LexM/S. BHS INDUSTRIES versus EXPORT CREDIT GUARANTEE CORP. &ANR.
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A B (2015] 8 S.C.R. 366 M/S. BHS INDUSTRIES v. EXPORT CREDIT GUARANTEE CORP. &ANR. (Civil Appeal No.2729 of 2009) JULY?, 2015 · [DIPAK MISRA AND V. GOPALA GOWDA, JJ.] c Contract - Contract of insurance - Between exporting proprietary concern and Export Credit Guarantee Corporation - Shipment Comprehensive Risk Policy issued - Consignments sent by the exporter insured which were covered by the insurance and also which were not covered o by the insurance - Non-acceptance of the documents negotiated and of the goods, by the.buyer- Communication regarding the non-acceptance by the insured to the insurer- Corporation and also regarding shipment which was not covered through insurance - Insurance claim - Repudiated E by the insurer on the ground that the insured violated the terms of the policy- Held:. In view of Clause 5 of the policy, it cannot be said that the insured violated the terms of policy as regards the reduction of the period for payment- However, the insured omitted the condition of declaration of shipment F amounting to 50% in number and 30% in value, which was violative of Clauses 1, 2, ?(a), B(a), 10, 19(a), 28 and 29 of the Policy - Hence after construing the policy in its entirety and in a harmonious manner, liability cannot be fastened on the insurer- Insurer rightly repudiated the claim. G Dismissing the appeal, the Court HELD: 1. If Clause 5(c) of the policy is properly understood, in the obtaining factual matrix, it cannot be J.J 366 BHS INDUSTRIES v. EXPORT CREDIT GUARANTEE 367 CORP. said that there has been violation of the terms of the A · policy as regards the reductfon of the period for payment What is stipulated is that the Corporation should not be liable if the insured gives credit for more than 180 days. That is the outer limit. As per the letter dated 2.9.1999, the appellant has shown the terms of payment ~ue within B 90 days of the shipment. The appellant had given a credit of 60 days which is well within the outer limit of 90 days. Thus, a& the insured has fixed the debt within the said period, that cannot be held against him. [Pa·ra 23] [386- G-H; 387-A-B] C 2.1 Terms of the policy are to be strictly construed. There can be no cavil about the proposition of law that in case of ambiguity, the construction has to be made in favour of the insured. Clauses 8(a) and 19(a) of the policy D deal with declarations and the exclusion of liability respectively. They are absolutely specific and as per the stipulations therein, the insured has been cast an obligation under the policy. He is obliged under the policy to deliver to the Corporation a declaration on or before E 151h day of each calendar month in a prescribed format details of all shipments made during the previous month and even he is required to give a 'nil' declaration if no shipment has been made. Clause 19(a) refers to the F declaration in terms of Clause 8(a). It also uses the word "without any omission". It adds a further postulate relating to payment of the premium in terms of Clause 10. The prescription of twin requirements in Clause 19(a) are cumulative. They cannot be read in segregation. The G insured has to declare the shipments in terms of Clause 8(a) without omission and also pay the premium in terms of Clause 10. Premium of payment alone does not make the Corporation liable to indemnify the loss or fasten the liability on it. It is also required on the part of the insured . H 368 SUPREME COURT REPORTS [2015] 8 S.C.R. A for the purpose of sustaining the claim to show that there has been compliance as regards the declaration. To construe Clause S(a) that the insured has a choice to declare which shipment he would cover and which ones he would leave, would run counter to the mandate of B the policy .. [Para 27] [390-G,H; 391-A-F] 2.2 The general clauses basically convey which risks are covered and which risks are not covered, how the premium is to be computed and paid. What eventually C matters is where the liability of the insurer is exclusively excluded, the said clauses of the policy are absolutely clear, unequivocal and unambiguous. The insured after availing a policy in commercial transactions is to understand the policy in entirety. The construction of the D policy in entirety and in a harmonious manner leaves no room for doubt that there is no equivocality or ambiguity warranting an interpretation in favour of the insured- appellant.
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