REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 971 OF 2014

M/s Rajankumar and Brothers (Impex)   ….Appellant(s)

 Versus

Oriental Insurance Company Ltd. ….Respondent(s)

J  U D  G  M  E  N T

MOHAN M. SHANTANAGOUDAR, J.  

1. This appeal arises out of judgement of the National

Consumer Disputes Redressal Commission (‘NCDRC’) dated

12.11.2013, dismissing the consumer complaint filed by the

Appellant herein.

2. The timeline of events giving rise to the present appeal is

as follows: The Appellant is a partnership firm in the business of

import­export of various commodities, including steel coils. The

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Respondent insurance company issued a Marine Cargo Cover Note

(hereinafter ‘Cover Note’) dated 14.5.2010 for a sum of 12,63,712.50

US Dollars, covering voyage from any port in China to Mumbai Port.

It was stated in the aforesaid Cover Note that a policy document

would be issued once the Appellant furnished the requisite

particulars of the vessel in which the cargo  was  being carried.

Accordingly, the Appellant forwarded the particulars of ‘Khalijia­III’,

the vessel in which the cargo was to be carried (hereinafter ‘subject

vessel’), to the Respondent, vide letter dated 26.5.2010. It was

stated in this letter that the subject vessel was built in March 1985,

and its “class” was specified as ‘I.R.S.’. The Appellant’s case is that

it had communicated the aforementioned details regarding the

subject vessel to the Respondent, as well as the Respondent’s

insurance broker, as per the documents presented by the Overseas

Seller.

2.1 Thereafter, Hangzhou Cogeneration (Hong Kong) Co. Ltd.

(hereinafter ‘Overseas  Seller’), through  its  agent  M/s Kirtanlal  &

Sons, shipped 80 prime hot rolled steel coils weighing 2000 Metric

Tonnes on board the subject vessel from Caofeidian Port, China to

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the Appellant, for discharge at Mumbai Port. The subject vessel was

carrying on board consignments of prime hot rolled steel coils of

seven other importers who had also imported them from the same

Overseas Seller. Subsequently, the Respondent’s brokers issued a

single voyage policy dated 2.7.2010 (hereinafter ‘Marine Insurance

Policy’) to the Appellant. It is undisputed that the Marine Insurance

Policy covered all risks as per the Institute Cargo Clauses (A),

Institute War Clause, and Institute Strike Clause.

2.2 The subject vessel reached Mumbai port on 6.7.2010 and

was allotted a berth on 14.7.2010 for discharge of the cargo.

However, on account of failure of the vessel’s crane during

discharge, further discharge could not take place, and the subject

vessel was removed from the allotted berth by an order of the port

authorities. Subsequently, on 19.7.2010, the Appellant came to

know that the subject vessel had run aground on the midnight of

18.7.2010. Thus, by letter dated 20.7.2010, the Appellant informed

the Respondent that there was a possibility of them claiming under

the Marine Insurance Policy.  

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2.3 Thereafter, the shipowners engaged the services of M/S.

Smit Singapore Private Ltd. (‘Salvors’) for the purpose of recovering

the cargo. The shipowners also appointed M/s Richard Hogg

Lindley as the General Average Adjustor (‘GAA’). The GAA sent an

email dated 27.7.2010 to both the Appellant and the Respondent,

stating that the situation had given rise to a “General Average”. The

concept of General Average, in maritime law, refers to a loss

mitigation measure whereby all those who are interested in a

marine adventure make pro rata contributions towards the losses

sustained or expenditure incurred in time of peril for the common

good of all parties.1 For instance, if a ship runs aground, as in the

present case, the shipowners and the cargo interests are mutually

liable for reimbursing the losses arising from such an event. If there

is  a contract of  marine insurance in respect of the voyage, the

insurer will be liable for reimbursing the amount on behalf of the

assured cargo owner.  

Accordingly, the Appellant requested its insurer i.e. the

Respondent, to issue a General Average Guarantee in ‘Form B’, as

1  Kyraki Nouassia,  The Principle of Indemnity in Marine Insurance Contracts: A Comparative Approach (Springer, 2007) 161.

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required by the GAA. The Respondent consequently issued a

guarantee dated 3.8.2010, agreeing to pay the GAA on behalf of the

Appellant, for contribution towards the General Average, as well as

towards other special charges. These documents were submitted by

the Appellant to the GAA.  

2.4 After the receipt of the General Average Guarantee, the

GAA requested the Appellant to pay a separate salvage security of

25 per cent of the ‘Cost, Insurance, and Freight’ (‘C.I.F.’) value of

their cargo, which amounted to 256,880 US dollars. Hence, by letter

dated 5.8.2010, the Appellant requested the Respondent to  issue

the salvage security. The Appellant contends that the Respondent

did not issue the separate salvage security as required, resulting in

the  withholding  of the release  of the  Appellant’s  consignment  at

Mumbai port, and exposing it to heavy demurrage and likelihood of

further damages. In addition to not issuing the salvage security, the

Respondent, by letter dated 20.8.2010, informed the Appellant that

they  were  withdrawing  the  General  Average  Guarantee, ‘Form B’

issued by them earlier in respect of the Appellant’s consignment on

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the subject vessel, on account of non­compliance with the ‘Institute

Classification Clause’ (‘ICC’) in the Marine Insurance Policy.  

2.5  Unfortunately for the Appellant, on 7.8.2010 there was a

collision between the subject vessel and a navy vessel in the waters

near Mumbai Port. On 13.8.2010, the Salvors claimed a maritime

lien on the cargo. Further, the Salvors initiated arbitration

proceedings against the Appellant and the shipowners. During the

course of the aforesaid arbitration proceedings, the Salvors

obtained interim orders from the Hon’ble High Court of  Mumbai,

restraining the  Appellant from removing their consignment from

Mumbai Port. Ultimately, vide order dated 24.8.2010, the High

Court directed that the Appellant would be allowed to take its

consignment on furnishing security in the form of a bank guarantee

in the sum of Rs. 14 crores. The Appellant furnished the security as

directed and took delivery of the consignment from the Mumbai Port

Trust on 3.9.2010. On 2.12.2011, the Arbitrator passed an award

against the Appellant and other cargo owners, finding them liable

for reimbursing the costs incurred by the Salvors.  

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2.6 The Appellant,  by letter  dated 2.2.2012, requested  the

Respondent to settle the losses incurred by it, and also forwarded a

copy of the aforementioned arbitration award dated 2.12.2011. A

legal notice was also sent on 21.6.2012, followed by a reminder on

4.7.2012, but these went unanswered. Hence, the Appellant filed a

consumer complaint  before the  NCDRC against the  Respondent,

asking for compensation on account of the losses incurred, for

deficiency in service, and for the legal and other incidental

expenses.  

