2026:HHC:24431 IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA CWP No.8421 of 2025 Decided on: 24th June, 2026 ------------------------------------------------------------------------------------- National Insurance Company Limited …..Petitioner Versus Om Prakash .....Respondent ------------------------------------------------------------------------------------- Coram Ms. Justice Jyotsna Rewal Dua Whether approved for reporting?1 Yes. For the Petitioner: Mr. Jagdish Thakur, Advocate. For the Respondent: Mr. Shashi Bhushan, Advocate. ------------------------------------------------------------------------------------ Jyotsna Rewal Dua, Judge It was in the year 2012 that respondent had instituted complaint under Sections 11 & 12 of the Consumer Protection Act, 1986 seeking insurance claim from the petitioner-Insurance Company in the sum of Rs.41,90,000/- alongwith interest @ 15% per annum on account of total loss of the insured ‘TATA Hitachi EX 200 LC Hydraulic Excavator Backhoe with bucket & kit, Model- February 2010’ on 13.08.2011. The loss was caused during the currency of the insurance period. Learned State 1Whether reporters of print and electronic media may be allowed to see the order? Yes. 2 2026:HHC:24431 Consumer Disputes Redressal Commission (hereinafter to be referred as the ‘State Commission’) allowed the complaint on 01.05.2013 as under:- “17. As a result of the above discussion, we allow the complaint and in view of the submissions of learned counsel for the complainant noticed in the just preceding paragraph, direct the opposite party either to pay to the complainant a sum of Rs.24,57,427/-, with interest at the rate of 9% per annum, from the date of complaint to the date of payment of the aforesaid amount of money, and also to pay Rs.1.00 lac as compensation and Rs.15,000/- as costs and if the opposite party opts to take the salvage, then to pay a sum of (Rs.23,88,724/- + Rs.6,57,000/-) = Rs.30,45,724/-, with interest at the rate of 9% per annum, from the date of complaint to the date of payment of aforesaid amount of money, besides paying the compensation and costs, as ordered hereinabove. Complaint stands disposed of accordingly.” Appeals preferred by the petitioner as also the respondent against the above order were dismissed by the learned National Consumer Disputes Redressal Commission (in short ‘National Commission’) on 13.03.2025 as under:- “21. For the aforesaid reasons, the appeal is upheld with the following directions: (i) Respondent insurance company is directed to pay the appellant a sum of Rs.24,57,427/- with interest at the rate of 9% per annum from the date of complaint till the date of payment; (ii) Respondent is also directed to pay litigation cost of Rs.50,000/-; and (iii) If the respondent opts to take the salvage, respondent is directed to pay Rs.30,45,724/- with 9% interest from the date of complaint till the date of payment.” 3 2026:HHC:24431 Taking exception to the orders passed by the learned State Commission as also by the learned National Commission, the Insurance Company has preferred the instant writ petition. 2(i). The pleaded case of the petitioner-Insurance Company in its reply filed to the complaint, as highlighted by its learned counsel, is that the respondent had taken Contractors Plant and Machinery Insurance for the excavator in question. The insurance policy was issued on 24.02.2011 with validity period from 25.02.2011 to 24.02.2012. The location of machine/excavator as mentioned in the policy was Bajoura, Kullu, H.P. That Contractors Plant and Machinery Insurance is fixed location policy. Any loss caused outside the location is not covered under the policy, which is clearly mentioned in the exception clause of the policy. As per exception No.(h) stipulated in the policy, the Insurance Company is not liable in respect of any loss caused to the excavator whilst in transit from one location to another location. In the instant case, the excavator was moving to the project site, therefore, the Insurance Company is not liable to pay claim to the respondent. Since attention was invited to the terms & conditions of the insurance policy, it will be appropriate 4 2026:HHC:24431 at this stage to make reference to the relevant terms as pressed into service:- “CONTRACTOR'S PLANT & MACHINERY INSURANCE POLICY WHEREAS the insured named in the Schedule hereto by a proposal and declaration which shall be the basis of the contract and is deemed to be incorporated herein has applied to the National Insurance Company Limited (hereinafter called the company) for the insurance hereinafter contained and has paid the premium as consideration for such insurance in respect of accident or damage occurring during the period of insurance stated in the schedule or during any subsequent period for which the insured pays and the company may accept the premium for the renewal of this policy. NOW THIS POLICY OF INSURANCE WITNESSETH THAT