In so far as the first point of determination is concerned, it
is an admitted position that no such objection to the institution of
the suit was ever taken by the Appellant in their, otherwise detailed, written statement. Order VIII, Rule 2 of the CPC, provides that the defendant must raise by his pleading, all matters which show the suit not to be maintainable. If objection to the non-maintainability of the suit were to be raised by the appellant their written statement in the first place or even by amending the written statement, the Respondent would have had an opportunity to meet with such objection. The mere fact that some questions were posed to Mr. C. D. Chitnis (PW.1) in the course of his cross examination, is not sufficient to conclude that the Respondent was not taken by surprise or was not likely to be taken by surprise. Order 8, Rule 2 of CPC, as noted earlier, inter alia, provides that the Defendant must raise by his pleading all matters which show the suit not to be maintained and all grounds of defence, if not raised, would be likely to take the opposite party by surprise, or would raise the issues of
fact, not arising out of the plaint. Ordinarily, therefore, the
Appellant ought not to be allowed to raise such objection at the
appellate stage. {Para 19}
IN THE HIGH COURT OF BOMBAY AT GOA
FIRST APPEAL NO. 123 OF 2013
The New India Assurance Co. Ltd. Vs Messrs Sesa Goa Ltd.,
Coram : M.S. Sonak &
Smt. M.S. Jawalkar, JJ.
Pronounced on : 16th January, 2020
J U G M E N T : (Per M.S. SONAK, J.)
Citation: 2020(5) MHLJ 66
This Appeal by the Insurance Company and the Cross
Objections by the Respondents-Claimants are directed against the
Judgment and Decree dated 30th April, 2013 made by the learned
Civil Judge, Senior Division, at Panaji in Special Civil Suit
No.124/98/B, instituted by the Respondents herein, seeking to
recover an amount of Rs.4,98,70,343/- with interest at the rate of
18% per annum, as against the insurance claim arising out of Marine
Insurance Policies issued by the Appellant.
2. There is no dispute between the parties that the Vessel M.V.
Orissa in which, the Respondent had insurable interest was, in fact,
insured under the aforesaid policies for the period between 1st April,
1996 and 31st March, 1997. It is the case of the Respondent that the
Vessel, whilst on a voyage between Marmugao – Goa and Toronto,
Italy, navigated through the rough weather between 10th June, 1996 -
18th June, 1996 and suffered substantial damages. It is the case of the
Respondent that the Appellant is duty bound to indemnify the
Respondent against such damages. Some correspondence ensued
between the Respondent and the Appellant regards the claim under
the said insurance policies, which finally led to the institution of the
civil suit, in which, the aforesaid impugned Judgment and Decree
came to be made.
3. The Appellant had raised the issue of territorial jurisdiction
of the trial Court to entertain and try the suit as instituted. This
issue has been decided by the trial Court against the Appellant. Mr.
Afonso, the learned Counsel for the Appellant has, however, made it
clear that this objection based upon the territorial jurisdiction, was
not being pursued by the Appellant in the present appeal.
4. Mr. Afonso, however, submitted that the suit as instituted,
was not maintainable because the same was not validly instituted. He
submits that the plaint, in the present case, was signed and verified
by the alleged officer of the Company who had no authority to do
the same. He submits that in this case, neither any resolution of the
Company, nor any Power of Attorney, were produced on record on
behalf of the Respondent. He submits that even though such
objection may not have been specifically raised in the written
statement, questions were posed to PW.1 on this issue and even the
learned Trial Judge has squarely addressed such issues, without any
objection on the part of the Respondent. Mr. Afonso submits that
this is basically a legal issue which goes to the root of the matter and,
therefore, there can be no bar to raising such issue at the appellate
stage. He relies upon a decision of the learned Single Judge of the
Delhi High Court in M/s. Nibro Limited vs. National Insurance Co.
Ltd.1 and the decision of the Hon'ble Supreme Court in State Bank
of Travancore vs. Kingston Computers India Private Limited2 in
support of this objection.
5. Mr. Afonso, then submits that the evidence on record very
clearly makes out a case that the Respondent had breached the
warranties and conditions of the insurance policies and, therefore, the
Appellant stood absolved of the liability to make any payments under
the insurance policies. He submits that the vessel was out of class
1 AIR 1991 Delhi 25;
2 (2011) 11 SCC 524
during the relevant period and, in any case, the vessel which was
basically a trans-shipper, was not seaworthy to embark upon an
adventure between Mormugao and Taranto at the onset of
monsoons. He submits that the Respondent, despite being privy to
the unseaworthiness of the vessel, undertook/permitted the voyage,
which clearly constitutes a breach of warranties and conditions
subject to which the insurance policies came to be issued. He
submits that this also attracts the provisions of Section 41(5) of the
Marine Insurance Act, 1963, in terms of which the Appellantinsurance
company cannot be held liable for any loss attributable to
any unseaworthiness.
6. Mr. Afonso submits that there was a specific condition in
the class certificate issued by one of the classification societies that
the vessel on full load must keep one of the 9 holds empty. He
submits that there is ample evidence on record, inter alia, in the form
of admissions on behalf of the witnesses of the Respondent that all
the 9 holds were full/loaded. He submits that this also constitutes a
breach of one of the conditions, subject to which the insurance
policies came to be issued and therefore, no liability can be imposed
upon the Appellant-insurance company.
7. Mr. Afonso, without prejudice, submits that there is no
clear evidence about the vessel running into any rough weather. He
submits that necessary logbooks have been suppressed and this is a
clear case which warrants drawal of adverse inference. He points out
that though it is the case of the Respondent that some seamen were
actually injured on account of rough weather and had to be embarked
at Aden, no evidence on this aspect is produced. He points out that
the logbooks are required to statutorily make entries on such aspects
and the fact that no logbooks were produced, clearly warrant drawal
of adverse inference against the Respondent.
8. Mr. Afonso, without prejudice, further submits that the so
called damages to the vessel have absolutely no nexus with the
alleged rough weather which it is said to have alleged encountered
between 10th June, 1996 - 18th June, 1996. He submits that the
damages, if any, are at the highest attributable to normal wear and
tear, as well as the circumstance that the damaged parts were already
corroded. He submits that the evidence in the form of survey report
furnished by the Salvage Association is very clear on this aspect. He
submits that the learned Trial Judge erred in relying upon the report
furnished by J. Basheer and Associates who are neither actual
surveyors, nor did they have any occasion to actually survey the vessel
M.V. Orissa. He submits that in the absence of any evidence that the
alleged damages had any nexus with any alleged rough weather, the
learned Trial Judge, was not justified in partly decreeing the suit in
favour of the Respondents.
