Holding

Condition 4 of the SFSP policy excludes United India Insurance’s liability because the STP policy is a marine policy, and Section 25 does not impose a mandatory domestic‑policy obligation on the insured.

Summary

The appellant United India Insurance issued a Standard Fire & Special Perils (SFSP) policy to Levi Strauss (India) for fire loss, while Levi also held a global Open Marine Insurance (STP) policy issued by Allianz covering the same goods. After a fire, Levi claimed under the SFSP policy, but the insurer denied liability invoking Condition 4, which excludes liability when the risk is covered by a marine policy. The NCDRC allowed the claim, holding that the STP policy was not a marine policy and that Section 25 of the Nationalization Act compelled Levi to obtain a domestic policy. On appeal, the Supreme Court examined the nature of the STP policy under the Marine Insurance Act and held that it was a marine policy, so Condition 4 operated to exclude liability. The Court also found that Section 25 did not impose a legal obligation on Levi’s parent company to obtain a domestic policy. Consequently, the appeal was allowed, the NCDRC order set aside and Levi’s complaint dismissed.

Issues considered

Whether the STP policy issued by Allianz constitutes a marine insurance policy under the Marine Insurance Act, 1963.
Whether Condition 4 of the SFSP policy excludes United India Insurance’s liability when the risk is covered by a marine policy.
Whether Section 25 of the General Insurance Business (Nationalization) Act, 1972 obliges the insured to obtain a domestic policy, thereby affecting the operation of Clause 47 of the STP policy.
Whether the doctrine of double insurance precludes liability under the SFSP policy.

Legislation cited

Consumer Protection Act, 1986s. 21, s. 22
General Insurance Business (Nationalization) Act, 1972s. 25
Insurance Act, 1938s. 13A
Marine Insurance Act, 1963s. 2(d), s. 2(e), s. 3, s. 4

Subjects

insurancedouble insurancemarine policystandard fire & special perils policycondition 4Nationalization ActNCDRCcontract interpretationMarine Insurance Act

Judgment

[2022] 10 S.C.R. 231 231

UNITED INDIA INSURANCE CO. LTD. A
v.
LEVIS STRAUSS (INDIA) PVT. LTD.
(Civil Appeal No. 2955 of 2022)
MAY 02, 2022 B
[UDAY UMESH LALIT, S. RAVINDRA BHAT AND
PAMIDIGHANTAM SRI NARASIMHA, JJ.]
Insurance – Standard Fire & Special Perils Policy (SFSP
Policy) – STP Policy – Insurance by different Insurers – When One
C
Insurance Policy ousts the application of Other Insurance Policy –
Respondent claimed benefit of insurance policy (SFSP Policy)
provided by the appellant-insurer – Per contra the appellant refused
to grant the benefit of insurance to the respondent upon the premise
that the losses suffered by the respondent were covered under
insurance policy (STP Policy) obtained from AGCS (respondent’s D
parent company) – Aggrieved, the respondent approached the
NCDRC – NCDRC allowed the insurance claim of the respondent
holding that Condition-4 of SFSP policy would support the claim
of the appellant only if the other policy (the one issued by AGCS)
was a marine policy, which as per NCDRC, was not – Further by
E
virtue of S. 25 of the Nationalization Act, the respondent was under
obligation to cover the risks through a domestic policy, which they
did in the present case and hence were entitled to the full benefit of
SFSP Policy – On appeal, held: As far as obligation u/s. 25 of the
Nationalization Act is concerned, NCDRC was wrong – Mere
prohibition in s. 25 of the Nationalization Act clearly did not apply F
to respondent’s parent company, which conducts business overseas
(and not only in India) and obtain a marine cover which catered to
all risks, (including marine risks as well as risks to the goods in
transit and when they were warehoused) – Therefore, the prohibition
in s.25 per se does not apply – Equally, there was no specific
G
provision requiring respondent to obtain a domestic policy, in the
conduct of its business – NCDRC also erred in holding that the STP
policy was not a marine policy since the policy, comprehensively
covered all kinds of risks including marine risks and what is material
is not whether the insurable event occurred during the voyage rather,
H
231
232 SUPREME COURT REPORTS [2022] 10 S.C.R.

A the focus is on the nature of the cover and the cover clearly and
unequivocally included marine perils therefore, it was a marine cover
– Condition No. 4 of the SFSP Policy, which constituted a contract
between the parties, precisely contemplated a situation whereby in
the event of occurrence of an insurance risk, if respondent (or
someone on its behalf, like in the present case the parent company)
B
was entitled to claim under a marine policy, the insurer was not to
be held liable – Therefore, condition No.4 operated to exclude the
appellant-insurer’s liability.
Words/Phrases – Double Insurance – discussed.
C Allowing the appeal, the Court
HELD: 1. The expression “marine adventure” is defined
by Section 2(d). Similarly, “maritime peril” referred to in “marine
adventure” is defined in Section 2(e). Section 3 defines a marine
policy; Section 4, which is relevant for this case, deals with mixed
D marine and land risks. It inter alia, enables coverage – through
“express terms, or by usage of trade” – extension of marine
policies “so as to protect the assured against losses on inland
waters or on any land risk which may be incidental to any sea
voyage.” Warehouse risks, combined with voyage and other
marine risks, are considered as part of marine insurance policies
E in India. In the present case, the first two recitals of the STP
Policy, as well as the warehouse-to-warehouse transit (Clause 6)
and other stipulations clearly state that the policy covers both
marine and other risks. In fact, the STP describes itself as “OPEN
MARINE INSURANCE CONTRACT”. [Paras 28, 30, 31][250-
F F, G-H; 252-D, G]
2. It is clear that the STP Policy was a marine policy which
comprehensively covered voyage, transit, transportation and
warehouse perils. As can be seen from the description of the
policy, and other express stipulations, all kinds of risks, including
G marine risks were covered. In fact, different limits for “retail
locations” were provided; further Clause 6 also extended to
warehouse risks. In these circumstances, and having regard to
the law declared by this Court, what is material is not whether
the insurable event occurred during the voyage; rather, the focus
is on the nature of the cover. The cover in this case, clearly and
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 233
(INDIA) PVT. LTD.

unequivocally included marine perils. Therefore, it was a marine A
cover. Condition No. 4 of the SFSP Policy, which constituted a
contract between the parties, precisely contemplated a situation
whereby in the event of occurrence of an insurance risk, if
respondent (or someone on its behalf, like in the present case
the parent company) was entitled to claim under a marine policy,
B
the insurer was not to be held liable. In the light of the above
discussion, on a plain and reasonable construction of Condition
No. 4 of the SFSP policy, that once it is established that
respondent– or on its behalf, in this case, its parent company –
was covered for the risk under a marine policy, (the STP Policy)
and was entitled to claim under it, the appellant insurer’s liability C
was excluded. Therefore, on a plain construction of the terms of
the policy issued by AGCS, it was a marine policy. Therefore,
Condition No. 4 operated to exclude the insurer’s liability. [Paras
32, 33, 36][252-G-H; 253-B-C; 254-D-E]
3. It is not respondent’s position that there exists any D
legislation which compelled it to obtain insurance to cover risks
which it sought to get covered by the SFSP Policy. In this context,
a mere prohibition in Section 25 of the Nationalization Act clearly
did not apply to respondent’s parent company, which conducts
business overseas (and not only in India) and obtain a marine
cover which catered to all risks, (including marine risks as well E
as risks to the goods in transit and when they were warehoused).
Therefore, the prohibition in Section 25 per se does not apply.
Equally, there was no specific provision requiring respondent to
obtain a domestic policy, in the conduct of its business. The
NCDRC, in this Court’s opinion, was clearly wrong in holding F
that Clause 47 applied and it had to be read in the way it was.
[Para 42][257-A-D]
4. A plain reading of Clause 41 of STP Policy shows that
where fire insurance or any insurance which was taken out by the
carrier was available to the beneficiary, i.e., respondent, or ‘would G
be so available’ if the STP did not exist, then a claim under that
policy, i.e., STP Policy would not be maintained and the insurance
would be void to that extent. There is nothing on the record to
show that any carrier or bailee in this case made a claim upon
Alliance or any other insurer to recover possible liability in
H
234 SUPREME COURT REPORTS [2022] 10 S.C.R.

