for example: TATA AIG

  for example: Indian Contract Act

  for example: Ratan Tata

  for example: Negotiable Instruments Act

w w w . L a w y e r S e r v i c e s . i n



Export Credit Guarantee Corporation of India Ltd., (Now ECGC Limited), Chennai & Another v/s Zoro Garments Private Ltd., Rep.by its Managing Director, N.F. Mogrella


Company & Directors' Information:- ECGC LIMITED [Active] CIN = U74999MH1957GOI010918

Company & Directors' Information:- CREDIT GUARANTEE CORPORATION OF INDIA LIMITED [Strike Off] CIN = U99999MH1971PLC014951

Company & Directors' Information:- REP CORPORATION PRIVATE LIMITED [Strike Off] CIN = U26921TN2005PTC055138

Company & Directors' Information:- ZORO GARMENTS PRIVATE LIMITED [Active] CIN = U18101TN1971PTC006070

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- G AND A GARMENTS PVT LTD [Strike Off] CIN = U18101PB1995PTC016121

Company & Directors' Information:- EXPORT INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U74899DL1972PTC006390

Company & Directors' Information:- CHENNAI GARMENTS (INDIA) PRIVATE LIMITED [Active] CIN = U18101TN2005PTC058277

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

    Original Side Appeal No. 17 of 2018 & CMP No. 745 of 2018

    Decided On, 24 July 2018

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MR. JUSTICE M.M. SUNDRESH & THE HONOURABLE MR. JUSTICE N. ANAND VENKATESH

    For the Appellants: P.V.S. Giridhar for M/s. Giridhar & Sai, Advocates. For the Respondent: T. Murugamanickam, Sr.C. for M. Selvaraju, Advocate.



Judgment Text

(Prayer: Original Side Appeal is filed under Order XXXVI Rule 9 of the O.S. Rules read with Clause 15 of the Letters Patent to set aside the judgment and decree passed in C.S.No.375 of 2009 dated 24.03.2017.)

N. Anand Venkatesh, J.

1. The defendants in the suit have filed this Original Side Appeal, aggrieved by the judgment and decree made in C.S.No. 375 of 2009, dated 24/03/2017.

2. For the sake of convenience, the parties shall be referred in the same manner as in the suit as plaintiff and defendants.

3. Facts in Nutshell:

3.1. The plaintiff is an exporter of garments. On 19/02/2001, he obtained a shipment comprehensive risks policy from the defendants to secure their goods from defaulting purchasers. As per the policy, the obligation is on the plaintiff to file shipment declarations and to pay the premium within the time stipulated under the policy. Clauses 8 and 10 of the policy specifically stipulates such an obligation. The proposal for renewal of policy was received from the plaintiff on 24/01/2003 and on receipt of premium for the difference of risk value amount on 17/03/2003, the policy was renewed with retrospective effect from 01/01/2003 valid for a period up to 31/12/2004.

3.2. The plaintiff made shipments to the buyer on 30/12/2002 and 31/12/2002 and as per clause 8 (a) of the policy, the declaration should have been submitted by the plaintiff for this shipment by 15/01/2003. However, the declaration was received by the first defendant only on 17/03/2003, which disentitles the plaintiff to make any claim for these shipments under the policy as per clause 19 (a). At this point of time there was a no claim bonus to the tune of Rs.1,33,552/-[Rupees One Lakh Thirty Three Thousand Five Hundred and Fifty Two only] for the policy for the period from 01/01/1997 to 31/12/2004.

3.3. In the regular course, the foreign buyer should have taken delivery of the goods only after accepting the documents sent to him through the plaintiff s bankers to the foreign buyer s bankers. However, the foreign buyer took delivery of the goods from the ship without accepting the documents from his bank. Later the importer simply rejected the goods complaining about the quality of the goods. The plaintiff made several efforts to recover the money and all their attempts failed.