2.7 The Respondent did not  file a written statement before

the NCDRC, and its request for consideration of written arguments

was rejected. However, counsel for the Respondent was allowed to

make oral submissions on the questions of law involved in the case.

The NCDRC found that the Appellant had failed to prove that the

subject vessel was in compliance with the ICC stated in the Marine

Insurance Policy. It noted a communication dated 9.8.2010, in

which the Respondent’s claim settling agent in London had

informed the Respondent that the subject vessel was classed with

Lloyd’s Register of Shipping until 10.10.2007, after which Lloyd’s

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had withdrawn  the  aforesaid  classification,  and  that the  subject

vessel appeared to be outside the scope of the ICC. The NCDRC

further found that the subject vessel had been more than 25 years

old on the date of loss i.e. when it ran aground on 18.7.2010, and

the Appellant had not produced any document showing that the

subject vessel  was classed  as ‘I.R.S.’  Hence, the complaint  was

dismissed.  

3. Heard learned counsel for both parties.  

3.1 Learned counsel for the Appellant submitted that the

‘I.R.S.’ classification was granted to the subject vessel by the

‘International Register of Shipping’, which is an independent

classification society. Further, that after the issuance of the Cover

Note, the Appellant had provided all particulars regarding the

subject  vessel,  and expressly  asked the  Respondent whether the

subject vessel was acceptable. It was argued that had the

Respondent indicated  at the time  of the issuance  of the  Marine

Insurance Policy that the classification was not acceptable; the

Appellant could have paid an extra premium to purchase the policy.

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This is as per the terms of Clause 6 of the Cover Note, which reads

thus:

“6  For coverage of shipments  by sea: the vessel shall conform  to the current Institute  Classification  Clause; otherwise the cover shall be subject to additional steamer extra premium such as coverage,  under  tonnage,  non­ classification and non approval extra at underwriter’s discretion.”

Learned counsel also referred to the Institute Marine

Cargo Clause (A) (‘Cargo Clause’) within the Marine Insurance

Policy, which provides for waiver of any breach of implied

warranties of seaworthiness of the subject vessel. He argued that

under the terms of the Cargo Clause, the Respondent would have

the right to not indemnify the Appellant only if the Appellant or its

servants were privy to such unseaworthiness. It was argued that

the Appellant was merely a cargo­importer, and not the vessel

owner, and had communicated all the particulars of the vessel as

provided to it by the Overseas Seller. Therefore, the Appellant could

not be said to have been privy to the unseaworthiness, if any, of the

subject vessel.

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Lastly, it was contended that indemnification by the

Respondent could not be dependent on the amount of loss caused

to the insured or on the nature of accident that caused the loss. It

was argued that  that once  the Respondent provided the General

Average Guarantee, it was estopped from claiming that the

Respondent had breached the ICC. 3.2 On the other hand, learned counsel for the Respondent

argued that there was a clear breach of the ICC, inasmuch as the

Appellant had failed to disclose that the classification granted to the

subject vessel by Lloyd’s Register of Shipping had been withdrawn

on 10.10.2007. So far as the I.R.S. classification is concerned, it

was submitted that ‘I.R.S.’ referred to Indian Register of Shipping,

and not International Register of Shipping, as claimed by the

Appellant. Furthermore, it was contended that although the

Appellant claimed to possess a certificate proving the ‘I.R.S.’

classification of the subject vessel, it had neither submitted the said

certificate to the  Respondent,  nor  produced  the same before the

NCDRC.  In response to the Appellant’s argument that the

Respondent was estopped from claiming breach of the ICC by its

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conduct in providing the General Average Guarantee, it was

submitted that at the time when such Guarantee was sought for by

the  Appellant, the  priority of all parties involved  was to ensure

mitigation of losses by saving as much of the cargo as possible. It

was only after the collision of the subject vessel on 07.08.2010 that

the Respondent began investigating into the seaworthiness of the

vessel, and found out that it was not a classed vessel at the time of

issuance of the Marine Insurance Policy. Therefore, it was

submitted that the Respondent would not be estopped from

claiming breach of the ICC merely because it had,  in good faith,

provided the General Average Guarantee so as to mitigate the

Appellant’s losses.

4.  Upon our  perusal of the  material on record  and after

hearing the learned counsels, we find that two issues arise in the

instant case:

First,  whether the  Appellant  had committed  breach of

warranty with respect to compliance with the ICC?

Second, whether the Respondent had waived such breach

of warranty by the Appellant?

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5. With respect to the first issue, it is not disputed that both

the Cover  Note and  the  Marine  Insurance Policy  stated  that the

‘ICC’ would be one of the warranties/terms of insurance.

Additionally, Clause 6 of the Cover Note, as mentioned supra,

prescribed that the subject vessel needed to conform to the current

ICC, in the absence of which, the insurance cover would be subject

to payment of an additional premium.  

At this juncture, we find it useful to dwell upon the scope

and relevance of the ICC in marine insurance contracts. The ICC is

drafted and  issued by  the  Joint  Cargo Committee  of the  Lloyd’s

Marketing Association (a premier marine insurance market in

London) in consultation with insurance and shipping interests. It is

commonly understood that this ‘classification’ relates to the

seaworthiness of the vessel in  which the cargo is carried.2  The

relevant portion of the latest version of the ICC, as revised in 2001

(‘ICC 01/01/2001’), which was in force at the time of the Marine

Insurance Policy, and continues to be in force till  date, reads as

follows:

2 See John Dunt, Marine Cargo Insurance (Informa Law, Routledge, 2009)166.  

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“QUALIFYING VESSELS 1 This insurance and the marine transit rates as agreed in the policy or open cover apply only to cargoes and/or interests carried by mechanically self­propelled vessels of steel construction  classed  with  a  Classification Society which is:  

1.1 a Member or Associate Member of the International Association of Classification Societies (IACS), or  

1.2 a National Flag Society as defined in Clause 4 below, but only where the vessel is engaged exclusively in the coastal trading of that  nation  (including  trading on an inter­island route  within  an  archipelago  of  which that nation forms part).  

Cargoes and/or interests carried by vessels not classed as above must be notified promptly to underwriters for rates and conditions to be agreed.  Should a loss occur prior to such  agreement  being  obtained  cover  may  be provided but only if cover would have been available at a reasonable commercial market rate on reasonable commercial market terms.