A furtherance of any policy. What has been established from the
record is that the sum of $4.54 million was in fact disbursed to
respondent as admitted liability by AGCS. In the circumstances,
clearly, Condition No. 4 of the SFSP Policy operated and excluded
the appellant-insurer’s liability. [Para 44][258-B-D]
B 5. What is in issue in this present case has been
characterized as “double insurance”, i.e., where an entity seeks
to cover risks for the same or similar incidents through two
different - overlapping policies. There is a wealth of international
jurisprudence on the various nuances of double insurance. Such
double insurance is per se not frowned upon in law. The courts
C however, adopt a careful approach in considering policies which
seeks to exclude liability on the part of the insurer. In the present
case, the facts are that the only claim preferred by respondent
with the insurer on 18.07.2008 was for ` 12.2 crores. There is no
material on the record to show that during the subsistence of the
D policy issued by the parent insurer, it was ever notified by
respondent about the existence of the policy issued by AGCS.
The final report of the surveyors appointed by the appellant insurer
assessed the total loss at ` 11.70 crores. However, it also stated
that as respondent’s parent company had obtained another policy
under which the loss was to be recovered, the claim was
E inadmissible because of Condition No. 4 of the SFSP Policy. It is
also a matter of record that as against the claim of ` 12.2 crores
made upon the insurer in this case, respondent ultimately
received equivalent of over ` 19 crores. A contract of insurance
is and always continues to be one for indemnity of the defined
F loss, no more no less. In the case of specific risks, such as those
arising from loss due to fire, etc., the insured cannot profit and
take advantage by double insurance. [Paras 45, 49, 50][258-D-E;
262-A-D]
Peacock Plywood Pvt. Ltd. v. The Oriental Insurance
G Co. Ltd. [2006] 10 Suppl. SCR 140; United India
Insurance Co. Ltd. v Great Eastern Shipping Co. Ltd.
[2007] 9 SCR 350; Export Credit Guarantee
Corporation of India Ltd. v. Garg Sons International
(2014) 1 SCC 686 : [2013] 1 SCR 336; Vikram
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 235
(INDIA) PVT. LTD.

Greentech India Ltd. v New India Assurance Co. (2009) A
5 SCC 599 : [2009] 5 SCR 437; Sikka Papers Ltd. v.
National Insurance Co. (2009) 7 SCC 777 : [2009] 9
SCR 1088; Impact Funding Solutions Ltd. v. Barrington
Support Services Ltd. [2016] UKSC 57 – relied on.
M/s. Galada Power and Telecommunication Ltd. v. B
United India Insurance Co. Ltd. (2016) 14 SCC 161;
New India Assurance Company Limited and Ors. vs.
Rajeshwar Sharma & Ors. (2019) 2 SCC 671 : [2018]
14 SCR 1181 – referred to.
Case Law Reference C

[2016] 4 SCR 69 referred to Para 14
[2008] 9 SCR 1198 relied on Para 29
[2006] 10 Suppl. SCR 140 relied on Para 30 D
[2007] 9 SCR 350 relied on Para 30
[2013] 1 SCR 336 relied on Para 34
[2009] 5 SCR 437 relied on Para 35
E
[2009] 9 SCR 1088 relied on Para 35
[2018] 14 SCR 1181 referred to Para 35
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2955
of 2022.
F
From the Judgment and Order dated 01.08.2019 of the National
Consumer Dispute Redressal Commission in Consumer Complaint
No.213 of 2011.
A. K. De, Ms. Ananya De, Zahid Ali, Pramit Saxena, Advs. for
the Appellant. G

Joy Basu, Sr. Adv., Ms. Surekha Raman, Akhil A. Roy, Kanak
Ghosh, M/s K J John & Co., Advs. for the Respondent.

H
236 SUPREME COURT REPORTS [2022] 10 S.C.R.

A The Judgment of the Court was delivered by
S. RAVINDRA BHAT, J.
1. This appeal questions an order of the National Consumer
Disputes Redressal Commission,1 (hereinafter, “NCDRC”) which allowed
B the insurance claim of Levi Strauss (India) Pvt. Ltd. (hereinafter, “Levi
/ insured / respondent”). Prior to this order, United India Insurance Co.
Ltd. (hereinafter, “insurer / appellant”) had repudiated the policy issued
to Levi.
Facts
C 2. The insurer issued to Levi a Standard Fire & Special Perils
Policy (hereinafter, “SFSP Policy”), for the period of 01.01.2007 to
31.12.2007. This policy covered Levi’s stocks while in storage for the
sum of ` 30 crores. Levi obtained another SFSP Policy for the period of
01.01.2008 to 31.12.2008 on similar terms. Meanwhile, the parent
company of Levi (i.e., Levi Strauss & Co.) had obtained a global policy
D
from Allianz Global Corporate & Specialty (hereinafter, “Allianz”) for
the period of 01.05.2008 to 30.04.2009, covering stocks of all its
subsidiaries, including Levi. The coverage through this stock throughout
policy (hereinafter, “STP Policy” or “foreign policy”) was for $10 million
in any one vessel or conveyance, and $50 million in any one location.
E The parent company also got another “all risks” policy (hereinafter, “AR
Policy”) issued by Allianz for the same period i.e., from 01.05.2008 to
01.05.2009 covering the stocks of its subsidiaries throughout the world
being commercial lines policy. The limit of liability of the AR Policy was
up to $ 100 million.
F 3. During subsistence of all these policies, on 13.07.2008, a fire
broke out in one of the warehouses containing Levi’s stocks. On
18.07.2008, Levi claimed ` 12.20 crores from the insurer. The claim
form furnished to the insurer on that date valued extent of loss to be
slightly higher at ` 12.5 crores. However, on the instructions of the global
insurer of the parent company, the Surveyor & Loss Assessor Mr. K.P.
G Sen submitted a status report on 28.07.2008 provisionally assessing the
loss at a higher figure of ` 14.30 crores. The insurer i.e., the appellant
appointed its professional surveyor, Professional Surveyors and Loss
Adjusters Pvt. Ltd., for an assessment. The surveyor submitted the final
1
H C.C. No. 213/2011, dated 01.08.2019.
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 237
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

Survey Report dated 08.08.2009 assessing the net loss at ` 11.34 crores. A
The insurer’s report recommended that it was not liable for the claim in
view of Condition No. 4 in the SFSP Policy due to the policies issued by
Allianz.
4. After considering the materials including Survey Report and
the conditions of the policies, the insurer repudiated Levi’s claim on B
11.09.2009. The repudiation letter stated as follows:
“The affected stocks in the present claim, at the hands of the
logistics provider would squarely fall within the scope of the
aforesaid Marine cover, being in storage in the course of
movement to retail locations. C
Condition No.4 of the Fire Policy issued by us reads as under:-
“4. This insurance does not cover any loss or damage to
property which, at the time of the happening of such loss
or damage is insured by or would, but for the existence of
this policy, be insured by any marine policy or policies D
except in respect of any excess beyond the amount which
would have been payable under the marine policy or
policies had this insurance not been effected.”
The Fire Policy thus excludes liability for such loss payable
under marine policy, had the Fire Policy not been effected. E
In view of coverage under the Companies Insurance Policy
being a marine cover, Condition No.4 of the Fire Policy is
attracted and you have to recover the loss from the marine
policy.
F
In fact Clause 47 of the marine policy stipulates that “where
the Assured....
Are obligated by legislation or otherwise to arrange insurance
locality, they shall continue to have the full benefits of these
insurance in respect to difference in perils insured:....”
G
Therefore, Clause 47 rather than excluding liability in such
cases of local Policy being available, agrees to pay where
loss is not payable under such local policy. The aforesaid
clause is thus intended to operate even in respect of property
required to be insured locally, to the extent that the local policy
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238 SUPREME COURT REPORTS [2022] 10 S.C.R.