3.4. The plaintiff by their letter dated 01/12/2004 lodged a claim with the first defendant seeking payment of the total loss sustained by them towards the export. The defendants on 31/03/2006 rejected the claim made by the plaintiff for non-payment of premium and for the failure to declare the shipment which was a mandatory requirement. Aggrieved by the same, the plaintiff filed the above suit seeking for a declaration to declare the letter of rejection dated 31st of March 2006 as null and void and also sought for a direction to the defendants to pay the claim amount with interest and also sought for damages.

3.5. The learned Single Judge on appreciation of the evidence available on record and on the facts and circumstances of the case decreed the suit in so far as the relief of declaration and the claim amount is concerned and rejected the relief for damages.

4. SUBMISSIONS:

Mr.P.V.S. Giridhar, the learned counsel appearing on behalf of M/s. Giridhar & Sai, counsel for the appellants, made the following submissions:

4.1. The learned counsel invited the attention of this Court to clauses 7 (b), 8 (a), 19 (a) and 28 from the terms and conditions of the policy. These clauses are extracted hereunder for easy reference.

7. Obligations of the Insured : The Insured shall

7(b) notify to the Corporation in writing of the occurrence of any event likely to cause a loss without delay but in no case later than 30 days of his becoming aware of any such occurrence.

8. Declarations:

(a) Declarations of shipments : On or before the 15th day of each calender month, the insured shall deliver to the Corporation of declaration, in the form prescribed by the Corporation, of all shipments made by him during the previous month. If no shipment has been made during a month, a 'NIL' declaration shall nevertheless be submitted.

19. Exclusion of Liability:

19(a) the Insured has failed to declare, without any omission, all the shipments required to be declared in terms of clause 8(a) of the Policy and to pay premium in terms of clause 10 of the Policy.

28. Observation of conditions: The due performance and observance of each terms and condition contained herein or in the Proposal or Declaration shall be a condition precedent to any liability of the Corporation hereunder and to the enforcement thereof by the insured.

By pointing out to these clauses, the learned counsel would submit that these are all the duties and obligations of the insured which should be complied with mandatorily in order to enforce a claim against the first defendant.

4.2. The learned counsel in order to substantiate his argument regarding the delay in declaration made by the plaintiff and failure to declare all the exports, brought to the notice of this Court Ex.D-3. The shipment in question pertains to the one made on 30/12/2002 and 31/12/2002. For these shipments, the declaration should have been made on or before 15/01/2003. However the declaration was made only on 17/03/2003 and the same is in violation of clause 8 (a). This has been specifically admitted by PW-1 during the course of cross examination and even otherwise, this fact is borne out by the documents available on record.

4.3. The learned counsel also brought to the notice of this Court Ex.D-2 which is the bank statement of the exports made by the plaintiff. The learned counsel points out three entries pertaining to 28/03/2002 and 30/03/2002 and correspondingly points out to the declaration made by the plaintiff for the month of March 2002, wherein these shipments have not been declared. Similarly three exports made on 10/10/2001 was also not declared by the plaintiff. The learned counsel submits that all the shipments should be declared on a monthly basis on or before 15th of the following month. If there is no shipment in a given month, a nil return should be filed. Clause 19 (a) specifically provides that if the insured fails to declare all the shipments required to be declared in terms of clause 8(a) of the policy, the Corporation shall cease to have any liability in respect of any claim.

4.4. The learned counsel fairly submitted that even though premium was not paid for the suit shipment, a sum of Rs.1,33,552/-[Rupees One Lakh Thirty Three Thousand Five Hundred and Fifty Two only] was available with the first defendant towards no claim bonus and the same could have been adjusted towards premium. However, this could not be done since the plaintiff failed to declare the shipments as per the conditions of policy.