9. Mr. Afonso, again without prejudice, submits that the
learned Trial Judge has failed to appreciate that this was a clear case
of breach of clause 10 of the insurance policies, inasmuch as no
intimation was ever sent to the Lloyd's Agent, by the Respondent.
He submits that in these circumstances, deduction at the rate of 15%
was due. He submits that in addition, deduction of Rs.20.00 lakhs
was clearly due in terms of the insurance policies. He relies on a
decision of the Hon'ble Apex Court in Suraj Mal Ram Niwas Oil
Mills Pvt. Ltd. vs. United India Insurance Co. Ltd. and another3 to
submit that the terms of a insurance contract have to be strictly
construed and no exception can be made on the ground of equity in
such matters.
10. Mr. Afonso submits that on a cumulative consideration of
the aforesaid grounds, the impugned Judgment and Decree is liable
to be reversed.
11. Mr. Ramani, learned Counsel for the Respondent contests
the aforesaid contentions raised by Mr. Afonso. He submits that the
objection with regard to any alleged incompetence of PW.1 to
institute the suit on behalf of the Respondent Company was never
3 (2010) 10 SCC 567
raised in the written statement. He submits that this was a hypertechnical
objection, which was rightly rejected by the learned Trial
Judge. He relies on a decision of the Hon'ble Supreme Court in the
case of United Bank of India vs. Naresh Kumar and ors .4 to submit
that a suit cannot be dismissed on such grounds.
12. Mr. Ramani then submits that the evidence on record
clearly bears out that the vessel was not only in its class during the
voyage, but further the same was very much sea-worthy. He refers to
the survey carried out by Palco Surveyors and Adjusters Pte Ltd., a
agency chartered by the Appellant themselves. He submits that in
terms of the Palco's report, the vessel was quite sea-worthy and even
recommendations in the said report were complied with by the
Respondent. He submits that there was no condition in the
classification certificate regards keeping of one hold empty. He
submits that neither the Salvage Association's report, nor the
Basheer's report make any reference to either existence or breach of
any such condition. He submits that there is absolutely no breach of
any warranty or condition on the basis of which the Appellant can be
permitted to avoid any liability under the insurance policies.
13. Mr. Ramani submits that since the vessel was absolutely seaworthy
at the time when it sailed from Mormugao and further since
4 AIR 1997 SC 3
there is ample evidence that the vessel ran into rough weather during
the period between 10th June, 1996 to 18th June, 1996, the damages
caused to the vessel can be said to be attributable only to this rough
weather and not to any other cause. He submits that there is no
serious challenge to the fact that the Respondent had to expend an
amount of Rs.4,98,70,343/- towards setting right the damages
caused to the vessel. He, therefore, submits that the impugned
Judgment and Decree warrants no interference at the behest of the
Appellant, but warrants interference at the behest of the Respondent
to the extent that the learned Trial Judge has not decreed the entire
claim of the Respondent. He submits that the cross objections,
therefore, deserve to be allowed.
14. Mr. Ramani submits that there is substantial compliance
with the provisions of Clause 10 of the insurance policies and,
therefore, there is no question of making a 15% deduction as urged
on behalf of the Appellant. However, on the aspect of deduction of
Rs.20.00 lakhs, Mr. Ramani quite fairly concedes that such deduction
was perhaps required to be made in terms of the insurance policies.
15. Mr. Ramani submits that Basheer's report is quite right to
the extent it sees nexus between the damages to the vessel and the
rough weather. But he submits that the distinction sought to be
made in such report is not quite right. Mr. Ramani submits that the
material on record justifies a decree for the entire claimed amount of
Rs.4,98,70,343/-. Mr. Ramani submits that the learned Trial Judge
should have awarded interest @ 18% per annum, taking into
consideration that this was a commercial transaction.
16. For all the aforesaid reasons, Mr. Ramani submits that the
Appeal may be dismissed and the cross objection may be allowed.
17. The rival contentions now fall for our determination.
18. Having heard the learned Counsel for the parties
extensively, and having regard to the contentions raised by them,
according to us, the following points for determination arise in this
Appeal :
(i) Whether the suit in the present matter was not properly
instituted on account of failure on the part of the
Respondent Company to produce on record any resolution
or power of attorney to authorise Shri C.D. Chitnis to sign,
verify the plaint and to institute the suit on behalf of the
Respondent Company ?
(ii) Whether the Respondent can be said to have breached
the warranties and conditions set out in the insurance
policies, thereby absolving the Appellant of any liability to
make any payments under the insurance policies ?
(iii) Whether the Respondent Company has succeeded in
establishing that the vessel M.V. Orissa indeed encountered
the rough weather between 10th June, 1996 and 18th June,
1996 on her voyage between Mormugao (India) and
Taranto (Italy) ?
(iv) If the answer to the aforesaid point is in the
affirmative, then, whether the damages suffered by the
vessel M.V. Orissa have any nexus with such rough weather
or whether, the damages are on account of normal wear and
tear ?
(v) Whether an amount of Rs.20.00 lakhs is required to be
deducted from the amount of ascertained claim in terms of
the expressed stipulation in the insurance policies ?
(vi) Whether, in the facts and circumstances of the present
case, there is compliance with the conditions imposed in
Clause 10 of the insurance policies, and if not, whether
deduction of 15 % is required to be made from the amount
of ascertained claim ?
19. In so far as the first point of determination is concerned, it
is an admitted position that no such objection to the institution of
the suit was ever taken by the Appellant in their, otherwise detailed,
written statement. Order VIII, Rule 2 of the CPC, provides that
the defendant must raise by his pleading, all matters which show
the suit not to be maintainable. If objection to the nonmaintainability
of the suit were to be raised by the appellant their
written statement in the first place or even by amending the written
statement, the Respondent would have had an opportunity to meet
with such objection. The mere fact that some questions were posed
to Mr. C. D. Chitnis (PW.1) in the course of his cross examination,
is not sufficient to conclude that the Respondent was not taken by
surprise or was not likely to be taken by surprise. Order 8, Rule 2 of
CPC, as noted earlier, inter alia, provides that the Defendant must
raise by his pleading all matters which show the suit not to be
maintained and all grounds of defence, if not raised, would be likely
to take the opposite party by surprise, or would raise the issues of
fact, not arising out of the plaint. Ordinarily, therefore, the
Appellant ought not to be allowed to raise such objection at the
appellate stage.
20. However, considering the position that there was some cross
examination of PW.1 on the aforesaid objection and further the fact
that the learned Trial Judge, in the impugned Judgment and Order
has also considered and rejected such objection, we heard Mr.
Afonso on the objection as raised. The material on record bears out
that Shri C.D. Chitnis (PW.1) who has signed and verified the
plaint, was the Company Secretary and General Manager (Corporate
Affairs) of the Respondent at the relevant time. This was specifically
disclosed in the verification clause to the plaint and this position,
despite the cross examination, the Appellant was not successful in
proving otherwise. In this state of the evidence, coupled with the
fact that no such objection was raised in the written statement, we see
no error on the part of the learned Trial Judge in rejecting the
objection to the maintainability of the suit.
