Haris Marine Products v. Export Credit Guarantee Corporation (ECGC) Limited

Case snapshot

Sections / provisions: Insurance contract

Questions before the Court / Tribunal

• Haris Marine Products Vs Export Credit Guarantee Corporation (ECGC) Limited (Supreme Court) Date-25th April,2022 Sub-When goods can be said to have been despatched/shipped in case of Marine Insurance guaranteeing default in payment by the Overseas Buyer. An interesting issue arose in this case when three judges bench of Supreme Court was called upon to decide the issue where the foreign buyer in this case defaulted payment of Rs 2.45 crores for which Credit insurance policy was taken by the appellant herein which was to run from 14th December, 2012. The goods were handed over to Ship on 13th December,2012 though the ship sailed on 15th December, 2012 and ECGC in this case disputed the liability by saying that the goods were shipped before the start of the policy by relying on the definition of Despatch in the DGFT guidelines. The appellant argued that despatch must mean the date on…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

1. With consent of counsel for the parties, the appeal was heard finally. The appellant is aggrieved by an order 1 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 the date of ‘despatch / shipment’ in the Single Buyer Exposure Policy of the respondent (hereinafter, “Policy”), and thereby deny the appellant’s claim.

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 th e rationale of the IRC and rejected the appellant’s contention that in absence of a clearly specifi ed 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 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

Appellant / petitioner / assessee submissions

The judgment does not separately label this side’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Revenue / respondent submissions

Therefore, reliance on the DGFT Guidelines to disallow the claim of the appellant was not good in law. The Counsel for the respondent has argued that the DGFT Guidelines are enforceable against the present facts. Therefore, an analysis of the same is merited.

Court / Tribunal analysis and reasoning

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 a s opposed to this, the DGFT Guidelines define d 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 o f Lading”, where the L/C provides for such Bill of Lading .

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.

that when the parties have entered into a contract of insurance with their eyes wide open, they cannot rely on the definition given in other enactment”. (emphasis supplied) Thus, the Court refused to import the definition of the term ‘burglary’ from criminal statutes into the insurance policy. However, it is pertinent to note that this Court also went on to hold the following7: “Therefore, it is settled law that the terms o f the contract have to be strictly read and natural meaning be given to it. No outside aid should be sought unless the meaning is ambiguous”.

Ms Prakash then placed reliance on LIC v. Insure Policy Plus Services (P) Ltd.,8 in which the assignment of insurance policies prior to the 2015 amendment to the Insurance Act, 1938 was in question. While dealing with an argument on disallowing such assignment on grounds of public policy, this Court held: “We also think that it is not appropr iate to import the principles of public policy, which are always imprecise, difficult to define, and akin to an unruly horse, into contractual matters. The contra proferentem rule is extremely relevant inasmuch as it is the appellant who has drafted the in surance policy and was, therefore, well positioned to include clauses making it specifically impermissible to assign policies”.

application of a fire insurance policy on goods kept within the boundary wall, held as follows: “Therefore, the terms of the contract have to be constru ed strictly without altering the nature of the contract as it may affect the interest of parties adversely”.

Coverage was thus denied on a contextual interpretation of the term, including placing reliance on the definition of ‘factory’ under Section 2(m) of the Factories Act, 1948 and under the Law Lexicon, to exclude goods destroyed by fire placed outside the plant premises but within the factory-cum-godown wall. Mr Jha submitted, therefore, that in absence of an express definition of a term, other relevant laws cannot be ignored. 11. Further, Mr Jha submitted that the court could not alter the interpretation of terms of the policy by reading in something which did not exist . In Export Credit Guarantee Corpn. of India Ltd. v. Garg Sons Inter national12, denying the application of contra proferentem where the insurance contract clearly specified that any default on part of a foreign buyer had to be brought to the respondent’s attention within a specified time period13, it was held: “Thus, it is not permissible for the court to substitute the terms of the contract itself, under the garb of construing terms incorporated in the agreement of insurance. No exceptions can be made on the ground of equity. The liberal attitude adopted by the court, by way of which it interferes in the terms of an insurance agreement, is not permitted. The same must certainly not be extended to the extent of substituting words that were never intended to form a part of the agreement”.

Operative decision and relief

22. Accordingly, 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 ₹ 2.45 crores to the appellant, with interest at the rate of 9% p.a. The appeal is allowed; all p ending application(s), are disposed off. There shall be no order on costs.

Ratio and legal principle

The narrow proposition associated with Haris Marine Products v. Export Credit Guarantee Corporation (ECGC) Limited concerns haris marine products vs export credit guarantee corporation (ecgc) limited (supreme court) date-25th april,2022 sub-when goods can be said to have been despatched/shipped in case of marine insurance guaranteeing default in payment by the overseas buyer. an interesting issue arose in this case when three judges bench of supreme court was called upon to decide the issue where the foreign buyer in this case defaulted payment of rs 2.45 crores for which credit insurance policy was taken by the appellant herein which was to run from 14th december, 2012. the goods were handed over to ship on 13th december,2012 though the ship sailed on 15th december, 2012 and ecgc in this case disputed the liability by saying that the goods were shipped before the start of the policy by relying on the definition of despatch in the dgft guidelines. the appellant argued that despatch must mean the date on… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in CIVIL APPEAL NO. 4139/2020.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: Haris Marine Products Vs Export Credit Guarantee Corporation (ECGC) Limited (Supreme Court) Date-25th April,2022 Sub-When goods can be said to have been despatched/shipped in case of Marine Insurance guaranteeing default in payment by the Overseas Buyer. An interesting issue arose in this case when three judges bench of Supreme Court was called upon to decide the issue where the foreign buyer in this case defaulted payment of Rs 2.45 crores for which Credit insurance policy was taken by the appellant herein which was to run from 14th December, 2012. The goods were handed over to Ship on 13th December,2012 though the ship sailed on 15th December, 2012 and ECGC in this case disputed the liability by saying that the goods were shipped before the start of the policy by relying on the definition of Despatch in the DGFT guidelines. The appellant argued that despatch must mean the date on… Its practical value lies in the way the Supreme Court of India connected the governing provisions—Insurance contract—to the procedural posture and evidence before it.

The authority level is Supreme Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of Insurance contract and the decision date 2022-04-25; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Haris Marine Products v. Export Credit Guarantee Corporation (ECGC) Limited, the proceeding is CIVIL APPEAL NO. 4139/2020, and the decision is dated 2022-04-25. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as S. Ravindra Bhat, J. (authoring judge identified in judgment). A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with Insurance contract. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is REVIEW_CURATIVE_DOCKET_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• Insurance contract — apply the exact version considered in the judgment.

Case network

• UCB India Pvt. Ltd. vs. ACIT — Supreme Court of India · Quashed / set aside
• SPL Labs India Pvt ltd Vs ITO,Circle 6 Bangalore — Supreme Court of India · Quashed / set aside
• M/s Suneja Towers Private Limited & Anr Vs Anita Merchant — Supreme Court of India · Quashed / set aside
• State of Gujarat and Anr Vs Saw Pipes Ltd — Supreme Court of India · Quashed / set aside

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