4.5. The learned counsel brought to the notice of the Court the finding of the learned Single Judge in this regard while dealing with issues 1 and 2. The learned Single Judge after referring to the purchase order from the importer marked as Exs.P-1 and P-2 and the invoices marked as Exs.P-6 and P-7 both dated 26/12/2002, has taken into account the application made by the plaintiff dated 27/12/2002 (Ex.P-10) to the 1st defendant for credit limit and also the bills of lading dated 30/12/2002 and 31/12/2002 (Exs.P-12 and P-13) and also the application for renewal of policy dated 23/01/2003 and the reminder letter for approval of credit limit dated 27/01/2003 (Exs.P-18 and P-19), and has held that the credit limit was sanctioned only on 21/02/2003 (Ex.P-21) by the first defendant and no claim bonus was also available with the first defendant and therefore the first defendant is liable to the plaintiff for the claim amount. The learned counsel submitted that the documents that have been referred by the learned Single Judge after the export was made are not the declaration made by the plaintiff as per the policy condition and to that extent, the finding of the learned Single Judge is not correct.

4.6. The learned counsel also found fault with the finding of the learned Single Judge with regard to the declaration on the ground that the learned Single Judge took into consideration the credit limit application submitted by the plaintiff on 27/12/2002 and equated it to a declaration.

4.7. The learned counsel further submitted that the plaintiff should have submitted the declaration for the shipments latest by 15/01/2003 but the declaration was received by the first defendant only on 17/03/2003 and that too after the payment for the said shipment remained outstanding beyond its due date i.e. 02/03/2003 and 03/03/2003, since the shipments were made on delivery against acceptance (DA)-60 days of terms of payment.

4.8. The learned counsel submitted that the plaintiff has availed the shipment comprehensive risks policy at a concessional premium, which was on Whole-Turnover concept wherein the plaintiff was required to necessarily declare and pay due premium for all the shipments made by him during the policy. The premium for all the shipments was the consideration for the contract of insurance entered into and executed between the plaintiff and defendants and the evidence on record showed that shipments to an extent of 30% of the total value of shipments made, were not declared to the defendants.

4.9. The learned counsel also relied upon the judgement of the Supreme Court in BHS Industries .Vs. ECGC reported in 2015 (9) SCC 414 wherein the Supreme Court has held that failure to declare all shipments is fatal to the claim, even if full premium is paid. The learned counsel by pointing out to this judgement submitted that the ratio in the said judgement will squarely apply to the facts of the present case.

4.10. Per contra, the learned Senior counsel Mr. T.Murugamanickam, appearing on behalf of Mr.Selvaraju, learned counsel appearing for the respondent, made the following submissions:

4.10.1.The learned Senior counsel brought to our attention Exs.P-2, P-3 and P-4 which are the purchase orders placed by IL.S. CORP, USA, the invoices raised pursuant to the purchase order Exs.P-6 to P-9, the credit limit application submitted by the plaintiff to the first defendant on 27/12/2002 Ex.P-10, the bill of lading dated 30/12/2002 and 31/12/2002 Exs.P-12 and P-13, the proposal forms submitted to the first defendant for shipments made during the period January 2002 to December 2002, on 22/01/2003 Ex.P-18, the letter dated 27/01/2003, Ex.P-19, written by the plaintiff to the first defendant requesting for the credit limit approval which was already submitted on 27/12/2002, the reminder letter written by the plaintiff to the first respondent dated 05/03/2003 Ex.P-22 requesting for the approval of the credit limit and the credit limit sanction letter given by the first defendant to the plaintiff dated 21st of February 2003 Ex.P-21, which was actually received by the plaintiff only after Ex.P-22 letter and which was clearly elicited during the cross examination of DW-1.

4.10.2. By pointing out to all these documents, the learned senior counsel would submit that the plaintiff had applied for credit limit with the first defendant even prior to the bills of lading and the first defendant was informed about the intention to export goods for December 2002 and January 2003 and also the value of the goods to be exported was specified as Rs.70 lakhs.

4.10.3. The learned Senior counsel contended that the plaintiff made several attempts for recovery of the value of the goods exported but that was of no avail. The plaintiff thereafter made an application for renewal of the policy on 23/01/2003 and the plaintiff also issued a cheque for Rs.10,000/- [Rupees Ten Thousand Only] towards the minimum premium payable. The plaintiff was also continuously following up with the first defendant for approval of the credit limit.

