REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 1557 OF 2004
Export Credit Guarantee Corpn. of India Ltd. …Appellant
Versus
M/s Garg Sons International …Respondent
With
Civil Appeal Nos. 1553, 1548, 1555, 1556, 1549, 1552, 1551, 1558,
1550, 1559, 1543, 1542, 1546, 1544, 1545 and 1547 of 2004.
J U D G M E N T
Dr. B.S. CHAUHAN, J.
1. All the above-mentioned appeals have been preferred against the
common impugned judgment and order dated 18.2.2003 passed by the
National Consumer Disputes Redressal Commission, New Delhi, in
Revision Petition Nos. 662, 663, 664, 665, 666, 667, 668, 669, 670,
671, 672, 673, 674, 933 of 2002 and 238, 246 and 247 of 2001.
2. Facts and circumstances giving rise to these appeals are that:
A. The appellant herein, Export Credit Guarantee Corporation of
India Ltd., (hereinafter referred to as `the insurer’), is a
government company, which is in the business of insuring exporters.
Respondent, M/s Garg Sons International, on 23.3.1995 purchased a
policy for the purpose of insuring a shipment to foreign buyers i.e.
M/s Natural Selection Co. Ltd. of UK, and the said buyer committed
default in making payments towards such policy from 28.12.1995
onwards, with respect to the said consignment.
B. The insured, that is M/s Garg Sons International, sought
enhancement of credit limit to the tune of Rs.50 lakhs with respect to
the said defaulting foreign importer. Subsequently, he presented 17
claims.
C. The insurer rejected all the abovementioned claims on the ground
that the insured did not ensure compliance with Clause 8 (b) of the
insurance agreement, which stipulated the period within which the
insurer is to be informed about any default committed by a foreign
importer.
D. Thus, the insured then filed several complaints before the State
Disputes Redressal Commission, to which the insurer filed replies. The
State Disputes Redressal Commission adjudicated upon the case and
disposed of the said complaint, vide order dated 4.6.2001, directing
the insurer to make various requisite payments due under different
claims, with 9 per cent interest and litigation expenses etc.
E. Being aggrieved against the orders passed in all 17 claims, the
insurer preferred appeals under Section 19 of the Consumer Protection
Act, 1986, before the National Consumer Disputes Redressal Commission,
wherein the impugned judgment and order was disputed, stating that it
was evident from the said judgment that 11 claims had been rejected
and that 5 claims made by the insured were accepted.
Hence, both the parties preferred these appeals.
3. Shri Santosh Paul, learned counsel appearing on behalf of the
insurer, has submitted that the insured failed to communicate
information pertaining to the default made by the foreign importer, to
the insurer, within the stipulated period, which was fixed as 45 days
from the date on which the payment became due, and thus, failed to
ensure compliance with the mandatory requirement under Clause 8 (b),
owing to which, the claims with respect to which the said information
was not furnished within the time period stipulated in the agreement,
have wrongly been allowed. Moreover, it is evident from the judgment
that only 5 claims made by the insured were accepted, and that 11
claims were rejected, though in the said order, only 9 claims were
found to be rejected and 4 were shown as accepted. As the only
numbers of 4 revisions have been mentioned, stating that only these
were worth acceptance, and those of 9 revisions have been mentioned,
as those that were rejected, which was all stated to show that there
were typographical errors in the judgment itself.
In addition thereto, there were also certain appeals and thus,
the order was required to be modified to the extent that only two
claims which were made in respect of Civil Appeal Nos. 1547 of 2004
and 1557 of 2004, wherein all statutory requirements were complied
with deserve to be allowed, while the others, owing to default on the
part of the insured, are liable to be rejected.
4. On the other hand, Shri Satinder Singh Gulati, learned counsel
appearing on behalf of the insured, has submitted that admittedly,
there is in fact a typographical error in the impugned judgment and
order, and has stated that the claims of the insured, with respect to
which there has been no default on the part of insured, i.e., some
claims have wrongly been rejected. Therefore, the appeals filed by him
i.e. Civil Appeal Nos. 1559, 1544, 1545, 1543 and 1546 of 2004 should
be allowed and the other appeals, should be rejected accordingly.
