NEW INDIA ASSURANCE CO.LTD. Vs PRIYA BLUE INDUSTRIES PVT. LTD.
Bench: B. SUDERSHAN REDDY,SURINDER SINGH NIJJAR, , ,
Case number: C.A. No.-003714-003714 / 2005
Diary number: 13316 / 2005
Advocates: NAVIN CHAWLA Vs
VIKAS MEHTA
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3714 OF 2005
The New India Assurance Co. Ltd. …Appellant
Versus
Priya Blue Industries Pvt. Ltd. …Respondent
WITH
CIVIL APPEAL NO. 2116 OF 2006
Priya Blue Industries Pvt. Ltd. … Appellant
Versus
The New India Assurance Co. Ltd. …
Respondent
J U D G M E N T
B. SUDERSHAN REDDY, J.
1. This appeal under Section 23 of the Consumer
Protection Act, 1986 is directed against the final
judgment and order of the National Consumer Disputes
Redressal Commission. The National Commission by
the impugned judgment allowed the complaint
preferred by the respondent complainant and
accordingly directed the appellant Company to pay a
sum of Rs. 13.69 crores with interest at 9% per annum
from 9th June, 1997 till its realization.
2. In order to consider as to whether the impugned
judgment of the National Commission (for short ‘the
Commission’) suffers from any infirmity requiring our
interference, it may be just and necessary to notice
relevant facts.
3. The respondent-complainant at the relevant time
was carrying on ship breaking and scrap dealing
business. It had under a Memorandum of Agreement
dated 2.6.1997 purchased and imported to Alang, a
very large bulk ore and oil carrier by the name of “Vloo
Arun” for the purpose of scrapping (ship
breaking/demolition) from one M/s. Ruby Enterprises
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Inc. Belgium. There is no controversy that the
respondent has taken a marine insurance policy for
hull and machinery on 4.6.1997 for the said vessel.
The policy was obtained after taking possession of the
vessel for covering only 9 kms. distance between Alang
Anchorage to Alang Ship Breaking yard. Insurance
cover was for a sum of Rs. 25.70 crores for which a
premium of Rs. 1,14,280/- was paid. As per the special
condition it was “Institute Voyage Clause (hulls) dated
1.10.1983 as attached with a specific condition, ‘but to
cover and/or Constructive Total Loss only’ including
salvage and sue and labour and expenses.”
4. The case of the complainant is that on 9.6.1997,
when vessel started its ‘funeral voyage’ on its way it
was completely damaged and could not be beached at
the specified place because of extremely rough
weather resulting in total loss. The insurance
Company was accordingly informed, followed by
several letters by the complainant requesting it to
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state as to what action was to be taken with regard to
the stranded vessel. The insurance Company did not
respond.
5. It is under those circumstances the respondent
complainant has claimed an amount of Rs.
18,30,44,912/- with interest @ 19.5% p.a from
14.6.1997 till its payment and Rs. 2.5 lakhs as costs
and expenses of the litigation and further a sum of
Rs. 5 lakhs towards harassment meted out by the
appellant insurance Company.
6. In response to the claim, the appellant insurance
Company appointed two Surveyors, and the
respondent complainant with the acceptance and
approval of the appellant insurance Company
appointed Tony Fernandez Average Adjusters Pvt. Ltd.
as its Surveyor. Each one of the Surveyors appointed
by the appellant insurance Company submitted their
respective reports on 24.6.1997 and 14.7.1997.
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7. In addition to the aforesaid two reports on record,
there is a report on record of Tony Fernandez Average
Adjusters Pvt. Ltd. which was appointed by the
respondent complainant. The appellant insurance
Company had accepted and approved its appointment.
In the report submitted by Tony Fernandez Average
Adjusters Pvt. Ltd., the cause of loss is as under:
“The proximate and dominant cause of the vessel becoming a total loss was the stranding on a rocky shoal prior to arriving at the destination. The stranding itself was due to heavy weather encountered on the “funeral” voyage to the ship-breaking yard. The stranding was accidental and fortuitous in nature.
Both heavy weather and stranding are perils of the sea. The proximate cause of the loss is an insured peril, falling under Clause 4.1.1 of Institute Voyage Clauses Hulls, 1/10/83 wordings (Clause 285), which covers loss of or damage to the subject-matter caused by, ‘perils of the seas rivers, lakes or other navigable waters.’