4.10.4. The learned Senior counsel further developed his argument by stating that the goods had been shipped on 30/12/2002 and 31/12/2002 and the period of 60 days will end only on 01/03/2003 and even prior to that on 23/01/2003, the plaintiff had applied for renewal of policy. The credit limit sanction letter from the first defendant is dated 21/02/2003 and the credit limit shall be applicable for the shipments made on or after 27/12/2002 and it was valid up to June 2003. The learned senior counsel also pointed out to the fact that the no claim bonus of a sum of Rs.1,33,552/- [Rupees One Lakh Thirty Three Thousand Five Hundred and Fifty Two only] was admittedly lying with the first defendant which should be adjusted with the premium amount payable by the plaintiff.

4.10.5. The learned Senior counsel therefore submits that the entire export made by the plaintiff was very much within the knowledge of the first defendant and it is very clear even from the credit limit sanction letter issued by the first defendant wherein the first defendant had referred only about the export made by the plaintiff to IL.S. CORP, USA.

4.10.6. The learned Senior counsel therefore submits that once a genuine claim has been made by the plaintiff and the premium amount was available with the first defendant, the first defendant cannot refuse to pay the amount claimed on a purely technical ground that declaration was not made in accordance with clause 8 (a) of the terms and conditions of the policy.

4.10.7. The learned Senior counsel also submitted that the first defendant in the regular course of business always regularised the policies even when the declarations are submitted beyond the time limit. For this purpose, the learned senior counsel brought to the notice of the court Ex.P-29 which is a letter dated 17/02/2005 written by the first defendant to the plaintiff wherein the premium is reworked for all the shipments effected between 01/01/1997 and 31/12/2004 and the first defendant was holding an excess amount of Rs.1,33,552/- [Rupees One Lakh Thirty Three Thousand Five Hundred and Fifty Two only] and the first defendant informed the plaintiff to submit declarations which have not been received by the first defendant on time.

4.10.8. The learned Senior counsel further submits that the learned single judge has considered all the issues in detail and has partly decreed the suit. The defendants have not made out any case in this appeal and there are no grounds to interfere with the judgment and decree passed by the learned Single Judge.

5. POINTS FOR CONSIDERATION:

5.1. Whether the plaintiff committed breach of policy condition under clause 8 (a) of the terms and conditions of policy by not declaring the shipments as stipulated in this clause and the same can be a ground for the defendants to reject the claim made by the plaintiff with regard to a particular export which was well within the knowledge of the defendants even before the bill of lading and excess amount was lying with the first defendant by way of no claim bonus which could be adjusted towards the premium payable by the plaintiff?

5.2. Whether the normal practice of the defendants to regularise the policy even in cases where the declaration is not made within time, can be put against the defendants in a case where the claim has arisen and there is an admitted delay in making the declaration?

5.3. Where at the time of making the claim, the insured has failed to make declarations regarding other exports made during the period, whether the same will be a ground to repudiate the claim made by the insured for a particular export which was within the knowledge of the defendants?

5.4. Whether the learned Single Judge was right in holding that since the first defendant has been made aware of the shipment even before the bills of lading was issued by the plaintiff, the claim of the first defendant that the declaration was not made as per the stipulation in the terms and conditions of the policy is purely technical and has no significance in a court of law?

6. DISCUSSION

6.1. In the instant case, there is not much of a dispute regarding facts. The plaintiff is a manufacturer and exporter of garments to various countries. The plaintiff had taken shipment comprehensive risks policy issued by the defendant. This policy is based on whole turnover principal where exporters are required to get all their shipments covered subject to permitted exclusions and were required to declare all their shipments that were sent during the period of the policy every month on or before the 15th day of each succeeding calendar month in the prescribed form giving information on all the shipments made by him in the previous month. The insurance policy is designed to protect exporters from the consequences of the non-payment risks, both political and commercial. For this purpose the defendant inter alia issues policies to exporters to cover their risks of non-receipt of payment in exporting goods to foreign buyers.

