M/S SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD.versusUNITED INDIA INSURANCE CO. LTD. & ANR.

                   [201 OJ 13 (ADDL.) S.C.R. 138


A       MIS SU RAJ MAL RAM NIWAS OIL MILLS (P.) LTD.
                                   v.
           UNITED INDIA INSURANCE CO. LTD. & ANR.
                 (Civil Appeal No. 1375 of 2003)
                         OCTOBER 8, 2010
8
                [D.K. JAIN AND T.S. THAKUR, JJ.]

       Insurance - Contract of insurance - In terms of the
  contract, insured required to disclose each and every dispatch
C of consignment - Insured not disclosing dispatch of some of
  the consignments - Dispatch of the consignment in question
  disclosed - Damage to the consignment during irs transit -
  Insurance claim - Repudiated by insurance company on the
  ground that the insured had violated terms and conditions of
D the contract by not disclosing all the dispatches - Entitlement
  of the insured to insurance claim - Held: Insurance claim
  must fail on the ground of the breach of contract - As per the
  contract, the insured was required to declare each and every
  dispatch and not those alone wherein it had insurable interest
E - Contract.
         Deeds and Documents - Contract of insurance -
    Interpretation of - Held: The terms of the contract of insurance
    have to be strictly construed - It is not open to the court to
    add, delete or substitute any words - Insurance contract.
F
       The appellant, a 11ompany engaged in the business
  of manufacture and sale of mustard oil, obtained an open
  transit insurance policy from the respondents-insurance
  company, covering all types of edible oils in tins
G transported by rail I road to anywhere in India. During the
  relevant period, liability of the insurance company was
  limited to Rs. 1 crore. The cover note of the insurance
  policy contained a special condition i.e. each and every

H                                 138
  SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.              139
      UNITED INDIA INSURANCE CO. LTD.
consignment was to be declared immediately before                A
dispatch of the goods.

     The insured dispat~hed certain tins of oils. The
railway wagon, carrying the goods met with an accident
resulting in damage to the consignment. The insured              B
informed about the accident to another branch of the
insurance company. A surveyor was appointed, who gave
his report assessing the loss. Thereafter another
surveyor was appointed by respondent No. 2 (the local
branch of the insurance company) who reported that till
the date the consignment in question was dispatched,
                                                                 c
the insured had only disclosed dispatches worth Rs.
91,22,778/- while the total dispatches were worth Rs.
1,43,59,303/-.

    The claim of the insured was repudiated by the               D
insurance company on the ground, amongst others, that
the insured violated the terms and conditions of the
contract in as much as it did not declare all the
dispatches. The insured filed a complaint, which was
allowed by the State Consumer Disputes Redressal                 E
Commission. The National Consumer Disputes
Redressal Commission set aside the order of State
Commission and upheld the rejection of the claim of the
insured. Therefore, the instant appeal was filed.

    Dismissing the appeal, the Court                             F

     HELD: 1. It is trite that 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        G
can be made on the ground of equity. 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       H
    140 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A 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
B always be to interpret the words in which the contract is
  expressed by the parties. [Paras 22 and 24) [151-E; 152-
  D-F]

       General Assurance Society Ltd. v. Chandumull Jain and
C Anr. (1966) 3 SCR 500 - followed.

       United India Insurance Co. Ltd. v. Harchand Rai
    Chandan Lal (2004) 8 SCC 644 - relied on.

       Oriental Insurance Co. Ltd. v. Sony Cheriyan (1999) 6
D SCC 451; Vikram Greentech India Limited and Anr. v. New
  India Assurance Company Limited (2009) 5 SCC 599; Sikka
  Papers Limited v. National Insurance Company Limited and
  Ors. (2009) 7 SCC 777; New India Assurance Company
  Limited v. Zuari Industries Limited and Ors. (2009) 9 SCC 70;
E Amravati District Central Cooperative Bank Limited v. United
  India Fire and General Insurance Company Limited. (2010)
  5 sec 294 - referred to.

