HARIS MARINE PRODUCTS v. EXPORT CREDIT GUARANTEE CORPORATION (ECGC)

mandated to cover is its business, and other insurers rarely foray into the field. A plain reading of the policy in question demonstrates that it was taken to protect against failure of the foreign buyer in paying the Indian exporter for goods exported. It was not a policy taken to cover in-transit insurance, and the cause of action triggering the claim arose much later, i.e., on 14.02.2013, well within the coverage of the policy. While interpreting insurance contracts, the risks sought to be covered must also be kept in mind. As argued on behalf of the appellant, the Mate’s Receipt indicating the completion of loading of the goods onto the ship was issued on 15.12.2012, pursuant to which the vessel sailed on 15.12.2012, and the Bill of Lading was issued on 19.12.2012. The term ‘despatch’ -contained in the policy implied ‘completion’ of handing over of possession of the goods to the first carrier (the ship herein), and not the date on which the loading ‘commenced’ – such an interpretation would give rise to an absurdity. On harmoniously construing the documents of this policy, it is the in fact the date on the Bill of Lading, and not the Mate’s Receipt / date of shipment which ought to be considered as the date of ‘despatch / shipment’, for the Bill of Lading is the legal document conferring title and possession of the goods to the carrier. Therefore, reliance on the DGFT Guidelines to disallow the claim of the appellant was not good in law. [Paras 16-18][313-G; 314- A-C, F-G; 315-B]

1.3 The DGFT Guidelines are part of a ‘Handbook of Procedures (Volume I)’ to enforce the Foreign Trade Policy of 2009-2014, which in turn emerge from Section 5 of the Foreign Trade (Development and Regulation) Act, 1992. Deviating from the rule of contra proferentem, even if in the present instance the third-party DGFT Guidelines were to be applied, it would not favour the ECGC, as a plain reading of provision 9.12 shows that the date on the Bill of Lading has to be considered as the date of despatch/shipment. The date of ‘onboard’ Bill of Lading is not applicable to the present facts as no letter of credit was executed, much less providing for application of such date. Therefore, ECGC could not have denied the appellant’s claim, even on a consideration the DGFT Guidelines. ECGC enjoys a significant position in the market for export credit insurance in India – in F.Y. 2012-2013, the total income received by way of premiums A B C D E F G H 300 SUPREME COURT REPORTS [2022] 17 S.C.R. A B C D E F G H exceeded Rupees one thousand crores, with the figures only growing ever since. It is the only government company offering such niche services, and is exempt from following the Trade Credit Insurance Guidelines periodically revised by the Insurance Regulatory and Development Authority of India. To deny the appellant’s claim over an incorrect interpretation of an ambiguous term, that too with delay amounting to only one day, goes against such duties, especially given the fact that the appellant had transacted with the respondent on several previous occasions. The impugned order of the NCDRC is hereby set aside; the appellant’s complaint is consequently allowed. ECGC is hereby directed to pay the claim amount of ` 1,96,38,400/- crores to the appellant, with interest at the rate of 9% p.a. [Paras 19-22][315- B-C; 316-G; 317-A-D] General Assurance Society Ltd. v. Chandumull Jain [1966] 3 SCR 500 – followed. United India Insurance Co. Ltd. v. Pushpalaya Printers (2004) 3 SCC 694 : [2004] 2 SCR 631; Sushilaben Indravadan Gandhi v New India Assurance Company Ltd., (2021) 7 SCC 151; Jacob Punnen & Anr. v United India Insurance Co. Ltd. (2021) SCC Online SC 1207; Peacock Plywood (P) Ltd. v. Oriental Insurance Co. Ltd. (2006) 12 SCC 673 : [2006] 10 Suppl. SCR 140 - relied on. Shaw Wallace & Co. Ltd. v. Nepal Food Corpn. (2011) 15 SCC 56 : [2011] 15 SCR 1181; Modern Insulators Ltd. v Oriental Insurance Co. Ltd., (2000) 2 SCC 734 : [2000] 1 SCR 1076; Polymat India (P) Ltd. & Ors. v National Insurance Co. Ltd. & Ors. (2005) 9 SCC 174 : [2004] 6 Suppl. SCR 535; United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal (2004) 8 SCC 644 : [2004] 4 Suppl. SCR 662; LIC v. Insure Policy Plus Services (P) Ltd. (2016) 2 SCC 507; Industrial Promotion & Investment Corpn. of Orissa Ltd. v. New India Assurance Co. Ltd. (2016) 15 SCC 315; Polymat India (P) Ltd. v. National Insurance Co. Ltd. (2005) 9 SCC 174 : [2004] 6 Suppl. SCR 535; Export Credit Guarantee Corpn. of India Ltd. v. Garg Sons HARIS MARINE PRODUCTS v. EXPORT CREDIT GUARANTEE CORPORATION (ECGC) LIMITED 301 International (2014) 1 SCC 686 : [2013] 1 SCR 336; Rainy Sky SA v. Kookmin Bank [2011] UKSC 50; Arnold v. Britton [2015] UKSC 36; Woods v Capita Insurance [2017] UKSC 24 – referred to. Case Law Reference [2011] 15 SCR 1181 [2000] 1 SCR 1076 referred to referred to [2004] 6 Suppl. SCR 535 referred to [2004] 4 Suppl. SCR 662 referred to [2004] 6 Suppl. SCR 535 referred to [2013] 1 SCR 336 [1966] 3 SCR 500 [2004] 2 SCR 63 referred to followed relied on [2006] 10 Suppl. SCR 140 relied on Para 5 Para 7 Para 7 Para 8 Para 10 Para 11 Para 16 Para 16 Para 17 CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4139 of 2020. From the Judgment and Order dated 13.07.2020 of the National Consumer Disputes Redressal Commission, New Delhi in Consumer Complaint No. 1546 of 2016. Ms. Anjana Prakash, Sr. Adv., Shahbaaz Husain, Mahesh Thakur, Ms. Vipasha Singh, Ms. Shailaja Das, Advs. for the Appellant. Rajnish Kumar Jha I, Adv. for the Respondent. The Judgment of the Court was delivered by S. RAVINDRA BHAT, J.

