Summary
A marine voyage policy for a barge's maiden voyage from Mumbai to Kolkata (16.05.2013 to 15.06.2013) carried a special condition that the voyage should commence and complete before monsoon sets in; the insurer repudiated the claim after the vessel ran aground, and the NCDRC dismissed the complaint for want of good faith. The Supreme Court held that the condition, though not ambiguous, could never have been complied with on a voyage the insurer knew spanned both coasts during the foul-weather period, that a strict reading would leave the assured without remedy and produce an absurdity, and that the condition was non-material and impliedly waived; the repudiation on that ground was set aside and the matter remanded to the NCDRC to quantify the sum payable.
Issues
- Whether the special condition 'voyage should commence & complete before monsoon sets in' was ambiguous so as to attract the rule of contra proferentem.
- Whether the assured breached the special condition and compromised the duty of utmost good faith by undertaking the voyage on 06.06.2013.
- Whether the special condition was a condition precedent to the insurer's liability or a non-material term impliedly waived by the parties.
- Whether the insurer's other objections (alleged forgery and breach of other conditions) could be decided in the appeal.
Provisions considered
- Section 67, Consumer Protection Act, 2019The appeal was preferred under this provision against the NCDRC's final order dismissing the consumer complaint. (¶ 2)
Held
- An insurance contract is interpreted on the same principles as any other contract, save for the requirement of utmost good faith on the assured's part, and its terms are to be construed strictly so far as possible. The rule of contra proferentem applies only where a real ambiguity exists in the clause itself; it cannot be used to create an ambiguity by importing external considerations. The special condition, read literally and with the DGS circular of 25.04.2008 (foul weather from 1 May on the East Coast and 1 June on the West Coast), was not ambiguous. (¶¶ 11, 12, 13, 14, 15)
- The insurer's plea that it did not know of the voyage and believed the vessel would be laid up at Kolkata during the monsoon was rejected: the proposal stated that the insurance was for a delivery voyage from Ghodbunder Jetty to Kolkata harbour, and the one-month policy period itself fell within the foul-weather period on the East Coast; even a voyage begun on 16.05.2013 would have ended after 1 June. The only logical conclusion was that the policy was availed to cover the foul-weather period. (¶¶ 16, 17, 18)
- Where a special condition in a policy is impossible of compliance on the very voyage insured, and a strict reading would deny the assured any claim for a marine accident preventing completion of the voyage, the result is an absurdity defeating the purpose of insurance. Such a condition cannot be treated as a condition precedent to liability; being non-material, it stands impliedly waived by the parties, as in Ramji Karamsi v. Unique Motor and General Insurance Co. (¶¶ 18, 19, 20)
- The insurer's remaining objections, including allegations of forgery and breach of other policy conditions, may bear on the sum awarded and must be examined and proved on their own merits before the NCDRC. (¶ 20)
Result
Appeal allowed; NCDRC order dated 13.04.2021 set aside. Matter remanded to the NCDRC to determine the extent of the insured sum payable by the respondent, with the parties to appear on 29.04.2025 without separate notice and the matter to be considered expeditiously. Parties to bear their own costs; pending applications disposed of.