       2. In the instant case, the claim of the appellant must
  fail on the short ground that there was a breach of the
F special condition incorporated in the cover note of the
  Contract. The special condition viz. "each and every
  consignment" must be declared before dispatch of
  goods is clear and admits of no ambiguity. The appellant
  was obliged to declare "each and every consignment"
G before it left the appellant's factory premises and there
  is nothing in the policy to suggest that the insured had
  the liberty to pick and choose the dispatches which they
  wanted to declare to the insurer, not even at the instance
  of the consignee, who otherwise is a stranger to the
H contract between the insurer and the insured. It is not
  SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.             141
      UNITED INDIA INSURANCE CO. LTD.
correct to say that the appellants were required to declare     A
only those dispatches in which they had an insurable
interest. Notwithstanding any request by the consignee,
the policy of insurance postulated declaration in respect
of each and every dispatch by the appellant. Therefore,
the fact that purchasers did not want an insurance cover        B
on certain dispatches had no bearing on the obligation
of the appellant to declare each and every dispatch
under the policy. It is a settled proposition of law that a
stranger cannot alter the legal obligations of parties to the
contract. [Para 25] [152-G; 153-A-E]                            c
     New India Assurance Co. Ltd. v. G.N. Sainani (1997) 6
SCC 383; New India Assurance Company Limited v. Hira Lal
Ramesh Chand and Ors. (2008) 10 SCC 626; United India
Insurance Co. Ltd. v. Great Eastern Shipping Co. Ltd. (2007)
7 SCC 101; Divisional Manager, UC of India v. Shri              D
Bhavanam Srinivas Reddy, (1991) CPJ 189; Divisional
Manager, UC India of India v. Smt. Uma Devi (1991) CPJ
516; Mis Raj Kamal and Co. v. Mis United Insurance
Company, (1992) CPJ 121; Dr. J.J. Merchant and Ors. v.
Shrinath Chaturvedi (2002) 6 SCC 635; CC/ Chambers              E
Coop. Hsg. Society Ltd. v. Development Credit Bank Ltd.
(2003) 7 sec 233 - referred to.

     Barratt Bros. (Taxis), Ltd. v. Davies 1966 2 Lloyd's
Rep.1; Dunlop Brothers and Company v. Townend. 1919             F
(2) 127 (KB); Kilroy Thompson, Ltd. v. Perkins and Homer,
Ltd. [1956] 2 Lloyd's Rep. 49 - referred to
                     Case Law Reference:
    (1966) 2 Llod's Rep. 1       Referred to      Para 16       G
    (2005) 9 sec 114             Referred to       Para 16
    (1995) Supp (1) sec 754      Referred to      Para 16
    (1999) 3 sec 465             Referred to       Para 16
                                                                H
    142    SUPREME COURT REPORTS (2010) 13 (ADDL.) S.C.R.


A         (1997) 6 sec 383           Referred to   Para 17
          (2008) 1o sec 626          Referred to   Para 17
          (1956) 2 Llyod's Rep. 49   Referred to   Para 18
          (2001) 1 sec 101           Referred to   Para 18
B
          (1991) CPJ 189             Referred to   Para 19
          (1991) CPJ 516             Referred to   Para 19
          (1992) CPJ 121             Referred to   Para 19
c
          (2002) 6 sec 635           Referred to   Para 19
          (2003) 1 sec 233           Referred to   Para 19
          1919 (2) 127 (KB)          Referred to   Para 20
D         (2008) 14 sec 598          Referred to   Para 21
          (1999) 6 sec 451           Referred to   Para 22
          (1966) 3 SCR 500           Followed      Para 22

E         (2009) 5 sec 599           Referred to   Para 22
          (2009) 1 sec 111           Referred to   Para 22
          (2009) 9 sec 10            Referred to   Para 22
          (201 O) 5 sec 294          Referred to   Para 22
F
          (2004) 8 sec 644           Relied to     Para 23

        CIVIL APPELLATE JURISDICTION : Civil Appeal No.
    1375 of 2003.
G       From the Judgment & Order dated 12.07.2002 of the
    National Consumer Disputes Redressal Commission, New
    Delhi in F.A. No. 354 of 1996.

