special condition envisages the voyage to be started
and completed before the monsoon/foul weather season
commences. The Appellant has attempted to introduce ambiguity
in the condition by bringing in external factors and
considerations, which is impermissible under the rule of contra
proferentum . The said rule only applies to cases of real ambiguity,
where the clause by itself is ambiguous irrespective of any
external considerations. Accordingly, we find no ambiguity in the
text of the policy itself. However, the rejection of the applicability
of the rule of contra proferentum does not prejudice the case of
the Appellant on the counts of validity and materiality of the
condition itself.
16. Mr. Kamat has placed before us the proposal form filled
by the Appellant, to submit that no statement was made therein
regarding its intention to set sail in the foul season. It is argued
that in response to the question stating “ Will the vessel be laid up
C.A. NO. 2323 of 2021 Page 13 of 17
during the South West or North East Monsoon? If so, please state
(a) where she will be laid up; and (b) period for which she will
laid up ”, the Appellant has answered “ At Kolkata Harbour ”. It is
then to be concluded that during the foul season, the Vessel will
be laid up and not undertake the voyage. Accordingly, it is
submitted that the doctrine of uberrima fides has been
compromised on account of the Appellant’s conduct.
17. In response, Mr. Ahmadi has stated that in the proposal
form it is mentioned that “ the insurance is required to undertake
delivery voyage from Ghodbunder Jetty to Kolkata harbour ” and
the insurance period is from 16.05.2013 to 15.06.2013.
18. There is no doubt that the policy was taken for a period of
one month (16.05.2013 to 15.06.2013) to cover the voyage from
Mumbai to Kolkata. Further, as per the DGS Circular, foul
st
weather commences on 1 May itself on the East Coast. The
Respondent’s contention that they had no knowledge of the
voyage and that they believed that the Vessel would be laid up at
the Kolkata harbour during the foul season is unacceptable and is
to be rejected. The Appellant had mentioned in the form that the
purpose of insurance is to undertake the voyage from
Ghodbunder Jetty in Mumbai to Kolkata harbour. The only
logical conclusion of the information provided is that the
insurance was availed to cover the foul weather period along the
west and east coast. Even if the voyage was undertaken
C.A. NO. 2323 of 2021 Page 14 of 17
immediately, i.e. on 16.05.2013, the Vessel would have arrived at
the Kolkata harbour in the first week of June 2013, i.e. after the
commencement of foul weather season on the east coast. There
is absolutely no permutation and combination in which the
Appellant could have fulfilled this condition under the policy,
given its voyage from Mumbai (west coast) to Kolkata (east
coast) via several coastal States. Further, the special condition
necessitates that the voyage commences and is completed before
monsoon sets in. If the condition is to be interpreted strictly, then
the assured would be unable to make a claim in case of a marine
accident where the vessel is unable to complete its voyage due to
a peril, rendering the special condition impossible to comply
with. Ultimately, the assured would be without any remedy under
the insurance. This amounts to an absurdity, vitiating the very
purpose behind an insurance contract. As a result, we hold that
the special condition cannot be treated as a condition precedent
to waive any liability under the policy. It has been impliedly
waived by the parties due to its non-material nature. It is probably
a term used in all contracts by the Respondent as a part of its
standard form, and it failed to exclude the same from the policy
availed of by the Appellant.
19. In a similar case, the policy required the assured to prove
the claim within forty days from the date of the policy itself. The
Court, in Ramji Karamsi (supra) allowed the claim of the
C.A. NO. 2323 of 2021 Page 15 of 17
assured to stand despite the breach of the condition therein by
observing that the term was not a condition precedent to the
plaintiff being entitled to maintain his claim. The Court opined:
“ 28… But the term of the policy which has been
relied upon by the defendants would mean that the
claim must be formally made and proved by the
assured within 40 days thereof, i.e., the policy which
would, taking the date of the policy as 21-4-1943,
bring this period of 40 days up to 31-5-1943. Even
though the loss be incurred on 3-6-1943, the
assured would be without a remedy, because he
would not have formally submitted and proved his
claim by 31-5-1943, which he ought to have done if
his claim was to be a good claim, having regard to
this term of the policy. A more absurd result could
not possibly be conceived. It could never be
intended by any men in their senses that when the
risk of the policy was to run right up to 4-6-1943,
and the loss which occurred on or before that date
would be considered by the insurance company, the
insurance company would be relieved of all liability
because on a strict interpretation of this term which
is relied upon by them and submitted by them to be
a condition precedent, the assured could in no event
make the claim before 31-5-1943. I decline to
entertain any further discussion on this point…”
20. In view of our findings, the Respondent is not entitled to
repudiate the claim of the Appellant on the ground of breach of
the special condition. We are cognisant of the fact that the
Respondent has raised several other objections, including
allegations of forgery and breach of other conditions, which may
C.A. NO. 2323 of 2021 Page 16 of 17
affect the sum awarded. However, the same would have to be
looked into on its own merits and proved before the NCDRC.
