M/S SHIVRAM CHANDRA JAGARNATH COLD STORAGE & ANR. versus NEW INDIA ASSURANCE COMPANY LIMITED & ORS.

Citation: [2022] 2 S.C.R. 363 · Decided: 24-01-2022 · Supreme Court of India · Bench: D.Y. CHANDRACHUD · Disposal: Dismissed

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Judgment (excerpt)

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[2022] 2 S.C.R. 363
363
M/S SHIVRAM CHANDRA JAGARNATH COLD STORAGE & ANR.
v.
NEW INDIA ASSURANCE COMPANY LIMITED & ORS.
(Civil Appeal No. 2371 of 2019)
JANUARY 24, 2022
[DR. DHANANJAYA Y CHANDRCHUD AND DINESH
MAHESHWARI, JJ.]
Insurance – Deterioration of Stock Policy (DOS policy) –
Specific exceptions in the policy – Stock of potatoes stored by the
appellant had sprouted while in the cold storage – Claim submitted
to the insurer – The exceptions to the policy made it clear that the
insurer would not be liable for any damage if the temperature in the
refrigeration chamber did not exceed 4.4 degree celsius (400F) – It
was stated by the appellant that the proper temperature was
maintained and it was recorded in the logbook – After some time,
when the statement of the representative of the appellant was
recorded by the surveyor, it was asserted that the main cause for
rotting of the potatoes was a rise in the temperature – NCDRC
characterized the assertion as an “afterthought” and rejected the
consumer complaint – On appeal, held: In the instant case, there is
no ambiguity in the terms of the exception – The surveyor’s report
indicates that the temperature never exceeded 4.4 degree celsius,
which was also accepted by the appellants – The temperature of the
cold storage is fundamental to the health of the potatoes relating to
which the policy was undertaken – The insurer identified a
temperature of 4.4 degree celsius as the optimum temperature, at
which rotting of the potatoes should not occur and thus has exempted
itself of any liability resulting from the deterioration of potatoes
occurring at a temperature that is below or equivalent to 4.4 degree
celsius – There is no reason to read down clause (vi) of exceptions
to the DOS Policy because it is not in conflict with the main purpose
of the policy – In terms of the insurance policy, the insurer is not
liable for damage caused to the potatoes as the temperature of the
storage did not rise above 4.4 degree celsius – No interference
required in the Judgment of the NCDRC.
Insurance – Role of exceptions in insurance policy – Discussed.
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SUPREME COURT REPORTS
[2022] 2 S.C.R.
Dismissing the appeal, the Court
HELD: 1. In the present case, there is no ambiguity in the
terms of the exception. The exception to the Deterioration of
Stock Policy (DOS Policy) clearly provides that the insurer would
not be liable for “[a]ny 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 40p  F (4.4 degree Celsius), which was also accepted
by the appellants in their communication dated 14 October 2008.
The assertion that the rotting of the potatoes resulted from a
higher temperature was only made on 17 February 2009, which
the NCDRC in its impugned judgement dated 14 August 2018
has characterised as an “afterthought”. Thus, in terms of the
insurance policy, the insurer is not liable for damage caused to
the potatoes as the temperature of the storage did not rise above
40p  F. Further, unlike in BV Nagaraju, the exception, in this
case, is neither too wide nor in conflict with the main purpose of
the insurance policy. The insurance policy covers the deterioration
of potatoes that have been stocked in cold storage by the
appellants. The temperature of the cold storage is fundamental
to the health of the potatoes relating to which the policy has been
undertaken. This is distinguishable from the exception relating
to the number of persons a vehicle can carry, which was the subject
matter of the exception in BV Nagaraju. The insurer has identified
a temperature of 400 F as the optimum temperature, at which
rotting of the potatoes should not occur and thus has exempted
itself of any liability resulting from the deterioration of potatoes
occurring at a temperature that is below or equivalent to 40p  F.
There is no reason to read down clause (vi) of exceptions to the
DOS Policy because it is not in conflict with the main purpose of
the policy. [Para 16][374-E-H; 375-A-B]
New India Assurance Company Ltd. v. Rajeshwar
Sharma & Anr. (2019) 2 SCC 671 : [2018] 14 SCR
1181; Oriental Insurance Co. Ltd. v. Sony Cheriyan
(1999) 6 SCC 451 : [1999] 1 Suppl. SCR 622; BV
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Nagaraju v. Oriental Insurance Co. Ltd., Divisional
Officer, Hassan (1996) 4 SCC 647 : [1996] 3 Suppl.
SCR 22 –relied on.
Sikka Papers Ltd. v. National Insurance Company Ltd.
& Ors. (20

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