Vikram Greentech (I) Ltd. & Anr vs New India Assurance Co. Ltd AIR 2009 SC 2493
FACT-
- Vikram Greentech (I) Ltd.(insured), the appellant, sought a comprehensive floriculture insurance policy from New India Assurance Co. Ltd, respondent.
- The policy covered specific components such as poly-houses, irrigation systems, and cultivation costs.
- Two storms occurred in May and June 1996, causing extensive damage to the insured property.
- The insured filed claims for the damages suffered due to the storms.
- National Consumer Disputes Redressal Commission, New Delhi held, the plaintiff can only claim for poly-houses 1 to 6 and the claim for Poly-houses 7, 8A, and 8B was rejected.
- Hence, this appeal before SC against the Judgment of National Consumer Disputes Redressal Commission.
- One of the contentions of the insured-appellant is that the interpretation of policy should be as per surveyor’s report by M/s Standard Surveyors Private Limited should.
- In that surveyor report the whole claim including poly- houses 7, 8A, and 8B were included.
ISSUE-
- Whether the insurance policy covered the damages to poly-houses 7, 8A, and 8B, in addition to the originally insured poly-houses 1 to 6.
RULE-
- Insurance contracts are construed strictly according to their terms, with a requirement of good faith from the insured. The essentials of an insurance contract include defining the risk, duration of the risk, premium, and amount of insurance.
- Outside aids, such as surveyor reports, cannot be used to interpret insurance policies.
HELD-
- The insured cannot claim anything more than what is covered by the insurance policy.
- The policy explicitly covered only poly-houses 1 to 6, as stated in the proposal form and policy documents.
- A careful consideration of the Proposal Form that sets out the particulars of the components which were to be covered and the inventory of the property insured (Sections I and II), mentioned in the policy leaves no manner of doubt that what was insured was existing poly-houses (i.e., 1 to 6 only) on the date of the issuance of policy
- Polyhouses 7, 8A, and 8B were completed after the issuance of the policy.
- The insured failed to provide evidence that these additional poly-houses were covered under the policy.
- The National Commission's decision to dismiss the insured's claim regarding poly-houses 7, 8A, and 8B was upheld.
- The appeal was dismissed, with no costs awarded to either party.
COMMENTARIES RATIO/NOTE-
- [s 2(11)] Deficiency [Clause (11)]
INSURANCE SERVICES 674. Nature of a contract of insurance – to be interpreted strictly
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. In General Assurance Society Ltd., a Constitution Bench of the Supreme Court had observed that:
The terms of the policy have to be construed as it is and the Courts cannot add or subtract something [United India Insurance Co Ltd v Harchand Rai Chandan Lal, (2004) 8 SCC 644].
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 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 always be to interpret the words in which the contract is expressed by the parties.