21. According to us, the decision of the Hon'ble Supreme
Court in the case of United Bank of India vs. Naresh Kumar and
ors. (supra) affords a complete answer to the objection now raised by
the Appellant. In this case, it is held that as far as possible,
substantive rights should not be allowed to be defeated on account of
procedural irregularities which are curable. It is further held that
companies can sue and can be sued in their own name. Under
Order 6, Rule 14 of the CPC, a pleading is required to be signed by
the party ad its pleader, if any. As a company is a juristic entity it is
obvious that some persons has to sign the pleadings on behalf of the
company. Order 29, Rule 1 of CPC, therefore, provides that in a suit
by or against a Corporation, the Secretary or any Director or other
principal officer of the Corporation who is able to depose to the facts
of the case might sign and verify on behalf of the company. Reading
Order 6, Rule 14, together with Order 29, Rule 1 of CPC, it would
appear that even in the absence of any formal letter of authority or
power of attorney having been executed a person referred to in Rule
1 of Order 29 can, by virtue of the office which he holds, sign and
verify the pleadings on behalf of the Corporation. In addition
thereto and dehors Order 29, Rule 1 of the Code of Civil Procedure,
as a company is a juristic entity, it can duly authroise any person to
sign the plaint or the written statement on its behalf and this would
be regarded as sufficient compliance with the provisions of Order 6,
Rule 14 of the Code of Civil Procedure.
22. The Hon'ble Supreme Court, in the aforesaid Judgment has
further proceeded to hold that a person may be expressly authorised
to sign the pleadings on behalf of the company, for example, by the
Board of Directors passing a resolution to that effect or by a power
of attorney being executed in favour of any individual. In absence
thereof and in cases where pleadings have been signed by one of its
officers a Corporation can ratify the said action of its officer in
signing the pleadings. Such ratification can be express or implied.
The Court can on the basis of evidence on record, and after taking
all the circumstances of the case, specifically with regard to the
conduct of the trial, come to the conclusion that the corporation had
ratified the act of signing of the pleadings by its officer.
23. In the aforesaid case, a specific objection had in fact been
taken to the authority of Shri L.K. Rohatgi to institute the suit on
behalf of the Union Bank of India. Such objection had, in fact, been
upheld upto the stage of the High Court. Hon'ble Supreme Court,
however, noted that the suit had been filed in the name of the
Appellant Company (the Bank); full amount of court fee had been
paid by the Appellant Company; documentary, as well as oral
evidence had been led on behalof of the Appellant and trial of the
suit before the trial Court had continued for about two years. The
Hon'ble Supreme Court observed that it is difficult, in these
circumstances, even to presume that the suit had been filed and tried
without the appellant having authorized the institution of the same.
24. In Nibro Limited (supra), the learned Single Judge of the
Delhi High Court has taken a view that the question of authority to
institute a suit on behalf of a company is not a technical matter, but
has far-reaching consequences.
25. In State Bank of Travancore (supra), the Hon'ble Supreme
Court has taken a view that a suit filed by a person not duly
authorised by the Company, is not maintainable. In latter case, the
company had neither produced any evidence to prove that the
signatory was appointed as the Director of the Company, nor was
there any resolution of the Board of Directors, authorising the
signatory to file the suit on behalf of the Company.
26. According to us, both the aforesaid decisions are quite
distinguishable. In the present case, there is evidence on record that
PW.1, who actually signed, verified and instituted the suit on behalf
of the Respondent, was its Company Secretary and General Manager
(Corporate Affairs). Besides, the facts in the present case on the
issue of institution of the suit, are substantially similar to the facts in
the case of United Bank of India vs. Naresh Kumar and ors . (supra).
Accordingly, the first point for determination will have to be
answered against the Appellant and in favour of the Respondent.
27. The second point for determination relates to the breach of
warranties and conditions of the policies on the part of the
Respondent. The Appellant alleges the following breaches :
(A) That though the insurance policies required the vessel M.V.
Orissa to maintain its class, the vessel failed to maintain its class
beyond 20th February, 1996 and, consequently, was not within its
class, when it undertook the voyage between Mormugao and Taranto
in June, 1996.
(B) The vessel M.V. Orissa was not sea-worthy at the time of its
voyage between Mormugao (India) and Taranto (Italy). Besides, the
Respondent despite being privy to this position, permitted sail of
the vessel. The Appellant submits that in terms of Section 41(4) of
the Marine Insurance Act, 1963, the Appellant in such circumstances
is not liable to any loss attributable to unseaworthiness.
(C) There was a specific condition in the class certificate issued
by the Registro Italiano Navale (RINA) that the vessel, carrying with
full load coditions must keep one of the 9 holds empty. This
condition was breached and, therefore, the vessel was out of class.
28. Clause 4 of the insurance policies, inter alia, provides that
unless the underwriters agree to the contrary in writing, the insurance
shall terminate automatically at the time of, inter alia, suspension,
discontinuance, withdrawal or expiry of the class of the vessel,
provided that if the vessel is at see, such automatic termination shall
be deferred until arrival at her next port. Therefore, it does appear
that if there was any suspension, discontinuance, withdrawal or
expiry of the class of the vessel which is insured, there shall be
automatic termination of the insurance. The insurance policies also
have specific classification and maintenance of class clause, which
inter alia, provides that warranted vessel classed as below by one of
the following Classification Societies and Class maintained
throughout the currency of this policy or held covered at Additional
Premium, if any, as may be decided by the committee, provided
immediate notice as to change of Classification Society of the vessel
or change, suspension, discontinuance, withdrawal or expiry of her
class is given to the Insurer :
1. Lloy's Register : 100A or B.S.
2. American Bureau of Shipping : + A 1
3. Bureau Verities (B.V.) : 13/3 E +
4. Germanischer Lloyd (G.L.) : + 100A 4
5. Korean Register of Shipping : + KRS 1
6. Nippon Kaiji Kyokai : NS *
7. Norske Varitas (NV/DNV) : + 1A1
8. Registro Italiano : * 100A 1.1 Nav.
9. Russian Register of Shipping : KM *
10. Polish Register of Shipping : * KM
11. Indian Register of Shipping (IRS): SU
(NOTE : + in the above symbols denote MALTESE CROSS)
* All Classes mentioned above are subject to Class without
any modification.
29. The Classification Society referred to in the class and
maintenance of class, as aforesaid, included, inter alia, Registro
Italiano (RINA) at Entry 8 and Indian Register of Shipping (IRS) at
Entry 11. This means that the requirement of the insurances
policies is that the vessel must be classed by any one of the
Classification Societies and the class maintained throughout the
currency of the insurance policy.