21. Accordingly, the appeal is allowed and the impugned order
dated 13.04.2021 passed by the NCDRC is set aside. The matter
is remanded to the NCDRC with a direction to determine the
extent of the insured sum liable to be paid by the Respondent to
the Appellant. Since the parties are represented by their
respective counsel, they shall appear before NCDRC on
29.04.2025, without expecting separate notices from NCDRC.
The matter may be considered expeditiously by NCDRC as the
claim was made by the Appellant herein in the year 2013.
22. Parties to bear their own costs. Pending applications, if
any, shall stand disposed of.
……………………………………J.
[B. V. NAGARATHNA]
……………………………………J.
[SATISH CHANDRA SHARMA]
NEW DELHI
APRIL 07, 2025
C.A. NO. 2323 of 2021 Page 17 of 17
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2323 OF 2021
SOHOM SHIPPING PVT. LTD. …APPELLANT(S)
VERSUS
M/S. THE NEW INDIA
ASSURANCE CO. LTD. & ANR. …RESPONDENT(S)
J U D G M E N T
SATISH CHANDRA SHARMA, J.
1. The present dispute hinges on the phrase “voyage should
commence & complete before monsoon sets in” contained in the
contract for insurance between the parties, and raises questions
regarding its validity, interpretation and materiality.
2. The appeal before us has been preferred by the Appellant
under Section 67 of the Consumer Protection Act, 2019
(hereinafter “ COPRA ”) against the final judgement and order
Signature Not Verified
Digitally signed by
BORRA LM VALLI
dated 13.04.2021 (hereinafter " Impugned Order ”) passed by the
Date: 2025.04.07
17:34:06 IST
Reason:
C.A. NO. 2323 of 2021 Page 1 of 17
National Consumer Disputes Redressal Commission, New Delhi
(hereinafter “ NCDRC ”) dismissing the consumer complaint
filed by the Appellant herein on account of the doctrine of
Uberrima Fidei being compromised.
3. Factual Background
3.1. The Appellant is engaged in the shipping business
and has its offices at Sougor Road Kulpi, Diamond
Harbour, Haldia and Kolkata. The Appellant
purchased a newly built barge ‘Srijoy II’
(hereinafter “ the Vessel ”) and sought to undertake
its maiden voyage from Mumbai to Kolkata.
3.2 In pursuance of the same, the Appellant applied for
a ‘single voyage permit’ to the Director General of
Shipping (hereinafter “ DGS ”), wherein the Vessel
was expected to sail from Mumbai on 30.04.2013
and arrive at Kolkata on 15.05.2013. The DGS
directed the Indian Register of Shipping (hereinafter
“ IRS ”) to carry out a detailed inspection.
3.3 The Appellant sought to insure its voyage and the
Vessel, and submitted its insurance proposal to the
Respondent. Thereafter, an insurance contract was
entered into between the parties for the period
between 16.05.2013 to 15.06.2013 (hereinafter “ the
Insurance Contract ”). The Insurance Contract
C.A. NO. 2323 of 2021 Page 2 of 17
contained a special condition that the “voyage
should commence & complete before monsoon sets
in”. Further, it contained Special Warranties, inter
alia that the “Vessel to depart in local weather
condition not exceeding Beaufort Scale No. 4…”.
3.4 The IRS granted clearance to the Appellant to
undertake its voyage in accordance with MS
Circular No. 03 of 2008. Thereafter, the DGS issued
a “No objection” with respect to the same.
3.5 The Vessel undertook the voyage on 06.06.2013.
Unfortunately, on the very next day it was anchored
off near Ratnagiri Port due to bad weather and
engine failure. Ultimately, the Vessel ran aground.