A may not apply. In this case since the Fire Policy excludes
liability where there is a marine policy, it is a situation
contemplated by Clause 47 and therefore marine policy cannot
refuse to answer the claim.
Accordingly, the Companies Insurance Policy being
B applicable to the affected stocks and there is nothing to
indicate that the extent of liability for insurer thereunder would
be less than the loss suffered, we have no liability under the
fire Policy issued by us.
We therefore regret our inability entertain the claim.”
C The Complaint and Proceedings before NCDRC
5. Levi approached NCDRC with its complaint under Sections 21
and 22 of the Consumer Protection Act, 1986 (hereinafter, “Act”). It
alleged that in view of Section 25 of the General Insurance Business
(Nationalization) Act, 1972 (hereinafter, “Nationalization Act”) it was
D obligated to obtain a policy issued by a domestic insurer to cover various
risks, and that as a consequence, the condition in Clause 47 of the STP
Policy (which guaranteed coverage of the foreign policy in the event
that the insured was obliged to seek domestic policy) was met.
6. It was further argued that the SFSP policy was to cover loss
E exclusive of $50 million inventory, which was the limit indicated in the
STP Policy. Levi alleged that claim repudiation on the ground that the
risk was covered by the global insurance policies (the STP Policy included)
was contrary to Clause 41 (on ‘other insurance clauses’) of the STP
Policy. In fact, Levi also argued that Clause 41 provided that if any fire
F insurance was specifically available to it, the STP Policy would be void
to the extent of such being available.
7. The insurer’s defence was that the SFSP Policy did not cover
any loss or damage to the property which at the time of the happening of
such loss or damage was insured, and which, but for the existence of the
SFSP Policy, was insured by any marine policy or policies except in
G
respect of any excess beyond the amount which would have been payable
under such marine policy. The insurer argued the fire policy issued by it,
therefore excluded liability in respect of property covered by marine
policy. The further argument was that in Condition No. 4 of the SFSP
Policy, coverage under the marine policy i.e., the STP policy, was
H excluded. It was submitted that Levi could (and did) recover loss from
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 239
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

the STP Policy. In this regard it was argued that Clause 47 of the STP A
Policy would continue to cover the insured if the local laws or other
conditions obligated the insured (i.e., Levi) to arrange insurance locally.
In the present case, it was submitted that Levi was not obliged to secure
a domestic policy.
The Impugned Order B
8. The impugned order allowed Levi’s complaint. The NCDRC
did not finally decide whether the STP Policy was a marine policy. It
held, on a consideration of Clause 47 of the STP Policy, that to the
extent of the insured risk being covered by the domestic policy, coverage
by the STP Policy stood excluded. The impugned order was based on C
the reasoning that there was difference in the perils insured and the
conditions and/or limits of liability under the domestic policy and the STP
Policy. Therefore, the loss of profit which Levi would have earned on
sale of the damaged/destroyed cost was payable to it by Allianz, whereas
the loss suffered by Levi to the extent of the cost of those goods would
be reimbursable under the domestic policy issued by the insurer. After D
noting that Levi had received $4.54 million (which, when converted into
Indian currency, worked out to be ` 19.52 crores), the claim was allowed
to the extent of ` 1.78 crores.
Contentions of the Parties
E
9. Mr. A.K. De, learned counsel appearing for the insurer argued
that on a reading of the STP Policy issued by Allianz, fire risk in question
was covered by virtue of the STP Policy being applicable whilst in transit
and/or in store or elsewhere, including whilst at retail locations. It was
argued that the impugned order erroneously interpreted Condition No. 4
of the SFSP Policy issued by it (i.e., insurer) and Clause 47 of the STP F
Policy (issued by Allianz) to hold that the loss caused to the goods was
covered by the SFSP Policy, and loss of earnings of Levi was covered
by the STP Policy. It was argued that there was no basis either in the
pleadings or in the material on record to bear out this distinction.
10. It was pointed out that the NCDRC completely overlooked G
the fact that in the claim form dated 18.07.2008, Levi specifically alleged
that it suffered a loss of ¹ 12.4 crores, and against this, received $4.54
million (equivalent to ¹ 19.52 crores) from Allianz. Clearly, on its own
showing, Levi collected far more than the actual loss admitted by it. It
was also argued that the NCDRC erred in not considering the facts of
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240 SUPREME COURT REPORTS [2022] 10 S.C.R.

A the case and in upholding Levi’s argument that the STP Policy covered
the loss sustained by virtue of loss of profit in addition to the cost of
goods destroyed, and that the SFSP Policy covered only loss. It was
argued that the loss suffered or included was a composite one which
could not be bifurcated in the manner that NCDRC was persuaded to,
at the behest of Levi.
B
11. Mr. Joy Basu, learned senior counsel for Levi argued that by
virtue of Clause 47 of the STP issued by Allianz, the findings of the
NCDRC were justly warranted. It was urged that the primary obligation
by law to arrange insurance locally i.e., through a domestic insurer,
reflected the statutory mandate which arose in this case by virtue of
C Section 2(c)(b) of the Insurance Act, 1938 (hereinafter, “Act”) and
Section 25 of the Nationalization Act. It was also urged that arguendo,
if it were to be held that there was no legal obligation, nevertheless,
Clause 47 contemplated other obligations by use of the term “or
otherwise”. In the present case, Levi was under a contractual obligation
D – in addition to its obligation under Section 25 – to cover its risk under a
domestic policy. In such an event, by the virtue of Clause 47, the primary
liability towards the insured risk lay with the domestic insurer, i.e., the
appellant.
12. It is submitted that if such a domestic policy had not been
E availed, there would’ve been non-compliance of Clause 47 of the STP
Policy which would have entitled Allianz to repudiate any claim if and
when made by the parent company of Levi. It was further argued that
Clause 47 of the STP Policy had to be read harmoniously with Condition
No. 4 of the SFSP Policy. The coverage under both policies was
envisioned to be mutually exclusive.
F
13. It was argued next that by virtue of Clause 47 of the STP
Policy, the fire incident cast liability upon the appellant insurer, and did
not result in repudiation of the SFSP Policy. It was submitted in this
regard that the SFSP Policy contained specific exclusions. Clause 9 of
the General Exclusion condition was relied upon to show that specific
G kinds of profit or earnings were excluded i.e., loss of profit / opportunity
cost as being not payable under the domestic policy. Consequently, all in
direct losses stood excluded. Such a specific condition did not rule out
other kinds of loss of profits. It was urged that the primary aim or purpose
of the SFSP Policy was to cover all manner of losses arising out of
H insurable incidents of different kinds. In this case that was fire; the only
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 241
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

amount payable under the SFSP Policy was relatable to loss. Undoubtedly, A
the SFSP Policy expressly disassociated itself from loss other than
manufacturing as a result of fire. That was covered by the STP Policy.
Consequently, there was no overlap between the claims under the two
policies.
14. It was argued that the insurer in its repudiation letter dated B
11.09.2009 and 29.01.2010 specifically took a position with respect to
liability, by holding that Clause 47 was not intended to operate in respect
of the property. It was therefore argued that the insurer was liable to the
extent of the local policy applicable. Learned Counsel relied upon the
decision of M/s. Galada Power and Telecommunication Ltd. v. United
India Insurance Co. Ltd2 to submit that the insurer could not be allowed C
to travel beyond the grounds on which the claim was repudiated by it.
Therefore, the appellant could not be allowed to resist the claim on the
ground that it was payable under the AR Policy, even if it was not payable
under the STP Policy issued by Allianz.
15. Learned senior counsel urged that it was only after attaining D
full clarity on the aspects of difference in conditions with regard to profit
element and manufacturing cost, and affording the insurer an opportunity
to dispute and question the same, did the NCDRC pass the impugned
order, which assessed the loss. It was argued that first, the NCDRC
took the figures in terms of report of the Domestic Surveyor appointed E
by it, who assessed gross cost of goods at ` 12.59 crores. A sum of
` 88.57 lakhs was deducted from that for seconds goods (after washing
and drying); and cost of stock impacted by fire was assessed @ ` 11.70
crores. Salvage of ` 36 lakhs was assessed by the Domestic Surveyor.
It was deducted, bringing the net loss to ` 11.34 crores. The NCDRC
noted that Levi claimed ` 9.08 crore in its complaint. F

16. To reconcile the figures, NCDRC noticed the affidavit of Kevin
Heston Whelan and the Final Survey Report of the Foreign Surveyor,
which found that the Foreign Surveyor assessed salvage at ` 2.6 crores,
i.e., higher than that assessed by the Domestic Surveyor. If this salvage
amount is deducted from the figure of ` 11.70 crores instead, then the G
figure of ` 9.1 crores was payable to Levi by the insurer (after deduction
of policy excess of ` 10,000/-). It was urged that in the alternative,
NCDRC also assessed insurer’s liability on the basis of assessment by
the Global Insurer’s surveyor, which ultimately worked out to a total
2
(2016) 14 SCC 161. H
242 SUPREME COURT REPORTS [2022] 10 S.C.R.

