Bench: Dipak Misra, V. Gopala Gowda
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 2729 OF 2009
M/s. BHS Industries ... Appellant
Versus
Export Credit Guarantee Corp. & Anr. ... Respondents
............
12. In Polymer India (P) Ltd. and Another v. National Insurance Co. Ltd. and Others[4], this Court has held thus:-
“19. In this connection, a reference may be made to a series of decisions of this Court wherein it has been held that it is the duty of the court to interpret the document of contract as was understood between the parties. In [pic]the case of General Assurance Society Ltd. v. Chandumull Jain[5], it was observed as under:
“In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves.”
20. Similarly, in the case of Oriental Insurance Co. Ltd. v. Samayanallur Primary Agricultural Coop. Bank[6], it was observed as under:
“The insurance policy has to be construed having reference only to the stipulations contained in it and no artificial far-fetched meaning could be given to the words appearing in it.”
21. Therefore, the terms of the contract have to be construed strictly without altering the nature of the contract as it may affect the interest of parties adversely.”
13. Learned senior counsel for the appellant has also drawn inspiration from the decision in General Assurance Society Ltd. v. Chandmull Jain[7], rendered by the Constitution Bench wherein it has been held that:- “In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e. good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt. A contract is formed when there is an unqualified acceptance of the proposal. Acceptance may be expressed in writing or it may even be implied if the insurer accepts the premium and retains it. In the case of the assured, a positive act on his part by which he recognises or seeks to enforce the policy amounts to an affirmation of it. This position was clearly recognised by the assured himself, because he wrote, close upon the expiry of the time of the cover notes that either a policy should be issued to him before that period had expired or the cover note extended in time. In interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves. Looking at the proposal, the letter of acceptance and the cover notes, it is clear that a contract of insurance under the standard policy for fire and extended to cover flood, cyclone etc. had come into being.”
14. Mr. Gupta, learned senior counsel for the appellant has also drawn our attention to Baj (Run Off) Ltd. v. Durham and others[8], wherein the Supreme Court of United Kingdom, while interpreting the contract of insurance has opined:-
“To resolve these questions it is necessary to avoid over-concentration on the meaning of single words or phrases viewed in isolation, and to look at the insurance contracts more broadly. As Lord Mustill observed in Charter Reinsurance Co. Ltd. v. Fagan[9], all such words “must be set in the landscape of the instrument as a whole” at p.381, any “instinctive response” to their meaning “must be verified by studying the other terms of the contract, placed in the context of the factual and commercial background of the transaction”. The present case has given rise to considerable argument about what constitutes and is admissible as part of the commercial background to the insurances, which may shape their meaning. But in my opinion, considerable insight into the scope, purpose and proper interpretation of each of these insurances is to be gained from a study of its language, read in its entirety. So, for the moment, I concentrate on the assistance to be gained in that connection.”
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