30. There is evidence on record which suggests that the vessel
had dual class, i.e. the class issued by RINA as well as IRS. Mr.
Afonso's arguments were mainly based upon the certificate of class
issued by RINA, on the basis of which he urged that at least with
effect from 20/02/1996, the vessel was without any class.
31. The certificate of class at Exhibit 25, in the first place,
indicates that the vessel was classed for a period of 5 years, running
from September, 1992. The certificate, however, contains an
endorsement that it will be invalidated whenever the requirements of
the Rules are not complied with. Further, there is a note that the
certificate is only valid provided it also contains the pages with the
expiry date of periodical surveys and the endorsements.
32. The certificate of class, as annexed to it, shows the expiry
dates of periodical surveys and the endorsements. If the details
placed and the date of service as indicated in the endorsements are
perused, then, it is apparent that there is a clearly discernible scheme,
in which, the class of vessel is confirmed a maximum period of time
and until the following survey. This scheme is discernible from the
detailed endorsements from 25th November, 1992 till 16th September,
1996.
33. The endorsement dated 17th March, 1995 is of some
significance and the same reads as follows :
“SURVEYS NOW CARRIED OUT : INTERMEDIATE HULL
AND
MACHINERY ANNUAL SURVEYS; DRYDOCKING SURVEY;
AUX. BOILER RINA N.93; OCCASIONAL HULL SURVEY.
THE SHIP CONTINUES IN HER CLASS SUBJECT TO
SURVEY
WITHIN 31ST AUGUSUT 1995.”
34. The endorsement dated 17th March, 1995 makes it clear
that the vessel was in Singapore during January-March, 1995 and that
the vessel continued in her class, subject to survey within 31st August,
1995. The next endorsement is dated 4th September, 1995 on the
basis of survey at Kaolising.
35. This endorsement indicates the ship continued in her
class till 31st October, 1995. The next endorsement is dated 16th
September, 1995, which indicates that survey was carried out at
Hong Kong and the class was confirmed until 31st December, 1995.
The next endorsement is dated 9th November, 1995 in relation to the
survey carried out at Ulsan, Korea in November, 1995 which
confirms the class until 31str December, 1995.
36. The next, perhaps most significant endorsement dated
10th February, 1996 and the same reads as follows :
“Surveys carried out : annual hull and machinery survey;
Aux. Boiler RINA N.92; Occasional hull and machinery
surveys- Class confirmed for the voyage in ballast
conditions from Singapore to Mormugao (India) -
The containerized aux. Diesel Generator on main deck and
the conveyor belts system have to be considered
temporarily out of order.”
37. The aforesaid endorsement dated 10th February, 1996 is to
be read in conjunction with the endorsement dated 16th September,
1996 in order to appreciate Mr. Afonso's contention. The
endorsement dated 16th September, 1996 which immediately follows
the endorsement dated 10th February, 1996, reads as follows :
“Hull and machinery ordinary surveys, hull occasional
survey carried out.
The containerized aux diesel generator on main deck and
the conveyor belts system have to be considered
temporarily out of order.
Ship continues in her class”
38. Cumulative reading of all the aforesaid endorsements, as
well as conjoint reading of the endorsements dated 10th February,
1996, and 16th September, 1996, do indicate that the vessel was
within the RINA class upto conclusion of its voyage in ballast
condition from Singapore to Mormugao (India). There is evidence
on record that this voyage commenced sometime on 12th February,
1996 in Singapore and concluded on 20th February, 1996 in Port of
Mormugao (India).
39. The endorsement dated 10th February, 1996 makes it clear
that at the survey carried out at Singapore between November, 1995
and February, 1996, the class was confirmed for the voyage in ballast
condition from Singapore to Mormugao (India). Unlike in the
previous endorsements, there was no confirmation or continuance of
class up to a particular date or upto the next survey indicated, but
the class was confirmed only for the purpose of voyage and that too
in ballast condition from Singapore to Mormugao (India). There is
evidence forthcoming from the Respondents themselves in the form
of testimony of PW.3 that this voyage was necessary in order to save
time pending preparation of Trim and Stability Report by RINA.
There is no endorsement that the class was either confirmed or
extended beyond the date on which the voyage in ballast condition
from Singapore to Mormugao (India) was concluded.
40. The next endorsement dated 16th September, 1996 refers to
the survey at Taranto (Italy) between the period July – September,
1996. That is the period after the vessel sailed through the alleged
rough weather between 10th June, 1996 - 18th June, 1996 and after
extensive repairs were carried out at Taranto in Italy between July –
September, 1996. There is a gap or break between 20th February,
1996 and July-September, 1996 during which it cannot be
considered that the Vessel was in its class, in so far as RINA is
concerned.
41. Mr. Ramani contends that since the endorsement dated 16th
September, 1996 refers to 'ship continues in her class' , it must be
presumed that there was no gap or break, cannot be accepted in the
state of the evidence on record. The expression 'continues' has to be
understood in the context that the classification was otherwise valid
for a period of 5 years running from September, 1992 i.e. up to
September, 1997. There are similar endorsements made earlier and
on the basis of such endorsements or rather use of the expression
'continues', it cannot be said that there was no break in the class for
the period between 20th February, 1996 and July-September, 1996.
42. There is no proper explanation furnished by any of the
witnesses examined on behalf of the Respondents in so far as this
break or gap is concerned, though there was a specific defence raised
by the Appellant on this issue. Therefore, in the present case, at least,
in so far as RINA classification is concerned, there is material on
record to hold that the vessel was out of its class for the relevant
period when it is alleged to have sustained damages on account of the
alleged rough weather. However, according to us, the aforesaid
circumstance, by itself, will not constitute any breach of warranties,
having regard to the specific classification and maintenance of class
clause in the insurance policies.
43. As noted earlier, this clause requires the warranted vessel to
be classed by one of the classification societies referred to in the
clause. In the present case, there is material on record which
establishes that the vessel had a dual class, that it was classified with
RINA as well as IRS. The Respondent has produced on record a
certificate of class dated 15th March, 1996 issued by the Indian
Register of Shipping (IRS), the validity period of which is extended
upto 30th September, 1997. This certificate at Exhibit 26 speaks
about the vessel having been certified on 17th March. 1995 by the
Society's Surveyors in accordance with the Rules and Regulations or
their equivalent for class notations. The Respondent has also
produced on record a Class Maintained Certificate dated 11th
December. 2007 at Exhibit 27. The latter certificate cannot be taken
into consideration because the same is not really a certificate of class,
but is only a certificate issued by Senior Surveyor, certifying that the
vessel was classed with the IRS that her class was maintained during
the period from 1st June, 1996 to 31st March, 1997. What is really
relevant is actually the certificate of class dated 15th March, 1996
which is at Exhibit 26 on record.