5. We have considered the rival submissions made by learned counsel
for the parties and perused the record.
6. Relevant clauses of the insurance policy dated 23.3.1995, read
as under:
“8. Declarations:
a) Declaration of shipments :- …………
b) Declaration of overdue payments: The insured shall also deliver
to the Corporation, on or before the 15th of every month,
declaration in the term prescribed by the Corporation, of all
payments which remained wholly or partly unpaid for more than 30
days from the due date of payment in respect of shipments made
within the policy period and such declaration shall continue to
be rendered to the Corporation even after the expiry of the
policy period so long as any such payment remains overdue.
xx xx xx
19. Exclusion of Liability: Notwithstanding anything to the
contrary contained in this policy, unless otherwise agreed to by
the Corporation in writing, the Corporation shall cease to have
any liability in respect of the gross invoice value of any
shipment or part thereof, if:
(a) the insured has failed to declare, without any omission,
all the shipments required to be declared in terms of clause
8(a) of the policy and to pay premium in terms of clause 10 of
the policy;
(b) the insured has failed to submit declaration of overdue
payments as required by clause 8(b) of the policy; or
(c) ……………”
7. If both the conditions referred to hereinabove are read together, it
becomes evident that the insured must make a declaration in the
prescribed form (Form No. 205), on the 15th of every month as regards
whether or not, there has been any default committed by the foreign
importer, either in part, or in full, for a period exceeding 30 days
from the date on which the payment fell due, with respect to shipments
made within the policy period. Non-compliance with the said term(s) of
contract, will exonerate the insurer of all liability in this regard.
8. It is a settled legal proposition that while construing the
terms of a contract of insurance, the words used therein must be given
paramount importance, and it is not open for the Court to add, delete
or substitute any words. It is also well settled, that since upon
issuance of an insurance policy, the insurer undertakes to indemnify
the loss suffered by the insured on account of risks covered by the
policy, its terms have to be strictly construed in order to determine
the extent of the liability of the insurer. Therefore, the endeavour
of the Court should always be to interpret the words used in the
contract in the manner that will best express the intention of the
parties. (Vide: M/s. Suraj Mal Ram Niwas Oil Mills (P) Ltd. v. United
India Insurance Co. Ltd., (2010) 10 SCC 567).
9. The insured cannot claim anything more than what is covered by
the insurance policy. “…the terms of the contract have to be construed
strictly, without altering the nature of the contract as the same may
affect the interests of the parties adversely.” The clauses of an
insurance policy have to be read as they are…Consequently, the terms
of the insurance policy, that fix the responsibility of the Insurance
Company must also be read strictly. The contract must be read as a
whole and every attempt should be made to harmonize the terms thereof,
keeping in mind that the rule of contra proferentem does not apply in
case of commercial contract, for the reason that a clause in a
commercial contract is bilateral and has mutually been agreed upon.
(Vide : Oriental Insurance Co. Ltd. v. Sony Cheriyan AIR 1999 SC
3252; Polymat India P. Ltd. v. National Insurance Co. Ltd., AIR
2005 SC 286; M/s. Sumitomo Heavy Industries Ltd. v. Oil & Natural Gas
Company, AIR 2010 SC 3400; and Rashtriya Ispat Nigam Ltd. v. M/s.
Dewan Chand Ram Saran AIR 2012 SC 2829).
10. In Vikram Greentech (I) Ltd. & Anr. v. New India Assurance Co.
Ltd. AIR 2009 SC 2493, it was held :
“An insurance contract, is a species of commercial transactions
and must be construed like any other contract to its own terms
and by itself…. The endeavour of the court must always be to
interpret the words in which the contract is expressed by the
parties. The court while construing the terms of policy is not
expected to venture into extra liberalism that may result in re-
writing the contract or substituting the terms which were not
intended by the parties.”