subject to the terms, exceptions, exclusions, provisions and conditions contained herein or endorsed hereon the company will at its own option by payment reinstatement or replace or indemnify the insured against unforeseen and sudden physical damage by any cause not hereinafter excluded to any insured property specified in the attached schedule(s), whilst at the locations mentioned therein necessitating its immediate repair or replacement. This Policy shall apply to the insured items whether they are at work or rest or being dismantled for the purpose of cleaning or overhauling or in the course of the aforesaid operations themselves or when being shifted within the premises or during subsequent re-erection, but in any case only after successful commissioners. The liability of the company for any item of the insured property shall not exceed in the aggregate in any one period of insurance the sum insured set against such item in the attached schedule(s) however the sum insured under such item can be reinstated after occurrence of a claim for balance period. EXCEPTIONS The company shall not be liable under this policy in respect of: (a) to (g) xxx xxx xxx 5 2026:HHC:24431 (h) Loss of damage whilst in transit from one location to another location.” The submissions urged for the petitioner is that insurance claim would have been admissible only in case the excavator had suffered damage as per the terms & conditions of the policy at its specified location, i.e. Bajoura, Kullu, whereas, at the time the excavator suffered extensive damage, admitted reporting of its total loss, it was at place ‘Kartah (Sainj), Kullu’. In view of exception No.(h) (extracted above), insurance claim for the loss/damage caused to the excavator, which was not at Bajoura, Kullu, could not be accepted and was justly repudiated. That insurance is a contract between two parties, who are bound by the terms & conditions of the contract. The conditions of the contract are required to be given effect to and assigned the same meaning as is intended to be given to them in terms of the contract executed between the parties. Reference in this regard was made to Polymat India (P) Ltd. and another Versus National Insurance Co. Ltd. and others2, Vikram Greentech India Limited and another Versus New India Assurance Company 2 (2005) 9 SCC 174 6 2026:HHC:24431 Limited3, Export Credit Guarantee Corporation of India Limited Versus Garg Sons International4 and Oriental Insurance Co. Ltd. Versus Sony Cheriyan5. Learned counsel further submitted that Contractors Plant and Machinery Insurance is distinct from motor vehicle insurance in its coverage and scope. Contractors Plant and Machinery Insurance focuses on the equipments used in construction/industrial activities covering damage or loss to these items while on the project site. Motor Vehicle insurance on the other hand covers liability and damage related to the operation of motor vehicles on public roads. Motor Vehicles are specifically excluded from Contractors Plant and Machinery Insurance unless used exclusively at the construction site. Learned counsel also submitted that in case the respondent intended to use the excavator at a location other than specified in the policy, it was incumbent upon him to have intimated the change of location and got approval thereof from the petitioner-Insurance Company. For all the aforesaid reasons, prayer was made to set aside the orders 3 (2009) 5 SCC 599 4 (2014) 1 SCC 686 5 (1999) 6 SCC 451 7 2026:HHC:24431 passed by the learned State Commission as affirmed by the learned National Commission. 2(ii). Learned counsel appearing for the respondent- Insured defended the impugned orders and the reasoning assigned therein for allowing the claim. Additionally, it was submitted that at the time of insurance of the excavator in question, terms & conditions of the policy had not been supplied to it. Only cover note was supplied. Inviting attention to the consent letter dated 13.10.2011 (page 31 of the paper book), it was submitted that the respondent was in immediate need of money on account of the damage caused to his excavator. He had even consented at that time for an amount of Rs.24,45,724.00/-, which was determined by the Insurance Company after depreciating the value of the excavator at 20% just after three months of insuring it. Even though the respondent had consented to this exploitary computation of depreciation, the amount was not released by the petitioner. Respondent’s claim was not settled and he was compelled to institute the complaint taking recourse to the Consumer Protection Act. Even though the orders had been passed in his favour by the learned Commissions below, yet despite the interregnum 8 2026:HHC:24431 period of 14 years, respondent is yet to receive the payment of his claim as allowed under the impugned orders. 