M/S SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. versus UNITED INDIA INSURANCE CO. LTD. & ANR.

Citation: [2010] 13 S.C.R. 138 · Decided: 08-10-2010 · Supreme Court of India · Bench: D.K. JAIN · Disposal: Dismissed

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Judgment (excerpt)

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[201 OJ 13 (ADDL.) S.C.R. 138 
MIS SU RAJ MAL RAM NIWAS OIL MILLS (P.) LTD. 
v. 
UNITED INDIA INSURANCE CO. LTD. & ANR. 
(Civil Appeal No. 1375 of 2003) 
OCTOBER 8, 2010 
[D.K. JAIN AND T.S. THAKUR, JJ.] 
Insurance - Contract of insurance - In terms of the 
contract, insured required to disclose each and every dispatch 
C of consignment - Insured not disclosing dispatch of some of 
the consignments - Dispatch of the consignment in question 
disclosed - Damage to the consignment during irs transit -
Insurance claim - Repudiated by insurance company on the 
ground that the insured had violated terms and conditions of 
D the contract by not disclosing all the dispatches - Entitlement 
of the insured to insurance claim - Held: Insurance claim 
must fail on the ground of the breach of contract - As per the 
contract, the insured was required to declare each and every 
dispatch and not those alone wherein it had insurable interest 
E - Contract. 
F 
Deeds and Documents -
Contract of insurance -
Interpretation of - Held: The terms of the contract of insurance 
have to be strictly construed - It is not open to the court to 
add, delete or substitute any words - Insurance contract. 
The appellant, a 11ompany engaged in the business 
of manufacture and sale of mustard oil, obtained an open 
transit insurance policy from the respondents-insurance 
company, covering all types of edible oils in tins 
G transported by rail I road to anywhere in India. During the 
relevant period, liability of the insurance company was 
limited to Rs. 1 crore. The cover note of the insurance 
policy contained a special condition i.e. each and every 
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138 
SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v. 
139 
UNITED INDIA INSURANCE CO. LTD. 
consignment was to be declared immediately before 
dispatch of the goods. 
The insured dispat~hed certain tins of oils. The 
railway wagon, carrying the goods met with an accident 
resulting in damage to the consignment. The insured 
informed about the accident to another branch of the 
insurance company. A surveyor was appointed, who gave 
his report assessing the loss. Thereafter another 
surveyor was appointed by respondent No. 2 (the local 
branch of the insurance company) who reported that till 
the date the consignment in question was dispatched, 
the insured had only disclosed dispatches worth Rs. 
91,22,778/- while the total dispatches were worth Rs. 
1,43,59,303/-. 
The claim of the insured was repudiated by the 
insurance company on the ground, amongst others, that 
the insured violated the terms and conditions of the 
contract in as much as it did not declare all the 
dispatches. The insured filed a complaint, which was 
allowed by the State Consumer Disputes Redressal 
Commission. The National Consumer Disputes 
Redressal Commission set aside the order of State 
Commission and upheld the rejection of the claim of the 
insured. Therefore, the instant appeal was filed. 
Dismissing the appeal, the Court 
HELD: 1. It is trite that in a contract of insurance, the 
rights and obligations are governed by the terms of the 
said contract. Therefore, the terms of a contract of 
insurance have to be strictly construed, and no exception 
can be made on the ground of equity. Thus, in construing 
the terms of a contract of insurance, the words used 
therein must be given paramount importance, and it is 
not open for the court to add, delete or substitute any 
words. It is also well settled that since upon issuance of 
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140 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R. 
A an insurance policy, the insurer undertakes to indemnify 
the loss suffered by the insured on account of risks 
covered by the policy, its terms have to be strictly 
construed to determine the extent of liability of the 
insurer. Therefore, the endeavour of the court should 
B always be to interpret the words in which the contract is 
expressed by the parties. [Paras 22 and 24) [151-E; 152-
D-F] 
General Assurance Society Ltd. v. Chandumull Jain and 
C Anr. (1966) 3 SCR 500 - followed. 
United India Insurance Co. Ltd. v. Harchand Rai 
Chandan Lal (2004) 8 SCC 644 - relied on. 
Oriental Insurance Co. Ltd. v. Sony Cheriyan (1999) 6 
D SCC 451; Vikram Greentech India Limited and Anr. v. New 
India Assurance Company Limited (2009) 5 SCC 599; Sikka 
Papers Limited v. National Insurance Company Limited and 
Ors. (2009) 7 SCC 777; New India Assurance Company 
Limited v. Zuari Industries Limited and Ors. (2009) 9 SCC 70; 
E Amra

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