3.6 The Appellant sought assistance from the
Respondent for towing and salvaging the Vessel
after the Insurance Contract had expired. On
25.07.2013, the Appellant issued a ‘Notice of
Abandonment’ to the Respondent claiming total loss
on the ground that repair of the Vessel would be
more expensive than the amount insured for.
3.7 On 12.09.2013, the Respondent issued a
‘Repudiation Notice’ rejecting the claim of the
Appellant on the ground that the Vessel set sail after
‘monsoon set in’ breaching the special condition in
C.A. NO. 2323 of 2021 Page 3 of 17
the Insurance Contract. Subsequently, the surveyor
appointed by the Respondent issued its final report
concluding that the Appellant was in wilful breach
of the condition.
3.8 Aggrieved by the repudiation of the insurance
claim, the Appellant herein filed a consumer
complaint under Section 21 of COPRA before the
NCDRC. Vide Impugned Order dated 13.04.2021,
the NCDRC dismissed the complaint on the ground
that the Appellant suppressed material facts by not
disclosing all its plans to the Respondent, and did
not conduct itself in good faith.
4. Submissions by the Appellant
4.1 Mr. Huzefa Ahmadi, learned Sr. Counsel for the
Appellant has strongly urged before us that the
conclusion drawn by the NCDRC is contrary to law
and prays for the same to be set aside.
4.2 The primary contention of the Appellant is that the
Respondent knew or should have known that the
policy period covers the foul period, and therefore
the policy cannot stand repudiated on this ground.
4.3 That the special condition contained in the insurance
contract was non-material as the Respondent was
aware that the voyage was to be undertaken in foul
C.A. NO. 2323 of 2021 Page 4 of 17
weather. Further, in the event that the special
condition is to be taken into account, there has been
an implied waiver of the same at the time of entering
into the contract as the period of 1 month for which
the insurance cover was availed of, covers the foul
weather period as well, and the Respondent was
aware that the Vessel would be travelling from
Mumbai to Kolkata through Kerala, where the
st
monsoon sets in on June 1 .
4.4 That the Court must apply the common law rule of
verba chartarum fortius accipiuntur contra
proferentem or simply put ‘ Contra Proferentum’
against the Respondent as the phrase is ambiguous
on account of extrinsic evidence of surrounding
circumstances (Reliance placed on General
Assurance Society Ltd. v. Chandumull Jain & Anr.
(1966) 3 SCR 500; Industrial Promotion and
Investment Corporation of Orissa Ltd. v. New
India Assurance Company Ltd. & Anr. (2016) 15
SCC 315; Dawsons Ltd. v. Bonnin [1992] 2 A.C.
413 .
4.5 The Appellant has also submitted that the
Respondent failed its duty to conduct reasonable
C.A. NO. 2323 of 2021 Page 5 of 17
due diligence as it provided the policy knowing the
circumstances.
4.6 That if the special condition is treated as a condition
precedent, it would result in absurd consequences as
any claim made would fall foul of the special
condition (Reliance placed on Ramji Karamsi v.
The Unique Motor and General Insurance Co.
Ltd. AIR 1951 Bom 347 .
5. Submissions by the Respondent
5.1 Mr. Devadatt Kamat, learned Sr. Counsel for the
Respondent has placed strong reliance on the
Impugned Order as a well-reasoned, valid and legal
order which ought not to be interfered with.
5.2 That the Appellant has breached the special
condition by setting sail after monsoon had set in.
Clause 3.1.2 of the Insurance Contract was also
breached by the Appellant inasmuch as it breached
the conditions imposed by the IRS, by sailing in
waters where the height of the wave is more than 2
metres.
5.3 The counsel for the Respondent submits that the
special condition is determinable and precise, which
dispels all arguments regarding its ambiguity and in-
C.A. NO. 2323 of 2021 Page 6 of 17
turn the applicability of the rule of Contra
Proferentum .
5.4 That the Appellant has committed forgery and
fabricated the policy it submitted to the authorities
as no amendment to the special condition has been
carried out between the parties.
5.5 That as per the DGS Notice No. 03/2008, the foul
st
weather season starts on 1 June, and the policy was
valid from 16.05.2013 to 15.06.2013.
5.6 That no statement was made in the application by
the Appellant regarding its intention to set sail in the
foul season.
5.7 The Respondent has also placed reliance on the
judgements of this Court, namely, Sea Lark
Fisheries v. United India Insurance Co. & Anr.