(See also : Sikka Papers Limited v. National Insurance Company Ltd &
Ors. AIR 2009 SC 2834).
11. Thus, it is not permissible for the court to substitute the
terms of the contract itself, under the garb of construing terms
incorporated in the agreement of insurance. No exceptions can be made
on the ground of equity. The liberal attitude adopted by the court, by
way of which it interferes in the terms of an insurance agreement, is
not permitted. The same must certainly not be extended to the extent
of substituting words that were never intended to form a part of the
agreement.
12. The instant case is required to be considered in light of the
aforesaid settled legal propositions. The requisite record reveals the
factual matrix as under:
CA No. |Invoice No. |Invoice date |Date of shipment |Due date of payment
|Period for payment |Date for submission of Form-205 8(b) compliance |Delay
in filing 8(b) compliance
(i.e. form 205) |Amount | |1555/04 |160/95 |3.11.95 |13.11.95 |28.12.95 |45
days |17.7.96 |More than 5 months |8777/- | |1548/04 |163/95 |8.11.95
|20.11.95 |5.1.96 |45 days |17.7.96 |More than 5 months |116424/- |
|1552/04 |165/95 |13.11.95 |19.11.95 |4.1.96 |45 days |17.7.96 |More than 5
months |96474/- | |1549/04 |166/95 |13.11.95 |19.11.95 |4.1.96 |45 days
|17.7.96 |More than 5 months |67194/- | |1551/04 |177/96 |2.1.96 |3.2.96
|18.3.96 |45 days |17.7.96 |More than 2 months |52629/- | |1558/04 |182/96
|16.1.96 |3.2.96 |18.3.96 |45 days |17.7.96 |More than 2 months |249377/- |
|1553/04 |184/96 |29.1.96 |15.2.96 |31.3.96 |45 days |17.7.96 |More than 2
months |414354/- | |1559/04 |186/96 |7.2.96 |6.3.96 |6.5.96 |60 days
|17.7.96 |More than 1 month |239656/- | |1550/04 |191/96 |22.2.96 |24.2.96
|24.4.96 |60 days |17.7.96 |More than 1 month |242055/- | |1544/04 |192/96
|22.2.96 |6.3.96 |6.5.96 |60 days |17.7.96 |More than 1 month |343777/- |
|1545/04 |193/96 |26.2.96 |28.2.96 |30.4.96 |60 days |17.7.96 |More than 1
month |267229/- | |1543/04 |195/96 |13.3.96 |25.3.96 |25.5.96 |60 days
|17.7.96 |2 days |306159/- | |1556/04 |196/96 |22.3.96 |25.3.96 |25.5.96
|60 days |17.7.96 |2 days |264400/- | |1547/04 |200/96 |19.4.96 |6.5.96
|6.7.96 |60 days |17.7.96 | |314961/- | |1546/04 |162/95 |8.11.95 |20.11.95
|5.1.96 |45 days |17.7.96 |More than 5 months |528257/- | |1557/04 |201/96
|19.4.96 |6.5.96 |6.7.96 |60 days |17.7.96 | |1362688/- | |1542/04 |164/95
|11.11.95 |19.11.95 |4.1.95 |45 days |17.7.96 |More than 5 months |579766/-
| |13. The aforesaid chart clearly establishes that the insured failed
to comply with the requirement of clause 8(b) of the agreement
informing the insurer about the non-payment of outstanding dues by the
foreign importer within the stipulated time except in two cases.
14. Thus, we are of the view that only two claims which are subject-
matters in Civil Appeal Nos. 1547 and 1557 of 2004 deserve to be
allowed. The others are dis-allowed.
With these observations, all 17 appeals stand disposed of.
..………………………….J.
(Dr. B.S.
CHAUHAN)
.…………………………..J.
(V. GOPALA GOWDA)
New Delhi,
January 17, 2013
