UNIVERSAL INSURANCE COMPANY vs KARIM GUL S — 2021 CLD 1189 SUPREME-COURT

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UNIVERSAL INSURANCE COMPANY VS KARIM GUL S. 2(7)---Goods subject matter of the contract between the parties---Scope---Suit for recovery---Wreckage of an accidental vehicle sold by appellant-insurance company to the respondent as 'total loss'---"Total loss"---Interpretation---Respondent expended a substantial sum to repair the vehicle and bring it into usable condition, however, when he went to have its registration with the motor vehicle authority transferred to his name he was informed that there was already another vehicle registered with the same number and that the documents produced by him were not genuine---Respondent filed suit in the civil court claiming damages in the sum of Rs. 10,00,000/- (of which Rs. 600,000/- was the total of the sums expended by him and the balance was by way of compensation)---Question as to whether the subject matter of the contract between the parties, was a 'motor vehicle' in howsoever badly damaged a condition it may have been, making the appellant (Insurance Company) liable to the respondent, or was it only a 'wreck' which was not a motor vehicle in any meaningful sense, and absolutely no regard had to be given to what the respondent intended to, or could, or actually did with it---Held, that in the insurance business the thing insured could be declared to be a "total loss" in two different senses---One was of it being an "actual total loss"; here, the sense was that the insured property had been destroyed or damaged to such an extent that it could be neither recovered nor repaired for further use---In this sense the insured property was reduced to just wreckage and nothing more---Other sense in which total loss was used was "constructive total loss"; this was the situation where the repair cost of the damaged insured property exceeded its market value if the repairs were undertaken, meaning it was not worthwhile to pay for the repairs or have them undertaken---In the present case the words 'total loss' had been used in the contract---Since the contract was created by the appellant, hence following the contra proferentem rule, any ambiguity in its meaning had to be resolved against the appellant---Words "total loss" used in the contract ought to be construed to have the meaning of "constructive total loss" i.e. the vehicle in question retained its character as such, and did not cease to be a thing of the kind that had been insured---Wreckage sold to the respondent was not mere wreckage, rather it was a vehicle, howsoever badly damaged it may have been and notwithstanding that the cost of the repairs may have exceeded the market value of the vehicle when repaired---Since what was sold was a vehicle, the respondent had an enforceable expectation that he would be able to use it as such in a lawful manner, i.e., to have it registered in his own name, but as he was unable to do so and clearly suffered loss, the burden of that loss must fall on the appellant---Suit of respondent had been rightly decreed by the Trial Court and the High Court---Appeal was dismissed. Citation Name: 2021 CLD 1189 SUPREME-COURTBookmark this Case UNIVERSAL INSURANCE COMPANY VS KARIM GUL Terms of contract---Interpretation---Reasonable person standard---Scope---Contract had to be interpreted objectively and not as per the subjective views of the parties---Terms of the contract were to bear that meaning as they would have for, or convey to, a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract. Citation Name: 2021 CLD 1189 SUPREME-COURTBookmark this Case UNIVERSAL INSURANCE COMPANY VS KARIM GUL Terms---Interpretation---Contra proferentem rule---Scope---When there was a doubt about the meaning of a contract, the words would be construed against the person who put them forward---Said rule was a principle not only of law but of justice.

UNIVERSAL INSURANCE COMPANY vs KARIM GUL S — 2021 CLD 1189 SUPREME-COURT

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