AI Structured Summary
Not yet generated for this judgment
Judgment
THE complainant company owned a vessel known as M.V. Sea Panther (hereinafter referred to as the ''Vessel"). The complainant had taken a Marine Hull Insurance Policy in respect of the vessel, from the opposite party for the period from 09.11.2005 to 08.11.2006, insuring the said vessel for Rs. 8,26,92,000/ -. On 03.12.2006, when the vessel was on a voyage from Mumbai to SLQ Complex, Mumbai High South Field, it was struck by a Tug "Sea Ways -9" which was a Port Side Mid -ship, as a result of which the vessel allegedly sank with all cargo on board. The intimation of the sinking of the vessel was given to the insurance company on the next day and M/s. J. Basheer & Associates Surveyors Pvt. Ltd., was appointed by the insurance company to assess the loss. However, no claim was paid to the complainants. Being aggrieved, the complainant is before this Commission by way of this complaint, seeking payment of Rs. 16,62,51,467/ - comprising Rs. 8,26,92,000/ - towards loss of the insured asset, Rs. 5,41,98,144/ - towards interest, along with further interest @ 18% per annum and costs of the proceedings.
IN its reply, the insurance company has submitted that during the term of the first insurance policy taken by the complainant in respect of the vessel, a claim was lodged on account of the alleged damage to the engine, crank shaft etc. of the vessel and M/s. Dhiraj Offshore Private Ltd., was appointed to assess the loss to the complainant. The surveyor, on inspection, found that the chief components of the port main engine of the vessel were beyond repairs. The complainant informed the surveyor that they had carried out temporary repairs to the port main engine due to their present urgent commitments, as there was a waiting period of six months for delivery of the replacement crankshaft and connecting rods from the manufacturers. The insurance company, on the recommendation of the surveyors, made payment of Rs. 1,00,00,000/ - to the complainant on account of the above referred damage to the vessel. This was an ''on account'' advance payment to enable the payment to order of replacement of crankshaft and other components of the port main engine of the vessel. On 19.02.2007, the surveyor submitted their final report, noticing that the repairs to the port main engine had not been completed and the spares had not been delivered by the suppliers to the complainant. It is further stated in the reply filed by the insurance company that the enquiry made by the surveyors M/s. J. Basheer & Associates revealed that the damage to the main part engine of the vessel which occurred during the currency of the first insurance policy taken by the complainant and which was affecting the class status of the vessel had not been reported to the concerned Classification Society i.e. American Bureau of Shipping (hereinafter referred to as "ABS"). It is further stated in the reply that when the surveyor met the officials of the ABS on 22.12.2006, they were surprised to learn about the damage which had taken place during the term of the first insurance policy and Mr. R.C. Bhavnani, Country Manager of ABS stated during the said meeting that if the damage to the port main engine of the vessel had been brought to their notice, the vessel would have been treated as ''off Class" with effect from the date the damage had occurred. According to the insurance company the vehicle therefore was not in class, on the date of issuance of the second policy. It is also pointed out in the reply that despite request by the surveyors, the complainant did not forward the class inspection reports and recommendations made by ABS regarding the damage and repairs to the port main engine of the vessel and rather claimed that all the matters under the first policy stood closed on account of expiry of the said policy. The complainant was therefore, asked to submit a letter from ABS that the vessel was in class despite damage to the port main engine, which had not been notified to them. It is also stated in the reply that the complainant failed to produce Mr. Kochrekar Govind Atmaram, Master of the vessel for enquiry and the surveyor came to know that the license purported to be issued to Mr. Kochrekar was a fake licence and that is why he was not produced before the surveyor for enquiry.
IT is not in dispute that the Marine Hull policy taken by the complainant in respect of the vessel was subject to the vessel possessing a class warranty. It is also an admitted case that the class warranty in respect of the vessel was issued by ABS which was a recognized Classification Society. A Certificate of Classification was issued in respect of the vessel by ABS on 19 October, 2006 and this certificate was based upon the service conducted on 29.9.2006 and 14.10.2006. Therefore, the vessel did possess a Class Certificate issued by the Classification Society, on the date it was hit by the ship Seaway -9.