3. Heard learned counsel for the parties and considered the case file. 4. The excavator in question having been insured under the Contractors Plant and Machinery Insurance Policy is not in dispute. Damage caused to the excavator resulting in its total loss during the currency of the insurance policy is also an admitted fact. The Surveyor’s report placed on record, as appreciated by the learned State Commission as also by the learned National Commission, establishes on record that at the time of suffering extensive damage (total loss), the excavator was lying stationary at Village Kartah (Sainj), District Kullu. While parked there, it had suffered damage due to heavy rains, resulting into landslide on 13.08.2011. The contention of the petitioner- Insurance Company that insurance claim is admissible only for location specified in the cover note of the policy, i.e. Bajoura, Kullu, cannot be accepted. In terms of the exceptions carved out in the policy, the petitioner was not to be liable under the policy in respect of ‘loss or damage whilst in transit from one location to another location’. I am in agreement with the conclusion drawn by the learned 9 2026:HHC:24431 State Commission that the aforesaid clause admits of situation, where the machinery, i.e. excavator in the instant case, moves or is shifted from one location to the other, or in other words, movement of machinery from one place to another is envisaged and permitted in the policy. The claim can be repudiated under the policy while the excavator remains in transit, but not when the excavator is stationary at a given location. Mentioning of place ‘Bajoura, Kullu’ in the policy cannot be construed to imply that excavator cannot be shifted from the said specified place to any other location without risking or at cost of insurance claim. Policy cannot be read in such restrictive manner. ‘Bajoura Kullu’- the place mentioned in the policy, can only be understood as the location where the machine was at the time of its insurance. Therefore, to contend that insurance claim would not be admissible to the excavator since it was not located at Bajoura, Kullu at the time of suffering extensive damage, but was located at Kartah (Sainj), District Kullu, would not be in terms of the policy. It will also be beneficial to refer to Haris Marine Products v. Export Credit Guarantee Corporation 10 2026:HHC:24431 (ECGC) Limited6, wherein elaborating the Rule of Contra Proferentem, Hon’ble Supreme Court held that an ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety. If after that, no clarity emerges, then the term must be interpreted in favour of the insured, i.e. against the drafter of the policy. Paras relevant to the context read as under:- “16. It is entrenched in our jurisprudence that an ambiguous term in an insurance contract is to be construed harmoniously by reading the contract in its entirety. If after that, no clarity emerges, then the term must be interpreted in favour of the insured, i.e., against the drafter of the policy. In deciding the applicability of a cover note on houses swept away by floods, a Constitution Bench of this Court in General Assurance Society Ltd. v. Chandumull Jain7 held as follows: “In other respects there is no difference between a contract of insurance and any other contract except that in a contract of insurance there is a requirement of uberrima fides i.e., good faith on the part of the assured and the contract is likely to be construed contra proferentem that is against the company in case of ambiguity or doubt… (I)n interpreting documents relating to a contract of insurance, the duty of the court is to interpret the words in which the contract is expressed by the parties, because it is not for the court to make a new contract, however reasonable, if the parties have not made it themselves”. (emphasis supplied) While the court ultimately denied insurer’s liability, it laid down the manner in which ambiguities were to be interpreted. Since then, a catena of 6 AIR 2022 Supreme Court 3036 7 (1966) 3 SCR 500 11 2026:HHC:24431 judgments has upheld this approach. In United India Insurance Co. Ltd. v. Pushpalaya Printers8, a Division Bench of this Court was confronted with interpreting the term ‘impact’ in an insurance policy for protection against damage caused to the insured building. Interpreting the term to include damage caused by strong vibrations by heavy vehicles without ‘direct’ impact, this Court held: “The only point that arises for consideration is whether the word “impact” contained in clause 5 of the insurance policy covers the damage caused to the building and machinery due to driving of the bulldozer on the road close to the building… (I)t is also settled position in law that if there is any ambiguity or a term is capable of two possible interpretations, one beneficial to the insured should be accepted consistent with the purpose for which the policy is taken, namely, to cover the risk on the happening of certain event… Where the words of a document are ambiguous, they shall be construed against the party who prepared the document. This rule applies to contracts of insurance and clause 5 of the insurance policy even after reading the entire policy in the present case should be construed against the insurer”. (emphasis supplied). Similarly, in Sushilaben Indravadan Gandhi v New India Assurance Company Ltd.9, this Court charted the evolution of the rule of contra proferentem, and relied inter alia on its explanation as provided under Halsbury's Laws of England10: “Contra proferentem rule.