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2025 (4) TMI 434 - SC - Indian LawsValidity interpretation and materiality of insurance contract - special condition in the insurance contract stipulating that the voyage should commence and complete before the monsoon sets in - dismissal of consumer complaint on the ground that doctrine of Uberrima Fidei being compromised - HELD THAT - 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 weather commences on 1st 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 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. Conclusion - The Respondent is not entitled to repudiate the claim of the Appellant on the ground of breach of the special condition. The Respondent has raised several other objections including allegations of forgery and breach of other conditions which may affect the sum awarded. However the same would have to be looked into on its own merits and proved before the NCDRC. 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 - Appeal allowed by way of remand.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Breach of Special Condition The insurance contract included a special condition that the voyage should commence and complete before the monsoon sets in. The Court examined the literal interpretation of this phrase, considering the DGS Circular which delineates the foul weather period as starting on 1st June on the West Coast and 1st May on the East Coast. The Court found that the voyage commenced on 6th June 2013, after the monsoon had set in on the West Coast, thus breaching the special condition. 2. Doctrine of Uberrima Fides The doctrine of uberrima fides requires good faith in insurance contracts. The Respondent argued that the Appellant failed to disclose its intention to sail during the foul season, compromising this doctrine. The Court noted that the insurance was for a period covering the foul weather, and the Appellant had disclosed the purpose of the insurance as a voyage from Mumbai to Kolkata. Therefore, the Court found no breach of uberrima fides by the Appellant. 3. Application of Contra Proferentem The Appellant argued that the special condition was ambiguous and should be construed against the Respondent under the rule of contra proferentem. The Court examined precedents and concluded that the special condition was not ambiguous per se, as it could be interpreted literally. The Court rejected the application of contra proferentem, as the ambiguity was not inherent in the contract but introduced by external factors. 4. Validity and Materiality of Special Condition The Court considered whether the special condition was valid and material to the insurance contract. It found that the condition was non-material, as it was impossible for the Appellant to comply with it given the voyage from Mumbai to Kolkata during the insurance period. The Court held that the special condition was likely a standard term used by the Respondent and was impliedly waived due to its non-material nature. 5. Justification for Repudiation of Insurance Claim The Respondent's repudiation of the insurance claim was based on the alleged breach of the special condition. The Court found that the special condition could not be treated as a condition precedent to waive liability under the policy, as it would lead to absurd results and defeat the purpose of the insurance contract. The Court held that the Respondent was not justified in repudiating the claim on this ground. SIGNIFICANT HOLDINGS The Court held that the special condition in the insurance contract was non-material and could not be used to justify the repudiation of the insurance claim. The Court emphasized the importance of interpreting insurance contracts strictly, with a focus on good faith and the purpose of the contract. The Court set aside the NCDRC's order and remanded the matter for further determination of the insured sum liable to be paid by the Respondent. Final Determinations:
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