AGE LIMITATION  2 Cargoes and/or interests carried by Qualifying Vessels (as defined above) which exceed the following age limits will  be  insured on the policy  or  open cover  conditions subject to an additional premium to be agreed.  Bulk or combination carriers over 10 years of age or other vessels over 15 years of age unless they:  

2.1 have been used for the carriage of general cargo on an established and regular pattern of trading between a range of specified ports, and do not exceed 25 years of age, or  

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2.2 were constructed as containerships, vehicle carriers or double­skin open­hatch gantry crane vessels (OHGCs) and have been continuously used as such on an established and regular pattern of trading between a range of specified ports, and do not exceed 30 years of age.

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PROMPT NOTICE 5 Where this insurance requires the assured to give prompt notice to the Underwriters,  the right to cover is dependent upon compliance with that obligation.”   (emphasis supplied)

As is evident from the above, the ICC 01/01/2001

imposes two requirements to ensure that the vessel complies with a

certain minimum standard of seaworthiness. The first is a

classification requirement which requires that the vessel should be

classed with a Classification Society which is a Member/Associate

Member of the International Association of Classification Societies

(‘IACS’) or, in the case  of vessels engaged  exclusively in coastal

trading, a National Flag Society. The second is an age limitation in

respect of the insured vessel. The IACS  consists  of  12  member

societies, as listed below:

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(i) American Bureau of Shipping (A.B.S.)

(ii) Bureau Veritas

(iii) China Classification Society (C.C.S.)

(iv) Croatian Register of Shipping (C.R.S.)

(v) Det Norske Veritas­Germanischer Lloyd (D.N.V.­G.L.)

(vi) Indian Register of Shipping (I.R.S.)

(vii) Korean Register of Shipping (K.R.)

(viii) Lloyd’s Register (L.R.)

(ix) Nippon Kaiji Kyokai (ClassNK)

(x) Polish Register of Shipping (P.R.S.)

(xi) Registro Italiano Navale (R.I.N.A.)

(xii) Russian Maritime Register of Shipping (R.S.)

The official statement provided  by the IACS about its

Quality Standards is significant for understanding why

classification of a cargo vessel with a member­society of the IACS,

as opposed to any other society, is  considered as a yardstick to

judge whether the voyage policy can be reasonably insured.

Members of the IACS have to comply with the IACS ‘Quality System

Certification Scheme’ (QSCS), which, after 25 years of continuous

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evolution, is considered as the ‘gold standard’ for ship classification

societies. Moreover, every IACS member is required to have its own

‘Internal  Quality  Management  System’ for ensuring that classed

vessels meet certain minimum criteria of quality. The audits of all

IACS members, and of those societies who wish to be considered for

such  membership, are carried out by independent accreditation

bodies,3  which lends further legitimacy to the classification

accorded to vessels by IACS members.  

Thus, it can be inferred from the above that an

underwriter/insurer would usually trust the quality of, and be

prepared to issue a reasonable premium for, a vessel classed with

an IACS member society. On the other hand, the insurer may

demand a higher premium, or deny insurance cover altogether, for

a voyage in respect of a vessel classed  by  a  non­IACS  member

society. Hence, the ICC prescribes classification with a member of

the IACS as the baseline for ensuring that the policy involves less

risk for the underwriter.  

3  International Association of Classification Societies,  Quality System Certification Scheme  (QSCS), http://www.iacs.org.uk/quality/quality­system­certification­scheme­ qscs/ (Last visited Feb. 2, 2020).  

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Therefore, Sub Clause 1 of the ICC 01/01/2001 provides

that cargo interests are obligated to promptly notify insurance

underwriters if the cargo is being carried by a vessel which is not

classed as prescribed in the ICC, and Clause 5 makes it clear that

failure to  provide  such information  will lead to  exclusion  of the

insurance cover.  

5.1 It has been contended by the Appellant that the NCDRC

has erred in relying on the older version of the ICC, i.e. the 1978

version. We are in agreement with the said contention of the

Appellant, inasmuch as the 1978 version of the ICC was replaced

by the ICC 13/4/92, the ICC 1/8/97, and the ICC 01/01/2001. As

mentioned supra, the ICC 01/01/2001 is the most recent version of

the ICC, and the one  which is relevant for the purpose of the

present case.

However, the  most recent  version of the ICC, i.e., ICC

01/01/2001, parts of which we have quoted earlier, does not help

the Appellant’s case inasmuch as it is stricter in its import. We find

it useful to undertake a comparative analysis of the older versions

of the  ICC and the  ICC 01/01/2001 in this regard.  Clause 1 of

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previous versions of the ICC stated that, “The marine transit rates

agreed in this insurance apply only to cargoes and/or interests…

classed as below by one of the following classification societies.”

This phrasing had led to confusion as to whether a failure of the

vessel to  comply with the classification requirement would mean

that the risk was completely excluded from cover or merely that the

premium  rate, as agreed  upon,  would  no longer apply and the

assured would have to pay a different premium rate.4 Hence, in the

ICC 01/01/2001, Sub Clause (1) was modified to read as follows:

“This insurance and the marine transit rates as agreed in the  policy  or  open cover  apply  only to  cargoes and/or interests…classed with a Classification Society...” (emphasis supplied)

The word  ‘insurance’ was specifically added in the ICC

01/01/2001 to clarify that the insurance itself, and not merely the

rate  of  premium,  is  subject to compliance with the classification

requirement.5 Furthermore, the 1978 version provided that:

“Cargoes and/or  interests carried by mechanically self­ propelled vessels not  falling within the classification of the above are held covered subject to a premium and on conditions to be agreed.” (emphasis supplied)

4 Dunt, supra note 2, at 167. 5 Dunt, supra note 2, at 167.

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The aforementioned  ‘held covered’  provision acted as a

saving clause to cater for situations where an assured discovered

that the vessel in which their cargo was being carried fell outside

the  classification and/or  age requirement in the ICC. In such a

situation the assured cargo owner could still avail of the insurance

cover subject to negotiating payment of an additional premium with

the insurer.  

English jurisprudence stipulates two requirements to

avail of such ‘held covered’ provisions ­ first, ‘prompt notification’ to

the underwriter, and second, the availability of cover at reasonable

commercial market rates. However, the wording of the ‘held covered’

provision in the ICC 1978, quoted supra, did not expressly state

these requirements, leading to the  apprehension that it  may  be

interpreted to mean that cover could be obtained in all cases,

without any precautionary measures being followed by the assured.

Hence, it  appears  that in order to  avoid  any confusion, the  ICC

01/01/2001 has been drafted to expressly incorporate the aforesaid

two requirements. Under the ICC 01/01/2001, the assured must

immediately inform the insurer/underwriter if they  discover that

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the vessel carrying the cargo does not meet the classification

requirement.  