       A.K. Ganguli, Bamali Basak, Chanchal Kumar Ganguli,
H Chitanya  Safaya, Debesh Panda for the Appellant.
   SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.                   143
       UNITED INDIA INSURANCE CO. LTD.
   Vineet Malhotra, K. Singhal, Dr. Kailash Chand for the               A
Respondent.
     The Judgment of the Court was _delivered by
      D.K. JAIN, J. 1. This appeal, by special leave, is directed
against the judgment and order dated 12th July 2002, delivered          B
by the National Consumer Disputes Redressal Commission (for
short "the National Commission") in First Appeal No. 354 of
1996, whereby it set aside order dated 24th June, 1996 passed
by the Consumer Disputes Redressal Commission, Rajasthan
(for short "the State Commission") and held that the respondents        c
- insurance company was justified in repudiating the insurance
claim of the appellant.
      2. Both the respondents are the same insurance company,
the first being the registered and head office and the second
its local branch office.                                                D
    3. Shorn of unnecessary details, the facts material for the
purpose of disposal of this appeal may be stated thus:
      The appellant company is engaged in the business of
manufacture and sale of "Bhisham" brand mustard oil and                 E
cakes. They had obtained an open transit insurance policy from
the respondents covering "all types of edible oils in tins ... "
transported by rail/road (which had to be declared) from Jaipur
to anywhere in India. Initially, the liability of the respondents was
limited to' 10 lakhs but during the relevant period, the limit was      F
enhanced to '1 crore. The insurance policy was subject to
certain conditions attached as schedule to the policy.
Additionally, the cover note also contained the following special
condition and warranty:
                                                                        G
     "Each & every consignment must be declared immediately
     before dispatch of goods."