#1. With consent of counsel for the parties, the appeal was heard finally. The appellant is aggrieved by an order1 of the National Consumer Disputes Redressal Commission (hereinafter, “NCDRC”) dismissing its complaint. The issue urged by the appellant is whether the NCDRC was correct in placing reliance on guidelines issued by the Directorate General of Foreign Trade (hereinafter, “DGFT Guidelines”)2 to interpret 1 CC No. 1546/2016, dated 13.07.2020. 2 Ministry of Commerce and Industry, Directorate General of Foreign Trade, Foreign Trade Policy, Handbook of Procedures (Volume I) w.e.f. 27.08.2009 – 31.03.2014. A B C D E F G H 302 SUPREME COURT REPORTS [2022] 17 S.C.R. A B C D E F G H the date of ‘despatch / shipment’ in the Single Buyer Exposure Policy of the respondent (hereinafter, “Policy”), and thereby deny the appellant’s claim. The facts

#2. The appellant is an exporter of fish meat and fish oil, whereas the respondent (hereafter, “ECGC”) is a government company (under the control of the Ministry of Commerce and Industry, Union Government). ECGC provides a range of credit risk insurance cover to exporters. On 13.12.2012, the appellant paid premium to ECGC for the Policy (bearing no. 0540000143), which covered foreign buyer’s failure to pay for goods exported. The coverage of this Policy, (with effect from 14.12.2012-13.12.2013), was for ` 2.45 crores. The vessel (Tiger Mango Voyage 62) set sail on 15.12.2012. The Bill of Lading (hereinafter, “BOL”) was prepared on 19.12.2012, with a line specifying the date of ‘onboard’ (i.e., date on which vessel commenced loading the goods in question on board) as 13.12.2012. The vessel delivered the goods on 22.01.2013. The overseas buyer defaulted on payment. The appellant then lodged a claim with ECGC on 14.02.2013.

#3. ECGC rejected the appellant’s claim on several levels; with the final rejection by the Independent Review Committee (hereinafter, “IRC”) on 28.03.2015. IRC’s view was that the date of ‘despatch/shipment’ (provided in the Policy) was not clearly defined, and it placed reliance on the definition contained in the DGFT Guidelines. For containerized cargo, the same was to be interpreted as the date of ‘Onboard Bill of Lading’3, which in the present case was 13.12.2012. This was just a day prior to the effective date of the Policy, i.e., 14.12.2012. It was therefore reasoned that the appellant was not entitled to the claim amount. The appellant, feeling aggrieved, complained of deficiency of service, and approached the NCDRC for compensation. ECGC resisted the claim.

