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2022 (4) TMI 1219 - SC - CustomsECGS Scheme - Rule of verba chartarum fortius accipiuntur contra proferentem - Relevant date of despatch/shipment - whether the NCDRC was correct in placing reliance on guidelines issued by the Directorate General of Foreign Trade (DGFT Guidelines) to interpret the date of despatch / shipment in the Single Buyer Exposure Policy of the respondent (Policy), and thereby deny the appellant s claim? HELD THAT - Taking into consideration all relevant documents, this Court is of the opinion that the date of loading goods onto the vessel, which commenced one day prior to the effective date of the policy, is not as significant as the date on which the foreign buyer failed to pay for the goods exported, which was well within the coverage period of the Policy. Thus, the claim could not be dismissed simply on such basis, especially given that the date of loading the goods onto the vessel was immaterial to the purpose for which the policy was taken by the appellant. Rule of contra proferentem - HELD THAT - The rule of contra proferentem thus protects the insured from the vagaries of an unfavourable interpretation of an ambiguous term to which it did not agree. The rule assumes special significance in standard form insurance policies, called contract d adhesion or boilerplate contracts, in which the insured has little to no countervailing bargaining power. This consideration is highlighted in the facts of this case, since the risks that ECGC is mandated to cover is its business, and other insurers rarely foray into the field. Deviating from the rule of contra proferentem, even if in the present instance the third-party DGFT Guidelines were to be applied, it would not favour the ECGC, as a plain reading of provision 9.12 shows that the date on the Bill of Lading has to be considered as the date of despatch / shipment. The date of onboard Bill of Lading is not applicable to the present facts as no letter of credit was executed, much less providing for application of such date. Therefore, ECGC could not have denied the appellant s claim, even on a consideration the DGFT Guidelines. ECGC enjoys a significant position in the market for export credit insurance in India in F.Y. 2012-2013, the total income received by way of premiums exceeded Rupees one thousand crores, with the figures only growing ever since. It is the only government company offering such niche services, and is exempt from following the Trade Credit Insurance Guidelines periodically revised by the Insurance Regulatory and Development Authority of India. To deny the appellant s claim over an incorrect interpretation of an ambiguous term, that too with delay amounting to only one day, goes against such duties, especially given the fact that the appellant had transacted with the respondent on several previous occasions. The impugned order of the NCDRC is hereby set aside - the appellant s complaint is consequently allowed - ECGC is hereby directed to pay the claim amount of ₹ 2.45 crores to the appellant, with interest at the rate of 9% p.a. - appeal allowed.
Issues Involved:
1. Interpretation of the term 'despatch/shipment' in the Single Buyer Exposure Policy. 2. Applicability of DGFT Guidelines to define 'despatch/shipment'. 3. Application of the rule of contra proferentem in insurance contracts. 4. Relevance of business common sense in interpreting commercial contracts. 5. Validity of reliance on external guidelines (DGFT) for interpreting insurance policy terms. Issue-wise Detailed Analysis: 1. Interpretation of the term 'despatch/shipment' in the Single Buyer Exposure Policy: The appellant argued that the term 'despatch' should refer to the date when the vessel set sail, which was 15.12.2012, not the date when loading commenced. The appellant relied on the Mate’s Receipt issued on 15.12.2012 and the Bill of Lading issued on 19.12.2012 to support this interpretation. The respondent, ECGC, interpreted 'despatch' as the date of the 'Onboard Bill of Lading', which was 13.12.2012, a day before the policy's effective date. 2. Applicability of DGFT Guidelines to define 'despatch/shipment': The ECGC rejected the appellant’s claim based on the DGFT Guidelines, which defined the date of 'despatch/shipment' for containerized cargo as the date of the 'Onboard Bill of Lading'. The appellant contended that the DGFT Guidelines should not apply as they were not part of the insurance policy and no Letter of Credit was issued. 3. Application of the rule of contra proferentem in insurance contracts: The appellant argued that the ambiguous term 'despatch' should be interpreted in favor of the insured under the rule of contra proferentem. The appellant cited several judgments, including United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal, to support this claim. The respondent countered that the rule of contra proferentem does not apply to commercial contracts where terms are mutually agreed upon. 4. Relevance of business common sense in interpreting commercial contracts: The Court emphasized the principle of 'business common sense' in resolving ambiguities in commercial contracts. The Court referred to UK Supreme Court decisions, including Rainy Sky SA v Kookmin Bank and Arnold v Britton, to highlight that the interpretation should align with what a reasonable person with background knowledge would understand. The Court concluded that the date of loading was less significant than the date of the foreign buyer’s default, which fell within the policy period. 5. Validity of reliance on external guidelines (DGFT) for interpreting insurance policy terms: The Court found that even if the DGFT Guidelines were applied, they would not support ECGC’s position. The guidelines specify that for containerized cargo, the relevant date is the Bill of Lading, not the 'Onboard Bill of Lading'. The Court held that reliance on DGFT Guidelines was inappropriate as the policy's terms should govern the contract. Conclusion: The Court set aside the NCDRC's order, holding that the date of 'despatch/shipment' should be interpreted as the date on the Bill of Lading, which was within the policy period. The Court directed ECGC to pay the claim amount of ?2.45 crores with interest at 9% p.a. The appeal was allowed, and all pending applications were disposed of without any order on costs.
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