     4. On 14th August 1992, the appellant dispatched 1194
tins of oil valued at Rs. 5,84,790/- from Jaipur to Dharamnagar
by rail and from Dharamnagar to Agartala by road to one M/s             H
    144   SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A   Sree Sree Kaibalia Bhandar, Agartala.
        5. The railway wagon carrying the said goods met with an
    accident on 28th September 1992, resulting in extensive
    damage to the consignment.
B         6. It is an admitted fact that the appellant did not inform
    either of the two respondents herein about the said accident
    till 30th September 1992 but claims to have informed their
    Agartala office on 28th September 1992 itself, who had also
    appointed a surveyor. The consignment, in damaged condition,
c   was forwarded to Agartala by road on 29th September 1992.
    The challans bearing Nos. 40336, 40337 and 40338 prepared
    by the road carrier Mis Paul Brothers clearly mentioned the
    damaged state of the goods. The said goods were received
    by the consignee on the same day.
D         7. On 30th September 1992, the consignee informed the
    Agartala branch office of respondent No. 1 about the damage
    to the goods. The road carrier, Mis Paul Brothers also reported
    the matter to the respondent No. 2, herein. Subsequently, on
    3rd October 1992, the road carrier issued a shortage/damage
E   certificate stating that 153 tins were handed over in fully empty
    condition and in the remaining 1041 tins, there was shortage
    of oil.
         8. It appears from the report of the surveyor, one Mr. Tapan
F   Kumar Saha, that the Agartala branch of respondent No.1 had
    issued instructions for survey on 28th November 1992. On 10th
    November 1992, he submitted his report whereby he assessed
    the total loss at Rs. 4,39, 178/- payable by the respondents. The
    said report was also communicated to respondent No. 2.
G      9. On 6th August 1993, another surveyor, Mr. S.K.
  Bakliwal, was appointed by respondent No. 2, who reported that
  during the period from 1st A.pril 1992 to 14th August 1992, the
  appellant had only declared dispatches worth Rs. 91,22,778/-
  whereas the total dispatches by the appellant during that period
H were to the tune of Rs. 1,43,59,303/-.
  SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.     145
 UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
     10. Respondent No. 2 thereafter requested Mr. Tapan           A
Kumar Saha to segregate the damage caused to the goods
at the place of accident, and the subsequent damage that
occurred during the transportation of the damaged consignment
to Agartala. In his report dated 22nd March 1994, the surveyor
observed that loss of oil due to the railway accident was 2,048    B
kgs. and from Dharamnagar to Agartala, it was 10,676 kgs.
      11. On 23rd August 1993, the appellant requested the
respondents to honour their claim, followed by a reminder on
12th May 1994. On 1st August 1994, the respondents, vide
letter No. UllC:DOll:JPR:1994-95, repudiated the claim of the      C·
appellant on the following grounds:
    "(i) As per the terms and conditions of the policy, you were
    supposed to declare each and every dispatch. From 10-
    4-1992 to 14-8-1992, you have dispatches goods worth           D
    Rs. 1,43,59,303/- while you have only declared as per your
    record, goods worth Rs. 91,22,778/-. Out of these
    declarations, a number of declarations have not reached
    the company's office. Even considering it to be correct as
    the dispatched have exceeded rupees one crore long
                                                                   E
    back, the policy has not continued to cover the dispatch
    in question, and thus your claim cannot be entertained.
    (ii) You -have further violated the terms and conditions of
    the policy by removing goods from the rail accident site
    without survey of the loss having been done by the             F
    Insurance Company's Surveyor immediately after the
    accident, and without the permission of the Insurance
    Company. You have not given any information or sought
    any permission before removing the goods from the rail
    accident site to Agartala.                                     G
    (iii) You have aided in increasing the losses knowingly that
    the goods dispatched from the rail accident site to Agartala
    were not properly packed, and carrying of the oil in
    damaged tins is clear violation of the terms and conditions
    of the policy and the normal conduct of behaviour. From        H
    146     SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A         the Surveyor's Report, it is evident that the losses which
          have been quantified on the basis of the certificates while
          the rail authorities are to the tune of Rs. 71, 130/- while the
          rest of the damages have occurred during the
          transshipment from the rail accident site to Agartala in
B         damaged tins by Mis Paul Brothers, the Road carriers. It
          is also not disputed that during the carriage of the goods
          by road from rail accident site to Agartala, there was no
          accident and these losses are contributed to your own fault,
          negligences and want of proper care to carry the oil only
c         after transferring the oil from tins damaged as a result of
          the rail accident into new tins."
       12. Being aggrieved with the rejection of their claim, the
  appellant filed a complaint before the State Commission,
  preferring a claim of Rs. 5,50,798/- along with interest at the
D rate of 24% payable from 10th November 1992 till its payment
  against the respondents.
          13. The State Commission, vide its order dated 24th June
    1996, allowed the complaint of the appellant and directed the
E   respondents to pay Rs. 4,39, 178/- with interest at the rate of
    12% per annum from 1st January 1993 till payment, and Rs.
    2,000/- as costs. In relation to the grounds of repudiation
    pressed into service by the respondents, the State
    Commission, inter a/ia, observed that firstly, the effect of non-
    declaration of the consignments could only be that they were
F   not covered by the insurance policy, and the appellant company
    having not crossed the limit of Rs. 1 crore in relation to
    consignments which were desired to be covered by insurance,
    the consignment in question would be covered by the insurance
    policy as declaration was duly made in regard to it; secondly,
G   the liability of the respondents would not be affected by the
    reason that the assessment of loss was not done immediately
    after the unloading of goods at Dharamnagar; and thirdly, it did
    not matter that the loss or damage to the consignment was
    remotely caused by the negligence of the insured unless the
H   loss was due to the wilful act of the insured.
 SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.     147
UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
     14. Aggrieved by the said order of the State Commission,       A
the respondents preferred an appeal before the National
Commission. As aforestated, the National Commission
allowed the appeal of the respondents, observing thus:
      "The insured's failure to report the loss caused by Rail
                                                                  8
      accident and removal of consignment without giving
      Surveyor a chance to assess the loss at first hand and on
      the contrary aggravating the loss on account of improper
      care while transporting it by Road after the initial damage
      as well violating the terms of the policy by not reporting
      each and every dispatch as per terms of the policy C
      prejudices the interest of the appellant and in our view
      repudiation by the appellant was in order."
     15. Being dissatisfied with the said order, the appellant is
before us in this appeal.                                           D
      16. Mr. A.K. Ganguli, learned senior counsel appearing for
the appellant, strenuously urged that admittedly the respondents
were informed of the accident on 28th September 1992 by the
consignee through their Agartala office and this fact has been
overlooked by the National Commission while recording the E
finding that the surveyor was not given a chance to assess the
real loss. To buttress the contention that intimation of loss of
subject matter of insurance even by the consignee was
sufficient and appellant's claim could not be rejected for want
of intimation about the accident by the insured themselves, F
learned counsel commended us to the decision of the Court of
Appeal in Barratt Bros. (Taxis}, Ltd. Vs. Davies 1 , wherein it was
held that if the insurance company receives all material
knowledge from another source so that they are not prejudiced
at all by the failure of the insured himself to inform them, then G
they cannot rely on such a condition in the insurance contract
to defeat the claim. It was pleaded that in the present case the
surveyor had also surveyed the consignment as soon as the
goods reached their destination and had assessed the loss at
1.   [1966] 2 Lloyd's Rep.1.                                        H
    148     SUPREME COURT REPORTS [2010) 13 (ADDL.) S.C.R.