(2008) 4 SCC 131 ; Deokar Exports (P) Ltd. v New
India Assurance Co. Ltd. (2008) 14 SCC 598;
Contship Container Lines Ltd. v. D.K. Lall & Ors.
(2010) 4 SCC 256; Rajankumar & Brothers
(Impex) v. Oriental Insurance Co. Ltd. (2020) 4
SCC 364; and Hind Offshore (P) Ltd. v. Iffco-
Tokio General Insurance Co. Ltd. (2023) 9 SCC
407 .
C.A. NO. 2323 of 2021 Page 7 of 17
Discussion and Analysis
6. We have given our careful consideration to the
submissions made on both sides of the bar, and perused the
materials provided. The only question which falls for our
consideration is, whether, the special condition stands breached
justifying the de facto repudiation of the Appellant’s claim by the
Respondent.
7. At this juncture, it would be appropriate to consider the
conditions in the proposal, upon which the Respondent relies to
repudiate the claim of the Appellant. Firstly, the ‘Special
Conditions’ in the ‘Policy Schedule for Voyage Insurance’
provides that:
“ Subject to 1) institute voyage clause 01.08.1989
2) express 1% of S.I. with the warranty that the
voyage should commence & complete before
monsoon sets in. ”
8. Under ‘Voyage Details’ the Appellant mentions the voyage
to be undertaken from “ Mumbai to Kolkata ”. ‘Special
Warranties’ stipulates as under:
“Vessel to depart in local weather condition not
exceeding Beaufort Scale No. 4 & favourable
synoptic meterological situation. The master to
exercise his discretion to alter course & speed or to
enter port of refuge/shelter in case of adverse
weather sea conditions/weather warings
emergency/navigational hazard. The relevant
national & international regulations regarding
lights, ags & shapes should be complied with.”
C.A. NO. 2323 of 2021 Page 8 of 17
9. Further, Clause 3 of the Insurance Contract provides:
“ 3. CLASSIFICATION
3.1 It is the duty of the Assured, Owners and
Managers at the inception of and throughout the
period of this insurance to ensure that
3.1.1 the vessel is classed with a Classification
Society agreed by the Underwriters and that her
class within that Society is maintained,
3.1.2 any recommendations requirements or
restrictions imposed by the vessel’s Classification
Society which relate to the vessel’s seaworthiness
or to her maintenance in a seaworthy condition
are complied with by the dates required by that
Society.
3.2 In the event of any breach of the duties set out in
Clause 3.1 above, unless the Underwriters agree to
the contrary in writing, they will be discharged from
liability under this insurance as from the date of the
breach provided that if the vessel is at sea at such
date the Underwriters’ discharge from liability is
deferred until arrival at her next port.”
(emphasis supplied)
10. The Respondent has relied upon Clause 3.1.2 and the
breach of the special condition contained in the policy to justify
the repudiation of the Insurance Contract.
11. It is trite to state that the interpretation of the Insurance
Contract falls upon the same principles as the interpretation of
any contract, except that there exists a requirement of uberrima
fides , i.e. good faith on part of the assured. It is therefore well-
C.A. NO. 2323 of 2021 Page 9 of 17
settled that the policy and all the terms therein ought to be
construed strictly, to the extent possible.
12. We now proceed to interpret the phrase “ before monsoon
sets in ” as contained in the ‘Special Conditions’ under the policy.
A literal interpretation reflects that this phrase refers to an event
occurring before monsoon commences or begins . In order to
assist us further, both parties have relied on a circular dated
25.04.2008 published by the DGS (hereinafter “ the DGS
Circular ”) delineating the foul weather period. The same is
reproduced below:
st
“ 3.1 During the period of foul weather, being 1
st
June till 31 August in the Arabian Sea along the
st
West Coast and 1 May till November in the Bay of
Bengal along the East Coast of the Indian
Peninsula.”
st
Accordingly, foul weather first arrives in the East Coast on 1
st
May and thereafter on the West Coast on 1 June. The correct
interpretation of the phrase would then entail that the requisite
st st
event is to occur before the 1 of May or the 1 of June
respectively, depending on the coast.