We have satisfied ourselves that the loss was neither caused proximately nor concurrently, by any of the excluded perils listed in Section 55 of the Marine Insurance Act, 1963, (MIA 1963), read in conjunction with the terms and conditions of the Policy of Insurance.
We have also satisfied ourselves that the loss was not caused proximately or concurrently by perils
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enumerated in the Paramount Exclusions of Clauses 20, 21, 22 and 23 of the Institute Voyage Clause Hulls 1.10.83 wordings.”
It is further observed in the said report that there was
“no evidence to indicate that there was either non-
disclosure of material facts or of any misrepresentation
to underwriters by PBIL as the Proponent.” They finally
assessed the claim under Total Loss Claim at Rs. 13.69
crores.
8. The National Commission, upon a meticulous
assessment and analysis of all the aforesaid survey
reports, found that:
A) Insurance coverage was taken for a short voyage of the vessel from Alang Anchorage to Alang Ship Breaking Yard;
B) The vessel came from Singapore to Alang Anchorage point and was on its funeral voyage;
C) From Singapore to Alang Anchorage point voyage was carried out on one engine only.
D) Delivery of the vessel was given to the insured at the Alang Anchorage point by the seller;
E) At the time of the delivery one engine was functioning and was in working condition. The other engine was out of order;
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F) Beaching of the vessel was scheduled on 6.6.97 at the evening tide time;
G) As the engine failed to start, beaching was not carried out;
H) Thereafter, beaching was scheduled on 9.6.97;
I) During the voyage, the sea condition was rough and strong sea currents were flowing due to strong monsoon winds.;
J) The vessel started drifting away from the yard, and drifted towards a different point;
K) Near Plot No. V-5(resting place) and beyond there was a coral rock structure on see bed which was not visible during the high tide time. The vessel’s bottom collided with rocks and the vessel was grounded and all efforts to move the vessel on available power failed.
L) The vessel was thereafter, badly damaged and was found deeply imbedded to the depth of 5ft.
M) It has developed holes and cracks;
N) With all normal efforts floating of the vessel was not possible because it was partially lying on the rock structure and partially submerged in sand; and
O) The grounded vessel could not be re-floated with the normal salvaging procedure and could not be beached.
In addition, in the report of J.B. Boda Offshore
Surveyors & Adjusters Pvt. Ltd, it is inter alia
observed: ”It is a ‘total loss’ because it was
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irretrievably stranded – it was concluded that the
vessel was irretrievably stranded due to marine
casualty which has resulted for the vessel being
deemed a total loss.”
9. Tony Fernandez Average Adjusters Pvt. Ltd.
further inter alia stated that “there is no evidence with
regard to non-disclosure of material fact, nor
misrepresentation; and the proximate and dominant
cause of vessel becoming a total loss was stranding on
the rocky shoal prior to arriving at the destination.
This was due to heavy weather encountered on the
‘funeral’ voyage to the ship-breaking yard. The
stranding was accidental and a fortuitous one in nature
and was proximately caused by an insured peril”.
10. In the proceedings before the National
Commission, the respondent complainant mainly
contended that the vessel was badly damaged due to
rough weather and strong winds and has collided with
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coral rock structure which was not visible during the
high tide and efforts to move the vessel failed. It had
relied upon the surveyors’ reports that there was a
total loss and grounded vessel cannot be refloated with
normal salvaging procedure and cannot be beached. It
relied upon the version of the Port Officer that the
damage by stranding was attributable to the prevailing
adverse weather conditions at the time of attempting
to beach the vessel at the designated plot. It is under
those circumstances the complainant contended that
there was no justifiable reason or ground for
repudiating the claim.