Additionally, if the vessel is such that a prudent

underwriter  would  not be prepared to  underwrite the risk at a

reasonable premium, the assured is not entitled to the insurance

cover.6  These requirements  are important  because,  as  discussed

earlier, the classification  of the vessel is a significant factor for

influencing the underwriter’s decision­making as regards whether

an insurance cover should be issued for the marine voyage or not.  

5.2 We  find  it  useful to  refer to some of the  common  law

decisions on the impact of non­compliance with the classification

requirement in the ICC. The courts of Singapore and Hong Kong

have frequently been seized with this question, and have held that

non­compliance  would render the  claim of the  assured excluded

from cover, and that it is the burden of the assured to inform the

insurer about such non­compliance and negotiate a reasonable

premium beforehand.

6 Dunt, supra note 2, at 168.

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5.3 In Everbright Commercial Enterprises Pte Ltd v. Axa

Insurance  Singapore Pte  Ltd  [2001]  SGCA 24, the  respondent

insurance company issued an ‘open cover note’ to the appellant in

that  case, trading in respect  of  shipment  of  wood  logs from the

Solomon Islands to Tuticorin, India. The arrangement between the

parties under the terms of the aforesaid ‘open cover’ was that the

appellant would provide the respondent’s insurance broker, Wilcom,

the details  with respect  to the description of the goods,  and the

ports of loading and discharge, for the purposes of issuance of the

cover note. However, the particulars of the carrying vessel were to

be declared subsequent to the cover note being issued. The

insurance policy was to be issued only once the vessel was on the

way to the port of discharge.  

The cover note was issued by Wilcom on behalf  of the

insurer on 9.5.1997. On 2.7.1998, the appellant communicated the

particulars of the ship to Wilcom, including that the class of the

vessel was ‘HSR­100A1’. Subsequently, before the insurance policy

could be issued, the ship was lost. The insurer came to know that

the ship was a ‘phantom ship’, i.e. one which has no valid

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classification, is not registered with any recognized ship registry,

and is usually operated by criminals. Hence, the insurer repudiated

the appellant’s claim on the ground that the vessel did not comply

with the requirements of the ICC 13/4/92 (which was the version of

the ICC in force at that time) as stipulated in the cover note.  

The Singapore Court of Appeal upheld the repudiation. It

also held that though the appellant cargo company had given

prompt notice, it would not be saved by the ‘held covered’ clause as

no reasonable underwriter would agree to issue cover for a vessel

with a suspicious classification background, even for a higher

premium.  It is pertinent to note that the above decision in

Everbright Commercial Enterprises  (supra) was rendered in the

context of the ICC 13/4/92 when the ‘held covered’ provision did

not expressly provide for the requirements of ‘prompt notification’

and ‘availability of reasonable premium’. However, the Court relied

upon the common law interpretation of ‘held covered’, as laid down

in the decisions of Thames and Mersey Marine Insurance Co Ltd

v. H T Van Laun & Co  [1917] 2 KB 48 and Liberian Insurance

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Agency Inc v. Mosse  [1977] 2 Lloyd’s Rep 560, to incorporate the

aforesaid requirements, and made the following observations:

“35     In construing this clause, we should bear in mind that the purpose of adopting the ICC is to ensure that the vessel  chosen by the insured to carry his cargo would meet certain standards of seaworthiness and maintenance by virtue of the fact that the carrying vessel is classed  by one of the  well­established international classification societies listed in the ICC  and is  within certain age limits. In an open­cover insurance, as in the present case, the ICC is adopted and forms part of the cover note, and is principally intended to deal with the agreed rates of premium for the insurance of a shipment in a case where the cover is provided before the particulars of the carrying vessel are declared to the underwriter. Where the carrying vessel subsequently declared has a listed classification and is within the age limitation, the ICC applies the agreed rates of premium for the insurance of such shipment. Where, however, the carrying vessel declared does not have a listed classification  or is  not  within the  age limitation, such agreed rates are not applicable for the insurance of the shipment; but in such event, the shipment is, nonetheless,  covered and  falls  within the  held  covered clause, subject to the payment of a premium as well as on conditions to be agreed between the underwriter and the insured. In Marine Reinsurance (1981) by Robert H Brown and Peter B Reed, the learned authors said at p 127:

When operating a cargo open cover the underwriter is not in a position to examine each risk separately, nor to  assess  it  on  the basis  of the  carrying  vessel.  He  is obliged to accept all valid declarations declared under the open cover.  However, to ensure that he obtains a premium commensurate with the additional risk arising

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from the use of  inferior vessels or bad management he attaches a “classification clause” to the open cover.  The effect of this clause is to apply a higher premium rate to shipments carried by overseas vessels that do not meet the minimum requirements of the classification clause.

The held covered clause is in effect a safety net to provide shippers a cover for their cargoes in the event that the carrying vessels declared by them do not satisfy the requirements as to class and age specified  in the  ICC, subject to the payment of a premium and on conditions to be agreed…

Xxx

53     Reverting to the present facts, one has to ask what a reasonable commercial rate of premium would be, that would have been fixed, if the parties were aware of all the facts affecting the risk involved in shipping the cargo on board the Sirena 1. No regard should be given to the fact that the Sirena 1 eventually turned out to be a phantom ship since that would be erroneously taking into account the “casualty” that happened later. Instead, the focus should be on all the facts that were available on 2 July 1998, when Everbright declared the details of the Sirena 1 to  AXA…It is clear from  the Greenock case ([49] supra) and the two cases which followed it, that it does not matter that the relevant facts affecting the risks were not known to the parties until  after the loss had already occurred. All the facts that were available at that time should be taken into account. The following are the relevant and undisputed facts about the Sirena 1 which we find could have been known to the parties on 2 July 1998:

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(a)     The vessel was not classed by any recognised classification society. Its classification was stated as HSR­100A1. It is unclear which classification society classed the vessel. It  was speculated that  “HSR” could either be Hellenic Shipping Registry of Greece or Honduras Shipping Registry. A proper check would have revealed that the Sirena 1 had no proper classification…

 (c)     The vessel was not listed or found in the Lloyd’s Register of Ships…

 (e)     The cover was on Institute Cargo Clauses (All Risks) terms.

(f)     The shipment was a chartered shipment, where there is higher risk involved, bearing in mind the size and value of the cargo to be insured.

