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SUPREME COURT OF INDIA
Dhananjaya Y Chandrachud, Dinesh Maheshwari, JJ.
M/s Shivram Chandra Jagarnath Cold Storage & Anr. – Appellants
Versus
New India Assurance Company Limited & Ors. - Respondents
Civil Appeal No 2371 of 2019
Decided On : 24-01-2022
Consumer Protection Act, 1986 – Section 23 – Insurance – Deterioration of Stock Policy – Stock of Potatoes sprouted while in cold storage – Exceptions to an insurance policy must be construed strictly since they reflect agreement between parties with respect to losses that are covered by insurance policy – Any departure from this principle is possible only if terms of policy are ambiguous or unclear – Temperature of cold storage is fundamental to health of potatoes relating to which policy has been undertaken – In present case, there is no ambiguity in terms of exception – In terms of insurance policy, Insurer is not liable for damage caused to potatoes as temperature of storage did not rise above 40 F – Claim was correctly repudiated by Insurer, having regard to specific exceptions in policy – Appeal dismissed. (Paras 14, 16 and 17)
Facts of the case:
Instant appeal arises from a judgement of the National Consumer Disputes Redressal Commission1 dated 14 August 2018 in Consumer Case No 37 of 2010. The insurance claim of the appellants arose under a Deterioration of Stock Policy which covered the stock of potatoes stored by the appellant in cold storage.
Findings of Court:
There is no ambiguity in the terms of the exception. The exception to the DOS Policy clearly provides that the insurer would not be liable for any damage if the temperature in the Refrigeration chambers does not exceed 4.4 degree Celsius. The Surveyor’s report indicates that the temperature never exceeded 400 F, which was also accepted by the appellants in their communication dated 14 October 2008. The assertion that the rotting of potatoes resulted from a higher temperature was only made on 17th February 2009, which NCDRC in its impugned judgement dated 14th August 2018 has characterised as an “afterthought”.
Result : Appeal dismissed.
JUDGMENT :
Dhananjaya Y Chandrachud, J.
1. The appeal arises from a judgment of the National Consumer Disputes Redressal Commission1[“NCDRC”] dated 14 August 2018 in Consumer Case No 37 of 2010.
2. The insurance claim of the appellants arose under a Deterioration of Stock Policy2[“DOS Policy”] which covered the stock of potatoes stored by the appellant in cold storage. The relevant terms of the DOS Policy indicated that:
“...THIS POLICY OF INSURANCE WITNEESETH that in consideration of the insured having paid to the company the premium mentioned in the schedule hereon the company hereby agrees with the insured that at any time during the period of insurance stated in the Schedule II or during any subsequent period for which the insured pays and the company may accept the premium for the renewal of this policy the company will indemnify the insured in the manner and to the extent hereinafter provided for damage to the stocks described in schedule II by contamination and/or deterioration, putrefaction as a result of rise in temperature in the Refrigeration Chambers caused by any loss of or damage due to an accident, as defined hereinafter to the Plant and Machinery specified in schedule I and indemnifiable under the Machinery Insurance Policy in force. The total liability of the Company under this policy shall be limited to the sum insured specified in Schedule II.”
3. The proviso to the above provision stipulated that:
“Provided always that:
(i) During the entire period of this insurance the Insured shall be in possession of a qualified permission in writing of the competent Licensing Authority to operate the Cold Storage.
(ii) At the time of loss or damage the said stocks are contained in the said Refrigeration Chambers.
(iii) The Plant and Machinery specified in schedule I is insured under the Machinery Insurance Policy in force and the payment shall have been made or liability admitted under such insurance; if no payment shall have been made under such insurance solely as a result of operation of any 'Excess' thereunder Liability of the company under this Policy shall not be affected.
(iv) The Insured maintains, on a daily basis, a stock book in the Proforma prescribed by the company, in which the type, quantity and value of the stocks stored and the beginning and end of the storage period are entered for each Refrigeration chambers separately.
(v) During the entire period of storage the Insured records in Log Book as per the Proforma supplied by the company the reading of the temperature and relative humidity of the Refrigeration Chambers as also the suction discharge and oil pressure on four hourly basis throughout the day.
(vi) stock Book, Log Book and all other records of the Insured relating to the stocks stored shall at all reasonable times be open to inspections by duly authorized representatives of the company.”
4. The expression “accident” was defined in clause (a) of the definitions as follows:
“a) Any sudden or unforeseen loss or damage to the Plant and Machinery described in schedule of this Policy due to an accident caused covered by the machinery insurance policy specified in schedule I and not hereinafter excluded.”
5. Among the exceptions to the DOS Policy, clause (vi) stipulated that the insurer would not be liable for:
“(vi) Any damage if the temperature in the Refrigeration chambers does not exceed 4.4 degree Celsius.”
6. Similarly, clause (viii) provided the following exception to the liability of the insurer in the case of:
“(viii) Any loss arising from improper storage insufficient circulation of air/non-uniformity of temperature for whatsoever reasons.”
7. The warranties to the DOS Policy, inter alia, stipulated as follows:
“6. The Insured shall take care to see that:
(i) the temperature inside the cold Chambers are brought down to 34 Degree F (1.1. Degree C) in all floors of all the chambers before loading commences and;
(ii) Further ensure that the temperature in all the chambers does not exceed 59 Degree
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