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Ambiguity in policy and definition of 'Tail End Transit'

In Va Tech Wabag Limited vs Cholamandalam Ms. General, a container truck while carrying membranes from Chennai Port to Nemmeli met with an accident while in transit.  On intimation being given to the insurer, a surveyor was appointed to assess the loss to the complainant.  The surveyor assessed the loss at Rs.1.60 crores but the claim was rejected vide letter dated 19.4.2012.

The only question before NCDRC which arises for consideration in this complaint is as to whether goods were in tail end transit at the time the truck met with an accident and the goods were consequently damaged.  The term 'tail end transit' has not been defined anywhere in the insurance policy. In the ordinary parlance, the aforesaid term would mean the final phase of the journey. A term, which is not clearly defined and therefore is capable of the several interpretations depending upon the factual matrix, would be a vague term and the benefit of such a term would accrue to the insured.

Hon'ble Supreme Court in New India Assurance Company Limited Vs. Zuari Industries Ltd. & Others (2009) 9 SCC 70, where the Hon'ble Supreme Court referred to its previous decision in General Assurance Society Ltd. Vs. Chandmull Jain, AIR 1966 SC 1644 holding that in case of ambiguity in a contract of insurance, the ambiguity should be resolved in favour of the claimant and against the insurance company.  Reliance is also placed upon the decision of the Hon'ble Supreme Court in United India Insurance Co. Ltd. Vs. Pushpalaya Printers (2004) 3 SCC 694, where the Hon'ble Supreme Court reiterated that where the words of a documents are ambiguous they shall be construed against the party, which prepared the documents.

However, NCDRC decided that irrespective of the ambiguity of the policy document, if the journey of the goods involves multiple cities, the tail end transit would begin when the goods enter the final city in which their journey has to terminate. In the journey involving a single city, the tail end transit, in my opinion would be the destination point where the goods have to be unloaded.  In the present case, the goods were to be unloaded at Nemmeli site, which s stated to be a part of Chennai.  The accident happened just before the trailer carrying goods was to enter the Nemmeli site.  Since trailer had not actually entered Nemmeli site, the goods, in my opinion were not in the tail end transit at the time they got damaged.  Therefore, there was no requirement of the entering into a written agreement as to the rate and other terms, prior to commencement of the transit.


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