—Where there is ambiguity in the policy the court will apply the contra proferentem rule. Where a policy is produced by the insurers, it is their business to see that precision and clarity are attained and, if they fail to do so, the ambiguity will be resolved by adopting the construction favourable to the insured. Similarly, as regards language which emanates from the insured, such as the language used in answer to questions in the proposal or in a slip, a 8 (2004) 3 SCC 694 9 (2021) 7 SCC 151 10 5th Edn., vol. 60, para 105 12 2026:HHC:24431 construction favourable to the insurers will prevail if the insured has created any ambiguity. This rule, however, only becomes operative where the words are truly ambiguous; it is a rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt. Therefore, where the words used are free from ambiguity in the sense that, fairly and reasonably construed, they admit of only one meaning, the rule has no application.” The rule of contra proferentem thus protects the insured from the vagaries of an unfavourable interpretation of an ambiguous term to which it did not agree. The rule assumes special significance in standard form insurance policies, called contract d’ adhesion or boilerplate contracts, in which the insured has little to no countervailing bargaining power11. This consideration is highlighted in the facts of this case, since the risks that ECGC is mandated to cover is its business, and other insurers rarely foray into the field. 17. A plain reading of the policy in question demonstrates that it was taken to protect against failure of the foreign buyer in paying the Indian exporter for goods exported. It was not a policy taken to cover in-transit insurance, and the cause of action triggering the claim arose much later, i.e., on 14.02.2013, well within the coverage of the policy. While interpreting insurance contracts, the risks sought to be covered must also be kept in mind. In Peacock Plywood (P) Ltd. v. Oriental Insurance Co. Ltd.12 while determining the validity of an insurance policy for a stranded ship, a Division Bench of this Court, noting that none of conditions in the termination clause were triggered, held: “When the termination of the contract of insurance has actually taken place, is essentially a question of fact. An insurance policy is to be construed in its entirety. A marine insurance policy does not come to an end only because the ship became stranded at a port”. And further: “(W)hile construing a contract of insurance, the reason for entering thereinto and the risks sought to be covered must be considered on its own terms”. 11 Jacob Punnen and Anr. v United India Insurance Co. Ltd., (2021) SCCOnline SC 1207 12 (2006) 12 SCC 673 13 2026:HHC:24431 (emphasis supplied) As argued on behalf of the appellant, the Mate’s Receipt indicating the completion of loading of the goods onto the ship was issued on 15.12.2012, pursuant to which the vessel sailed on 15.12.2012, and the Bill of Lading was issued on 19.12.2012. The term ‘despatch’ -contained in the policy implied ‘completion’ of handing over of possession of the goods to the first carrier (the ship herein), and not the date on which the loading ‘commenced’ – such an interpretation would give rise to an absurdity. On harmoniously construing the documents of this policy, it is the in fact the date on the Bill of Lading, and not the Mate’s Receipt/date of shipment which ought to be considered as the date of ‘despatch/shipment’, for the Bill of Lading is the legal document conferring title and possession of the goods to the carrier13.” In M/s Tarapore and Co. versus United India Insurance Company Limited14, the insurance claim was with respect to a Tata Hitachi Heavy Duty Crane. The Insurance Company took up the stand that it was not liable to satisfy the insurance claim as the accident had not occurred at the premises specified in the policy. Learned Commercial Court as also the learned Appellate Court went strictly by the terms of the insurance policy and rejected the claim petition. Following significant observations were made by the Hon’ble Apex Court while allowing the insurance claim:- “21. The understanding of the Insurance Company is that it is only in the event of the accident occurring within the 13 Carriage of Goods by Sea Act, 1925 14 Civil Appeal No.2387 of 2025, decided on 12.02.2025 14 2026:HHC:24431 premises i.e. the place mentioned in the insurance policy that the claim is liable to be sanctioned. 