44. Mr. Afonso did submit that the vessel was in Singapore as
on 17th March 1995 and, therefore, it is not understood as to how the
Surveyors of IRS could have undertaken the survey of the vessel on
17th March, 1995. There is evidence on record that the Surveyors of
IRS have undertaken the survey in Singapore. Besides, PW.3 has
deposed that there was understanding between RINA and IRS to act
on the basis of survey reports made by their respective Surveyors.
45. According to us, once there is a certificate of class on
record, in a matter of this nature, it would not be appropriate for us
to go into the issue as to whether this certificate of class was validly
issued by the IRS or not. The document at Exhibit 25 came to be
admitted in evidence. It contents indicate that the vessel was within
IRS class for the relevant period between 1st June, 1996 to 31st
March, 1997. There is also endorsement dated 5th June, 1996 made
by the Marine Mercantile Department (MMD) on record. On the
basis of this documentary evidence, no interference is called for with
the view taken by the learned trial Judge that the vessel was within its
class during the operation of the policies and consequently, there
was no breach of any conditions or warranties as to the classification.
46. On the aspect of seaworthiness of the vessel, to begin with,
reference is required to be made to the report of Palco Surveyors &
Adjusters Pte Ltd., which is on record at Exhibit 68. No doubt, it is
correct as pointed out by Mr. Afonso that Palco Surveyors were
engaged by the Appellant in order to find out whether the Appellant
should reasonably accept the report and underwrite the insurance qua
the vessel M.V. Orissa. However, Palco Surveyor's report gives an
indication as to the state of the Vessel on 5th January, 1995. The
report, no doubt, makes certain recommendations which reads as
follows :
“Recommendations
1. Owing to the age and type of the vessel, thickness
gaugings are recommended to ascertain the extent of
wastage of steel plating of the vessel.
2. Owing to present change of class to ABS; class records
have not been sighted and we recommend all outstanding
class items to be attended to.”
47. There is evidence on record that some measures were
undertaken by the Respondent to comply with the recommendations
of Palco Surveyors and it is only upon the Appellant being satisfied
that such recommendations were duly complied with, that the
Appellant issue the marine insurance policies on the basis of which
the Respondent claims amount in the suit. Besides, it is necessary to
note that even the report of the Salvage Association at Exhibit 4,
upon which strong reliance is placed by the Appellant, does not
indicate that the vessel was unseaworthy for undertaking the voyage
between Mormugao (India) and Taranto (Italy). The report of
Salvage Association, no doubt, refers to corrosion of some of the
frames in holds and to the renewal of some of the frames in the
holds. All these observations may be extremely relevant to
determining the issue as to whether the damages which the vessel
suffered, were on account of the alleged rough weather or whether the
same was on account of the state of the vessel and it is normal wear
and tear. However, even the Salvage Association report, despite
making specific reference to the corroded frames in the holds, does
not go to the extent of observing that the vessel was unseaworthy to
undertake the voyage between Mormugao (India) and Taranto (Italy).
48. The Trim and Stability report issued by RINA is also on
record and on the basis of the same as well, it cannot be said that the
vessel was unseaworthy to undertake the voyage between Mormugao
(India) and Taranto (Italy). Then, there is a report of Basheer and
Association, again commissioned by the Appellants itself which also
does not say that the vessel was unseaworthy to undertake the voyage
between Mormugao (India) and Taranto (Italy).
49. Further, PW.3, who was the Marine Engineer, holding Class
I (Motor) Certificate of Competency issued by the Mercantile Marine
Department, Mumbai has deposed to the surveys, repairs and
modifications which were carried out to the vessel from time to time
before it ultimately sailed from Mormugao to Taranto. Similarly,
PW.2, again, Master Mariner (Foreign Going), holding Certificate of
Competency issued by the Mercantile Marine Department, Mumbai
has deposed that necessary Cargo Ship Safety Construction
Certificate was obtained and the said Certificate contained an
endorsement dated 5th June, 1996 that annual inspection of the
vessel structures had been carried out prior to sailing. He has
deposed that this endorsement was made without any conditions
which would affect the seaworthiness of the vessel. The witnesses on
behalf of the Respondent have deposed that all statutory compliances
were in place before the vessel sailed from Mormugao to Toranto.
PW.4 Nitin Sahakari is B.E. (Mechanical) Marine Engineer holding
Class I (Motor) Certificate of Competency issued by the Marine
Mercantile Department, Mumbai. He was on board the vessel during
the voyage between Mormugao and Tarato. He too has deposed to
the seaworthiness of the vessel. All these witnesses were subjected to
extensive cross examination. However, at least, on the aspect of
seaworthiness, it cannot be said that any serious dent has been made
to their depositions. Therefore, on the basis of the documentary, as
well as oral evidence on record, we see no ground to differ from the
findings recorded by the learned Trial Judge on the aspect of
seaworthiness of the vessel.
50. The contention based upon keeping one of the holds
empty, is based upon the endorsement in the certificate of class,
issued by RINA against the entry “Trade” which reads as follows :-
“Carriage of bulk sold cargoes restricted to ore, coal,
grain, unseasoned timber, non combustible goods or
goods which constitute a low fire risk; specifically
strengthened to carry very heavy cargoes in full load
conditions which specified hold empty”.
51. According to Mr. Afonso, the aforesaid endorsement
means that the vessel, when carrying very heavy cargo in full load
condition, must keep one out of nine holds empty. DW1 or DW2
examined on behalf of the Appellant has really not thrown sufficient
light as to the meaning of the aforesaid endorsement. In contrast,
PW.2 has explained that the aforesaid endorsement only means that
the vessel has been specifically strengthened to carry very heavy cargo
in full load condition even with a specified hold being kept empty.
52. Neither Salvage Association, nor Basheer Associates, the
agency engaged by the Appellant, have really commented upon this
aspect. In this state of evidence, it is really not possible to hold, one
way or the other as to whether the aforesaid endorsement is to be
interpreted in the manner suggested by the Appellant, or in the
manner suggested by the Respondent. However, it is necessary to
note that the aforesaid endorsement is not some warranty or
condition specified in the insurance policy. The aforesaid
endorsement is a condition imposed by RINA for vessel to continue
in its class. As noted earlier, we have, in fact, agreed with the
contention of Mr. Afonso that the vessel was not in RINA class post
the conclusion of its voyage for ballast condition from Singapore to
Mormugao i.e. from 20th February, 1996. Therefore, even if Mr.
Afonso's contention regards the interpretation of the aforesaid
endorsement is to be accepted, the same might afford yet another
ground to hold that the vessel was not within RINA class at the time
of voyage between Mormugao and Taranto. However, again, as noted
earlier, that would make no difference because the vessel which had a
dual class, continued to have IRS class, which is evident from the
document at Exhibit 25 and the findings thereon recorded earlier in
this judgment and order.