13. We straightaway deal with the argument of the Appellant
that the special condition is ambiguous leading to it being
construed contra proferentum . The common law rule of
interpreting the clause against the maker of the contract in case
of ambiguity has been well adopted into the Indian legal
C.A. NO. 2323 of 2021 Page 10 of 17
framework. In the case of Chandumull Jain (supra), the
Supreme Court observed:
“ 11. …In other respects there is no difference
between a contract of insurance and any other
contract except that in a contract of insurance there
is a requirement of uberrima fides i.e., good faith on
the part of the assured and the contract is likely to
be construed contra proferentem that is against the
company in case of ambiguity or doubt.”
14. It is the case of New India Assurance (2016) (supra) that
expounded on the principle and rejected its application in the
facts of that case. The relevant portion is extracted below:
“ 10. We proceed to deal with the submission made
by counsel for the Appellant regarding the rule of
contra proferentem. The Common Law rule of
construction “verba chartarum fortius accipiuntur
contra proferentem” means that ambiguity in the
wording of the policy is to be resolved against the
party who prepared it. MacGillivray on Insurance
Law deals with the rule of contra proferentem as
follows:
“The contra proferentem rule of
construction arises only where there is
a wording employed by those drafting
the clause which leaves the court
unable to decide by ordinary
principles of interpretation which of
two meanings is the right one. One
must not use the rule to create the
ambiguity – one must find the
ambiguity first. The words should
receive their ordinary and natural
meaning unless that is displaced by a
C.A. NO. 2323 of 2021 Page 11 of 17
real ambiguity either appearing on the
face of the policy or, possibly, by
extrinsic evidence of surrounding
circumstances.”
11. Colinvaux’s Law of Insurance propounds the
contra proferentem rule as under:
“Quite apart from contradictory
clauses in policies, ambiguities are
common in them and it is often very
uncertain what the parties to them
mean. In such cases the rule is that the
policy, being drafted in language
chosen by the insurers, must be taken
most strongly against them. It is
construed contra proferentes, against
those who offer it. In a doubtful case
the turn of the scale ought to be given
against the speaker, because he has not
clearly and fully expressed himself.
Nothing is easier than for the insurers
to express themselves in plain terms.
The assured cannot put his own
meaning upon a policy, but, where it is
ambiguous, it is to be construed in the
sense in which he might reasonably
have understood it. If the insurers wish
to escape liability under given
circumstances, they must use words
admitting of no possible doubt.
But a clause is only to be contra
proferentes in cases of real ambiguity.
One must not use the rule to create an
ambiguity. One must find the
ambiguity first. Even where a clause by
itself is ambiguous if, by looking at the
whole policy, its meaning becomes
C.A. NO. 2323 of 2021 Page 12 of 17
clear, there is no room for the
application of the doctrine. So also
where if one meaning is given to a
clause, the rest of the policy becomes
clear, the policy should be construed
accordingly .”
(emphasis supplied)
15. As per the aforementioned rule, we are unable to find that
the special condition contained in the policy is ambiguous per se .
As demonstrated above, the policy can be construed literally,
wherein the special condition envisages the voyage to be started
and completed before the monsoon/foul weather season
commences. The Appellant has attempted to introduce ambiguity
in the condition by bringing in external factors and
considerations, which is impermissible under the rule of contra
proferentum . The said rule only applies to cases of real ambiguity,
where the clause by itself is ambiguous irrespective of any
external considerations. Accordingly, we find no ambiguity in the
text of the policy itself. However, the rejection of the applicability
of the rule of contra proferentum does not prejudice the case of
the Appellant on the counts of validity and materiality of the
condition itself.
16. Mr. Kamat has placed before us the proposal form filled
by the Appellant, to submit that no statement was made therein
regarding its intention to set sail in the foul season. It is argued
that in response to the question stating “ Will the vessel be laid up
C.A. NO. 2323 of 2021 Page 13 of 17
during the South West or North East Monsoon? If so, please state
(a) where she will be laid up; and (b) period for which she will
laid up ”, the Appellant has answered “ At Kolkata Harbour ”. It is
then to be concluded that during the foul season, the Vessel will
be laid up and not undertake the voyage. Accordingly, it is
submitted that the doctrine of uberrima fides has been
compromised on account of the Appellant’s conduct.
17. In response, Mr. Ahmadi has stated that in the proposal
form it is mentioned that “ the insurance is required to undertake
delivery voyage from Ghodbunder Jetty to Kolkata harbour ” and
the insurance period is from 16.05.2013 to 15.06.2013.