A figure of ` 27 crores. After deducting the sum of ` 19.52 crores, the
balance i.e., ` 7.48 crores was held payable by the insurer.
17. Counsel lastly urged that if the insurer’s interpretation of the
SFSP policy, as well as Clause 47 of the STP policy were to be accepted,
the result would be anomalous inasmuch as the SFSP policy would in
B effect result in no coverage. In such case, the insurer would have
collected the premia (which it undoubtedly did) without any liability at
all.
The Provisions of Law
18. The first issue involved before the NCDRC was whether the
C STP Policy was a marine policy. The NCDRC considered the stipulations
in the policy, having regard to Condition No. 4 in the SFSP Policy.
However, it did not return any positive finding that the STP Policy was a
marine policy. Since the parties have joined issues on this aspect, and
made submissions, the issue has to be decided, particularly in the context
D of the Condition No. 4 of the SFSP Policy and provisions of law. It
would therefore, be relevant to examine the provisions of the Marine
Insurance Act, 1963 in addition to other provisions. Section 3 of the Act
defines marine insurance. The expression “marine adventure” is defined
by Section 2(d). Similarly, “maritime peril” referred to in “marine
adventure” is defined in Section 2(e). Those definitions are extracted
E below:
“ Section 2….
(d) “marine adventure” includes any adventure where -
(i) any insurable property is exposed to maritime perils;
F
(ii) the earnings or acquisition of any freight, passage money,
commission, profit or other pecuniary benefit, or the security
for any advances, loans, or disbursements is endangered by
the exposure or insurable property to maritime perils;
(iii) any liability to a third party may be incurred by the owner
G of, or other persons interested in or responsible for, insurable
property by reason of maritime perils;
(e) “maritime perils” means the perils consequent on, or
incidental to, the navigation of the sea, that is to say, perils
of the seas, fire, war perils, pirates, rovers, thieves, captures,
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 243
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

seizures, restraints and detainments of princes and people, A
jettisons, barratry and any other perils which are either of
the like kind or may be designated by the policy..”
19. Section 4 clarifies that a contract of marine insurance may, by
its express terms, or by usage of trade, be extended so as to protect the
assured against losses on inland waters or on any land risk which may B
be incidental to any sea voyage. The provisions of Marine Insurance
Act are therefore subject to the terms of the policy of insurance. Sections
3 and 4 read as follows:
“3. Marine insurance defined.—A contract of marine
insurance is an agreement whereby the insurer undertakes to C
indemnify the assured, in the manner and to the extent thereby
agreed, against marine losses, that is to say, the losses
incidental to marine adventure.
4. Mixed sea and land risks.—
(1) A contract of marine insurance may, by its express terms, D
or by usage of trade, be extended so as to protect the assured
against losses on inland waters or on any land risk which
may be incidental to any sea voyage.
(2) Where a ship in course of building or the launch of a
ship, or any adventure analogous to a marine adventure, is E
covered by a policy in the form of a marine policy, the
provisions of this Act, in so far as applicable, shall apply
thereto, but except as by this section provided, nothing in this
Act shall affect any rule of law applicable to any contract of
insurance other than a contract of marine insurance as by F
this Act defined.
Explanation.—”An adventure analogous to a marine
adventure” includes an adventure where any ship, goods or
other movables are exposed to perils incidental to local or
inland transit.”
G
Section 57 states that where the subject matter insured is
destroyed, or so damaged so as to cease to be a thing of the kind insured,
or where the assured is irretrievably deprived thereof, there is an actual
total loss.
H
244 SUPREME COURT REPORTS [2022] 10 S.C.R.

A 20. It is also relevant to note at this stage that Section 2 (13A) of
the Insurance Act, 1938 too defines “marine insurance” expansively. It
reads as follows:
“(13A) “marine insurance business” means the business of
effecting contracts of insurance upon vessels of any
B description, including cargoes, freights and other interests
which may be legally insured, in or in relation to such vessels,
cargoes and freights, goods, wares, merchandise and property
of whatever description insured for any transit, by land or
water, or both, and whether or not including warehouse risks
or similar risks in addition or as incidental to such transit,
C and includes any other risks customarily included among the
risks insured against in marine insurance policies”
21. It is the consistent argument by Levi that the provisions of the
Nationalization Act obligate it to cover its risks through a domestic policy.
Section 25 of the Nationalization Act, is as follows:
D
“25. Properties in India not to be insured with foreign insurers
except with permission of Central Government.—
(1) No person shall take out or renew any policy of insurance
in respect of any property in India or any ship or other vessel
E or aircraft registered in India with an insurer whose principal
place of business is outside India save with the prior
permission of the Central Government.
(2) If any person contravenes any provision of sub-section
(1), he shall be punishable with imprisonment for a term which
F may extend to one year, or with fine which may extend to one
thousand rupees, or with both.”
Relevant provisions of the STP policy and the SFSP policy
a. STP Policy
22. The relevant provisions of the STP Policy are extracted below:
G
“OPEN MARINE INSURANCE CONTRACT
Issued to
Levi Strauss & Co. (and Majestic Insurance International Ltd.
as a reassured where applicable) and/or subsidiaries and/or
H associated and/or affiliated and/or controlled companies or
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 245
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

corporations as may now exist or may hereafter be formed or A
acquired, any companies or corporations over which the
Assured exercises management control and/or for whom they
have authority to insure. Hereinafter referred to as the Assured
(For account of whom it may concern)
(1) In consideration of premium to be paid at rates to be B
agreed, insurance herein covers all shipments of goods and/
or merchandise of every kind and description, (including,
but not limited to, raw stock, materials, stock and goods in
process, finished goods and packaging materials), machinery,
equipment, spare parts and shipping containers, freight and
all other interests incidental to the Assured’s business, lost or C
not lost, by any conveyance including any connecting
conveyances between ports and/or places throughout the
world, including transhipment
(2) This policy covers continuously while in transit, from the
time of commencement of transit until delivery to ultimate D
destination without limitation of time (except as may be
specifically excluded elsewhere herein) notwithstanding the
Warehouse to Warehouse Clause and Marine Extension
Clauses.
B. This insurance to cover all shipments, whether made by E
the Assured, or its agents, or by others for its account or in
which it may have an insurable interest; also shipments
belonging to others, which the Assured has instructions, or is
under obligation (whether by arrangements, understandings,
agreements or otherwise) or has a right to insure. F
C. To take all insurances attaching hereto during the period
from 1st May, 2008 to 30th April, 2009, both days inclusive,
Local Standard Time, at the place the shipment commences
and, on all goods, and/or merchandise and/or property in
storage at locations insured under this policy. G
**************** ****************
SUBJECT MATTER INSURED:
Goods and/or merchandise and/or cargo of every description
incidental to the Assured’s business as may be declared.
H
246 SUPREME COURT REPORTS [2022] 10 S.C.R.

