# UNITED INDIA INSURANCE CO. LTD v. LEVIS STRAUSS (INDIA) PVT. LTD

- **Citation:** [2022] 10 S.C.R. 231
- **Court:** Supreme Court of India
- **Decided:** 2022-05-02
- **Case number:** Civil Appeal No. 2955 of 2022
- **Bench:** Uday Umesh Lalit, S. Ravindra Bhat, Pamidighantam Sri Narasimha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/united-india-insurance-co-ltd-v-levis-strauss-india-pvt-ltd-35528
- **Pages:** 32

## Headnote

Insurance - Standard Fire & Special Perils Policy (SFSP
Policy) - STP Policy - Insurance by different Insurers - When One
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
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
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
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
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,
[2022] 10 S.C.R. 231
231
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[2022] 10 S.C.R.
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)
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.
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
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
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][250F, 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
marine risks were covered. In fact, different limits for "retail
locations" were provided; further Clause 6 also extended to
warehouse risks. In these circumst

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UNITED INDIA INSURANCE CO. LTD.
v.
LEVIS STRAUSS (INDIA) PVT. LTD.
(Civil Appeal No. 2955 of 2022)
MAY 02, 2022
[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
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
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
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
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
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,
[2022] 10 S.C.R. 231
231
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SUPREME COURT REPORTS
[2022] 10 S.C.R.
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)
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.
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
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
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][250F, 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
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
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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) was entitled to claim under a marine policy,
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
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
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
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
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
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
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS
(INDIA) PVT. LTD.
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SUPREME COURT REPORTS
[2022] 10 S.C.R.
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]
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
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
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
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
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
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
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Greentech India Ltd. v New India Assurance Co. (2009)
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.
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
[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
[2007] 9 SCR 350
relied on
Para 30
[2013] 1 SCR 336
relied on
Para 34
[2009] 5 SCR 437
relied on
Para 35
[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.
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.
Joy Basu, Sr. Adv., Ms. Surekha Raman, Akhil A. Roy, Kanak
Ghosh, M/s K J John & Co., Advs. for the Respondent.
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS
(INDIA) PVT. LTD.
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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
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
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
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.
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.
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.
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 C.C. No. 213/2011, dated 01.08.2019.
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Survey Report dated 08.08.2009 assessing the net loss at ` 11.34 crores.
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
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.
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
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.
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.
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:...."
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
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]
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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
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."
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
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
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
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
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
excluded. It was submitted that Levi could (and did) recover loss from
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the STP Policy. In this regard it was argued that Clause 47 of the STP
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
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
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
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
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
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
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
UNITED INDIA INSURANCE CO. LTD. v. LEVIS STRAUSS
(INDIA) PVT. LTD. [S. RAVINDRA BHAT, J.]
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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.
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
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
- 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
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.
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
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
insurable incidents of different kinds. In this case that was fire; the only
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amount payable under the SFSP Policy was relatable to loss. Undoubtedly,
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
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
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
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
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.
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
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
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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
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
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
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
below:
" Section 2....
(d) "marine adventure" includes any adventure where -
(i) any insurable property is exposed to maritime perils;
(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
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,
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seizures, restraints and detainments of princes and people,
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
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
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,
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
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
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."
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.
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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
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,
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:
"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
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
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:
"OPEN MARINE INSURANCE CONTRACT
Issued to
Levi Strauss & Co. (and Majestic Insurance International Ltd.
as a reassured where applicable) and/or subsidiaries and/or
associated and/or affiliated and/or controlled companies or
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corporations as may now exist or may hereafter be formed or
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
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
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
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
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.
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.
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SUBJECT MATTER INSURED:
Goods and/or merchandise and/or cargo of every description
incidental to the Assured's business as may be declared.
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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.
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
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
(first loss).
(or equivalent in other currencies).
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6. WAREHOUSE TO WAREHOUSE
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
hereunder.
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41. OTHER INSURANCE CLAUSE
In case the interest hereby insured is covered by other
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
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to the beneficiary of this policy, or would be so available if
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
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
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.
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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
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:
"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
ii) its undergoing any heating or drying process.
b)
burning of property insured by order of any Public
Authority.
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General Exclusions
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"9. Loss of earnings, loss by delay, loss of market or other
consequential or indirect loss or damage of any kind or
description whatever."
***
Condition No. 4 which is material for the purpose of deciding this
case is extracted below:
"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".
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 &
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
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
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:
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XVII ADMISSIBILITY OF THE CLAIM:
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
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.
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.