NDLI: Shree Ambica Medical Stores & Ors. Vs. The Surat People’s Co-operative Bank Limited & Ors.

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Insurance Act Cash Credit
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Insurance Act, 1938 (4 of 1938)
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Insurance Act, 1938 – s.64(VB) – Appellants hypothecated goods with first respondent-bank under an agreement for cash credit facility – Appellants were obligated to insure the goods hypothecated to the Bank – Bank, as a routine practice, obtained policies for all its borrowers and upon receipt of intimation, would remit the premium payable on behalf of the borrowers – Bank obtained first insurance policy for 1998-99 in sum of Rs.60 lakhs, from insurer-third respondent, which covered specific location (“12/1123-1124, Basement, Meghdoot Apartment, Surat”) of the borrower where goods were stored – From 2001, the insurance policy was renamed as ‘Standard Fire and Special Perils Policy’ – Perils insured included those by storm, tornado, flood & inundation, together referred as ‘STFI Perils’ – Value of insurance was also enhanced by Rs.25 lakhs – For 2002-03, the insurer issued policy in sum insured of Rs.25 lakhs in terms of the aforesaid location however, separate insurance cover of Rs.60 lakhs was issued in respect of goods stored at another location – Similar was the case for 2003-04, 2004-05 – However, for 2005-06, location in the insurance cover of Rs.60 lakhs was changed back to the premises at Meghdoot Apartment, Surat – Same position continued for 2006-07 – In Aug.2005, the bank while filling up proposal form handed a cheque to the insurer for a cover also extending to STFI perils – Premium of Rs.992 covering STFI perils was refunded by insurer to the bank – In 2006, appellants claimed loss of Rs.78,66,857/- due to floods – Insurer paid claim of Rs.23 lakhs under the policy cover of Rs.25 lakhs but repudiated entire claim under the policy cover of Rs.60 lakhs – State Commission allowed the complaint only against the bank and its manager – Reversed by National Commission – Held: Address mentioned in the policy for 2004-05 differs from that of 2005-06 – Insurer proceeded on the basis that this was a ‘fresh contract of insurance’– Proposal does not conclude the contract – Terms of the policy will govern the contract between parties – Insurance policy for 01.08.05 to 31.07.06 was issued with exclusion of STFI perils– Sub-sec.(3) of s.64(VB) provides for refund of premium amount to the insured in case of cancellation or alteration of the terms & conditions of the policy – Insurer while issuing the new policy specifically excluded STFI perils and refunded the premium of Rs.992 to the bank which deposited it in appellants’ account – Insured at the time when the loss occurred was covered by a policy that excluded STFI perils – Thus, insurer cannot be held liable – Appellants had knowledge of this exclusion as they were provided a copy of the policy and received refund of the premium– No merit in appeal.Insurance – Contract of Insurance – Interpretation of – Held: Court while interpreting the contract of insurance must interpret the words of the contract by giving effect to the meaning and intent which emerges from the terms of the agreement – Court through its interpretative process cannot rewrite or create a new contract between the parties – Court has to simply apply the terms and conditions of the agreement as agreed between the parties.
Judge	Hon'ble Dr. Justice D.Y. Chandrachud
Neutral Citation	2020 INSC 98
Petitioner	Shree Ambica Medical Stores & Ors.
Respondent	The Surat People’s Co-operative Bank Limited & Ors.
SCR	[2020] 3 S.C.R. 359
Judgement Date	2020-01-28
Case Number	562

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