11. On behalf of the appellant insurance Company, it
was merely contended that there was no deficiency of
service on the part of the appellant insurance Company
which was repelled by the National Commission. It
was also contended on behalf of the appellant
Insurance Company that there was no ‘total and/or
constructive loss’ as defined under Sections 57 and 60
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of the Marine Insurance Act, 1963 inasmuch as the
insured has recovered more than Rs. 13.00 crores by
sale of the vessel. The Commission having
meticulously examined the rival contentions with
regard to this particular point, found that there was
actual total loss of the vessel to the complaint because
the complainant could not bring the vessel to the
destined point for its breaking. The Commission found
that the vessel was brought for the sole purpose of
‘breaking’ and the complainant has lost its purpose as
it could not bring it to the destined point because of
the sea peril. It was impossible for the complainant to
refloat the vessel for bringing it to the destined point
for the purpose for which it was purchased. The
National Commission also rejected the contention of
the appellant insurance Company that the respondent
complainant has committed utmost breach of the
principles of good faith. It was the contention of the
appellant insurance Company that the respondent
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complainant did not disclose at or before taking the
insurance policy that:
(a) one engine of the vessel (viz. starboard engine)
was not working.
(b) the Addendum no. 2 dated 3.6.97, which records
that the starboard engine of the vessel was not
working.
This plea of the appellant insurance Company was
resisted by the respondent mainly contending that the
issue has been raised for the first time at the time of
filing the written statement alleging non-disclosure of
material facts. The National Commission, after a critical
analysis of the material available on record, found that
the contract is liable to be repudiated for non-
observance of good faith or non-disclosure of the
material facts. At all points of time, the contract was
sought to be repudiated on the one and only ground
that there was no total loss. In this connection, the
National Commission examined the complete
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correspondence that has taken place between the
parties prior to filing of the complaint and written
statement before the National Commission and found
that at no point of time the insurance company took
any plea or stand that there was any suppression on
the part of the complainant in not disclosing that one
engine of the vessel was not functioning. The
Commission referred to the evidence led by the
appellant insurance Company in which it was
specifically admitted that repudiation was only on the
ground that the vessel had encountered neither total
loss nor a constructive total loss. It is under those
circumstances the Commission found that the issue
has been raised by the insurance Company for the first
time in the proceedings before it only as an
afterthought.
12. The Commission also found that at the time of
making insurance proposals, the respondent had given
Memorandum of Agreement (MOA) along with two
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addendums and one addendum clearly stated that the
vessel was with one engine, and it has come from
Singapore to Alang Anchorage for its funeral voyage.
The Commission found that there is no reason to
disbelieve this version of the respondent. Neither the
agent of the insurance Company nor the Development
Officer stated that addendum No. 2 was not given to
the insurance Company at the time of issuing the
policy. The Commission also noticed that the vessel
sailed from Singapore with one engine without any
difficulty and in such view of the matter, the
Commission found that it would be of no significance in
the present case even if there is non-disclosure of fact
that only one engine was working.
13. We do not wish to refer to other issues raised by
the insurance Company before the Commission which
were dealt with since the only question that was
argued before us in this appeal relates to non-
disclosure of the material facts. The learned counsel
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for the appellant submitted that the respondent
complainant suppressed the material fact that one
engine of the vessel was not working and therefore,
not entitled to any relief. We do not find any merit
whatsoever in the submission made by the learned
counsel for the appellant. The material available on
record which has been taken into consideration by the
National Commission clearly demonstrates that the
respondent complainant never made any
representation that the vessel had two functional
engines. On the other hand, addendum No. 2 to MOA
expressly speaks about the fact that starboard engine
was not working. The MOA that was forwarded
included both the addendums and in fact it was one of
the reasons for demolishing the vessel. At any rate, as
observed by the National Commission, at no point of
time the insurance Company took this plea to
repudiate the contract. This plea was raised for the
first time in the written statement filed in the National
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Commission as an afterthought.
14. The learned counsel for the appellant did not
show any material available on record in support of her
submission. Nor the counsel could point out any
material or evidence which has a bearing on the issue
that had escaped the attention of the Commission.
Thus it is not a case of non-consideration of any
evidence available on record by the Commission. The
findings and conclusions drawn by the National
Commission are based on proper appreciation and
elaborate consideration of the entire material available
on record. The Commission did not commit any error
in appreciating the evidence available on record. The
contention urged before us in this appeal is accordingly
rejected. No other contention was raised.
15. For the same reasons, we find no merit in the
cross appeal preferred by the respondent complainant.
16. The appeals are accordingly dismissed.
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….………..………………………J. (B. SUDERSHAN REDDY)
……………………………………J. (SURINDER SINGH NIJJAR)
NEW DELHI, March 9, 2011.
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