6.2. It is important to keep in mind that premium for all shipments was the consideration for the contract of insurance entered into and executed between the plaintiff and the defendant. The responsibility and the contractual obligation of the plaintiff to file shipment declarations and to pay due premium within the time required under the policy is specifically provided under clauses 8 and 10 of the policy.

6.3. The plaintiff was holding a policy with the defendant for the period from 01/01/2001 to 31/12/2002 which was subsequently renewed for a further period from 01/01/2003 to 31/12/2004. The proposal for renewal of policy was received from the plaintiff on 23/01/2003. The policy was renewed with retrospective effect from 01/01/2003 valid for the period up to 31/12/2004.

6.4. The plaintiff subsequent to the purchase order raised by IL.S. CORP, USA, and the invoice raised by the plaintiff, on 27/12/2002 applied for sanctioning credit limit for a sum of Rs. 50 lakhs based on declarations submitted up to November 2002 and by specifically mentioning the name of the buyer as IL.S. CORP, USA. It was only subsequent to the submission of this application, the bill of lading was made on 30/12/2002 and 31/12/2002. The application for renewal of policy was made on 23/01/2003 and the policy was also renewed. Subsequently reminder letters were also written by the plaintiff to the defendant for sanctioning the credit limit and ultimately the credit limit was sanctioned by the first defendant by letter dated 21st of February 2003, and this credit limit was made applicable for the shipments made on or after 27/12/2002.

6.5. The plaintiff, in spite of their best efforts did not receive payments from the foreign buyer. It is pertinent to note that the plaintiff made declaration regarding the shipment made to IL.S. CORP, USA only on 17/03/2003, which declaration they should have made latest by 15/01/2003 as per the terms and conditions of the policy. The shipments were made on delivery against acceptance (DA)-60 days of terms of payment and the actual due date for payment was 02/03/2003 and 03/03/2003. Therefore it is clear that the declaration was received by the defendant only after the due date for payment.

6.6. The plaintiff by letter dated 01/12/2004 (Exs.P-26 and P-27) lodged a claim with the first defendant seeking for payment of the total loss sustained by them for the said export to a tune of Rs. 63,85,147/-[Rupees Sixty Three Lakhs Eighty Five Thousand One Hundred and Forty Seven Only]. This claim was repudiated by the first respondent by letter dated 31/03/2006 (Ex.P-39). The claim was repudiated primarily on two grounds:

a) shipment to the extent of over 30% under the policy were not declared to the Corporation and the premiums were not remitted and ;

b) the shipment under claim had been declared with a delay of two months and the premium was remitted after the credit period had expired and payment for those shipments had become overdue and remained unpaid by the buyer which is not in line with clause 8 (a) of the policy.

6.7. At the outset, it may be stated that contracts of insurance are contracts of Uberrima fides and every material fact is required to be disclosed.

In United India Insurance Co. Ltd. v. M.K.J. Corpn. Manu/sc/0113/1997 : (19916) 6 SCC 428, a two-Judge Bench has observed:-

It is a fundamental principle of Insurance law that utmost good faith must be observed by the contracting parties. Good faith forbids either party from concealing (non-disclosure) what he privately knows, to draw the other into a bargain, from his ignorance of that fact and his believing the contrary. Just as the insured has a duty to disclose, similarly, it is the duty of the insurers and their agents to disclose all material facts within their knowledge, since obligation of good faith applies to them equally with the assured.

6.8. The judgement of the Supreme Court in BHS Industries .Vs. ECGC and others reported in 2015 (9) SCC 414, will have a lot of bearing in deciding this appeal. In the said case, the Supreme Court was considering the claim made in a similar policy wherein the terms and conditions of the policy is the same as contained in the present policy. It will be useful to extract the relevant portions in the judgement hereunder:

24. ........ To appreciate the controversy in an appropriate manner, we reproduce the said clauses hereunder:-

1. Proposal and Declaration: The Proposal and the Declaration therein shall be the basis of this Policy and shall form part thereof and if any of the statements contained in the Proposal or the Declaration be untrue or incorrect in any respect, this Policy shall be void but the Corporation may retain any premium that has been paid.