#4. By the impugned order, NCDRC upheld the rationale of the IRC and rejected the appellant’s contention that in absence of a clearly specified provision in the Policy, it was entitled to the benefit of the rule of verba chartarum fortius accipiuntur contra proferentem (hereinafter, “contra proferentem”). Hence the present appeal. Contentions of parties 3 Id., Chapter 9 Definitions – Clause 9.12(i) (Date of shipment / Dispatch in respect of Exports by Sea). HARIS MARINE PRODUCTS v. EXPORT CREDIT GUARANTEE CORPORATION (ECGC) LIMITED [S. RAVINDRA BHAT, J.] 303

#5. Ms Anjana Prakash, the appellant’s Senior Advocate, brought the Court’s attention to the relevant clause in the Policy, which is reproduced as follows: “Part IV – Definitions (1) DESPATCH OR DESPATCHED ‘Despatch’ means passing or handing over of the goods to the first carrier for through carriage to the place where the Insured Buyer or his nominee is to accept them ‘despatched’ will be construed accordingly”. Ms Prakash submitted that a plain reading of the above stipulation did not clarify the exact date of initiation of the coverage. However, the condition must be interpreted to mean the date on which the vessel set sail, and not the initial date of loading of the goods, given that four thousand containers were to be loaded, which took time, and was completed by 10 PM on 14.12.2012. Thus, possession by the first carrier (the vessel herein) could only be completed when all the goods were loaded, and the vessel sailed. To support her submissions, Ms Prakash alluded to the Mate’s Receipt, i.e., the receipt issued by the Master of the vessel when the cargo was loaded on board4, issued on 15.12.2012. Therefore, the date of ‘despatch/shipment’ had to be construed as 15.12.2012, and not 13.12.2012.

#6. Ms Prakash submitted that as opposed to this, the DGFT Guidelines defined the date of ‘shipment’ as follows: “Date of shipment/despatch for exports will be reckoned under:- (i) By Sea: For bulk cargo, date of Bill of Lading or date of mate receipt, whichever is later. a) For containerised cargo, date of “Onboard Bill of Lading”, or “Received for Shipment Bill of Lading”, where the L/C provides for such Bill of Lading. For exports by containers from Inland Container Depot (ICD), date of Bill of Lading issued by shipping agents at the time of loading of export goods in ICD after customs clearance. 4 See Shaw Wallace & Co. Ltd. v. Nepal Food Corpn., (2011) 15 SCC 56, paras 26-28 for relationship between Mate’s Receipt and Bill of Lading. A B C D E F G H 304 SUPREME COURT REPORTS [2022] 17 S.C.R. A B C D E F G H b) For Lash barges, date of Bill of Lading evidencing loading of export goods on board”. (emphasis supplied) The date of ‘Onboard Bill of Lading’ had no application to the present facts, as no Letter of Credit (hereafter, “L/C”) was issued. In any event, such an interpretation of an unspecified term was contrary to consensus ad idem arrived at by the parties. The unjustness of such an interpretation was compounded by the fact that the appellant was not in a position to negotiate the standard terms of the Policy issued by the respondent, and thus ECGC could not have unilaterally relied on such a definition.

#7. Ms Prakash further submitted that as the policy was silent on the date of ‘despatch’ or ‘shipment’, an insurance policy being a commercial contract, had to be strictly interpreted in terms of the clauses it contained, which reflected the intentions of the parties, and not secondary sources. In the event that a contract contained an ambiguous term, which could be interpreted in more than one way, the well- recognized rule of contra proferentem must be made available to the appellant, i.e., it must be interpreted against the drafter of the contract (the respondent herein) who is deemed to be aware of the consequences of imprecise drafting. The NCDRC therefore, could not have placed reliance on the guidelines issued by a third party (DGFT) which was an external entity not privy to the contract between the present parties, to disallow the claim5.

#8. Ms Prakash placed reliance on certain judgments of this Court. In United India Insurance Co. Ltd. v. Harchand Rai Chandan Lal6, on the interpretation of the word ‘burglary’ in the insurance policy, this Court held: “It is settled law that terms of the policy shall govern the contract between the parties, they have to abide by the definition given therein and all those expressions appearing in the policy should be interpreted with reference to the terms of policy and not with reference to the definition given in