22. Prima facie it appears that neither of the parties paid attention to such an absurd condition. The appellant at the time of purchase of the crane and while getting it insured could have pointed out to the insurance company that how do you accept us to use the crane in our office. A crane is always used at the construction sites. At the same time even the Insurance Company kept themselves silent in this regard. Even the Insurance Company could have said that how do you intend to use the crane in your office. 23. Both the courts went strictly by the terms of the insurance policy and thereby rejected the claim. 24. There is no dispute as regards the accident. There is no dispute as regards the damage caused due to the accident. There is no dispute even as regards the quantum of damage. To that extent that it took quite a long time before the Insurance Company itself realised that they cannot sanction the claim because the accident did not occur at the address shown in the insurance policy. 25. In the peculiar facts and circumstances of the case and with a view to doing substantial justice between the parties we made a fervent appeal to the learned counsel appearing for the insurance company to speak to his client so as to consider payment of some reasonable amount to give a meaningful interpretation to the policy more particularly the terms of the policy.” Further in the present case, the petitioner is an insurance company that entered into an insurance policy with the respondent. Subsequently, the respondent’s excavator (insured machine) met with an accident, whereafter, the respondent filed a claim, which was denied by the petitioner. The petitioner-Company had proposed to settle the claim on a depreciated value basis, to which the 15 2026:HHC:24431 respondent had given his consent, however, the petitioner failed to honour the same. Instead of fulfilling its contractual obligation, the petitioner dragged the respondent into endless litigation and denied him his claim till date, i.e. for more than 12 years. The respondent has still not been paid the claimed amount. The petitioner continues to prolong the litigation process. Such conduct on part of the petitioner-Insurance Company deserves to be deprecated with heavy costs. The costs awarded by the National Commission to the tune of Rs.50,000/- is hereby enhanced to Rs.1 Lakh. To justify this reasoning, reference can be made to the decision rendered by the Hon’ble Apex Court in Vinod Seth Versus Devinder Bajaj and another15, whereunder the objectives sought to be achieved by awarding costs were laid down as under:- “(i). Costs are awarded to create a deterrent effect against vexatious, frivolous and speculative litigation, so that every litigant things twice before putting forward such claims or defenses. (ii). Costs should ensure that laws governing procedure are scrupulously and strictly complied with and the parties do not adopt delaying tactics or mislead the Court. (iii). Costs should also provide adequate indemnity to the successful litigant for the expenditure incurred in litigation. (iv). Provision of costs should be taken as incentive for parties to adopt alternative dispute resolution remedy. 15 (2010) 8 SCC 1 16 2026:HHC:24431 (v). Provision of costs should not discourage individuals with bona fide or genuine claim from seeking justice.” 5. For the foregoing reasons, I am not inclined to interfere with the impugned orders to the extent they allow the claim of the respondent, however, as submitted by learned counsel for the respondent, there is a clerical error in the final amount allowed to the respondent by the learned State Commission. Paragraph 14 of the order passed by the learned State Commission takes note of the fact that the respondent had consented to accept a sum of Rs.24,45,724/-. This figure is correct as the document is available at page 31 of the paper book, however, in the operative paragraph 17 of the decision, the figure has been mentioned as Rs.24,57,427/-. It seems to be a case of intermixing of digits, which is also carried forward in the order passed by the learned National Commission. Learned counsel for the respondent submits that salvage of Rs.6,57,000/- is also now required to be deducted from the amount payable to the respondent as he is not in a position to part with it at this stage. After deducting this amount, the amount payable to the respondent comes to Rs.17,88,724/- (Rs.24,45,724 - Rs.6,57,000). This amount 17 2026:HHC:24431 shall be paid to the respondent with interest as allowed by the learned State Commission. In view of above, the present writ petition lacks merit and is accordingly dismissed with costs of Rs.1 Lakh to be paid by the petitioner-Insurance Company to the respondent. Pending miscellaneous application(s), if any, also stand disposed of. Jyotsna Rewal Dua June 24, 2026 Judge Mukesh