54     Before the incidence  of the loss, it  was  probably unlikely that a reasonable and prudent underwriter would conclude with reasonable certainty that the Sirena 1 was a phantom ship. But it does not follow that a reasonable and prudent underwriter would be prepared to provide insurance for the kind of risks involved.  In our view,  when confronted  with the facts which we have discussed, a reasonable and prudent underwriter would be put on enquiry and upon enquiry, they would find that there was no record of      Sirena      1  , and what emerged would be a vessel with a highly suspect background. Clearly, there were sufficient warning signs which would persuade a reasonable and prudent underwriter to reject providing cover rather than to accept a higher  premium to cover the  increased risks. This is especially so since the  policy required  was  on Institute Cargo Clauses (All Risk) terms and the value to be insured was high as it was a chartered shipment. In our judgment, in the circumstances, a reasonable commercial rate of premium would not be available for insuring the shipment of logs on board the Sirena 1, and

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consequently Everbright would not be able to invoke successfully the held covered clause…”  

(emphasis supplied)

Thus, it can  be  seen from  the  above that the lack  of

recognized classification was a significant factor in leading the

Court to conclude that the appellant therein would not be saved by

the  ‘held covered’ clause. This is because no underwriter/insurer

would agree to insure a high value shipment, and include all risks

arising thereunder for a voyage involving a vessel which is of

suspect classification, even if the assured agreed to pay a higher

premium in respect of the same.  The Court further held that the fact that the insurer had

not specifically informed the appellant, prior to loss of the ship, that

the vessel was not included in the ICC, would not amount to a case

of estoppel by silence or acquiescence. Rather, it was held that it

was the obligation of the assured to ensure that the shipment

complied with the terms and conditions of the cover note, as

elucidated by the Court in the following terms:

“57     In considering this issue of estoppel, it is helpful to bear in mind the obligations of each party in effecting the

26

insurance under the cover note. It is not disputed that the insurance sought to be effected by Everbright with AXA was not a facultative insurance where the insured provides full details of the shipment, including the relevant particulars of the vessel, to the underwriter for consideration on whether the shipment would be accepted for immediate insurance. What the parties here had arranged  for  was an open­cover insurance or  one akin to an open­cover insurance, where a cover note incorporating the ICC was first issued for the prospective shipment of cargo and the relevant particulars relating to the shipment were to be declared later by Everbright to AXA. In respect of this arrangement, the obligation was on  Everbright to ensure that their shipment complied with the terms and conditions of the cover note, and only if such shipment complied with the terms would there be insurance coverage for the shipment. AXA, on their part, had no right to reject a vessel which complied with the terms and conditions, but they were under no obligation to  inform Everbright, if  the vessel declared did not  fall within the terms of the ICC.”

It is true that the Court’s reasoning in  Everbright  was

significantly predicated upon the fact that the respondent insurer

had issued an ‘open­cover’ insurance in which the insurer had only

issued a cover­note based on the details of the cargo and the port of

origin and destination of the voyage, and the relevant particulars of

the vessel had not been provided to the insurer in advance. This is

important to note because in the present case, though the

Respondent initially issued the Cover Note dated 14.5.2010 (supra)

27

without knowing the particulars of the vessel, it subsequently

issued the  Marine Insurance  Policy  dated  2.7.2010  after  having

received the Appellant’s communication that the vessel was classed

as ‘I.R.S.’  

Subsequent common­law decisions,  however,  have held

that the obligation of the assured to inform the correct details in

respect of the vessel’s classification extends even where a policy is

issued after the particulars of the vessel have been provided.  

5.4 In Nam Kwong Medicines & Health Products Co. Ltd.

v. China Insurance Co. Ltd. [2002] 2 Lloyd's Rep. 591, the insurer

denied liability for loss of goods during sea voyage inter alia on the

ground that the vessel  was  unclassified, and  thus, there  was  a

breach of the ICC. It was contended by the insured that in

‘facultative’ insurance covers where there was no warranty that the

ship was classed with an approved classification society, and where

an ‘overage’ surcharge (i.e. an extra premium with respect to the

age of the vessel) had been duly paid, the ICC could not be made

applicable.  

28

The High Court of Hong Kong rejected the argument of

the insured, holding that facultative insurance covers and the ICC

were not mutually exclusive, and that the requirement of ICC

classification was no different from the one that existed in open­

cover insurances. The Court also reaffirmed the principle of English

law as stated in Liberian Insurance Agency (supra), i.e., that the

‘held covered’ clause in insurance contracts could not be invoked in

cases where it would have been impossible to insure the risk at a

reasonable commercial rate of premium.

5.5 In  Kam Hing Trading (Hong Kong) Ltd.  v.  The

People’s Insurance  Co. of  China (Hong  Kong)  Ltd.  and  Anr.

[2010] 4 HKLRD 630, the respondent insurance company

repudiated the claim of  the appellant cargo seller  on the ground

that that the vessel carrying was not classed in compliance with the

ICC. It may be worth noting that in Kam Hing Trading (supra), the

appellant cargo company had produced a certificate to show that

the vessel  was classed by the  International Register of  Shipping.

However, it was observed by the High Court of Hong Kong that the

29

International Register of Shipping was not a Member or Associate

Member of the IACS, as required by the ICC 01/01/2001.

It was argued by the appellant that the burden to verify

whether or not the vessel was classed was upon the insurer, and

that once the insured had provided the name of the vessel to the

insurer, the insurer had the means to verify the class of the vessel

from registers/databases of ships, and the subsequent issuance of

a marine cargo policy by the insurer amounted to acceptance of the

non­classed vessel.  

The High Court of Hong Kong, referring to the decision of

the Singapore Court of Appeal in  Everbright Commercial

Enterprises  (supra),  held  that  as  per the ICC 01/01/2001, the

insured was obligated to disclose that the vessel was not classed in

accordance with the ICC. The Counsel for the appellant sought to

distinguish Everbright on the ground that in  Kam Hing, a policy

had been issued subsequent to the open cover­note. However, the

High Court of Hong Kong held that the obligation to disclose the

vessel’s classification was a continuing obligation ­ the assured was

30

required to provide a ‘prompt notice’ to the insurer once it became

privy to the fact that the vessel  was  non­classed, even if such

information was discovered after the policy had already been

issued. The following observations of the High Court of Hong Kong

are relevant to the instant case:

“172. It was the evidence of Mr Bilney, which in its substantially  amended  form  I  accept, that the ICC/01 class requirement is of central importance, and constitutes a condition of the insurance. I also accept the evidence of Mr Xie that such internal check as was made by the insurer did not extend to class, and in any event my view is that as a matter of principle that in the situation as had arisen the plaintiff was obliged to ensure by ‘prompt notice’ to the insurer that the carrying vessel was an “approved” vessel in terms both of the Open Cover and after issue of an actual policy; the Open Cover and the Cargo Policy each incorporated the ICC, and I have no doubt that this must be a continuing obligation on the part of the insured.