A   Rs. 4,39, 178/-. It was contended that since insurance contracts
    are a different species of contract, their interpretation is
    governed by different principles and in the event of any
    ambiguity in any clause or where two interpretations are
    possible, an interpretation which favours the policy holders
B   should be given. In support of the proposition, learned counsel
    relied on the decisions of this Court in General Assurance
    Society Ltd. Vs. Chandumull Jain & Anr. 2 , Polymat India (P)
    Ltd. & Anr. Vs. National Insurance Co. Ltd. & Ors. 3 , Shashi
    Gupta Vs. Life Insurance Corporation of India & Anr. 4 a.nd Life
c   Insurance Corporation of India Vs. Raj Kumar Rajgarhia &
    Anr. 5 .

         17. As regards the objection of the respondents about the
    non-disclosure of dispatch of each and every consignment, as
    pointed by the second surveyor, learned counsel submitted that
D   the said condition has to be understood in the context of the.
    fundamental condition that the insurance cover was intended
    to secure only the "insurable interest" of the appellant in the
    dispatches. It was urged that the appellant had declared only
    those consignments in which they had an "insurable interest"
E   as in relation to dispatches which had not been declared, the
    consignees had desired that their consignments should be
    dispatched without an insurance cover. In all such cases, the
    purchasers took the risk of loss to their goods, and hence the
    appellant had no "insurable interest" in them, unlike in the
F   consignment in question for which due declaration was made.
    Reference was made to the decisions of this Court in New India
    Assurance Co. Ltd. Vs. G.N. Sainani 5 and New India
    Assurance Company Limited Vs. Hira Lal Ramesh Chand &
    Ors. 7, wherein it was held that "insurable interest" over a
G   2.   (1966) 3 SCR 500.
    3.   (2005) 9 sec 174.
    4.   1995 Supp (10) sec 754.
    5.   (1999) 3 sec 465.
    6.   (1997) 6 sec 383.
H   7.   (2008) 10 sec 626.
   SURAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.     149
  UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]
 property is "such interest as shall make the loss of the property        A
 to cause pecuniary damage to the assured."

         18. It was then contended by learned counsel for the
  appellant that in the instant case the insurance policy covered
  all risks from the point of loading at Jaipur till the final delivery   8
  and the appellant was only under a duty to ensure that goods
  were in a properly packed condition when they were handed
  over at Jaipur for transport by train. It was asserted that the
  appellant had done everything possible to ensure that the goods
  reached their destination in proper condition as the event that         C
  had occurred at Dharamnagar station was beyond their control.
  In order to buttress the contention that the goods were in transit
  till they reached their destination, viz. Agartala, learned counsel
  relied on Kilroy Thompson, Ltd. Vs. Perkins & Homer, Ltd. 8
· and United India Insurance Co. Ltd. Vs. Great Eastern
  Shipping Co. Ltd. 9 It was argued that in the instant case the          D
  respondents have not led 9ny evidence to prove negligence on
  the part of the appellant.