A Consisting principally of, but not limited to, raw stock,
materials, stock, goods in process, finished goods etc. and
similar property of others for which the Assured is liable and/
or duty and/or freight and/or insurance and/or interest and/
or advances and/or charges.
B Coverage hereunder includes whilst in transit and/or in store
or elsewhere, including whilst at retail locations.
LIMITS
USD 10,000,000 any one vessel and/or conveyance USD
50,000,000 any one location and in the aggregate per annum
C in respect of earthquake (first loss).
But in respect of Retail Locations USD 5,000,000 any one
Retail Location and in the aggregate per annum in respect of
earthquake

D (first loss).
(or equivalent in other currencies).
**************** ****************
6. WAREHOUSE TO WAREHOUSE
E This insurance attaches from the time the goods leave the
warehouse at the place named in the policy or certificate or
declaration for the commencement of the transit and continues
until the goods are delivered to the final warehouse at the
destination named in the policy or certificate or declaration,
or a substituted destination as provided in Clause 7.B
F hereunder.
**************** ****************
41. OTHER INSURANCE CLAUSE
In case the interest hereby insured is covered by other
G insurance (except as hereinafter provided) the loss shall be
collected from the several policies in the order of the date of
their attachment, insurance attaching on the same date to be
deemed simultaneous and to contribute pro rata; provided,
however, that where any fire insurance, or any insurance
(including fire) taken out by any carrier or bailee is available
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 247
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

to the beneficiary of this policy, or would be so available if A
this insurance did not exist, then this insurance shall be void
to the extent that such other insurance is or would have been
available.
It is agreed, nevertheless, that where these Assurers are thus
relieved of liability because of the existence of other B
insurance, these Assurers shall receive and retain the premium
payable under this policy and, in consideration thereof, shall
guarantee the solvency of the companies and/or underwriters
who issued such other insurance and the prompt collection
of the loss hereunder to the same extent (only) as these
Assurers shall have been relieved of liability under the terms C
of this clause, but not exceeding, in any case, the amount
which would have been collectible under this policy if such
other insurance did not exist.
***************** ******************
D
47.ADMITTED INSURANCE-DIFFERENCE IN CONDITIONS
CLAUSE
It is agreed that where the Assured or any of their Associated,
Affiliated or Companies or Partners are obligated by
legislation or otherwise to arrange insurance locally, they E
shall continue to have the full benefit of these insurances in
respect to difference in perils insured, definitions, conditions
and/or limits of liability.”
(b) SFSP Policy
23. The coverage of the policy was as follows: F
“Policy covers various loss or damage caused on account of
fire (excluding destruction or damage caused to the property
insured by:
a) i) its own termination, natural heating or spontaneous
combustion G

ii) its undergoing any heating or drying process.
b) burning of property insured by order of any Public
Authority.
**************** **************** H
248 SUPREME COURT REPORTS [2022] 10 S.C.R.

A General Exclusions
**************** ***************
“9. Loss of earnings, loss by delay, loss of market or other
consequential or indirect loss or damage of any kind or
B description whatever.”
***
Condition No. 4 which is material for the purpose of deciding this
case is extracted below:
C “4. This insurance does not cover any loss or damage to
property which, at the time of the happening of such loss or
damage, it insured by or would, but for the existence of this
policy, be insured by any marine policy or policies had this
insurance not been effected”.
D Analysis and Conclusions
24. The fire incident took place on 13.07.2008. Levi’s goods were
stored in the warehouse of Safexpress. There is no dispute that the fire
incident was reported immediately. On 22.07.2008 and 23.07.2008, the
premises were visited by authorized representative of Kaypsens &
E
McLarens Young International, Surveyor & Loss Assessor for final survey
to value the loss caused by the fire at the premises. They were nominated
by Allianz. Pursuant to that visit, a Status Report dated 28.07.008 was
prepared setting out the details of the accident and losses incurred.
Subsequently the premises were once again inspected on 07.08.2008
F and 08.08.2008, pursuant to which a Second Status Report was made
on 11.08.2008. In the meanwhile, on receipt of the fire accident intimation
the insurer appointed M/s Professional Surveyors and Loss Adjusters
Pvt. Ltd. for survey and assessment of loss submitted their final Survey
Report on 08.08.2009. The surveyor assessed the loss for ` 11.34 crores.
So far as the claim’s admissibility is concerned, the surveyor noticed the
G
two policies issued by Allianz, Clauses 41 and 47 of the STP Policy, and
Condition No. 4 of the SFSP policy, and stated that in its opinion the
insurer “had no liability in respect of the captioned claim, in view of
the Global Marine Policy.” The relevant observations are extracted
below:
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 249
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

XVII ADMISSIBILITY OF THE CLAIM: A
a. The Insured’s Parent Company M/s Levi Strauss & Co.,
has two Insurance Policies, one Companies Marine
policy covering the goods worldwide and while at
locations worldwide for storage, processing or
packaging or otherwise, on First Loss basis for an B
amount of USD 50,000,000 for any one location, as.
per Endorsement No: 2 - Storage/Inventory/Processing
Coverage. Clause 41 - Other Insurance Clause - also
provides for pro-rata contribution along with all other
insurance-policies. This policy has been taken from
Allianz Global Risks. C

b. The other Policy taken by the Parent is a Commercial
Lines Policy from Allianz Global Risks US Insurance
Company. This policy also covers goods worldwide upto
a loss limit of USD 100,000,000/= per location. This
Policy also has a Standard Fire Bay Provisions D
Endorsement which mentions “Pro-rata Liability”.
c. According to Condilion No: 4 of the SFSP Policy issued
by UIC, “The Insurance does nol cover any loss or
damage to property which, at the time of happening of
such loss or damage, is insured by or would but for the E
existence of this policy, be insured by any marine policy
or policies except in respect of any excess beyond the
amount which would have been payable under the
marine policy or policies’ had this, insurance not been
effected.” F
d. Therefore, in our opinion, UIIC has no. lability in respect
of the captioned claim, in view of the Global Marine
Policy.”
Eventually, the insurer, on 11.09.2009, repudiated the claim. In the
meanwhile, even before that event, on 18.07.2009, the insurer had G
intimated to Levi that by virtue of Condition No. 4 of the SFSP policy,
since the risk was covered by another policy, that fact had to be
considered.
25. The complaint before the NCDRC claimed the sum of ¹ 9.08
crores along with interest @ 18% calculated from the date of claim to H
250 SUPREME COURT REPORTS [2022] 10 S.C.R.

A the date of payment. It was in these proceedings, for the first time, that
Levi disclosed that it received amounts in satisfaction of its claims under
the STP Policy issued by Allianz. It was submitted that the position with
regard to the losses incurred by Levi as on date of the complaint was
that the total inventory loss was $ 7.01 million. Under the STP Policy
issued by Allianz to Levi’s parent company, US $4.54 million had already
B
been paid to the parent company. Levi claimed that this was amount in
excess to the claim made by it under the SFSP Policy on “Difference in
Conditions” basis. Levi, therefore, claimed it was entitled to receive $
1.97 million (~ ` 9.08 crores) under the SFSP Policy plus interest for
inventory losses caused by the fire. The insurer resisted, arguing that by
C virtue of a co-joint reading of Condition No. 4 of the SFSP Policy, and
Clause 47 of the STP Policy, it was not liable.
26. NCDRC, in its impugned order, repelled the insurer’s
contention, holding firstly that Condition No. 4 could operate only if the
other policy (i.e., one issued by Allianz) was a marine policy. The NCDRC
D did not decide this issue. The impugned order next held that by reason of
Section 25 of the Nationalization Act, Levi was obligated to cover its
risks through a domestic policy and therefore the condition in Clause 47
of the STP Policy, it was entitled to the full benefit of the SFSP Policy. It
was lastly held that the claimant was entitled to the amount of loss
constituting the difference between the pay out by Allianz and the value
E of the goods.
Was the STP Policy a Marine Policy?
27. In the light of the above facts, the first question which this
Court has to decide is regarding the nature of the STP Policy issued by
F Allianz. The insurer asserts that it was a marine policy. However, the
NCDRC has held otherwise.
28. This Court has, in a previous section of this judgment, noted
relevant provisions of the Marine Insurance Act. The expression “marine
adventure” is defined by Section 2(d). Similarly, “maritime peril” referred
G to in “marine adventure” is defined in Section 2(e). Section 3 defines a
marine policy; Section 4, which is relevant for this case, deals with mixed
marine and land risks. It inter alia, enables coverage – through “express
terms, or by usage of trade” – extension of marine policies “so as to
protect the assured against losses on inland waters or on any land
risk which may be incidental to any sea voyage.”
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 251
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