xxx

174. It follows that I reject the plaintiff’s submission that the legal/evidential ‘burden’ of discovering the non­ compliant class of the vessel lay on the insurer, which in light of such information as it may then discover of its own volition then  has to evaluate  whether, and  upon what terms, it is going to assume the increased risk, just as  I reject the argument that the  formal  issuance of a cargo policy effectively is conclusive of the insurer’s acceptance of the situation and/or that by such issuance

31

a ‘non­ICC­classed’ vessel thereby is, in effect, somehow transmuted to an ICC/01 ‘approved vessel’.

xxx

179. Accordingly,  I reject the argument that in the circumstances of this case the information given by the insured to the insurer constituted ‘prompt  notice’ in ICC/01 terms (see clauses 1 and 5 of ICC/01), and that thereafter it was the responsibility of the insurer to do its own investigation from  the primary (but patently incomplete) data provided by the putative insured, and thereafter to ‘fill in the blanks’ in terms of acceptance or otherwise arising from any perception of  increased risk due to any knowledge which may have been gained as to the ‘non­ICC­classed’ status of this carrying vessel.  

180. I accept the contention of the 1st defendant that the whole object of the ICC/01 ­ even absent an express ‘held covered’  clause ­ is to place the underwriter on risk, and that if the assured wishes to seek extended cover ­ as for example, due to the use, as here, of a non­ICC­classed vessel ­ then “prompt notice” (vide Clause 5 of the ICC) must be given to underwriters.  

xxx

181. In this context I record, and also accept, Mr Bartlett’s submission that the plaintiff never pleaded a case that it did send ‘notice’ to the insurers, and factually never did so, although he noted that at trial Mr Sussex but “faintly” had referred to an email from a Mr Sunny Ng of the plaintiff to loss adjusters dated 27 December 2007 as comprising such ‘notice’. I agree with the submission that this email clearly was nothing of the  sort,  and said  no more than  it  was attaching documents pursuant to a request from the loss adjusters for such documents, and made no mention of a desire to engage in negotiation for revised insurance terms, and thus could not possibly constitute nor

32

purport to be a ‘notice’ to insurers; indeed, in her evidence Ms Lui had confirmed that the plaintiff  had never sent nor  instructed the 2nd defendant to send such a notice to the insurer under ICC/01.”  

(emphasis supplied)

Therefore, where the insurer issues the insurance policy

based on incomplete or incorrect details provided by the assured,

it does not amount to acquiescence to improper classification of

the vessel. It is the duty of the assured to provide the full and

correct  particulars of the vessel  at the  time of issuance of the

policy, irrespective of whether or not the insurer carries out any

due diligence from their end. Since no such prompt notice was

given by the appellant in  Kam Hing Trading  (supra), the High

Court held that the appellant was excluded from the scope of the

insurance  cover.  The High Court further  observed that  even  if

such evidence had been given, there was no evidence to show that

premium could have been obtained at reasonable market terms,

and hence the ‘held covered’ clause would not apply. 5.6 Thus, it can be seen from the above decisions that where

a vessel is  not classed with a recognized classification society  in

terms  of the ICC,  any loss incurred  by the cargo­owner  will be

33

excluded from the scope of the insurance cover. Further, the cargo

owner is required to immediately notify the underwriters and

negotiate an additional premium  if the vessel is not classed in

accordance with the ICC.  

5.7  In the instant case, it is apparent that neither was the

subject vessel in compliance with the ICC clause, nor had the

Appellant given prompt notification to the Respondent about such

non­compliance. The Appellant, in its letter dated 26.5.2010 (supra)

had  informed  the  Respondent that the  vessel is  of ‘I.R.S.’ class.

However, the full  form of  ‘I.R.S.’  was not specified. As mentioned

supra, the Appellant has contended that the NCDRC wrongly

interpreted the term ‘I.R.S.’  to mean ‘Indian Register of Shipping’

and that the subject vessel was actually registered and classified

with the ‘International Register of Shipping’. However, our perusal

of the official website of the International Register of Shipping

shows that its official acronym is ‘INTLREG’.7 Whereas ‘I.R.S.’ is the

official acronym of the ‘Indian  Register of  Shipping’.8  Hence the

7 See International Register of Shipping, ‘About’, https://intlreg.org/about/.  8  See Indian  Register  of  Shipping, ‘About IRClass’,  https://www.irclass.org/about­ irclass/.  

34

Appellant’s contention that ‘I.R.S.’ refers to the International

Register of Shipping is prima facie sustainable.  

The  Appellant  had also  averred in its complaint  before the

NCDRC that the Overseas Seller had produced a certificate dated

11.6.2010, certifying that the subject vessel was registered with an

approved Classification Society as per  the  Institute  Classification

Clause. Further, that as per the said certificate, the class of the

subject vessel  was  equivalent to  Lloyd’s  100A1,  and the  subject

vessel was seaworthy and not more than 30 years old. However, no

such evidence of the vessel’s classification was ever provided to the

Respondent. It is true that the Appellant has, during the course of

hearing this appeal, placed the certificate dated 11.6.2010 before

this Court. However, a perusal of the certificate shows that is only a

self­certification wherein the vessel owners have claimed that the

subject vessel is classed with an approved classification society as

per the ICC clause. It cannot be taken as conclusive evidence that

the vessel was actually classed with an IACS member society.  

Even if we were to accept the Appellant’s contention that the

vessel is classed with the International Register of Shipping

35

(hereinafter ‘INTLREG’ for convenience), this does not help its case

inasmuch the  INTLREG is  not  one of the  12 accredited Member

Societies  of the IACS.  Rather, it is the I.R.S.  which is  an IACS

member. It has never been the case of the Appellant that the

subject vessel was classed by the Indian Register of Shipping. It is

also not the Appellant’s case that the subject vessel was classed

with a National Flag Society. Hence we find that the Appellant had

committed  breach  of the classification requirement contained in

Clause 1 of the ICC.  

5.8  The letter dated 26.5.2010 sent by the Appellant to the

Respondent, in respect of the ship’s particulars, cannot be said to

constitute ‘prompt  notification’ as the  particulars of the subject

vessel’s classification were not clearly specified therein. The

Respondent may have, in good faith, assumed that  ‘I.R.S.’ meant

that the subject vessel  was  classed  with the ‘Indian  Register  of

Shipping’, and  may  have consequently inferred that the subject

vessel fell within the scope of the ICC clause.  

It was only pursuant to the Appellant’s request for release of

separate salvage security that the Respondent’s claim settling

36

agents, M/s. W.K. Webster & Co., London by e­mail dated 9.8.2010

informed the Respondent that as per their investigation, the subject

vessel was classed with Lloyd’s Register of Shipping only until

10.10.2007, after which the classification was withdrawn. Hence it

was only from this e­mail that the Respondents came to know that

the shipment may fall outside the scope of the insurance cover, as

per the terms of the ICC. Consequently, we find that the ‘prompt

notification’ requirement  has  not  been satisfied,  and  there is  no

ground for the application of the ‘held covered’ clause.