2. Disclosure of facts: Without prejudice to any rule of law it is declared that this Policy is given on condition that the Insured has at the date of issue of this Policy disclosed and will at all times during the operation of this Policy promptly disclose all facts in any way affecting the risks injured.

7. Obligations of the Insured: The Insured shall:

(a) use all reasonable and usual care, skill and forethought and take all practicable measures, including any measures which may be required by the Corporation, (including if so required the institution of legal proceedings) to prevent or minimize loss.

8. Declarations:

(a) Declarations of shipments: On or before the 15th day of each calendar month, the Insured shall deliver to the Corporation a declaration, in the form prescribed by the Corporation, of all shipments made by him during the previous month. If no shipment has been made during a month, a NIL declaration shall nevertheless be submitted.

10. Incidence of premium and payment of additional premium: The Insured shall be liable to pay premium, at the rates set out in Schedule-II hereto, or, as the case may be, at such other rates for the time being in force, on the gross invoice value of all shipments to which this Policy applies forthwith on the making of such shipments and shall pay to the Corporation additional premium, if any, that may become due and payable after adjustment of the Minimum Premium referred to herein above, while submitting the relevant declaration of shipments as per clause 8(a) of this Policy.

19. Exclusion of Liability: Notwithstanding anything to the contrary contained in this Policy, unless otherwise agreed to by the Corporation in writing, the Corporation shall cease to have any liability in respect of the gross invoice value of any shipment or part thereof, if;

(a) the Insured has failed to declare, without any omission, all the shipments required to be declared in terms of clause 8(a) of the Policy and to pay premium in terms of clause 10 of the Policy.

28. Observance of conditions: The due performance and observance of each term and condition contained herein or in the proposal or declaration shall be a condition precedent to any liability of the Corporation hereunder and to the enforcement thereof by the insured.

29. Failure to comply with conditions: No failure by the Insured to comply with the terms and conditions of the Policy shall be deemed to have been waived, excused or accepted by the Corporation unless the same is expressly so waived, excused or accepted by the Corporation in writing and such waiver, excuse or acceptable shall be subject to such terms and conditions as the Corporation may stipulate, including a reduction in the percentage specified under clause 30 of this policy being the percentage of loss payable by the Corporation.

25. As has been held in Chandmull Jain (supra) by the Constitution Bench that in a contract of insurance, there is a requirement of good faith on the part of the insured and in case of ambiguity, it has to be construed against the company. As per other authorities, the insurance policy has to be strictly construed and it has to be read as a whole and nothing should be added or subtracted. That apart, as has been held in Polymer India (P) Ltd. (supra), it is the duty of the Court to interpret the document as is understood between the parties and regard being had to the reference to the stipulations contained in it.

26. Keeping in view the aforesaid parameters of law, we are required to appreciate the stipulations in the policy pertaining to rejection on the said score. Clause 8(a) which deals with declarations, assumes significance. The said clause requires that before the 15th day of each calendar month, the insured shall deliver to the Corporation a declaration in the prescribed format of all shipments made by him during the previous month and if no shipment has been made during a month, a NIL declaration shall nevertheless be submitted. Clause 9 deals with minimum premium and Clause 10 with incidence of premium and payment of additional premium. Clause 19(a), as has been indicated earlier, deals with exclusion of liability. Clause 19, the exclusionary clause, categorically states that unless otherwise agreed to by the Corporation in writing, the Corporation shall cease to have any liability in respect of gross invoice value of any shipment or part thereof if the insured has failed to declare, without any omission, all the shipments required to be declared in terms of Clause 8(a) of the Policy and to pay premium in terms of Clause 10 of the Policy. Submission of Mr. Sangal is that these clauses are binding on the insured and he cannot play with the requirements at his own will. Mr. Gupta, learned senior counsel, as we have noted earlier, has contended that these clauses are to be read in juxtaposition with Clauses 2, 10 and 30, for the Policy has to be read in entirety and so read, the clauses do not require that all shipments are to be declared. To appreciate the submission, we think it appropriate to reproduce Clauses 2, 10, and 30:- 2. Disclosure of facts: Without prejudice to any rule of law it is declared that this Policy is given on condition that the Insured has at the date of issue of this Policy disclosed and will at all times during the operation of this Policy promptly disclose all facts in any way affecting the risks injured.

