APHC010043892025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI WRIT PETITION NO: 7204 of 2025 Bench Sr.No:-22 [3552] Bajaj Allianz General Insurance Co. Ltd. ...Petitioner Vs. Union of India and others ...Respondents ********** Advocate for Petitioner: Mrs. T. V.Sri Devi Advocate(s) for Respondent(s): Mr. Sai Gangadhar Chamarty CORAM : THE CHIEF JUSTICE DHIRAJ SINGH THAKUR SRI JUSTICE CHALLA GUNARANJAN DATE : 2nd March, 2026. Per Dhiraj Singh Thakur, CJ: The petitioner, Bajaj Allianz Insurance Company Limited, challenges the order passed by the National Consumer Disputes Redressal Commission (for short, “NCDRC”), New Delhi, in First Appeal No. 204 of 2022 dated 21.06.2024, whereby the order dated 30.04.2021 passed by the Andhra Pradesh State Consumer Disputes Redressal Commission (for short, “SCDRC”) was upheld with modifications. 2. Briefly stated, the material facts are as under: A proposal form for a Standard Fire and Special Perils Policy and Burglary Insurance Policy was submitted by M/s. Santha Lakshmi Traders to the petitioner-Insurance Company. The proposer, in the proposal form, inter alia mentioned the required details in the following manner: p. 2 HCJ Name of the insured M/s. Santha Lakshmi Traders Address for communication H.No: 6-86, Ilavari Street, Bodasakurru Village, Amalapuram Risk Location Address Same as above Policy Period 02.06.2012 to 01.06.2013 If Risk is Occupied as: 1. Shop/godown, pl specify nature of stocks. 2. Godown, pl specify if exclusive or not and whether stocks are stored in open 3. Manufacturing Unit, pl specify raw materials, process details and finished goods. 4. Goods held in trust/third party goods to be covered, pl specify details Stock of Coconuts in Godown 3. Based on the proposal form, the petitioner-Insurance Company issued a Standard Fire and Special Perils Policy for an amount of Rs.30,00,000/- for the period from 13.06.2013 to 12.06.2014, as per the „policy schedule‟, which, inter alia, reads as under: Insured Name M/s. Santha Lakshmi Traders Insured Address D.No.6-86, Ilavari Street, Bodasakurru Village, Andhra Pradesh, Amalapuram – 533201 Period of Insurance 13-Jun-13 to 12-Jun-14 Sum Insured (Rs) 3000000 Risk covered Standard Fire & Special Perils and Addons as detailed under Annexure Exclusions Standard Fire and Special Perils wordings, clauses and warranties as attached Subject to clauses Agreed Bank Clause Annexure1-Terrorism Damage Exclusion Warranty Warranties Godowns-hazardous goods cat I STORAGE Open Stock Warranty p. 3 HCJ 4. The Policy Schedule carried with it three annexures. In Annexure I, the following was described: Location Description : Godown Occupation Description : Storage-Category 1 Goods Block Description : Stock of Coconuts in Godown 5. Annexure II also referred to the insured item as stock of coconuts in a godown. 6. Annexure III, under the head “Open Stock Warranty,” specifically stated: “Open Stock Warranty: It is hereby warranted that this policy covers stock stored in closed premises only and stock stored outside the closed premises and in open shall be out of the scope of the policy coverage.” 7. The insured/complainants are stated to be in the business of trading of coconuts. They purchase coconuts from farmers, transport them to their premises, dump them in the open, grade them with the help of labour, and thereafter pack them in gunny bags for storage in the godown. 8. It appears that there was a fire accident at the address reflected in the policy of insurance, in the early hours of 21.02.2014, which was reported to the Insurance Company, which deputed a Surveyor for a field inspection. 9. The Surveyor proceeded to the spot and submitted a report, in which it was stated that a huge stock of coconuts, which had been kept in the open was destroyed in the fire. According to the Surveyor/Loss Assessor, p. 4 HCJ approximately 2,88,371 coconuts which were kept in the open, were burnt or damaged and the net loss was assessed at Rs.16,42,617/-. 10. The claim of the claimants, however, was repudiated by the petitioner/Insurance Company vide communication dated 04.03.2014 on the ground that the said policy covered only stock stored in closed premises, and that stocks stored in the open were out of the scope of policy coverage. Reference in this regard was made to the Open Stock Warranty, which was an essential part of the insurance policy. 11. It is in the aforementioned backdrop that a complaint came to be filed before the Andhra Pradesh State Consumer Disputes Redressal Commission, which allowed the same. It was held that the repudiation was bad and illegal inasmuch as the coconuts were stored within the premises bearing Door No.6- 86 of Illavari Street in Bodasakurru Village of Amalapuram, which formed part of the godown premises, and as per Annexure III of policy schedule, the stocks available within the premises, fell within the policy coverage. 