29. In New India Assurance Co. Ltd. vs. Hira Lal Ramesh Chand A
& Ors3 this court described a marine policy as follows:
“14. Marine Insurance is a contract whereby the insurer
undertakes to indemnify the assured in the manner and to the
extent thereby agreed, against marine losses, that is to say
losses incident to marine adventure. The instrument in which B
the contract of marine insurance is generally embodied is
called a policy. The thing or property insured is called the
subject matter of insurance and the assured’s interest in that
subject matter is called his insurable interest. That which is
insured against is the loss arising from maritime perils and
casualties, and these are called the perils insured against or C
the losses covered by the policy. When the insurer’s liability
commences under the contract, the policy is said to attach;
or in other words, the risk is said to attach or to begin to run
from that time. A marine insurance cover applies to the
shipment and if the shipment reaches the destination, in a D
safe and sound condition, no claim can arise against the
insurer. A contract of marine insurance may, however, by its
express terms or by trade usage, be extended so as to protect
the assured against losses on inland waters or against any
land risk which may be incidental to a sea voyage. (Vide
Sections 3 & 4 of Marine Insurance Act, 1963 and Halsbury’s E
Law of England, 4th Edition, Vol.25 paras 216 and 218).
(emphasis supplied)
30. Warehouse risks, combined with voyage and other marine
risks, are considered as part of marine insurance policies in India. This F
has been held in Peacock Plywood Pvt. Ltd. v. The Oriental Insurance
Co. Ltd4; United India Insurance Co. Ltd. v Great Eastern Shipping
Co. Ltd 5. In Hira Lal (supra), this Court, after considering Section 4 of
the Marine Insurance Act, held as follows:
“17. In view of the insurance cover extending `warehouse to G
warehouse’ the consignments are covered by insurance not
only during the sea journey, but beyond as stated in the policy.
3
2008 (10) SCC 626.
4
2006 Supp (10) SCR 140.
5
2007 (9) SCR 350.
H
252 SUPREME COURT REPORTS [2022] 10 S.C.R.

A Therefore, the contention of the insurer that the insurance
cover is available only in regard to maritime perils that is
perils relating to or incidental to the navigation of the sea
may not be correct. Having regard to Section 4 of the Marine
Insurance Act and the terms of the policy undertaking
insurance cover against wider risks, the policy of insurance
B
would cover the loss not only while goods or navigating the
sea but also any loss or damage during transit from the time
it leaves the consignor ’s warehouse till it reaches the
consignee’s warehouse. The cover against risks will however
cease on the expiry of 60 days after discharge of the
C consignment from the vessel at the final port of discharge, if
the goods do not reach the consignee’s warehouse or place
of storage for any reason within the said 60 days.”
31. In the present case, the first two recitals of the STP Policy, as
well as the warehouse-to-warehouse transit (Clause 6) and other
D stipulations clearly state that the policy covers both marine and other
risks. An express condition is that
“Coverage hereunder includes whilst in transit and/or in store
or elsewhere, including whilst at retail locations.
------ ------ ------
E
LIMITS
USD 10,000,000 any one vessel and/or conveyance USD
50,000,000 any one location and in the aggregate per annum
in respect of earthquake (first loss).
F
But in respect of Retail Locations USD 5,000,000 any one
Retail Location and in the aggregate per annum in respect of
earthquake.”
In fact, the STP describes itself as “OPEN MARINE
INSURANCE CONTRACT”.
G
32. In view of these materials, it is clear that the STP Policy was
a marine policy which comprehensively covered voyage, transit,
transportation and warehouse perils. As can be seen from the description
of the policy, and other express stipulations, all kinds of risks, including
marine risks were covered. In fact, different limits for “retail locations”
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 253
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

were provided; further Clause 6 also extended to warehouse risks. In A
these circumstances, and having regard to the law declared by this Court,
what is material is not whether the insurable event occurred during the
voyage; rather, the focus is on the nature of the cover. The cover in this
case, clearly and unequivocally included marine perils. Therefore, it
was a marine cover.
B
33. Condition No. 4 of the SFSP Policy, which constituted a
contract between the parties, precisely contemplated a situation whereby
in the event of occurrence of an insurance risk, if Levi (or someone on
its behalf, like in the present case the parent company) was entitled to
claim under a marine policy, the insurer was not to be held liable.
C
34. In Export Credit Guarantee Corporation of India Ltd. v.
Garg Sons International6, this Court held:
“The insured cannot claim anything more than what is covered
by the insurance policy. The terms of the contract have to be
construed strictly, without altering the nature of the contract D
as the same may affect the interests of the parties adversely.
The clauses of an insurance policy have to be read as they
are. Consequently, the terms of the insurance policy, that fix
the responsibility of the insurance company must also be read
strictly. The contract must be read as a whole and every attempt
E
should be made to harmonise the terms thereof, keeping in
mind that the Rule of contra proferentem does not apply in
case of commercial contract, for the reason that a Clause in
a commercial contract is bilateral and has mutually been
agreed upon. (Vide Oriental Insurance Co. Ltd. v. Sony
Cheriyan [ (1999) 6 SCC 451], Polymat India (P) Ltd. v. F
National Insurance Co. Ltd. (2005) 9 SCC 174], Sumitomo
Heavy Industries Ltd. v. ONGC Ltd. (2010) 11 SCC 296 and
Rashtriya Ispat Nigam Ltd. v. Dewan Chand Ram Saran (2012)
5 SCC 306)”
35. Similar views about the nature of insurance contracts and the G
principles of their interpretation were expressed in Vikram Greentech
India Ltd v New India Assurance Co. 7 and Sikka Papers Ltd v

6
2014 (1) SCC 686.
7
2009 (5) SCC 599.
H
254 SUPREME COURT REPORTS [2022] 10 S.C.R.

A National Insurance Co8. It has been held recently, in Impact Funding
Solutions Ltd. v. Barrington Support Services Ltd.9 that
“As a matter of general principle, it is well established that if
one party, otherwise liable, wishes to exclude or limit his
liability to the other party, he must do so in clear words; and
B that the contract should be given the meaning it would convey
to a reasonable person having all the background knowledge
which is reasonably available to the person or class of persons
to whom the document is addressed... This applies not only
where the words of exception remove a remedy for breach,
but where they seek to prevent a liability from arising by
C
removing, through a subsidiary provision, part of the benefit
which it appears to have been the purpose of the contract to
provide.”
36. In the light of the above discussion, on a plain and reasonable
construction of Condition No. 4 of the SFSP policy, that once it is
D established that Levi – or on its behalf, in this case, its parent company
– was covered for the risk under a marine policy, (the STP Policy) and
was entitled to claim under it, the appellant insurer’s liability was excluded.
Therefore, on a plain construction of the terms of the policy issued by
Allianz, it was a marine policy. Therefore, Condition No. 4 operated to
E exclude the insurer’s liability.
Was Levi Obligated by Indian Law to Cover its Risks?
37. Clause 47 of the STP Policy issued by Allianz stated that the
assured (i.e., Levi’s parent company) “or any of their Associated,
Affiliated or Companies or Partners are obligated by legislation or
F otherwise to arrange insurance locally”.
38. The second question which arises for consideration is what is
the meaning of the term “obligated by legislation” This expression is an
integral part of Clause 47 of the STP Policy. An overall reading of that
condition bears out the intention of the parties that regardless of whether
G domestic legislation in a particular country mandates the taking out of a
policy issued by local insurer, the global insurer, i.e., Allianz would still
continue to be liable. This is clear from the latter part of the condition,
8
(2009) 7 SCC 777.
9
[2016] UKSC 57. This judgment was followed in New India Assurance Company
H Limited and Ors. vs. Rajeshwar Sharma & Ors. (2019) 2 SCC 671.
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 255
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

“they shall continue to have the full benefit of this insurance in A
reference to the difference in the insured, definitions, conditions
and/or limits of liability.”
39. It is clear that if and only if the insured, i.e., Levi, is obligated
by law, i.e., required to have some form of mandatory insurance by
virtue of express provisions of law that the particular stipulation would B
operate to the extent of ‘difference’, Levi would be entitled to claim
from Alliance. The expression “obligated by law” has to be understood
in the context as mandatory.
40. According to Stroud’s Judicial Dictionary of Words and
Phrases 10: C
“Obligation” is a word of his own nature of a large extent;
but it is commonly taken in the common law, for a bond
containing penalty, with condition for payment of money or
to do or suffer some act or thing, etc. and a bill is most
commonly taken for a single bond without condition. The D
person bound is the “obligor”; the other party is the
“obligee”. See Ryland Vs. Delisle L.R. 3 P.C 17
The word “obligation” primarily means a tie. Legally it was
in origin the binding tie established by what is called a “bond”
as between obligor and obligee. [Watkinson Vs. Hoolington E
(1944) K.B 16, 21 (Scott L.J.)]
“Oblige” :- A person is “obliged” to do a thing when placed
in such circumstances that he can scarcely help it; e.g. a
constable who has been suspended and on whom an inquiry
has been ordered, and who thereupon sends his resignation, F
has been “obliged to resign”, within the rules of a pension
fund (Lapointe Vs. L’Association de Retraite, Montreal [1906]
A.C. 535)”
P. Ramanatha Iyer’s Advanced Law Lexicon11 explains the term:
“”Obligate” means to bring or place under obligation; to G
bring or firmly hold to an act.
“Obligated” means strictly, and in common parlance, to be
bound.
10
Ninth Edition (2016) Vol. II pg. 1691.
11
Sixth Edition, (2019) Vol.3 pg. 3833. H
256 SUPREME COURT REPORTS [2022] 10 S.C.R.