53. For all the aforesaid reasons, we are unable to interfere
with the findings recorded by the learned Trial Judge that there was
any breach of warranty or condition on the part of the Respondent,
so as to absolve the Appellant of the liability under the insurance
policies. The second point for determination is accordingly required
to be answered against the Appellant and in favour of the
Respondent.
54. The third point for determination is whether the
Respondent company has succeeded in establishing that the vessel
indeed encountered the rough weather between 10th June, 1996 and
18th June, 1996 on her voyage between Mormugao and Taranto.
55. The documentary evidence produced on record by the
Respondent are two Notes of protest at Exhibit 30 issued by Master
of Vessel and Accord Ship Management (Pvt.) Ltd., Bombay. To the
Notes of protest issued by Accord Ship Management (Pvt.) Ltd.,
there are annexed certain copies of log extracts. Then there is a
document at Exhibit 32 issued by the India Meteorological
Department. These documents do indicate that the vessel
encountered the severe weather condition between 10th June, 1996
and 18th June, 1996 at the Arabian Sea.
56. Although, there is some merit in the contention of Mr.
Afonso that all the logbooks or entries therein have not been
produced by the Respondent, we do not think that non-production
of such logbooks, in the facts and circumstances of the present case,
calls for a drawal of any adverse inference to the extent of disbelieving
the documentary evidence already produced on record. Besides, in
this case, the Respondent has examined Nitin Vinayak Sahakari
( PW4), second Engineer, who was on board the vessel at the time
when it took voyage from Mormugao to Taranto in Arabian Sea.
PW.4 has deposed, in detail, as to the weather conditions during the
period from 10th June, 1996 and 18th June, 1996. Though, PW4 was
extensively cross examined, it cannot be said that any serious dent
was made to his deposition. The learned Trial Judge has accepted the
documentary as well as oral evidence produced on behalf of the
Respondent and we do not think that there is any serious error in
appreciation or evaluation of such evidence.
57. Mr. Afonso may be right in his submission that if some of
the crew members were injured and vessel had to be diverted to the
port of Aden to drop them, all these matters would have certainly
been reflected in the logbooks. However, as noted earlier, nonproduction
of the logbooks cannot result in virtually discarding all
other documentary and oral evidence on record. Accordingly, even
the third point for determination is required to be answered against
the Appellant and in favour of the Respondent.
58. The fourth and perhaps most important point for
determination is, whether the damages suffered by the vessel have
nexus with rough weather or whether the damages are on account of
normal wear and tear.
59. In the plaint at paragraph 9, the Respondent has pleaded
that as a consequence of the severe weather, the vessel sustained
damages to its frame and brackets in various holds, suffered burn out
to the electric cables in junction box of Crane 3, sustained damage to
her hydraulic pipelines, as well as damage to an accommodation
ladder and platform. The evidence produced on record substantially
bears out that the vessel did suffer the damages as indicated in the
pleadings. The evidence on record also substantially establishes that
the Respondent spent an amount of Rs.4,98,70,343/- towards repairs
or setting right for the aforesaid damages caused to the vessel.
However, the moot question is whether all these damages are
attributable to the rough weather which the vessel encountered
between 10th June, 1996 and 18th June, 1996 or, whether these
damages are attributable to the normal wear and tear arising out of
condition of the vessel when it sailed from Mormugao to Taranto.
60. The entire case of the Respondent is that once it is
established that the vessel was seaworthy at the time when it set sailed
from Mormugao to Taranto and once it is established that it
encountered rough weather on her voyage, it must be presumed that
the damages caused to the vessel are solely on account of such rough
weather alone. According to us, even if it is established that the vessel
was seaworthy at the time when it sailed from Mormugao to Taranto
and even if it is established that the vessel did encounter some rough
weather between 10th June, 1996 and 18th June, 1996 still it does not
follow that the damages can invariably to be attributed to such rough
weather.
61. Merely because the vessel may be seaworthy, does not mean
that the damages caused to it in the course of voyage are only
attributable to the perils of sea like rough weather. In this case, there
is evidence to indicate that the frames were already corroded. Despite
the corroded frames, it is possible that the vessel could qualify to be
declared as seaworthy. However, the damages caused to such corroded
frames can hardly be regarded as damages on account of any peril of
sea like rough weather.
62. The Respondent, has hardly led any independent evidence
in order to establish nexus between damages and rough weather. The
Respondent instead has relied almost entirely upon the report of
Basheer and Associates, an agency engaged by the Appellant
themselves. Basheer and Associates admittedly, did not themselves
carry out any survey of the vessel, but have only offered their opinion
on the report of Salvage Association, who actually carried out the
survey on the vessel on behalf of the Appellant. Basheer and
Associates, after considering the report of Salvage Association, have
opined that only the damages to the extent of Rs.1,12,46,999/- can
be reasonably attributed to the rough weather and rest of the
damages, in monetary terms, are attributable to the condition of the
vessel at the time it set to sail from Mormugao to Taranto and
consequently, two factors like normal wear and tear. J. Basheer and
Associates have, therefore, only partially agreed or rather disagreed
with the report of the Salvage Association who are the actual
surveyors of the vessel on behalf of the Appellant.
63. The survey report of the Salvage Association at Exhibit
40 was in fact produced on record by the Respondents themselves.
This report is totally against the case of the Respondent. This report
refers to the survey of each of nine holds of the vessel and points out
that in so far as the first hold is concerned, a total of 19 frames were
found to be corroded and 19 frames were found to be recently
renewed; in so far as the second hold is concerned, about 22 frames
were found to be distorted, holed, buckled and heavily wasted.
However, all the remaining frames, although undamaged, were found
only to be heavily wasted; In so far as the third hold is concerned, the
position was similar to the second hold; In so far as the fourth hold
is concerned, no severe wastage of the structure was evident; In so
far as the fifth hold is concerned, nine frames were found to be
distorted, buckled and wasted and all remaining frames, though
undamaged, were found to be heavily visited; In so far as the sixth
hold is concerned, 23 frames were found to be distorted, buckled and
corroded. Thus, all the remaining frames, with the exception of
eight, were heavily corroded; In so far as the seventh hold is
concerned, again, 19 frames were found to be heavily corroded and
holed and all other frames, though undamaged, were found to be
heavily corroded; In so far as the eighth hold is concerned, 14 frames
were found to be buckled, distorted and wasted and remaining
frames, which were undamaged, were found to be heavily corroded;
In so far as the ninth hold is concerned, no frames were found to be
damaged, however all the frames port and starboard were found to be
heavily corroded.
