IMPORTANT POINTS
Contracts of insurance are contracts of uberrima fides. That means, every material fact is required to be disclosed.
In contract of insurance policy good faith required on the part of the insured. In case of ambiguity, provision should be construed against the insurer.
In order to sustain its claim the insured had to satisfy twin postulates: declaration of all shipment without omission in terms of clause 8(a); and payment of premium in terms of clause 10.
Its not open to the insured to make declaration selectively.

Judgment

Dipak Misra, J.

The present appeal, by special leave, assails the judgment and order dated 20.08.2007 passed by National Consumer Disputes Redressal Commission, New Delhi (for short “the Commission’) in First Appeal No.189 of 2007 whereby it has affirmed the Judgment and Order dated 15.2.2007 passed by the State Consumer Disputes Redressal Commission, Union Territory of Chandigarh (for short, “the State Commission”) in complaint case No. 82/2002 (Pb)/RBT No. 46 of 2006 wherein the State Commission had rejected the claim of the complainant-appellant on two counts, namely, the claim was barred by limitation, and that under the postulates of the policy, it was totally untenable.

2. The factual score that is essential to be depicted is that the appellant, a small scale industry and a proprietary concern dealing in handicraft goods, being desirous of exporting its goods to a buyer, namely, M/s Treasures of India, Atlanta, USA took insurance cover from the first respondent on 15.6.1999 and accordingly the appellant was issued a Shipment Comprehensive Risk Policy on the same date. The maximum liability of the respondent-insurer under the policy was Rs.30 lakhs. The insurer had initially granted provisional credit limit of Rs.8 lakhs on 14.7.1999 in respect of M/s Treasures of India which was enhanced to Rs.10 lakhs on 20.7.1999 and later on enhanced to Rs.20 lakhs. The appellant had sent one consignment of Rs.6,50,000/- to M/s Treasures of India on 15.7.1999 and a declaration to that effect was duly sent to the respondents. Be it noted, the appellant has arrayed the Export Credit Guarantee Corporation Limited, Nariman Point, Mumbai through its Managing Director and the same corporation at Suryakant Complex, Ludhiana through its Branch Manager as respondents 1 and 2 respectively. As averred, the appellant had obtained further orders from the aforesaid buyer and the shipments were required to be sent immediately. The appellant kept writing to the respondents to send the approval for the additional limit in respect of the said buyer. On 20.8.1999 the appellant made another shipment of Rs.4,76,139/- to the said buyer and a declaration to that effect was also sent to the respondents. The appellant received further orders from the buyer but the corporation had not accorded approval for the additional credit. Under these circumstances the appellant had sent two shipments amounting to Rs.2,77,732/-and 1,00,512/-on 20.8.1999. It is the case of the appellant that the said two shipments were sent at its own risk as the corporation had not accorded the additional limit as asked for. When the matter stood thus, on 29.9.1999 the appellant was informed by its bank that the buyer had refused to accept the documents negotiated with the drawee bank i.e. Sun Trust Altanta, USA in respect of the shipments sent vide invoices dated 15.7.1999 and 20.8.1999 and accordingly the documents were returned. Since the buyer had refused to accept the goods which had already been exported from India, the appellant on 22.10.1999 intimated the corporation regarding non-acceptance of documents by the buyer. The appellant also informed the respondent-corporation regarding the shipment which was not covered through insurance by letter dated 10.12.1999.

3. As the factual matrix would further unfurl, on 22.12.1999 the corporation sent a communication stating that the approved limit was Rs.20 lacs, and it required the appellant to comply with the formalities on the prescribed format. On 11.1.2000, the corporation asked the appellant the reason for non-payment and to explore the possibilities and further negotiate with the buyer and to take steps. Thereafter, the appellant sent a letter for payment of the aforesaid claim and as there was no response to the said communication, it sent reminders to process the claim with expediency. In response to said letters the respondents on 6.6.2000 repudiated the claim by stating that the corporation’s liability was not attracted be