A “Obligatio” denotes not merely the passive duty imposed upon
the obligor but also the relationship between the obligor and
the obligee such as that between debtor and his creditor. It is
that legal relationship subsisting between two persons by
which one is bound to the other for a certain performance.
B “obligatio civilis” means an obligation enforceable by action,
whether it derives its origin from the jus civile, as the
obligation engendered by formal contracts or the obligation
enforceable by bilaterally penal suits, or from such portion
of the jus gentium as has been completely naturalized in the
civil law and protected by all its remedies, such as obligation
C engendered by formless contracts.”
According to Black’s Law Dictionary12:
“Obligation is a legal or moral duty to do or not to do
something”.
D “Legal obligation” has wide and varied meanings. It may refer
to anything that a person is bound to do or forbear from
doing, whether the duty is imposed by law, contract, promise,
social relations, courtesy, kindness or morality.”
41. It is therefore evident from the above discussion that there
E should be a mandate in law or in contract or by contract (which is covered
by the expression “or otherwise”). The argument on behalf of Levi
was that Section 25 prohibits the foreign insurers from taking or bringing
any policy of insurance in respect of any property in India and as a result
it was compelled to take out the SFSP Policy. If the plain meaning of the
F expression “obligated by law” or “obliged by law” is to be understood,
there should be an express requirement in law, which compels the insured
to obtain a policy. There are provisions in specific legislations in this
regard, such as the Motor Vehicles Act, 198813; the Merchant Shipping
Act, 195814; Carriage by Air Act, 197215 and the Public Liability Insurance
Act, 199116, etc. The conditions spelt out in these specific instances
G 12
11th Edition (2019) page 1292
13
Section 146.
14
Section 352; Section 434A and 434B.
15
Section 4A read with Para 50, Chapter VI, Third Schedule to the Act.
16
Section 4 imposes a duty on owners of establishments involved in hazardous
industries, to take out insurance policies.
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 257
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

compel entities and business to obtain specific kinds of insurance policies A
to cover particular risks.
42. In this case, it is not Levi’s position that there exists any
legislation which compelled it to obtain insurance to cover risks which it
sought to get covered by the SFSP Policy. In this context, a mere prohibition
in Section 25 of the Nationalization Act clearly did not apply to Levi’s B
parent company, which conducts business overseas (and not only in India)
and obtain a marine cover which catered to all risks, (including marine
risks as well as risks to the goods in transit and when they were
warehoused). Therefore, the prohibition in Section 25 per se does not
apply. Equally, there was no specific provision requiring Levi to obtain a
domestic policy, in the conduct of its business. The NCDRC, in this C
Court’s opinion, was clearly wrong in holding that Clause 47 applied and
it had to be read in the way it was.
Interpretation of Clause 6 and 41 of STP Policy and Condition
No. 4 of SFSP Policy.
D
43. As concluded in the first section of the analysis of this judgment,
Condition No. 4 of the SFSP Policy clearly excluded the insurer’s liability
in the event Levi could collect amounts under another insurance policy
for the same risk. Clause 6 of the STP Policy as well as the recitals
(noted earlier) point to the fact that a comprehensive overall coverage
was envisioned by Levi’s parent company. That comprehensive risk E
included fire risks at the various warehouses where different subsidiaries,
including Levi (insured in this case) had stored its goods. The surveyors
appointed by Allianz, Mr. K.P. Sen, prepared and submitted two reports.
In the final report, according to the assessment made, two alternatives
were provided. In the first one, the value of the goods was affected by F
the fire incidents after deduction for 2.5% for obsolete desktops and the
value of net realization of salvage at actuals was fixed at ¹ 11.10 crores.
According to the second alternative, which was on sale cost basis, again,
after taking 2.5% for obsolete/dead stocks and subtracting net realization
of salvage value at actual cost, the next cost at net sale basis was assessed
at ¹ 15.30 crores. Initially, the assessment (in terms of the documents G
placed on the record) was $3.60 million as on 19.08.2008. This report
took note of a plausible claim by Levi upon the insurer. The subsequent
supplementary report which provided global claims services to Levi’s
parent company dated 03.10.2008 indicated that “based on present
information”, it stated that the loss reserves should be increased to H
258 SUPREME COURT REPORTS [2022] 10 S.C.R.

A $4.5 million. It further stated that upon review, MYI calculation of
inventory at wholesale selling price loss salvage value was $6.85 million.
In these circumstances, finally, the sum of $ 4.54 million was paid out ($
3 million plus ~$ 1.54 million).
44. A plain reading of Clause 41 of STP Policy shows that where
B fire insurance or any insurance which was taken out by the carrier was
available to the beneficiary, i.e., Levi, or ‘would be so available’ if the
STP did not exist, then a claim under that policy, i.e., STP Policy would
not be maintained and the insurance would be void to that extent. There
is nothing on the record to show that any carrier or bailee in this case
made a claim upon Alliance or any other insurer to recover possible
C liability in furtherance of any policy. What has been established from the
record is that the sum of $4.54 million was in fact disbursed to Levi as
admitted liability by Allianz. In the circumstances, clearly, Condition No.
4 of the SFSP Policy operated and excluded the appellant-insurer’s liability.
45. What is in issue in this present case has been characterized as
D “double insurance”, i.e., where an entity seeks to cover risks for the
same or similar incidents through two different - overlapping policies.
There is a wealth of international jurisprudence on the various nuances
of double insurance. Such double insurance is per se not frowned upon
in law. The courts however, adopt a careful approach in considering
E policies which seeks to exclude liability on the part of the insurer.
46. The celebrated commentary on insurance, Colinvaux’s Law
of Insurance, has this to say on double insurance - 17:
Pg. 12-130: General definition. Double insurance arises
where two or more independent insurers cover the same interest
F against the same risk, that is, there is a common liability18.
As a matter of principle, it is clear that there cannot be double
insurance unless there is in existence more than on valid policy
attaching to the same interest. There is, for example, no double
17
G Colinvaux’s Law of Insurance 12 th edition Sweet & Maxwell (2019) Ed. Robert
Merkin
18
See generally, Albion Insurance Co Ltd v GIO (NSW) (1969) 121 C.L.R. 342. In
Equity Syndicate Management Ltd v Glaxosmithkline Plc [2015] EWHC 2163 (Comm);
[2016] Lloyd’s Rep. I.R. 155 a motor policy which by its terms covered a claim by an
employee driving a hired car was rectified to accord with the parties’ common intention,
so that the risk was borne solely by a policy designed to cover such risks and there was
H no double insurance.
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 259
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

insurance where one policy is substituted for another19. For A
there to be double insurance the policies need not be identical
but may cover different subjects and different risks as well as
the risk covered in common, but what is essential is that a
common liability to indemnify the same assured in respect of
a specified loss must exist. The loss which more than one
B
insurer is liable to make good must be identical, so that
payment of a claim by one insurer will provide a co-insurer
with a defence to a like claim against it. In other words, two
or more insurers must have insured the same assured in respect
of the same risk on the same interest in the same subject-
matter.20 C
Pg. 12-131: Same assured and same interest Double
insurance arises only where both policies cover the subject-
matter which has been the subject of the loss. This is essentially
a matter of construction of each of the policies. Thus, in Baag
v Economic Insurance Co Ltd21 it was held that a lorry-load D
of cigarettes insured under an all-risks transit policy did not
form part of the assured’s stock in trade at a factory at which
the load had been temporarily stored, so that the fire insurers
of the factory were not liable to contribute towards payments
made by the all-risks insurers on the destruction of the factory
and the load by fire.” E