IT is also not in dispute that the engine crank shaft etc. of the vessel had got damaged in an earlier incidence, which was reported to the insurance company on 11.3.2006. This is complainant''s own case that temporary repairs to the port main engine were carried out at that time, as the crank shaft and connecting rods were not readily available and there was a waiting period of about six months of the delivery of the aforesaid components. It is also not in dispute that the aforesaid crank shaft and connecting rods had not been replaced even by the time the incident in question happed on 03.12.2006. In fact, as late as on 19.2.2007, M/s. Dhiraj Offshore Private Ltd. submitted a report stating therein that the repairs to the main port engine had not been completed and the spares had not been delivered to the complainant. The case of the insurance company is that the serious damage to the vessel, which had taken place during the term of the previous policy was not reported by the complainant to M/s. ABS and had it been reported to ABS that vital components such as crank shaft and connecting rods of the vessel required replacement but had not been replaced, Class Certificate would not have been issued to them. The contention of the learned senior counsel in this regard was that though the crank shaft and the connecting rods had not been replaced, the vessel was in a seaworthy condition and that is why Class Certificate, after due inspection of the vessel, was issued by M/s. ABS on 19.10.2006. The learned counsel for the complainant also refuted the case of the insurance company that the aforesaid damage to the vessel had not been brought to the notice of M/s. ABS before the certificate dated 19.10.2006 was issued and in this regard, he referred to the letter dated 05.1.2007 issued by Shri R.C. Bhavnani, Country Manager of ABS confirming that the vessel was classed with them and the said class was maintained for the period from 30.3.2006 to 03.12.2006. He submitted that had any material fact, including that the crank shaft and connecting rods were yet to be replaced been withheld from ABS, the aforesaid letter dated 05.1.2007 would not have been issued, particularly when the said letter was issued after the alleged meeting of the surveyor with Mr. R.C. Bhavnani, Country Manager. In its report, the surveyor M/s. J. Basheer & Associates Surveyors Pvt. Ltd., inter -alia stated as under:
"OUR ENQUIRY WITH "ABS" CLASSIFICATION SOCIEITY OF VESSEL M.V. SEA PANTHER REGARDING DAMAGE TO PORT MAIN ENGINE:
We had visited ''ABS'' Classification Society office on 22.12.2006 and enquired from Principal Surveyor Mr. Ashok and Country Manager Mr. R.C. Bhavnani, as to whether they were informed by the Owner/Managers of the Damage to Port Main Engine of M.V. Sea Panther which reportedly occurred on 22.2.2006 and temporary repairs carried out as per their recommendations and any Condition of Class (CoC) imposed for subsequent operation of the Vessel with temporary repairs.
They were quite surprised to learn from us about such serious damage to Port Main Engine on 22.2.2006, which they were not aware and the Owners or their representative had not intimated any such incident. They said that their Surveyor had inspected the Vessel on 29.9.2006 at Ferry Wharf, Mumbai and even at that stage, there was no reporting of any damage to Port Main Engine and based on their inspection, they had issued a Certificate of Class on 19.10.2006.
Mr. R.C. Bhavnani, Country Manager had further clarified that if a vessel sustains any damage to either Hull or Machinery and the same is not reported to the Class, then the Class would deem to be automatically suspended. In this context, he had referred ABS Rules for Building and Classing Steel Vessels - 2005 Edition, Part 1, Chapter 1, Section 2 heading ''Suspension and Cancellation of Classification''.
General:
It states that:
"The continuance of the Classification of any Vessel is conditional upon the Rule requirements for periodical, damage and other surveys being duly carried out. The committee reserves the right to reconsider, withhold, suspend or cancel the Class of any vessel or any part of the machinery for noncompliance with the rules, for defects or damages which are not reported to ABS, for defects reported by the Surveyors which have not been rectified in accordance with their recommendations, or for non -payment of fees which are due on account of Classification, Statutory or cargo gear surveys. Suspension or cancellation of class may take effect immediately or after a specified period of time''''.
A major Damage had been reported to Port Main Engine in March, 2006 and the same did not appear to be genuine since the incident was not found reported to the Class and the Insured/the attending surveyors claimed to have carried out only temporary repairs. Such act would amount to Suspension/Cancellation of Vessel''s Class'' as per Class rules, and therefore, when the renewal of the expiring Policy was sought without Condition of Class (CoC) for the Machinery damage, which had taken place in expiring policy, the succeeding Policy would be null and void, as the Vessel would be considered without Class.
The operational efficiency of the Propulsion machinery/maneuverability of the Vessel M.V. Sea Panther in averting the collision in broad day light is in doubt, since the Vessel was reportedly operating at sea in restricted waters of ONGC Bombay High area, with temporary repairs of severally damaged Port Main Engine, as per the then attending damage Surveyor, which was without the knowledge of the Class".
