In Sohom Shipping Pvt. Ltd. v. New India Assurance Co. Ltd. & Anr. (Civil Appeal No. 2323 of 2021), the Supreme Court of India set aside the order of the National Consumer Disputes Redressal Commission (NCDRC), which had dismissed the consumer complaint filed by the appellant on the ground of breach of uberrima fides. The apex court held that the insurance company could not repudiate the claim based on the breach of a special condition that was found to be non-material and impliedly waived. Judgement was delivered by the bench of Justice B.V. Nagarathna and Justice Satish Chandra Sharma.
Background
The appellant, Sohom Shipping Pvt. Ltd., engaged in the shipping business, purchased a newly built barge, ‘Srijoy II’, and sought to undertake its maiden voyage from Mumbai to Kolkata. For this voyage, it obtained a ‘single voyage permit’ and secured a marine insurance policy from the New India Assurance Co. Ltd. covering the period from 16 May 2013 to 15 June 2013.
The insurance policy included a special condition stipulating that the “voyage should commence & complete before monsoon sets in” and a warranty that the vessel should not depart in weather exceeding Beaufort Scale No. 4. Despite this, the vessel began its journey on 6 June 2013, encountered rough weather near Ratnagiri, suffered engine failure, and ultimately ran aground.
The appellant claimed a total loss and issued a Notice of Abandonment to the insurer. However, the insurance company repudiated the claim, stating that the voyage commenced after the monsoon had set in, thereby breaching the special condition.
Parties’ Arguments
Appellant’s Submissions: Senior Counsel Mr. Huzefa Ahmadi argued that the insurer was aware of the foul weather period and the voyage route. He contended that:
- The special condition was non-material.
- The insurer had impliedly waived the special condition.
- The clause was ambiguous and should be interpreted against the drafter under the doctrine of contra proferentem.
- Enforcing the clause strictly would render the insurance claim mechanism absurd and meaningless.
Respondent’s Submissions: Senior Counsel Mr. Devadatt Kamat supported the NCDRC’s decision, maintaining that:
- The special condition was clear and precise.
- The appellant breached Clause 3.1.2 by sailing in sea conditions that exceeded prescribed wave heights.
- The policy clause was not ambiguous and did not warrant the application of contra proferentem.
- The proposal form did not disclose intent to sail during the foul season and suggested the vessel would be laid up at Kolkata during monsoon.
The respondent also alleged forgery and referred to several Supreme Court judgments, including Sea Lark Fisheries v. United India Insurance Co. (2008) and Hind Offshore (P) Ltd. v. Iffco-Tokio (2023).
Supreme Court’s Analysis
The Court framed the core issue as whether the special condition had been breached in a manner justifying repudiation. It held that:
- The term “before monsoon sets in” could be interpreted literally using the Director General of Shipping Circular dated 25.04.2008, which defines the monsoon onset as 1 June (West Coast) and 1 May (East Coast).
- The special condition was not ambiguous; therefore, contra proferentem was not applicable.
- The insurer knew the voyage route and the purpose of the insurance, which covered a period including the monsoon onset. Thus, the insurer’s claim of ignorance was rejected.
- The clause, if treated as a strict condition precedent, would make any claim for a voyage during the insured period impossible, leading to an “absurdity, vitiating the very purpose behind an insurance contract.”
The Court concluded that the special condition was non-material, impliedly waived, and possibly a standard term not excluded for this specific policy. It relied on Ramji Karamsi v. Unique Motor and General Insurance Co. Ltd. (AIR 1951 Bom 347), where a similarly impractical policy term was disregarded.
Decision
The Supreme Court allowed the appeal, set aside the NCDRC’s order dated 13.04.2021, and remanded the matter to the NCDRC for determining the insured amount payable by the insurer. The Court directed both parties to appear before the NCDRC on 29 April 2025 and urged the Commission to expedite proceedings, noting the pendency of the claim since 2013.
Parties were directed to bear their own costs.