5.9 Further, as per the observations of the Singapore Court

of Appeal in  Everbright Commercial Enterprises  (supra), we

consider it highly unlikely on the facts of this case that any prudent

underwriter would have agreed to cover the risk involved in a such

a high value shipment under the Marine Cargo Clause (which

covers almost all risks of loss or damage), even though the

Appellant  had  no  documentary evidence on record to  prove the

classification of the subject vessel. However, neither of the parties

has led evidence on whether the Respondent would have agreed to

insure the policy for a reasonable premium had the correct

37

particulars of the subject vessel been disclosed. Hence we do not

consider it appropriate to record any findings on the same. In any

case, such question does not arise inasmuch as the Appellant did

not provide “prompt notification” in the first place.   Hence, as

provided under Clause 5 of the ICC, the insurer’s liability is

automatically discharged.  Consequently, we conclude that the Appellant had

committed breach of the warranty contained in the Marine

Insurance Policy requiring the subject vessel to be classed in

accordance with the ICC, and such breach of warranty discharged

the liability of the insurer.

6.  The second issue which then arises for our consideration

is whether the Respondent had, through its conduct or in any of its

communications, waived the requirement of compliance of the

subject vessel with the classification requirement of the ICC. In this

regard, it may be of use to refer to Sections 35 and 36 of the Marine

Insurance Act, 1963 (‘1963 Act’):

“35. Nature of warranty.—(1) A warranty, in the following sections relating to warranties, means a promissory warranty, that is to say a warranty by which the assured undertakes that some particular thing shall

38

or  shall  not  be  done,  or that  some condition  shall  be fulfilled, or whereby he affirms or negatives the existence of a particular state of facts.

(2) A warranty may be express or implied.

(3)  A warranty,  as above defined, is  a condition which must be exactly complied with, whether it be material to the risk or not. If it be not so complied with, then, subject to any express provision in the policy, the insurer is discharged from liability as from the date of the breach of warranty, but without prejudice to any liability incurred by him before that date.

36. When breach of warranty excused.—(1) Non­ compliance with a warranty is excused when, by reason of a change of circumstances, the warranty ceases to be applicable to the circumstances of the contract, or when compliance  with  the  warranty is rendered unlawful  by any subsequent law.

(2) Where a warranty is broken, the assured cannot avail himself of the defence that the breach has been remedied, and the warranty complied with before loss.

(3) A breach of warranty may be waived by the insurer.”

A warranty  imposes certain obligations on the insured,

and Section 35(3) makes it amply clear that a warranty needs to be

complied with, regardless of whether or not its non­compliance

materially affects the risk involved in carrying the shipment. As a

corollary,  when a warranty is  not  complied with, i.e., there is  a

breach of warranty, the insurer is discharged from liability from the

39

date of such breach, by virtue of Section 35(3). At the outset,

therefore, it is important to note that the scheme of the 1963 Act is

clear inasmuch as the automatic consequence of a breach of

warranty is discharge of the insurer’s  liability. Such discharge of

liability  does  not require any express conduct or representation

from the insurer.  

However, Section 36(3) of the 1963 Act provides that the

insurer may waive a breach of  warranty.  Such a waiver may be

done either  by or  by  way  of incorporating certain terms in the

insurance contract, such as the ‘held covered’ clause in the ICC or

the exclusion clause found in the Institute Cargo Clauses, or by a

representation or  conduct  of the insurer.  We shall first  examine

whether the Respondent had waived the breach of warranty by way

of incorporating certain terms in the contract.

6.1  In the instant case, though the Respondent initially

issued the Cover Note dated 14.5.2010 without knowing the

particulars of the vessel in which the Appellant’s cargo was to be

carried,  it  subsequently  issued the Marine  Insurance Policy after

the particulars of the subject vessel, including the purported

40

classification of ‘I.R.S.’, were received. However, while the

importance of the ICC is undoubtedly more significant in cases of

‘open­cover’ insurances where the specific details of the vessel

carrying the cargo are not known to the insurer, as held in  Nam

Kwong Medicines (supra), a ‘facultative’ insurance policy in which

the details of the subject vessel are specified, need not be mutually

exclusive with the ICC.  

It is  not the Appellant’s case that the Respondent had

chosen to issue the Marine Insurance Policy despite being informed

by the Appellant that the vessel was non­classed. Rather the

Appellant had represented that the subject vessel was ‘I.R.S.’

classed. That being the case, as noted in Everbright Commercial

Enterprises  and  Kam Hing Trading  (supra), it was not the

Respondent’s burden to have investigated the Appellant’s claim and

informed  the  Appellant that the subject vessel  was  non­classed.

Hence, at the outset it is important to note that the mere formal

issuance of the Marine Insurance Policy by the Respondent does

not indicate ‘acceptance’/waiver of the vessel’s classification or lack

thereof.  

41

6.2 At this juncture, it may be pertinent to refer to Clause 5

of the Marine Insurance Policy which provides for exclusion of loss

arising from unseaworthiness of the subject vessel.

“5.1 In no case shall this insurance cover loss damage or expense arising from unseaworthiness of vessel or craft…

5.2 The Underwriters waive any breach of the implied warranties of seaworthiness of the ship and fitness of the ship to carry the subject­matter insured to destination, unless the Assured or their servants are privy to such unseaworthiness or unfitness.”

It was contended by the Appellant that non­compliance

with the ICC stood waived by Clause 5.2, as stated above. However,

it cannot be said that the ICC was an ‘implied’ warranty within the

meaning of  Clause  5.2. It  was  stated on  the face  of the  Marine

Cargo Cover dated 14.5.2010 and the Marine Insurance Policy that

the ICC is one of the warranties/terms of insurance.

In  any  case, the  Appellant’s stand is that the subject

vessel  was  classed  with the ‘INTLREG’ (which it  has  mistakenly

referred to as ‘I.R.S.’). As the Singapore Court of Appeal has

observed  in  Everbright Commercial Enterprises  (supra) and as

discussed supra, the very purpose of adopting the ICC is to ensure

42

that the vessel chosen by the insured meets certain minimum

standards of seaworthiness, by virtue of being classed with one of

the well­established member societies of the IACS. The Appellant,

having known that the subject vessel was classed with the

‘INTLREG’, which neither was nor is a member of the IACS, was

privy to the fact that the subject vessel was not compliant with the

minimum standard of seaworthiness as laid out in the Marine

Insurance Policy. Clause 5.2 only waives breaches of implied

warranties of seaworthiness where the assured was not privy to the

unseaworthiness of the vessel. Hence, the Appellant would not be

saved by Clause 5.2 of the Policy, and it cannot be said that the

Respondent had waived the breach of warranty before the

Appellant’s claim, by incorporating Clause 5.2 of the Policy.

