Bharti AXA General Insurance Co. Ltd. v. Priya Paul & Anr.
Background
Priya Paul's son died when the two-seater glider plane he was riding in, during a sightseeing flight at a gliding facility in British Columbia, Canada, collided mid-air with another aircraft. She claimed Rs. 1 crore under her son's personal accident insurance policy, but the insurer repudiated the claim, arguing the glider was not a "standard type of aircraft" and that the gliding facility was not a "regular scheduled airline or air charter company" as required by the policy's exclusion clauses. The National Consumer Disputes Redressal Commission ruled in her favour, and the insurer appealed to the Supreme Court.
Decision Breakdown
The Court held that a glider squarely falls within the statutory definition of "aircraft" under both Indian and Canadian law, and that since the policy itself never defined "standard type of aircraft," the ambiguity had to be resolved in favour of the insured (the rule of contra proferentem in insurance contracts). It found the glider was duly licensed and that the gliding facility, by renting out the entire two-seater aircraft for a fee, operated as an "own-use air charter company" even without a formal charter licence. The deceased was held to be a fare-paying passenger. On every disputed point, the Court upheld the Commission's reasoning and dismissed the insurer's appeal.
Lesson Learnt
When an insurance policy's exclusion clause uses an undefined or ambiguous term, courts will interpret it in favour of the policyholder/claimant, not the insurance company that drafted it: insurers must define their exclusions clearly if they want them strictly enforced.