64. The Salvage Association, in its report, has made a detailed
assessment and thereafter opined that the damage found and the
permanent repairs detailed in this report are what can reasonably be
attributed to normal wear and tear. The report opines that the
evidence available at survey indicates that the wastage of the side shell
frames and brackets was beyond classification limits and as a result,
were unfit to cope with the weather the vessel was built to withstand.
The report also comments upon ultrasonic readings taken by yet
another agency SANKI at Singapore by surmising that the thickness
gauge readings were taken by inexperienced operators and the results
were not representative of the true state of the side frames. The report
also refers to extensive photographs having taken and records kept of
the condition of the frames. Mr. Afonso submits that no such
photographs were produced on record by the Respondent.
65. J. Basheer and Associates analysed the report of the
Salvage Association as also the other material on record produced on
behalf of the Respondent and finally opined that they were only to
agree in entirety with the observations in the report of the Salvage
Association, but felt that damages to the extent of Rs.1,12,46,999/-
could be attributed to rough weather, though rest of the damages can
be attributed to the condition of the vessel and normal wear and tear.
Again even the report of J. Basheer and Associates was relied upon
and produced by the Respondents themselves. Thereafter, the matter
was once again referred to the Salvage Association and the Salvage
Association, by its communication dated 18th August, 1998 at
Exhibit 95, reiterated its opinion by disagreeing entirely with the
opinion expressed by J. Basheer and Associates. The Salvage
Association reasoned that despite so called rough weather, the frames
and plates which have been renewed and strengthened, did not suffer
any damage and therefore, the damage suffered by the remaining
frames is attributable to normal wear and tear and has no nexus with
the weather condition.
66. Now it is necessary to note that the reports of Salvage
Association and J. Basheer and Associates were commissioned by
none other than the Appellant itself. The Respondent had also
commissioned a report, however, the same was never produced on
record by the Respondent. Nevertheless, what is important is the two
reports produced on record by the Respondent, were the reports
which were commissioned by the Appellant itself. The first report of
the Salvage Association attributes the entire damage to normal wear
and tear. The second report analyses the first report, as also the other
material placed on record by the Respondent and thereafter concludes
that the damages ,at least to the extent of Rs.1,12,46,999/-, cannot
be said to be attributable to the normal wear and tear, but can be said
to be attributable to the weather condition. It is true that J. Basheer
and Associates were not actually involved in the survey. However, J.
Basheer and Associates had the benefit of survey undertaken by the
Salvage Association, as also the other material placed on record on
behalf of the Respondent. J. Basheer and Associates have analysed this
material, in substantial detail, and thereafter given their opinion.
67. The learned Trial Judge has accepted the opinion of expert
J. Basheer and Associates. The material produced on record by the
parties indicate that though the vessel was seaworthy nevertheless,
number of plates were indeed corroded and it is these corroded plates
which have suffered the maximum damage during the voyage. No
doubt, there are also some other plates which had suffered damage.
There are some other parts of the vessel which had suffered damage
as pointed out in the report of J. Basheer and Associates. Upon
cumulative consideration of all this material on record, as also the
analysis offered by J. Basheer and Associates, we find that no serious
error can be said to have been committed by the learned Trial Judge
in accepting the report of the J. Basheer and Associates.
68. As noted earlier, J. Basheer and Associates has, in fact,
agreed with the report of the Salvage Association, the actual surveyor
of the vessel and on the said basis, held that the claims of the
Respondent to the extent of almost 75% do not deserve to be
accepted, since, damages on the basis of such claims which have been
raised. have no nexus with rough weather or peril of the sea, but
these damages are basically on account of condition of the vessel at
the time of its sail and normal wear and tear. The evidence on record
indicates that in fact the vessel was due for its annual survey and it
cannot be ruled out the reason as to why the vessel was proceeding to
Taranto, eventually the annual survey was carried out. The report of
J. Basheer and Associates disagrees with the opinion of the Salvage
Association only to the extent of 25% of the total claim. It is on this
basis, the learned Trial Judge has awarded the Respondent an amount
of Rs.1,12,46,999/- as against the claimed amount of
Rs.4,98,70,343/-.
69. At this stage, it is necessary to consider the evidence on
behalf of the Appellant. The Appellant has examined Aloke N. Jha,
the Deputy General Manager as DW.1. The learned Trial Judge in
paragraphs 96 to 111 of the impugned Judgment and Decree has
discussed the deposition of DW.1 in the context of the issues in the
suit. On most of the aspects, DW.1 has disclaimed any knowledge.
DW.1 has, however, admitted that the representatives of Palco
Surveyors attended the vessel on behalf of the underwriters and on
completion of the repairs, they even confirmed that all the repairs
were satisfactorily completed. DW.1 has admitted that the
classification notations are indicatives of the specific rule
requirements which have been met and the classification notations
assigned to a ship are indicated on the certificate of classification, as
well as the register of ship published by the Society. DW.1 even
admitted that the total loss recorded in the Basheer's report comes to
Rs.1,12,46,999/-. As noted earlier, all this evidence has been
discussed in substantial details by the learned Trial Judge and there is
really no reason to differ from the findings recorded by the learned
Trial Judge. The fourth point for determination will have to be
answered by endorsing the findings recorded by the learned Trial
Judge that the damages to the extent of Rs.1,12,46,999/-, are only
the damages which can be said to be relatable to the perils of the sea,
like rough weather and not the entire damages of Rs.4,98,70,343/- as
urged by the Respondent in its cross objection. The fourth point for
determination is answered accordingly.
70. The fifth point for determination relates to deduction of
amount of Rs.20.00 lakhs in terms of the insurance policy. On this
aspect, there was really no serious dispute and such deduction is
required to be done in terms of the insurance policies. Accordingly,
from the amount of Rs.1,12,46,999/-, the learned Trial Judge,
ought to have deducted the amount of Rs.20.00 lakhs and to this
extent, interference is warranted with the impugned judgment and
decree. The sixth point for determination is accordingly required to
be answered in favour of the Appellant and against the Respondent.
71. The sixth point for determination is whether there was any
breach of clause 10 of the insurance policy. Clause 10 of the
insurance policy reads as follows :-
“10. NOTICE OF CLAIM AND TENDERS
10.1 In the event of accident whereby loss or damage
may result in a claim under this insurance, notice shall
be given to the Underwriters prior to survey and also, if
the vessel is abroad, to the nearest Lloyd's Agent so that a
surveyor may be appointed to represent the Underwriters
should they so desire.
10.2 The Underwriters shall be entitled to decide the
port to which the Vessel shall proceed for docking or
repair ( the actual additional expense of the voyage
arising from compliance with the Underwriters'
requirements being refunded to the Assured) and shall
have a right of veto concerning a place of repair or a
repairing firm.
