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Haris Marine Products vs. Export Credit Guarantee Corporation (ECGC) Limited - (Supreme Court) (25 Apr 2022)

Ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety



The Appellant is aggrieved by an order of the National Consumer Disputes Redressal Commission (NCDRC) dismissing its complaint. The issue urged by the Appellant is whether the NCDRC was correct in placing reliance on guidelines issued by the Directorate General of Foreign Trade (DGFT Guidelines) to interpret the date of ‘despatch / shipment’ in the Single Buyer Exposure Policy of the Respondent (Policy), and thereby deny the Appellant’s claim.

The Appellant is an exporter of fish meat and fish oil, whereas the Respondent (“ECGC”) is a government company. ECGC rejected the Appellant’s claim on several levels; with the final rejection by the Independent Review Committee (“IRC”). IRC’s view was that the date of ‘despatch / shipment’ (provided in the Policy) was not clearly defined. For containerized cargo, the same was to be interpreted as the date of ‘Onboard Bill of Lading’, which in the present case was 13th December, 2012. This was just a day prior to the effective date of the Policy, i.e., 14th December, 2012. It was therefore reasoned that the Appellant was not entitled to the claim amount. The Appellant, feeling aggrieved, complained of deficiency of service, and approached the NCDRC for compensation. ECGC resisted the claim.

By the impugned order, NCDRC upheld the rationale of the IRC and rejected the Appellant’s contention that in absence of a clearly specified provision in the Policy, it was entitled to the benefit of the rule of verba chartarum fortius accipiuntur contra proferentem (“contra proferentem”). Hence, the present appeal.

An ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety. If after that, no clarity emerges, then the term must be interpreted in favour of the insured, i.e., against the drafter of the policy.

Even if in the present instance, the third-party DGFT Guidelines were to be applied, it would not favour the ECGC, as a plain reading of provision 9.12 shows that the date on the Bill of Lading has to be considered as the date of despatch / shipment. The date of ‘onboard’ Bill of Lading is not applicable to the present facts as no letter of credit was executed, much less providing for application of such date. Therefore, ECGC could not have denied the Appellant’s claim, even on a consideration the DGFT Guidelines.

To deny the Appellant’s claim over an incorrect interpretation of an ambiguous term, that too with delay amounting to only one day, goes against such duties, especially given the fact that the Appellant had transacted with the Respondent on several previous occasions. Accordingly, the impugned order of the NCDRC is set aside. The Appellant’s complaint is consequently allowed. ECGC is directed to pay the claim amount of Rs. 2.45 crores to the Appellant, with interest at the rate of 9% p.a. Appeal allowed.


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