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SUPREME COURT OF INDIA
B. V. Nagarathna, Satish Chandra Sharma, JJ.
Sohom Shipping Pvt. Ltd. – Appellant
Versus
M/S. The New India Assurance Co. Ltd. & Anr. – Respondents
Civil Appeal No. 2323 of 2021
Decided On : 07-04-2025
Insurance Act, 1938 – Section 45 – Consumer Protection Act, 2019 – Section 67 – Insurance – Insured Vessel ran aground due to due to bad weather and engine failure – Claim repudiated on the ground of breach of a special condition – Interpretation of Insurance Contract falls upon same principles as interpretation of any contract, except that there exists requirement of uberrima fides, i.e. good faith on part of assured – Policy and all terms therein ought to be construed strictly, to the extent possible – Appellant has attempted to introduce ambiguity in the condition by bringing in external factors and considerations, which is impermissible under rule of contra proferentum – No ambiguity in text of policy itself – However, rejection of the applicability of rule of contra proferentum does not prejudice case of Appellant on the counts of validity and materiality of condition itself – Respondent is not entitled to repudiate claim of Appellant on the ground of breach of special condition – Impugned order passed by NCDRC set aside and matter remanded to NCDRC with direction to determine extent of insured sum liable to be paid by Respondent to Appellant. (Paras 11, 15, 20 and 21)
Facts of the case:
Present appeal has been preferred by Appellant under Section 67 of Consumer Protection Act, 2019 against final judgement and order dated 13.04.2021 passed by National Consumer Disputes Redressal Commission, New Delhi (“NCDRC”) dismissing consumer complaint filed by Appellant herein on account of doctrine of Uberrima Fidei being compromised.
Findings of Court:
Respondent has raised several other objections, including allegations of forgery and breach of other conditions, which may affect sum awarded. However, same would have to be looked into on its own merits and proved before NCDRC.
Result : Appeal allowed.
Yes, the term "good faith" has been used in the legal document. It appears in the context of the interpretation of the insurance contract, where it is stated that the interpretation of insurance contracts involves a requirement of "uberrima fides," which translates to good faith on the part of the insured. This principle emphasizes that the insured must act honestly and disclose all material facts when entering into the insurance agreement (!) .
JUDGMENT :
SATISH CHANDRA SHARMA, J.
1. The present dispute hinges on the phrase “voyage should commence & complete before monsoon sets in” contained in the contract for insurance between the parties, and raises questions regarding its validity, interpretation and materiality.
2. The appeal before us has been preferred by the Appellant under Section 67 of the Consumer Protection Act, 2019 (hereinafter “COPRA”) against the final judgment and order dated 13.04.2021 (hereinafter "Impugned Order”) passed by the National Consumer Disputes Redressal Commission, New Delhi (hereinafter “NCDRC”) dismissing the consumer complaint filed by the Appellant herein on account of the doctrine of Uberrima Fidei being compromised.
3. Factual Background
3.1. The Appellant is engaged in the shipping business and has its offices at Sougor Road Kulpi, Diamond Harbour, Haldia and Kolkata. The Appellant purchased a newly built barge ‘Srijoy II’ (hereinafter “the Vessel”) and sought to undertake its maiden voyage from Mumbai to Kolkata.
3.2 In pursuance of the same, the Appellant applied for a ‘single voyage permit’ to the Director General of Shipping (hereinafter “DGS”), wherein the Vessel was expected to sail from Mumbai on 30.04.2013 and arrive at Kolkata on 15.05.2013. The DGS directed the Indian Register of Shipping (hereinafter “IRS”) to carry out a detailed inspection.
3.3 The Appellant sought to insure its voyage and the Vessel, and submitted its insurance proposal to the Respondent. Thereafter, an insurance contract was entered into between the parties for the period between 16.05.2013 to 15.06.2013 (hereinafter “the Insurance Contract”). The Insurance Contract contained a special condition that the “voyage should commence & complete before monsoon sets in”. Further, it contained Special Warranties, inter alia that the “Vessel to depart in local weather condition not exceeding Beaufort Scale No. 4…”.
3.4 The IRS granted clearance to the Appellant to undertake its voyage in accordance with MS Circular No. 03 of 2008. Thereafter, the DGS issued a “No objection” with respect to the same.
3.5 The Vessel undertook the voyage on 06.06.2013. Unfortunately, on the very next day it was anchored off near Ratnagiri Port due to bad weather and engine failure. Ultimately, the Vessel ran aground.
3.6 The Appellant sought assistance from the Respondent for towing and salvaging the Vessel after the Insurance Contract had expired. On 25.07.2013, the Appellant issued a ‘Notice of Abandonment’ to the Respondent claiming total loss on the ground that repair of the Vessel would be more expensive than the amount insured for.
3.7 On 12.09.2013, the Respondent issued a ‘Repudiation Notice’ rejecting the claim of the Appellant on the ground that the Vessel set sail after ‘monsoon set in’ breaching the special condition in the Insurance Contract. Subsequently, the surveyor appointed by the Respondent issued its final report concluding that the Appellant was in wilful breach of the condition.
3.8 Aggrieved by the repudiation of the insurance claim, the Appellant herein filed a consumer complaint under Section 21 of COPRA before the NCDRC. Vide Impugned Order dated 13.04.2021, the NCDRC dismissed the complaint on the ground that the Appellant suppressed material facts by not disclosing all its plans to the Respondent, and did not conduct itself in good faith.
4. Submissions by the Appellant
4.1 Mr. Huzefa Ahmadi, learned Sr. Counsel for the Appellant has strongly urged before us that the conclusion drawn by the NCDRC is contrary to law and prays for the same to be set aside.
4.2 The primary contention of the Appellant is that the Respondent knew or should have known that the policy period covers the foul period, and therefore the policy cannot stand repudiated on this ground.
4.3 That the special condition contained in the insurance contract was non-material as the Respondent was aware that the voyage was to be undertaken in foul weather. Further, in the event that the special conditio
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