       19. Relying on the decisions rendered by the National
 Commission in Divisional Manager, UC of India Vs. Shri                   E
 Bhavanam Srinivas Reddy 10 , Divisional Manager, UC India
 of India Vs. Smt. Uma Devi11 and Mis Raj Kamal & Co. Vs.
 Mis United Insurance Company1 2 , learned counsel contended
 that the jurisdiction of a consumer forum has to be construed
 liberally and it covers unilateral repudiation of a claim arising        F
 out of insurance. It was also submitted that apart from the fact
 that the present case does not involve any complicated issues
 of fact for which very detailed evidence would have to be led,
 which the State or the National Commission would not be able
 todo~ mere complication either of facts or of law cannot be a            G
 8.   [1956) 2 Lloyd's Rep. 49.
 9.   c2007) 7 sec 101.
 10. (1991) CPJ 189.
 11. (1991) CPJ 516.
 12. (1992) CPJ 121.                                                      H
    150    SUPREME COURT REPORTS [201 OJ 13 (ADDL.) S.C.R.


A ground for shutting the doors of those fora to the person
  aggrieved. To buttress the submission, reliance was placed on
  the decisions of this Court in Dr. J.J. Merchant & Ors. Vs.
  Shrinath Chaturvedi13 and CCI Chambers Coop. Hsg. Society
  Ltd. Vs. Development Credit Bank Ltd14 .
B
       20. Per contra, Mr. Vineet Malhotra, learned counsel
  appearing for the res pondents, while supporting the judgment
  of the National Commission, urged that the claim of the
  appellant could not be considered as the appellant had violated
  the special condition of the policy by not disclosing each and
C every consignment before it had left the factory premises. It was
  asserted that the said condition was the basic condition of the
  policy and on its breach the liability of the respondents stood
  repudiated. It was also pleaded that the moment goods worth
  Rs.1 crore had been dispatched from the factory of the
D appellant, the policy ceased to exist. It was argued that prior
  to the dispatch of the goods in question, goods worth
  Rs.1,43,59,303/- had already been dispatched, whereas the
  appellant had declared dispatches of goods only worth Rs.
  91,22, 778/- and, therefore, liability of the respondents under the
E policy ceased to exist both on account of non-declaration of
  material facts, as also due to the fact that the value of
  dispatches had exceeded the policy limit. In support of his plea
  that it was not open to the insured to pick and choose the
  consignments for the purpose of declaration, learned counsel
F relied on the decision of the Kings Bench in Dunlop Brothers
  & Company Vs. Townend 15 • Learned counsel contended that
  appellant had also violated the terms of policy by not informing
  the respondents immediately about the accident as well as not
  taking adequate steps to minimise the losses, in as much as
G the goods dispatched from Dharamnagar to Agartala were not
  properly packed. According to the learned counsel, the
  insurance policy casts an obligation on the insured and its
    13. (2002) 6 sec 635.
    14. (2003) 7 sec 233.
H   15. 1919 (2) 127 (KB).
  SU RAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.    151
 UNITED INDIA INSURANCE CO. LTD. [D.K. JAIN, J.]

agents to take steps for minimizing losses, and the fact that the    A
appellant permitted the carriage of oil in broken tins clearly
establishes that the appellant had violated the terms of the
policy and, therefore, the respondents cannot be made liable
for the losses.
                                                                     B
     21. Lastly, learned counsel urged that there must be strict
compliance with the terms and conditions of an insurance
policy, and the appellant having breached a fundamental
condition of the policy, the respondent is not liable to pay any
amount to them. In support of the contention that in a contract
of insurance, rights and obligations are strictly governed by the    C
terms of the policy and no exception or relaxation can be given
on the ground of equity, learned counsel relied on the judgments
of this Court in Deokar Exports Private Limited Vs. New India
Assurance Company Limited16 , United India Insurance Co.
Ltd. Vs. Harchand Rai Chandan La/1 7 and Vikram Greentech            D
India Limited & Anr. Vs. New India Assurance Company
Limited 18 .
     22. Before embarking on an examination of the correctness
of the grounds of repudiation of the policy, it would be apposite
                                                                     E
to examine the nature of a contract of insurance. It is trite that
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. (supra), a Constitution Bench of this         F
Court had observed that:

     "In interpreting documents relating to a contract of
     insurance, the duty of the court is to interpret the words in
     which the contract is expressed by the parties, because it      G
     is not for the court to make a new contract, however
     reasonable, if the parties have not made it themselves."
16. (2008) 14 sec 598.
11. (2004) 8 sec 644.
18. (2009) 5 sec 599.                                                H
    152 SUPREME COURT REPORTS [2010] 13 (ADDL.) S.C.R.


A         (See also: Oriental Insurance Co. Ltd. Vs. Sony
          Cheriyan 19 ; Vikram Greentech (supra); Sikka Papers
          Limited Vs. National Insurance Company Limited &
        · Ors. 20 ; New India Assurance Company Limited Vs. Zuari
          Industries Limited & Ors. 21 ; Amravati District Central
8         Cooperative Bank Limited Vs. United India Fire and
          General Insurance Company Limited. 22 )

        23. Similarly, in Harchand Rai Chandan Lal's case
    (supra), this Court held that:

C        ''The terms of the policy have to be construed as it is and
         we cannot add or subtract something. Howsoever liberally
         we may construe the policy but we cannot take liberalism
         to the extent of substituting the words which are not
         intended."
D
         24. Thus, it needs little emphasis that 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
E 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
F parties.
       25. Having considered the instant case on the touchstone
  of the aforenoted broad principles to be borne in mind while
  examining the claim of an insured, we are of the opinion that
G the claim of the appellant must fail on the short ground that there

    19. (1999) 6 sec 451.
    20. (2009) 7 sec 777.
    21. (2009) 9 sec 10.
H   22. (2010) 5 sec 294.
   SU RAJ MAL RAM NIWAS OIL MILLS (P.) LTD. v.     153
  UNITED INDIA INSL)RANCE CO. LTD. [D.K. JAIN, J.]
was a breach of the afore-extracted special condition
incorporated in the cover note. The special condition viz. "each
and every consignment" must be declared before dispatch of
goods is clear and admits of no ambiguity. The appellant was
obliged to declare "each and every consignment" before it left
the appellant's factory premises and there is nothing in the        B
policy to suggest that the insured had the liberty to pick and
choose the ~ispatches which they wanted to declare to the
insurer, not even at the instance of the consignee, who
otherwise is a stranger to the contract between the insurer and
the insured. We have no hesitation in rejecting the plea of the     c
appellant that they were required to declare only those
dispatches in which they had an insurable interest. It bears
repetition that notwithstanding any request by the consignee,
the policy of insurance postulated declaration in respect of each
and every dispatch by the appellant. Therefore, the fact that       D
purchasers did not want an insurance cover on certain
dispatches had no bearing on the obligation of the appellant
to declare each and every dispatch under the policy. It is a
settled proposition of law that a stranger cannot alter the legal
obligations of parties to the contract.
                                                                    E
     26. We are in complete agreement with the National
Commission that there was a breach of the special condition
in the cover note for the insurance policy on the part of the
appellant and, therefore, the repudiation of the claim of the
appellant by the respondents was justified.                         F
     27. Having come to the conclusion that the repudiation of
the claim preferred by the appellant on the aforestated ground
was valid, we deem it unnecessary to evaluate the correctness
of the other rival submissions made before us by the learned
counsel.                                                            G
     28. Resultantly, the appeal being devoid of any merit
deserves to be dismissed. It is dismissed accordingly, leaving
the parties to bear their own costs.

.K.K.T.                                     Appeal dismissed.       H