18. There is no doubt that the policy was taken for a period of
one month (16.05.2013 to 15.06.2013) to cover the voyage from
Mumbai to Kolkata. Further, as per the DGS Circular, foul
st
weather commences on 1 May itself on the East Coast. The
Respondent’s contention that they had no knowledge of the
voyage and that they believed that the Vessel would be laid up at
the Kolkata harbour during the foul season is unacceptable and is
to be rejected. The Appellant had mentioned in the form that the
purpose of insurance is to undertake the voyage from
Ghodbunder Jetty in Mumbai to Kolkata harbour. The only
logical conclusion of the information provided is that the
insurance was availed to cover the foul weather period along the
west and east coast. Even if the voyage was undertaken
C.A. NO. 2323 of 2021 Page 14 of 17
immediately, i.e. on 16.05.2013, the Vessel would have arrived at
the Kolkata harbour in the first week of June 2013, i.e. after the
commencement of foul weather season on the east coast. There
is absolutely no permutation and combination in which the
Appellant could have fulfilled this condition under the policy,
given its voyage from Mumbai (west coast) to Kolkata (east
coast) via several coastal States. Further, the special condition
necessitates that the voyage commences and is completed before
monsoon sets in. If the condition is to be interpreted strictly, then
the assured would be unable to make a claim in case of a marine
accident where the vessel is unable to complete its voyage due to
a peril, rendering the special condition impossible to comply
with. Ultimately, the assured would be without any remedy under
the insurance. This amounts to an absurdity, vitiating the very
purpose behind an insurance contract. As a result, we hold that
the special condition cannot be treated as a condition precedent
to waive any liability under the policy. It has been impliedly
waived by the parties due to its non-material nature. It is probably
a term used in all contracts by the Respondent as a part of its
standard form, and it failed to exclude the same from the policy
availed of by the Appellant.
19. In a similar case, the policy required the assured to prove
the claim within forty days from the date of the policy itself. The
Court, in Ramji Karamsi (supra) allowed the claim of the
C.A. NO. 2323 of 2021 Page 15 of 17
assured to stand despite the breach of the condition therein by
observing that the term was not a condition precedent to the
plaintiff being entitled to maintain his claim. The Court opined:
“ 28… But the term of the policy which has been
relied upon by the defendants would mean that the
claim must be formally made and proved by the
assured within 40 days thereof, i.e., the policy which
would, taking the date of the policy as 21-4-1943,
bring this period of 40 days up to 31-5-1943. Even
though the loss be incurred on 3-6-1943, the
assured would be without a remedy, because he
would not have formally submitted and proved his
claim by 31-5-1943, which he ought to have done if
his claim was to be a good claim, having regard to
this term of the policy. A more absurd result could
not possibly be conceived. It could never be
intended by any men in their senses that when the
risk of the policy was to run right up to 4-6-1943,
and the loss which occurred on or before that date
would be considered by the insurance company, the
insurance company would be relieved of all liability
because on a strict interpretation of this term which
is relied upon by them and submitted by them to be
a condition precedent, the assured could in no event
make the claim before 31-5-1943. I decline to
entertain any further discussion on this point…”
20. In view of our findings, the Respondent is not entitled to
repudiate the claim of the Appellant on the ground of breach of
the special condition. We are cognisant of the fact that the
Respondent has raised several other objections, including
allegations of forgery and breach of other conditions, which may
C.A. NO. 2323 of 2021 Page 16 of 17
affect the sum awarded. However, the same would have to be
looked into on its own merits and proved before the NCDRC.
21. Accordingly, the appeal is allowed and the impugned order
dated 13.04.2021 passed by the NCDRC is set aside. The matter
is remanded to the NCDRC with a direction to determine the
extent of the insured sum liable to be paid by the Respondent to
the Appellant. Since the parties are represented by their
respective counsel, they shall appear before NCDRC on
29.04.2025, without expecting separate notices from NCDRC.
The matter may be considered expeditiously by NCDRC as the
claim was made by the Appellant herein in the year 2013.
22. Parties to bear their own costs. Pending applications, if
any, shall stand disposed of.
……………………………………J.
[B. V. NAGARATHNA]
……………………………………J.
[SATISH CHANDRA SHARMA]
NEW DELHI
APRIL 07, 2025
C.A. NO. 2323 of 2021 Page 17 of 17