10. Incidence of premium and payment of additional premium: The Insured shall be liable to pay premium, at the rates set out in Schedule-II hereto, or, as the case may be, at such other rates for the time being in force, on the gross invoice value of all shipments to which this Policy applies forthwith on the making of such shipments and shall pay to the Corporation additional premium, if any, that may become due and payable after adjustment of the Minimum Premium referred to herein above, while submitting the relevant declaration of shipments as per clause 8(a) of this Policy.

30. Uncovered Risks: If any account or bill (or any extension or renewal thereof) in respect of any shipment declared hereunder exceeds the limits herein before provided or is otherwise not in accordance with the Policy, no acknowledgement of the declaration by the Corporation and no payment or tender of premium by the Insured shall be deemed to bind the Corporation to undertake liability in respect of such account or bill (or to approve of the renewal or extension).

27. Mr. Gupta, learned senior counsel for the appellant has laid immense emphasis on the words that the insured shall disclose all the facts in any manner affecting the risks insured. Similarly, he has also highlighted the words on the gross invoice value of all shipments to which this policy applies occurring is clause 10. Clause 30, as Mr. Gupta would submit, deals with uncovered risks which are not in accordance with the policy. It is his submission that payment of premium in respect of uncovered risks shall not bind the Corporation to undertake the liability. The proponement propounded by Mr. Gupta, on a first blush, seems quite attractive, but on a keener scrutiny it has to pale into insignificance. 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) deal with declarations and the exclusion of liability respectively. They are absolutely specific. Clause 2 deals with disclosure of facts. Clause 10 deals with incidence of premium and payment of additional premium and Clause 30 with uncovered risks. Clause 8(a) and 19(a), which we have reproduced herein above are absolutely clear as crystal 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 15th 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 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 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 for the purpose of sustaining the claim to show that there has been compliance as regards the declaration. To construe Clause 8(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 the policy. It has to be borne in mind that these are specific clauses relating to the obligations of the insured. The attempt on the part of the appellant to inject concept of payment of premium and the risk covered to this realm would not be acceptable. 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 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 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. Whatever the reasons the appellant may give, he having not declared as prescribed in Clause 8(a), which is again reiterated by way of reference in Clause 19(a), the exclusionary clause, it will be an anathema to the concept of interpretation of contract of insurance of such a nature, if liability is fastened on the insurer. The finding of the Commission that the appellant had not take steps to retrieve the goods is absolutely immaterial for the present purpose. The said finding though is flawed, the ultimate conclusion, which is based upon our independent analysis, is correct.

6.9. Issues 1 to 3 in the points for determination can be taken together for discussion. In this case on the admitted facts, two important factors that were pointed out by the defendant in the letter of repudiation gains a lot of significance. It must be kept in mind that the plaintiff has availed the shipment comprehensive risks policy at concessional premium, which was on whole-turnover concept wherein the plaintiff was required to necessarily declare and pay due premium for all the shipments made by him during the policy period. The premium for all shipments was the consideration for the contract of insurance entered into and executed between the plaintiff and the defendant and the evidence on record shows that shipments to the extent of 30% of the total value of shipments made, were not declared to the defendant. This fact has been demonstrated by the Counsel for the appellant by pointing out to the bank statement of exports made by the plaintiff which did not get reflected in the declaration made by the plaintiff. There is absolutely no answer for this from the side of the plaintiff and in fact PW1 in the course of cross examination specifically admits that Ex.D.2 Series and Ex.D.3 Series are signed by the director of the plaintiff company. This important factor has not even been considered by the learned Single Judge. The learned Single Judge has only focused on the declaration made by the plaintiff in so far as the exports which became the subject matter of claim.