10.3 The Underwriters may also take tenders or may
require further tenders to be taken for the repair of the
Vessel. Where such a tender has been taken and a tender
is accepted with the approval of the Underwriters, an
allowance shall be made at the rate of 30% per annum
on the insured value for time lost between the despatch
of the invitations to tender required by Underwriters and
the acceptance of a tender to the extent that such time is
lost solely as the result of tenders having been taken and
provided that the tender is accepted without delay after
receipt of the Underwriters' approval.
Due credit shall be given against the allowance as above
for any amounts recovered in respect of fuel and stores
and wages and maintenance of the Master Officers and
Crew or any member thereof, including amounts
allowed in general average, and for any amounts
recovered from third parties in respect of damages for
detention and/or loss of profit and/or running expenses,
for the period covered by the tender allowance or any
part thereof.
Where a part of the cost of the repair of damage other
than a fixed deductible is not recoverable from the
Underwriters the allowance shall be reduced by a similar
proportion.
10.4 In the event of failure to comply with the
conditions of this Clause 10 a deduction of 15% shall be
made from the amount of the ascertained claim.”
72. In this case, admittedly, the accident whereby the loss or
damage is said to have taken place when the vessel was abroad.
Therefore, in terms of Clause 10.1, the Respondent was duty bound
to give notice not only to the Respondent, but also to the Lloyd's
Agent, so that the surveyor could be appointed to represent the
underwriters and should they so desire. Admittedly, no such notice
was given by the Respondent to Lloyd's Agent.
73. Mr. Ramani, however, tried to contend that there was
substantial compliance with this clause, inasmuch as the notice was
given to the Appellant. He also pointed out that eventually the
Appellant did appoint the surveyors. According to us, the fact that
after some time the surveyors were indeed appointed by the
Appellant, is not a good ground to hold that there was compliance
with the conditions prescribed in clause 10.1 of the insurance
policies. The purpose for which the notice is required to be given to
the Lloyd's Agent, is so that the Lloyd's Agent can immediately
survey the vessel and give a report to the insurance company as to
whether the vessel was involved in any accident and whether loss or
damage has no nexus with such accident. In the present case, if the
Respondents were to comply with the requirements of giving notice
to the Lloyd's Agent, then, as pointed out by Mr. Afonso in all
probabilities the Lloyd's Agent who have surveys practically in every
port, would have surveyed the vessel at the port of Aden itself, where
the vessel is alleged to have called.
74. In any case, when it comes to interpretation of insurance
contract and its terms, the words used therein must be given
paramount importance and interpreted as expression without any
addition, deletion or substitution. Besides, in a contract of insurance,
the rights and obligations are governed by the terms of the said
contract. Since, upon issuance of an insurance policy, the insurer
undertakes to indemnify the loss suffered by the insured on account
of risks covered by the policy, its terms have to be strictly construed
to determine the extent of liability of the insurer and no exception
can be made on the ground of equity. Thus construed, we find merit
in the contention of Mr. Afonso that this is a case where the
Respondent has breached the provisions of clause 10 of the insurance
policy.
75. In Suraj Mal Ram Niwas Oil Mills Private Limited
( supra ) there was a condition in the insurance policy that each and
every consignment must be declared. The claimant failed to disclose
the number of consignments during the relevant period when its
goods suffered damages. The claimant, however, took up a defence
that there was substantial compliance, because the claimant had
declared the goods having insurable interest and non-declaration of
goods, which, in any case had no insurable interest, did not constitute
any breach of the conditions of the insurance policy. However, the
Hon'ble Supreme Court held that there was a breach of this
condition and the appellant's claim must fail on this short ground. It
was held that as per the policy, the appellant could not have picked
and chosen dispatches to be declared and that too at the instance of
the third party consignee who was otherwise a stranger to the
contract. It is in this case that the Hon'ble Supreme Court has held
that in a contract of insurance, the rights and obligations are
governed by the terms of the said contract. Since upon issuance of an
insurance policy, the insurer undertakes to indemnify the loss suffered
by the insured on account of risks covered by the policy, its terms
have to be strictly construed to determine the extent of liability of the
insurer and no exception can be made on the ground of equity. The
Hon'ble Supreme Court further held that the Courts should always
try to interpret the words in the insurance contract as they have been
expressed by the parties. It is not open for the Court to add, delete or
substitute any words. The words used in the insurance contract must
be given paramount importance.
76. In the present case, although the breach of Clause 10 of the
insurance policy is established, that, by itself, does not entitle the
Appellant to repudiate the policy or reject the Respondent's claim. In
fact, that was not even the case of the Respondent. Mr. Afonso's
contention was only that in the event of failure to comply with the
conditions of clause 10, a deduction of 15% to be made from the
amount of ascertained claim.
77. Clause 10.4 of the insurance policy, in terms provide that
in the event of failure to comply with the conditions of this clause 10,
a deduction of 15% shall be made from the amount of the
ascertained claim. Accordingly, the contention of Mr. Afonso in this
regard is quite well founded and will have to be upheld. Therefore,
from the ascertained claim of Rs.92,46,999/-, a further deduction of
15% is due. This means that the Respondent's suit can be decreed to
the extent of Rs.78,59,949.15. The impugned judgment and decree
therefore warrants further modification. The fifth point for
determination will also have to be decided in favour of the Appellant
and against the Respondent.
78. There is absolutely no case made out by the Respondent in
their cross objections. As noted earlier, the report of J. Basheer and
Associates deserves to be accepted in its entirety, as has been done by
the learned Trial Judge. Reasoning for this has been set out not only
in the impugned judgment and decree, which we have endorsed, but
further we too have set out our own reasons for upholding the view
taken by the learned Trial Judge. Accordingly, we find that there is
absolutely no merit in the cross objections, which deserve to be
dismissed. Even on the aspect of rate of interest, we are of the opinion
that the interest at the rate of 6% per annum awarded by the learned
Trial Court is fair and reasonable, having regard to all circumstances
in which the claim arose.
79. For all the aforesaid reasons, we dispose of this appeal and
cross objections by making the following order :-
(a) The appeal is partly allowed and the cross objections are
dismissed;
(b) The impugned judgment and decree is modified by
substituting the amount of Rs.1,12,46,999/- with
Rs.78,59,949.15. This means that there shall now be a
decree directing the Appellant to pay to the Respondent a
sum of Rs.78,59,949.15, together with interest at the rate
of 6% per annum from the date of institution of suit, till its
actual payment.
(c) From out of the amount deposited by the Appellant in
this Court, the Respondent is entitled to withdraw the
amount to the aforesaid extent along with accrued interest,
if any, thereon and the Registry is directed to refund the
balance amount to the Appellant again, along with accrued
interest thereon, if any;
(d) In the facts of the present case, there shall be no order as
to costs.
Smt. M.S. Jawalkar, J. M.S. Sonak, J.
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