Haris Marine Products Vs Export Credit Guarantee Corporation (ECGC) Limited (Supreme Court)
Date-25th April,2022

Sub-When goods can be said to have been despatched/shipped in case of Marine Insurance guaranteeing default in payment by the Overseas Buyer.

An interesting issue arose in this case when three judges bench of Supreme Court was called upon to decide the issue where the foreign buyer in this case defaulted payment of Rs 2.45 crores for which Credit insurance policy was taken by the appellant herein which was to run from 14th December, 2012. The goods were handed over to Ship on 13th December,2012 though the ship sailed on 15th December, 2012 and ECGC in this case disputed the liability by saying that the goods were shipped before the start of the policy by relying on the definition of Despatch in the DGFT guidelines. The appellant argued that despatch must mean the date on which the Ship sailed as simply loading the goods on the ship when the loading was to continue for days could not have been meant despatched. The Supreme Court agreeing with the appellant relied on the principles of Business Common Sense as propounded by UK Supreme Court in Rainy Sky SA Case which was further developed in Arnold Vs Britton and held that this Court is of the opinion that the date of loading goods onto the vessel, which commenced one day prior to the effective date of the policy, is not as significant as the date on which the foreign buyer failed to pay for the goods exported, which was well within the coverage period of the Policy. Thus, the claim could not be dismissed simply on such basis, especially given that the date of loading the goods onto the vessel was immaterial for the purpose for which policy was taken. The court also interpreted Rule of contra proferentem by observing that that an ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety.

This is a landmark judgement which will be helpful not only in interpretation of similar matters related to insurance claims but the principles of Business common sense can be used in general other matters as well.

Ramesh Patodia
26-04-2022