6.3  We may now turn to whether the Respondent waived the

breach of warranty by its conduct or any representation. During the

course  of arguments, it  was  put to the learned counsel for the

parties whether the act of provision of General Average Guarantee

amounted to a waiver of breach of warranty.  It is commonly

understood that a waiver in the context of marine insurance, apart

43

from one already provided for by way of ‘held covered’ or other such

terms in the insurance contract, must include two elements,

namely, (i) knowledge of the insurer, and (ii) unequivocal

representation of the insurer. The presence of both these elements

is indispensable.  

For instance, after the occurrence of loss, even if the insurer

makes an express representation that it would affirm the contract

and indemnify the loss, if the insurer can prove that such a

representation was made without the knowledge that there was a

breach of warranty on part of the insured, the liability of the insurer

would stand discharged from the date on which the warranty was

breached. Similarly, mere knowledge on the part of the insurer that

there was a breach of warranty would not amount to a waiver, in

the absence of an express representation to that effect.9

6.4 Insofar as the element of knowledge is concerned, if the

vessel carrying the insured cargo incurs loss, and the insurer seeks

to investigate into whether or not there was a breach of warranty,

no knowledge can be attributed to the insurer until such

9 Baris Soyer, Warranties in Marine Insurance (Cavendish, 2001) 206­213.

44

investigation is completed.10  Once there is knowledge, the second

element, i.e., unequivocal representation comes into play. The

representation must be of such a nature that it is sufficient for the

insured to conclude that the insurer is aware of the  breach  of

warranty and has chosen to waive such breach and indemnify the

loss. The determination of whether or not these elements are

present assumes more complexity in cases where such a

representation comes from an agent of the insurer, or where such

an agent has knowledge of the breach. However, these arguments

with respect to representations made by the insurer’s agent have

not  been raised  before  us,  and hence,  such  issues  need  not  be

addressed for the purposes of the present case.

6.5 Under the facts and circumstances of this case, the

breach of warranty occurred when the Appellant informed the

Respondent by letter dated 26.5.2010 that the subject vessel was

classed by ‘I.R.S.’, thereby indicating the subject vessel was

compliant with the ICC. After the subject vessel ran aground on the

10 Id, 209.

45

midnight of 18.7.2010, the Appellant requested the issuance of

General Average Guarantee, and the same was issued on 3.8.2010.  At the outset, the General Average Guarantee in ‘Form B’

dated 3.8.2010 issued by the Respondent to the GAA was only an

undertaking to pay the shipowners and the GAA on behalf of the

Appellant for their contribution to the  General Average, as and

when such contribution was ascertained. This Guarantee was

issued as per Clause 2 of the Marine Insurance Policy, under which

the Respondent had agreed to cover all general average and salvage

charges. Clause 2 reads as follows:  

“2.  This insurance covers  general  average  and  salvage charges, adjusted or determined according to the contract of affreightment and/or the governing law and practice, incurred to avoid or in connection with the avoidance of loss from any cause, except those excluded in Clauses 4, 5, 6 and 7 or elsewhere in this insurance.”

(emphasis supplied)

At the time the aforesaid General Average Guarantee

dated  3.8.2010  was issued, the  Respondent  was still  under the

impression that the subject vessel is in compliance with the ICC.

Obviously, such impression was based on the representation made

by the Appellant that the subject vessel was classed with I.R.S. It

46

was only by the e­mail dated 9.8.2010 from its claim settling agent

that the Respondent came to know that the subject vessel does not

meet the prescribed classification.  Subsequently, the Respondent

withdrew the Guarantee and refused to pay the separate salvage

security.  Hence, the issuance  of the  General  Average  Guarantee

cannot not be understood as a waiver inasmuch as the Respondent,

on the date of such issuance, did not have the knowledge of the

breach of warranty committed by the Appellant and was only

fulfilling its duty to contribute to the General Average (as explained

supra) in good faith, as required by Clause 2 of the Marine

Insurance Policy.

6.6 Further, in any case, at the time of issuing the General

Average Guarantee, the Respondent did not expressly state that it

was aware of the non­compliance with the ICC and it was waiving

the same.  In fact, the moment the breach of warranty was

discovered, the Respondent initiated steps to withdraw the General

Average Guarantee that had been issued by them and refused to

pay the additional salvage security, which clearly demonstrates that

there was no intent to waive the breach of warranty. Therefore, it

47

cannot be said that the Respondent had waived the breach of

warranty through its conduct or representations after the claim was

made by the Appellant.

7.  Since we have concluded that the liability of the insurer

was discharged on account of  the breach of  warranty caused by

non­compliance with the classification requirement within the ICC,

we do not consider it relevant to deal with the age limitation

requirement therein for the purpose of the present case.  

8.  It is pertinent to note that during the course of hearing

the  present appeal, three other  parties,  namely  K.  Amishkumar

Trading Pvt. Ltd., Baijnath Melaram and Viraj Impex Pvt. Ltd.

(‘Intervenors’) filed Intervention Applications No. 3 of 2016, No. 4 of

2016 and No.  5 of  2016 respectively in  the present  appeal.  The

aforesaid Intervenors filed individual consumer complaints against

the  Respondent  before the NCDRC, which are presently  pending

adjudication.

The Intervenors’ applications were allowed by this Court vide

order dated 27.10.2017.   We do not consider it appropriate to

decide  the  Intervenors’  claims on merits  at this  stage,  especially

48

since these may require separate findings of fact as to the terms

and conditions of the policies issued by the Respondent to them,

the warranties made by the Intervenors to the Respondent and so

on.  Hence,  we direct that the  Intervenors be  relegated  to record

their evidence before the NCDRC, and the NCDRC is requested to

hear the matters on merits and decide the same expeditiously, in

accordance with the law as stated by us above.

9.  Thus, we conclude that the Appellant had committed

breach of warranty and the same was not waived by the

Respondent. As a result, the  Respondent rightly repudiated the

claim of the Appellant.

10. In view  of the above, the impugned judgement  of the

NCDRC stands confirmed, and the appeal is dismissed.  

……..………………………………….J. (MOHAN M. SHANTANAGOUDAR)

…………………………………………J. (K.M. JOSEPH)

NEW DELHI FEBRUARY 07, 2020  

49