Pg. 12-132: Same assured and same interest. Generally,
double insurance arises where the same assured possesses
two overlapping policies, although there could potentially be
double insurance where two assureds with the same interest
in the subject-matter insured that interest. It is more likely, F
however, that different assureds will have different interests
in the insured subject-matter, and there is no double insurance
19
Union Marine Insurance Co Ltd v Martin (1866) 35 L.J.C. P. 181. See also QBE
Insurance (International) Ltd v Allianz Australia Ltd [2018] NZCA 239, where the
second policy was held to incept on the termination of the first, so that there was no
overlapping cover.
G
20
Portavon Cinema Co Ltd v Price & Century Insurance Co Ltd [1939] 4 All E.R. 601;
North British & Mercantile Insurance Co v London, Liverpool & Globe Insurance Co
(1877) 5 Ch. D. 569. See also: Co-operative Bulk Handling Ltd v SGIC (WA) (1990) 6
ANZ Ins Cas 60-992; Boys v Insurance General Manager [1980] 1 N.Z.L.R. 87.
21
[1954] 2 Lloyd’s Rep. 581. Cf. QBE Insurance (Australia) Ltd v Westfarmers General
Insurance Ltd [2010] N.S.W.SC. 855. H
260 SUPREME COURT REPORTS [2022] 10 S.C.R.

A in that situation because each assured is insuring his own
interest. Typical illustrations include concurrent interests in
land held by vendor and purchaser,22 landlord and tenant,23
employer and contractor, or mortgagor and mortgagee,24 and
concurrent interests in goods held by bailor and bailee. 25
Equally, there is no double insurance between a primary
B
policy and a subsequent excess of loss policy26 or between a
primary policy and an increased value policy.27"
47. Similarly, Mac Gillvray on Insurance Law28 has this to say:
“There is high appellate authority 29 for preferring the
C reasoning in the Eagle Star case to that in Legal & General
on the ground that an insurer should be able to rely on policy
defences to a claim by the assured in answer to a claim for
contribution. It is very respectfully submitted that Legal &
General should prevail. If an insurer can defeat a claim for
D contribution by reliance upon defences to his liability to the
assured arising after the loss, this will strike at the foundations
of the doctrine. First, once the first insurer has paid a complete
indemnity to the assured, the second insurer would be entitled
to decline liability to the assured on the ground that he has

E
22
Davjoyda Estates Pty Ltd v National Insurance Co of NZ Ltd (1965) 69 S.R.
(NSW) 381.
23
Portavon Cinema v Price [1939] All E.R. 601.
24
Western Australian Bank v royal Insurance Co (1908) 5 C.L.R. 533.
25
Dickson Watch & Jewellery Co Ltd v Mow Tai Insurance & Reinsurance Co
F Ltd [1985] 1 H.K.C. 505
26
Pacific Employers Insurance Co v Non-Marine Underwriters 71 D.L.R (4th)
731 (1990); Steelclad Ltd v Iron Trades Mutual Insurance Co Ltd 1984 S.L.T.
304.
27
Boag v Standard Marine Insurance [1937] 2 K.B. 113.
28
Mac Gillivray on Insurance Law Centenary Edition 2012 Sweet and Maxwell
G
Page 759 (24-027)
29
Bolton MBC v. Municipal Mutual Insurance Ltd. [2007] Lloyd’s Rep IR 173
at [37] per Longmore L.J. Obiter, stating that precedent did not oblige the CA
to follow Legal & General Assurance Society v. Drake insurance Co. [1992]
QB 887
H
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS 261
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]

been fully indemnified30, although the payment is the basis of A
the equity between the two insurers. Secondly, it would be
possible for the second insurer to defeat the claim for
contribution by agreeing with the assured to cancel the second
policy after the first insurer had paid a complete indemnity,
contrary to the decision in O’Kane v Jones, The Martin P31"
B
48. In National Employers Mutual General Insurance
Association v Haydon32, ‘S’, a firm of solicitors was insured by ‘P’
under a policy, renewable annually; that policy excluded indemnification
where the claimant was doubly insured. It however covered claims arising
after expiration, if due notice was given of the likelihood of the claim
C
before the policy expired. The claimant was later insured by another
insurer under a policy with similar double insurance provisions and
excluding cover for prior claims. S gave notice to P of a future claim in
due time. P claimed a contribution from D, on the ground that this claim
was a case of double insurance. It was held that
“Where each of two insurers agrees to an indemnity payable D
under one policy, unless it is payable under another policy,
neither insurer can prove that he is not liable; therefore both
insurers are liable and there is a true event of double
insurance. In my judgment, however, the principle of Weddell’s
case as to the sharing of liability only applies if an indemnity E
is payable under both policies. A clause of express absolution
from one policy by reference to another only applies if there
is another policy which indemnifies against the same risk. If
this were not the case, an unfortunate insured could fail to
recover against the first insurer because of the existence of
the second policy, but fail to recover under the second policy F

30
Austin v. Zurich General Accident & Liability Insurance Co. [1945] KB 250
at 258; AMP Workers’ Compensation v. QBE Insurance [2001] NSWCA 267,
stating – “The right of contribution cannot depend upon the continued
existence of co-ordinate liabilities for the same demand because the very G
payment which calls the right into existence will have put an end to the
liablility of the other insurance.”
31
O’Kane v. Jones, the Martin P [2004] 1 Lloyd’s Rep. 389, where the court
held it was bound by precedent to follow Legal & General Assurance Society
v. Drake Insurance Co. [1992] QB 887 at [201]-[202].
32
[1980] 2 Lloyd’s Rep. 149 H
262 SUPREME COURT REPORTS [2022] 10 S.C.R.

A because the risk had not been accepted by the second insurer.
If only one insurer is liable the insured can claim the whole.”
49. In the present case, the facts are that the only claim preferred
by Levi with the insurer on 18.07.2008 was for ¹ 12.2 crores. There is
no material on the record to show that during the subsistence of the
B policy issued by the parent insurer, it was ever notified by Levi about the
existence of the policy issued by Allianz. The final report of the surveyors
appointed by the appellant insurer assessed the total loss at ¹ 11.70 crores.
However, it also stated that as Levi’s parent company had obtained
another policy under which the loss was to be recovered, the claim was
inadmissible because of Condition No. 4 of the SFSP Policy. It is also a
C matter of record that as against the claim of ¹ 12.2 crores made upon the
insurer in this case, Levi ultimately received equivalent of over ¹ 19
crores.
50. A contract of insurance is and always continues to be one for
indemnity of the defined loss, no more no less. In the case of specific
D risks, such as those arising from loss due to fire, etc., the insured cannot
profit and take advantage by double insurance. Long ago, Brett LJ
in Castettion v Preston33 said that:
“The contract of insurance … is a contract of indemnity, …,
and this contract means that the assured, in the case of a loss
E …, shall be fully indemnified, but shall never be more than
fully indemnified.”
51. Levi could not have claimed more than what it did, and not in
any case, more than what it received from Allianz. Its endeavour to
distinguish between the STP Policy and the SFSP Policy, i.e., that the
former covered loss of profits, and the latter, the value of manufactured
F goods, is not borne out on an interpretation of the terms of the two
policies. Even the facts here clearly show that Levi received substantial
amounts towards the sale price of its damaged goods, over and above
the manufacturing costs.
52. In view of the foregoing discussion, the appeal has to succeed;
G the impugned order of NCDRC is hereby set aside. Levi’s complaint is
dismissed; consequently, the appeal is allowed.

Ankit Gyan Appeal allowed.
(Assisted by : Mahendra Yadav, LCRA)

H 33
(1833) 11 QBD 380.