Today, I will talk about the case of Manmohan Nanda v. United India Assurance Co. Ltd. & Anr., Civil Appeal No. 8386/2015, wherein the Hon’ble Supreme Court inter alia discussed the Doctrine of Contra Proferentem in the field of statutory interpretation and Insurance Contracts.
Today, I will talk about the case of Manmohan Nanda v. United India Assurance Co. Ltd. & Anr., Civil Appeal No. 8386/2015, wherein the Hon’ble Supreme Court inter alia discussed the Doctrine of Contra Proferentem in the field of statutory interpretation and Insurance Contracts.
To know more about Insurance Contracts, please visit my earlier show the link for which is https://www.desikanoon.co.in/2021/12/what-are-rules-for-drafting-and-filling.html
To know more about the present post, please visit https://www.desikanoon.co.in/2021/12/doctrine-of-contra-proferentem-and-its.html
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Hi everyone.
I am Suyash and today, I will talk about the case of Manmohan Nanda v. United India Assurance Co. Ltd. & Anr., Civil Appeal No. 8386/2015, wherein the Hon’ble Supreme Court inter alia discussed the Doctrine of Contra Proferentem in the field of statutory interpretation and Insurance Contracts.
To know more about Insurance Contracts, please visit my earlier show the link for which is provided in the description below.
Contra Proferentem is a Latin Term that literally means “against the offeror” and it is also a legal doctrine that stipulates that “in interpreting documents, ambiguities are to be construed unfavourably to the drafter.”
Basically, “when words are to be construed, resulting in two alternative interpretations then, the interpretation which is against the person using or drafting the words or expressions which have given rise to the difficulty in construction, applies.”
The Contra Proferentem Rule is mostly invoked in Standard Form of Contracts as “such contracts heavily comprise of forms with printed terms which are invariably used for the same kind of contracts.” Further, it has also been noticed that in today’s world that is dominated by corporate entities, the Standard Form Contracts are “harshly worded against individuals.” While entering into such contracts, the individuals often do not read and understand the provisions, resulting in grave legal implications later on. It is also pertinent that “when such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem against the person who has drafted the same.”
Moreover, “in construing a document one must have regard, not to the presumed intention of the parties, but to the meaning of the words they have used. If two interpretations of the document are possible, the one which would give effect and meaning to all its parts should be adopted and for the purpose, the words creating uncertainty in the document can be ignored.”
Thus, “where there is an ambiguity it is the duty of the court to look at all the parts of the document to ascertain what was really intended by the parties.”
In the present case, the Court invoked the Contra Proferentem Rule in relation to a Contract of Insurance, that is also a Standard Form Contract, and it was noted that “where there is an ambiguity or doubt in the contract of insurance, it has to be construed contra proferentem against the Insurance Company.”
The Court also cited Halsbury’s Laws of England on the Contra Proferentem Rule and stated that “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, when the insured fills up the Proposal Form or the Application Form, the language used in such Proposal or Application is to be interpreted in a manner that is “favourable to the insurers will prevail if the insured has created any ambiguity.”
The Court also cautioned that the Contra Proferentem Rule becomes operative only where the words are truly ambiguous since “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.” Thus, “the words should receive their ordinary and natural meaning unless that is displaced by a real ambiguity either appearing on the face of the policy or, possibly, by extrinsic evidence of surrounding circumstances.”
Therefore, in conclusion, the following pertinent points emerge: -
a. Contra Proferentem means that “in interpreting documents, ambiguities are to be construed unfavourably to the drafter.”
b. The Contra Proferentem Rule is mostly invoked in Standard Form of Contracts.
c. “When such standard form contracts ordinarily contain exception clauses, they are invariably construed contra proferentem rule against the person who has drafted the same.”
d. “Where there is an ambiguity or doubt in the contract of insurance, it has to be construed contra proferentem against the Insurance Company.”
e. Similarly, an interpretation “favourable to the insurers will prevail if the insured has created any ambiguity” while filling up the Insurance Proposal or Application.
f. “It is a Rule for resolving ambiguity and it cannot be invoked with a view to creating a doubt.”
g. “The words should receive their ordinary and natural meaning unless that is displaced by a real ambiguity.”
Thus, I hope that the meaning and the nature of the Doctrine of Contra Proferentem is clear by now.
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