Special Condition Requiring Voyage Before Monsoon Is Not Condition Precedent; Insurer Cannot Repudiate Solely On That Ground

A bench of Justice B. V. Nagarathna and Justice Satish Chandra Sharma heard an appeal by Sohom Shipping under Section 67 of the Consumer Protection Act, 2019 challenging the National Consumer Disputes Redressal Commission’s order that had dismissed a consumer complaint against an insurer. The appeal arose from repudiation of a marine insurance claim on the ground that the policy’s special condition that the “voyage should commence & complete before monsoon sets in” was breached.

The Court allowed the appeal, set aside the NCDRC order dated 13.04.2021 and remanded the matter to the NCDRC to determine the extent of the insured sum payable. The Court held that the phrase “before monsoon sets in” admitted a literal construction informed by the Director General of Shipping circular identifying foul-weather periods, and that the policy term was not ambiguous so as to attract the rule contra proferentem. At the same time, the Court found that treating the special warranty as a condition precedent would lead to an “absurdity” and would vitiate the purpose of marine insurance; accordingly the clause could not be invoked as a complete waiver of liability and was impliedly waived as non-material. The Court, in its reasoning, observed: “If the condition is to be interpreted strictly, then the assured would be unable to make a claim in case of a marine accident where the vessel is unable to complete its voyage due to a peril, rendering the special condition impossible to comply with. Ultimately, the assured would be without any remedy under the insurance. This amounts to an absurdity, vitiating the very purpose behind an insurance contract. As a result, we hold that the special condition cannot be treated as a condition precedent to waive any liability under the policy. It has been impliedly waived by the parties due to its non-material nature.” The Court directed the parties to appear before the NCDRC on 29.04.2025 and directed that the NCDRC proceed expeditiously; parties were to bear their own costs.

Background

The dispute concerned a newly built barge, the Srijoy II, which the appellant purchased and proposed to deliver on a single voyage from Mumbai to Kolkata. The appellant procured voyage insurance for the period 16.05.2013 to 15.06.2013; the policy contained a special condition stating that the “voyage should commence & complete before monsoon sets in” and a special warranty restricting departure to local weather not exceeding Beaufort Scale No. 4. The Director General of Shipping directed inspection by the Indian Register of Shipping and the DGS issued a related circular (MS Circular No. 03 of 2008) specifying foul weather as 1 May–November on the Bay of Bengal and 1 June–31 August on the Arabian Sea.

The vessel sailed on 06.06.2013, encountered bad weather and engine failure, anchored near Ratnagiri and ultimately ran aground. The appellant issued a notice of abandonment and claimed total loss; the insurer repudiated the claim on 12.09.2013 alleging breach of the monsoon warranty and other conditions, and a surveyor reported wilful breach. The appellant filed a consumer complaint before the NCDRC which dismissed the complaint holding that the appellant had compromised the duty of uberrima fide by non-disclosure and therefore repudiation was justified.

Before the Supreme Court, the appellant argued that the insurer knew or ought to have known that the cover extended into foul weather, that the monsoon phrase was non-material or impliedly waived, and that any ambiguity must be construed contra proferentem. The insurer contended that the special condition and Clause 3.1.2 (compliance with classification society requirements) were precise, that the vessel sailed after monsoon set in, and raised additional allegations including forgery. The parties placed reliance on prior authority including Sea Lark Fisheries, Deokar Exports, Contship Container Lines and the Bombay decision in Ramji Karamsi.

The Court interpreted the phrase by reference to the DGS circular, rejected the appellant’s plea that the clause was ambiguous so as to attract contra proferentem, and affirmed that insurance contracts required uberrima fides and were to be construed strictly. However, finding that strict enforcement of the special warranty would produce an absurd result leaving the assured without remedy, the Court held the warranty was not a condition precedent and was impliedly waived. The Court remanded the matter to the NCDRC to examine other objections (including forgery and breach of other conditions) on their merits and to determine the quantum payable under the policy.

Case Details: Case No.: CIVIL APPEAL NO. 2323 OF 2021 (Citation: 2025 INSC 453) Case Title: Sohom Shipping Pvt. Ltd. v. M/s. The New India Assurance Co. Ltd. & Anr. Appearances: For the Petitioner(s): Mr. Huzefa Ahmadi, Senior Counsel For the Respondent(s): Mr. Devadatt Kamat, Senior Counsel