JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

                The complainant imported U/F RO membranes from M/s. X-Flow BV Netherlands which arrived by sea at Chennai Sea Port in India.  The complainant had obtained two insurance policies, both from the opposite party.  The first policy called Marine Cargo Open Policy – Import, insured the shipment from anywhere in the World to anywhere in India and vice-versa.  The second policy taken by the complainant covered the goods from anywhere in India to anywhere in India by Road, Rail, Air and Courier.

2.      On 21.4.2011, a container truck while carrying membranes from Chennai Port to Nemmeli met with an accident while in transit.  On intimation being given to the insurer, a surveyor was appointed to assess the loss to the complainant.  The surveyor assessed the loss at Rs.1.60 crores but the claim was rejected vide letter dated 19.4.2012.   The aforesaid letter, to the extent it is relevant reads as under:

          “In so far as the claim under the Inland Transit cover is concerned, being a transit from Chennai Seaport to your project site, the claim is hit by specific Exclusion Clause No.2.  The said exclusion clause reads “2 Excluding……. Tail end transits unless written agreement is taken as to the rate and other terms prior to the commencement of such transits”.

          On scrutiny of the Inland transit it is clear that the transit was being on the last / final leg on its transit from Chennai Seaport to your Project site.  Being a clear case, as per Exclusion No.2, the contract of insurance had imposed on obligation on you to put the insurer on notice by way of a Witten agreement with rate / terms of such transit.  Upon failure to comply with Exclusion No.2, the claim arising from any cause of action during this period transit stood excluded from the ambit of cover.

          Upon intimation of claim, the insurer appointed an independent, licensed surveyor.  On verification of documents, facts and circumstances of the case, it is clear that insured having not entered into ‘written agreement’ on details of “rate and other terms prior to commencement of transit”, the claim stands excluded under the contract of insurance.

          Hence, we have found the claim inadmissible.  Al declarations made by the Insured under the contract of insurance ought to answer the description of the terms / conditions / exclusions.  Failure to do so as per Exclusion No.2 is a clear breach of agreed terms of the contract of insurance.

          For any and all the above said reasons, we regret our inability to entertain the claim as the loss / damage in question stands excluded under Exclusion No.2 of the contract of insurance.”

          The rejection of the claim was reiterated vide letter dated 06.12.2012, which to the extent it is relevant reads as under:

          “Therefore the claim for the movement / transit of goods from Chennai Port to final warehouse is neither admissible under Import Policy since the import was on CIF Chennai Port basis nor under Inland Transit Policy as Tail end transit is specifically excluded unless written agreement is taken as to the rate and terms of cover before commencement of such transit.

          While we regret to deny this claim, we remain committed to offering our best services and meet admissible claims under the contract of insurance”.

3.      Being aggrieved from the rejection of the claim, the complainant is before this Commission, by way of this consumer complaint.

4.      The complaint has been resisted by the insurer primarily on the ground on which the claim had been rejected.  Reliance by the opposite party is placed upon the repudiation letter dated 19.4.2012.

5.      The only question which arises for consideration in this complaint is as to whether goods were in tail end transit at the time the truck met with an accident and the goods were consequently damaged.  The term ‘tail end transit’ has not been defined anywhere in the insurance policy.  In the ordinary parlance, the aforesaid term would mean the final phase of the journey.  The contention of the learned counsel for the complainant is that since the term tail end transit has not been defined in the insurance policy, the clause based upon the aforesaid term is vague and therefore, cannot be relied upon by the insurer to the disadvantage of the insured.  It is true that in the absence of definition of the term tail end transit, nothing prevents the insurer from claiming any particular part of the journey, particularly the last phase of journey as tail end transit.  A term, which is not clearly defined and therefore is capable of the several interpretations depending upon the factual matrix, would be a vague term and the benefit of such a term would accrue to the insured.  A reference in this regard can be made to the decision of the Hon’ble Supreme Court in New India Assurance Company Limited Vs. Zuari Industries Ltd. & Others (2009) 9 SCC 70, where the Hon’ble Supreme Court referred to its previous decision in General Assurance Society Ltd. Vs. Chandmull Jain, AIR 1966 SC 1644 holding that in case of ambiguity in a contract of insurance, the ambiguity should be resolved in favour of the claimant and against the insurance company.  Reliance is also placed upon the decision of the Hon’ble Supreme Court in United India Insurance Co. Ltd. Vs. Pushpalaya Printers (2004) 3 SCC 694, where the Hon’ble Supreme Court reiterated that where the words of a documents are ambiguous they shall be construed against the party, which prepared the documents. 

6.      Be that as it may, if the policy document is to be construed in its present form, without being influenced by its ambiguous nature, it would be difficult to say in the facts and circumstances of the case that the goods were in the tail end transit at the time they got damaged.  In my view, if the journey of the goods involves multiple cities, the tail end transit would begin when the goods enter the final city in which their journey has to terminate. In the journey involving a single city, the tail end transit, in my opinion would be the destination point where the goods have to be unloaded.  In the present case, the goods were to be unloaded at Nemmeli site, which s stated to be a part of Chennai.  The accident happened just before the trailer carrying goods was to enter the Nemmeli site.  Since trailer had not actually entered Nemmeli site, the goods, in my opinion were not in the tail end transit at the time they got damaged.  Therefore, there was no requirement of the entering into a written agreement as to the rate and other terms, prior to commencement of the transit.  In any case, the loss having happened before the tail end transit, absence of such a written agreement would not result in denial of the benefit of insurance to the complainant.

7.      For the reasons stated hereinabove, the repudiation of the claim, in my opinion was not justified and the complainant s entitled to the amount assessed by the surveyor.

8.      The complaint is disposed of with the following directions:

(i)      The opposite party shall pay the principal amount of Rs.1,63,52,117/- to the complainant, along with simple interest @ 9% per annum with effect from six months from the date of lodgment of the claim till the date of payment.

(ii)      In the facts and circumstances of the case there shall be no order as to cost.

(iii)     If there was any other insurer associated with the insurance of the damaged goods, the opposite party shall be entitled to recover the share payable by the other insurer from it, in accordance with law.

(iv)    The payment in terms of this order shall be made within three months from today.