THE complainant has not produced any evidence to prove that the damage, which happened to the vessel during the term of the first policy and the fact that only temporary repairs to the port main engine had been carried out and the crank shaft and connecting rods were yet to be replaced, was duly reported by them to the ABS, at the time, the service were carried out on 29.9.2006 and 14.10.2006. If the aforesaid information was brought to the notice of the ABS, the complainant ought to have produced the same not only before the surveyor appointed by the insurance company but also before this Commission. In any case, the complainant could easily have obtained and submitted a letter to this effect from ABS, as was required by the insurance company. An adverse inference therefore, needs to be drawn against the complainant for not producing the aforesaid evidence. Despite knowing the stand taken by the insurance company viz. the damage which took place during the term of the first policy had not been reported to ABS, no effort was made by the complainant to produce any evidence form ABS before this Commission to prove that the aforesaid damage, including the fact that the crank shaft and connecting rods had not been replaced, was duly reported to them by the complainant. In these circumstances, it would be difficult for us to reject the report of the surveyor, who specifically stated that he had met the Principal Surveyor Mr. Ashok and Country Manager, Mr. R.C. Bhavnani of ABS to enquire whether they were informed of the damage to the port main engine of the vessel, which had occurred on 22.2.2006 and the temporary repairs carried out as per their recommendations and they were quite surprised to learn about such serious damage to the port main engine of the vessel. According to Mr. Basheer they clearly told him that they were not aware of the aforesaid damage nor had the owner of the vessel intimated any such incident to them. They also told the surveyor that when they had inspected the vessel, no damage to the port main engine had been reported to them. Mr. R.C. Bhavnani told the surveyor that if a vessel sustains any damage to either HULL or machinery and the same is not reported to them, then the Class was deemed to be automatically suspended. Reliance in this regard was placed on the rules of the ABS and relevant rule has been extracted in the report of the surveyor and reproduced hereinabove.
AS regards the letter of Mr. Bhavnani dated 05.1.2007, it would be noticed from a careful examination of the said letter that it only confirms that the vessel was classed with ABS and the Class was maintained as published in the record of the ABS for the period from 30.3.2006 to 03.12.2006. In this letter Mr. Bhavnani is only referring to the record of the ABS as maintained, and not to the question as to whether the damage to the vessel on 22.2.2006 had been reported to them or not. Since the Class Certificate was not actually withdrawn by ABS, they had to give a letter, based upon the information stored in their record. Had the complainant intimated the damage to the vessel and the fact that the crank shaft and connecting rods had not been replaced and the ABS issued the certificate despite receipt of such information from the complainant, only then a reliance on the said letter could have been placed. The note appended below this letter makes it clear that the said letter is a representation only that the subjected vessel was listed in the record of ABS on the date or itself stated. There is no dispute that the vessel was actually classed with ABS for the period from 30.3.2006 to 03.12.2006; the issue before us is that the aforesaid Classification was obtained by concealing vital information with respect to the damage to the vessel, from the Classification Society. We are therefore, satisfied that had the complainant disclosed to ABS that the vessel had met with a serious accident on 22.2.2006 and only temporary repairs to the port main engine had been carried out whereas the crank shaft and connecting rods were yet to be replaced, the requisite Class Certificate would not have been issued by the ABS in respect of the vessel in question. The Class Certificate obtained by the complainant, therefore, has to be excluded from consideration, the same having been obtained by concealment of material facts from the Classification Society. Consequently, the vessel shall be deemed to be without class on the date it was hit by ship Seaways -9. The insurance company therefore is under no contractual or legal obligation to reimburse the complainant company for the loss suffered by it on account of sinking of the vessel. The learned counsel for the complainant has in his written submission relied upon Section 41(5) and 55 of the Marine Insurance Act, 1963. Section 41(5) to the extent it is relied upon provides that "in a time policy there is no implied warranty that the ship shall be seaworthy at any stage of the adventure, but where, with the privity of the assured, the ship is sent to sea in an unseaworthy state, the insurer is not liable for any loss attributable to unseaworthiness". Section 55 of the Act provides for the liability of the insurer for any loss proximately caused by a peril insured against, subject of course to the provisions of the Act and the terms of the policy. Neither of the aforesaid provisions is applicable to the present case since it is not the case of the insurance company that the accident involving the vessel was not one of the perils of the sea. The case of the insurance company is based on the Class Certificate having been obtained by concealment of material fact from the Classification Society and not on the actual unseaworthiness or otherwise of the vessel.
For the reasons stated hereinabove, the complaint is hereby dismissed with no order as to costs.