6.10. The learned Single Judge seems to have been swayed by the fact that the defendant was aware about the export made to IL.S. CORP, USA, even before the formal declaration was made by the plaintiff on 17/03/2003 and by which time the policy was renewed with effect from 01/01/2003 and the credit limit was also extended by the defendant on 21/02/2003. One important factor which missed the attention of the learned Single Judge was that the outstanding amount from the importer became due on 02/03/2003 and 03/03/2003 respectively and it is only thereafter the plaintiff makes a declaration about those exports on 17/03/2003. Even for the sake of argument if it is taken that the no claim bonus in the hands of the defendant should have been used towards the premium amount due, that by itself will not cure the serious infirmity that has been committed by the plaintiff in not only making the declaration in violation of clause 8 (a) of the policy but also making such a declaration after the payment has already become due,

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as stated above. 6.11. In the decision referred supra, the Supreme Court has categorically held that the insured has to declare the shipments in terms of clause 8 (a) without omission and also pay the premium in terms of clause 10. Payment of premium 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 for the purpose of sustaining the claim to show that there has been compliance as regards the declaration. Whatever reasons the insured may give, if he has not made declaration as prescribed in clause 8 (a), which is again reiterated by way of reference in clause 19 (a), the exclusionary clause, it will be an anathema to the concept of interpretation of contract of insurance of such a nature, if liability is fastened on the insurer. 6.12. In the present case there is no dispute with regard to a) the plaintiff not declaring all the shipments to the extent of 30% of the total value of shipments made and ; b) the plaintiff not declaring the shipments made to IL.S. CORP, USA, on or before 15/01/2003 under clause 8(a) of the policy and further making the declaration only on 17/03/2003 much after the payment for the shipment had remained outstanding beyond its due date i.e., 02/03/2003 and 03/03/2003 respectively. These facts clearly dis-entitles the plaintiff from making the claim under the policy from the defendant. If this court permits claims of this nature, it will set a very wrong precedent for all future claims wherein the insured will get an impression that even if the declarations are not made on time, the insurance company is bound to settle the claims. This will run against the very concept of insurance law that utmost good faith must be observed by the contracting parties. This will also give room for frivolous claims that may be made by the insured in future, quoting this case as a precedent. 6.13. This court therefore finds that the plaintiff has committed breach of policy condition under clause 8 (a) of the terms and conditions of policy by not declaring all the shipments as stipulated in this clause and the same is a ground for the defendants to reject the claim made by the plaintiff even with regard to a particular export even assuming it is within the knowledge of the defendants and even if premium had been paid for those exports. Even if the defendants had regularised the policy in cases where the declaration is not made within time, the same cannot be put against the defendants in a case where the claim has arisen and there is an admitted delay in making the declaration or non-declaration of the entire shipments. 6.14. In so far as Issue No.4 in the points for consideration, the learned Single Judge was not right in holding that since the first defendant has been made aware of the shipment even before the bills of lading was issued by the plaintiff, the claim of the first defendant that the declaration was not made as per the stipulation in the terms and conditions of the policy is purely technical and has no significance in a court of law. We have already held that compliance with the terms and conditions of the policy by the insured is mandatory and is the basis for the claim and therefore to dilute the same will go against the basic tenets of Insurance law. 6.15. For all the reasons stated Supra, we do not agree with the findings of the Learned Single Judge. Accordingly, we set aside the Judgment and Decree of the Learned Single Judge made in C.S.No. 375 of 2009, dated 24/03/2017. 7. In the result, the Original Side Appeal is allowed and consequently the suit filed by the Plaintiff in C.S.No.375 of 2009 is hereby dismissed. In the facts and circumstances of the case parties shall bear their own costs. Consequently, the connected civil miscellaneous petition is closed.
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