2015 (7) TMI 1161 - SC - Indian Laws

Violations of the terms and conditions of the contract of insurance - Held that - The insured has to declare the shipments in terms of Clause 8(a) without omission and also pay the premium in terms of Clause 10. Premium of payment alone does not make the Corporation liable to indemnify the loss or fasten the liability on it. It is also required on the part of the insured for the purpose of sustaining the claim to show that there has been compliance as regards the declaration. To construe Clause 8(a) that the insured has a choice to declare which shipment he would cover and which ones he would leave would run counter to the mandate of the policy. It has to be borne in mind that these are specific clauses relating to the obligations of the insured. The attempt on the part of the appellant to inject concept of payment of premium and the risk covered to this realm would not be acceptable. The general clauses basically convey which risks are covered and which risks are not covered how the premium is to be computed and paid. What eventually matters is where the liability of the insurer is exclusively excluded the said clauses of the policy are absolutely clear unequivocal and unambiguous. The insured after availing a policy in commercial transactions is to understand the policy in entirety. The construction of the policy in entirety and in a harmonious manner leaves no room for doubt that there is no equivocality or ambiguity warranting an interpretation in favour of the insured-appellant. Whatever the reasons the appellant may give he having not declared as prescribed in Clause 8(a) which is again reiterated by way of reference in Clause 19(a) the exclusionary clause it will be an anathema to the concept of interpretation of contract of insurance of such a nature if liability is fastened on the insurer. The finding of the Commission that the appellant had not take steps to retrieve the goods is absolutely immaterial for the present purpose. The said finding though is flawed the ultimate conclusion which is based upon our independent analysis is correct.

Issues Involved:
1. Limitation period for filing the complaint.
2. Compliance with the terms and conditions of the insurance policy.
3. Non-declaration of shipments and its implications.
4. Reduction of the credit period for payment.
5. Steps taken by the appellant to retrieve the goods.

Detailed Analysis:

1. Limitation Period for Filing the Complaint:
The State Commission initially held that the complaint was barred by limitation. However, the National Consumer Disputes Redressal Commission (NCDRC) did not agree with this finding and proceeded to examine the merits of the case. The Supreme Court did not find it necessary to delve into this issue further as the NCDRC had already addressed it.

2. Compliance with the Terms and Conditions of the Insurance Policy:
The core issue revolved around whether the appellant had complied with the terms and conditions of the insurance policy. The policy required strict adherence to its clauses, including the declaration of all shipments and payment of premiums. The Supreme Court emphasized that insurance contracts are contracts of "uberrima fides" (utmost good faith), and every material fact must be disclosed by both parties. The appellant's failure to declare certain shipments and the alteration of payment terms were deemed violations of the policy.

3. Non-Declaration of Shipments and Its Implications:
Clause 8(a) of the policy mandated that the insured must declare all shipments made during the previous month by the 15th day of each calendar month. Clause 19(a) stipulated that the insurer would not be liable if the insured failed to declare all shipments or pay the premium. The appellant argued that only shipments relevant to the policy needed to be declared. However, the Supreme Court held that the policy's language was clear and unambiguous, requiring the declaration of all shipments to avoid exclusion of liability. The appellant's omission to declare shipments amounting to 50% in number and 34% in value was a serious and uncondonable lapse.

4. Reduction of the Credit Period for Payment:
The appellant had reduced the credit period for payment from 90 days to 60 days for certain shipments. The State Commission and NCDRC found this to be a violation of the policy terms. However, the Supreme Court clarified that Clause 5(c) of the policy allowed for a maximum credit period of 180 days. Since the appellant's credit period was within this limit, it could not be held against them.

5. Steps Taken by the Appellant to Retrieve the Goods:
The appellant was criticized for not taking adequate steps to retrieve the goods after the buyer refused to accept them. The State Commission noted that the appellant did not write to the Debt Collecting Agency in the USA or take other measures to safeguard the goods. The Supreme Court found this finding immaterial for the present purpose but noted that the appellant had not complied with the policy's requirements to protect the shipment.

Conclusion:
The Supreme Court upheld the NCDRC's decision, emphasizing that the terms of the insurance policy must be strictly construed and complied with. The appellant's failure to declare all shipments and the unilateral change in payment terms constituted violations of the policy, leading to the repudiation of the claim. The appeal was dismissed, and no costs were awarded.

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