12. The State Consumer Disputes Redressal Commission therefore directed the insurance company to pay Rs.16,42,617/- towards loss of coconuts with interest @ 9% per annum from the date of filing of the complaint, i.e., 21.08.2014 till realization, along with compensation of approximately Rs.2,00,000/- and costs of Rs.20,000/- to be paid by the Insurance Company/1st Opposite Party and Karur Vysya Bank/2nd Opposite Party, with whom the goods were hypothecated. Apart from this, it also p. 5 HCJ directed that in case of non-compliance within two months, interest @ 12% per annum would apply from the date of the order till realization. 13. An appeal then came to be filed by the Petitioner-Insurance Company before the National Consumer Disputes Redressal Commission, which held that there was some ambiguity in the terms of the insurance contract, inasmuch as although the heading „Open Stock Warranty‟ read that it covered stock stored in closed premises only and stocks stored outside the closed premises and in the open would be out of the scope of the policy coverage, yet the stocks in question were within the four walls of the premises. It therefore applied the principle of contra proferentem, which lays down that if there is an ambiguous term in an insurance contract, it is to be considered harmoniously by reading the contract in its entirety, and if no clarity emerges, then the term must be interpreted in favour of the insured and against the drafter of the policy. 14. It is in that backdrop that the National Commission upheld the order of the State Consumer Disputes Redressal Commission in principle except to the extent of payment of compensation. 15. Learned counsel for the petitioner, Mrs. T. V. Sri Devi, would submit that the entire premise on which both the SCDRC as also the NCDRC proceeded was erroneous and contrary to the express terms and conditions of the insurance policy. p. 6 HCJ 16. Learned counsel for the private respondents, on the other hand, tried to support and buttress the view expressed by the fora below. 17. We have heard learned counsel for the parties and gone through the material placed before us for our consideration. 18. In our view, indeed the findings of the National Consumer Disputes Redressal Commission upholding the order passed by the State Consumer Disputes Redressal Commission is untenable in law and contrary to the express terms of the contract entered into between the petitioner herein and the claimants. 19. As can be seen from the record and, in particular, from the proposal form submitted by the claimants, a specific question was required to be answered as to whether the godown was exclusive or not and whether the stocks were stored in the open. The answer in the proposal form was „Stocks of Coconuts in Godown‟. 20. The claimants, therefore, while submitting the proposal form, never intended that stocks which are kept in the open be covered under the contract of insurance, inasmuch as had that been the intention at that stage, it should also then have specifically mentioned that they also store stocks in the open. 21. Even the policy of insurance and, in particular, the clauses mentioned in the policy schedule which are reproduced in the preceding paragraphs with regard to the risk covered and warranties specifically mentioned that it was an p. 7 HCJ Open Stock Warranty Policy. The clause with regard to Open Stock Warranty specifically stated that the policy cover only stocks stored in closed premises and stocks stored outside the closed premises and in open shall be out of the scope of the policy coverage. 22. Coconuts stored in the open, under the stars, in a plot of land, although enclosed by a boundary wall, cannot be said to be a closed premises. There would be no distinction left between stocks „in godown‟ and stocks being stored „in open‟, even as per the proposal form, if stocks in open were considered to be stocks in godown. 23. While walls may demarcate a plot of land and protect a property, it would not assume the character of a godown, by keeping the goods within the boundary walls, if they were under the stars, in the open and in the absence of there being a specially designated enclosed space, however flimsy or temporary the structure may be. 24. In our opinion, the policy of insurance never intended to cover stocks lying in the open, other than stocks in the godown. 25. Learned counsel for the petitioner also drew our attention to the tariff provision, which envisages a different rate for insuring materials stored in a godown, i.e., @ Rs.2.50/-, as against Rs.6/- for materials in the open. In the instant case, it is stated a lower premium was charged to the unofficial respondents/complainants. p. 8 HCJ 26. Be that as it may, in our opinion, the order passed by the State Commission, which was affirmed by the National Commission,is unsustainable and contrary to the express terms and conditions of the policy. Accordingly, the orders impugned are hereby set aside, and the Writ Petition stands allowed. No costs. As a sequel, pending miscellaneous applications, if any, in this case, shall stand closed. DHIRAJ SINGH THAKUR, CJ. CHALLA GUNARANJAN, J. SSN