M/S. Ajabha Virambha Manek vs National Insurance Co. Ltd. & Anr

V.K. Jain, J

The complainant who is appellant in FA/233/2011 owned a Dumb Barge, which was used for transporting material from the port to the ships. The said Barge had been got insured by the complainant with the National Insurance Co. Ltd. appellant in FA/420/2011 and respondent in FA/233/2011, for the period from 19.9.2001 to 18.9.2002, for a sum assured of Rs.27 lakhs. The aforesaid Barge sunk on 9.10.2001 between Okha Port and Encourage point. The case of the complainant is that the Barge was hit by the propeller of a ship, namely, MV Jagvikas which led to its getting sunk. A claim in terms of f the insurance policy having been lodged with the insurer, M/s JB Boda Surveyors Pvt. Ltd. were appointed as the surveyors. They submitted an interim report dated 17.9.2001 followed by a final report dated 29.11.2004. The claim, however, was repudiated vide letter dated 3.2.2006 which to the extent it is relevant, reads as under:-

"This has a reference to the claim cited above. While going through the documents you have submitted in connection with the claim, and the survey report of M/s. J.B. Boda Pvt. Ltd. the surveyor appointed to survey and investigate the loss, we have observed that the sinking of the Barge is not due to any "perils of the sea"."

Being aggrieved from the repudiation of the claim, the complainant approached the concerned State Commission by way of a consumer complaint. The complaint was resisted by the insurer primarily on the ground that the Barge had not sunk due to any of the perils of the sea.

The State Commission vide order dated 25.2.2011 directed the insurer to pay a sum of Rs.18,50,000/- to the complainant alongwith interest @ 9% p.a. w.e.f. 3.2.2006. Being aggrieved from the order passed by the State Commission, the insurer is before this Commission by way of FA/420/2011. Since the complainant is also dissatisfied with the quantum of the compensation awarded to it, it has approached this Commission by way of FA/233/2011.

The primary question which arises for consideration in these appeals is as to whether the Barge had got damaged and had consequently sunk due to one of the perils of the sea. It is not in dispute before me that if the Barge was hit by propeller of a ship/vessel that would be one of the insured perils and consequently would be covered under the insurance policy taken by the complainant.

In order to prove that the Barge was hit by the ship/vessel, namely, MV Jagvikas, the complainant has relied primarily upon (i) the pre-insurance inspection report dated 17.9.2001 submitted just about three weeks before the Barge sank, by none other than M/s JB Boda Surveyors Pvt. Ltd. who were appointed as surveyors by the Insurance Co. which reported no defect in the Barge (ii) the Preliminary Loss report dated 18.10.2001 submitted by M/s JB Boda Surveyors Pvt. Ltd. (iii) the underwater inspection reports given by the diving team of M/s RR Marine Services who were appointed by the complainant on the advice of the surveyor, for the purpose of inspection of the Barge and (iv) the statement of a crew member of the ship Bhagwati, on which the goods were to be loaded by the Barge.

Before me, the insurer has relied upon the incident report given by the Master of the Vessel MV Jagvikas and the entries made in the logbook of the ship, besides pointing out that no notice to the owner of the ship, namely, Jagvikas was given by the complainant till it was so pointed out to them by the surveyor and the incident was not reported by the complainant either to the police or the port authority.

The insurer also relies upon the reports of the salvagers appointed by the complainant for retrieving the Barge.

The inspection report dated 17.9.2001 would show that the Barge was inspected when it was afloat, in order to survey the same for the purpose of the valuation for insurance purposes in its condition existing at that time.

The report to the extent it is relevant, reads as under:-

"VALUATION

Taking into consideration the above facts and also our physical inspection of the barge, we are of the opinion that, the present day market value of the dumb barge 'SHIV' Redg No. THN - 16929 could be around Rs.27,00,000/- (Rupees Twenty Seven Lakhs only)."

It would thus be seen that no defect as such in the Barge was found by M/s JB Boda Surveyors Pvt. Ltd. at the time it was inspected. Based upon the condition of the Barge at that time, they valued it at Rs.27 lakhs for the purpose of the insurance. It is not in dispute before me that such a report is required to be provided to the insurer, before the insurance cover is issued. Therefore, it can hardly be disputed that the Barge was found to be seaworthy on 17.9.2001, and that is why it was insured by the National Insurance Co. Ltd. Mr. Rawat submits that the aforesaid report is not an audit report but only a valuation report in respect of the Barge. However, the fact remains that no defect in the Barge was reported in the said report and it was on the basis of this report that the insurance policy came to be issued, meaning thereby that the Barge was found to be seaworthy at the time the policy was issued. The authenticity of this report has not been assailed by the insurer, nor is this the case of the insurer that the Barge was not seaworthy at the time it sank.

In the preliminary loss survey report dated 18.10.2001 M/s JB Boda Surveyors Pvt. Ltd. interalia stated as under:-

"PROBABLE CAUSE OF SINKING OF THE BARGE:

On the basis of our interrogation of the tindel of the Craft crew members, Sarang/Master of the towing tug and inferences drawn therefrom, the probable cause of sinking of D.B. "Shiv" at the open anchorage area off Okha Port, is attributed to hole/puncture at its stern (after end) below water line created by heavy contact of propeller movement of the sailing out Vessel, M.V. "Jagvikas" which lead to ingress of seawater and flooding of after tank compartment, settling down by stern. Further shipping water overdeck, resulting in loss of reserve buoyancy and ultimate sinking of Craft laden with cargo (coal) beneath the sea.

CONCLUSION - REMARKS & COMMENTS:

The Dumb Barge "SHIV", whilst enroute from anchorage to Okha Port, laden with Coal Cargo appx. 350 M.T., passed by M.V. "JAGVIKAS" sailing out, and during the period, it sustained contact damages by sudden movement of propeller of the ship and it was punctured, holed, flooded with seawater and sank beneath the sea.

The master of the Vessel stated that his Vessel was not responsible and denied the liability. However, we had advised the insured to lodge their protest against the Vessel's owners for contact damage to the barge, as a result of which it sprung leak and sank. The insured's were also advised to appoint immediately diving agency for carrying out underwater inspection and submit their report indicating feasibility of salvage etc."

It would thus be seen that after interrogating the tindel of the craft, the crew members and drawing inference therefrom they felt that the probable cause of sinking was the contact of the propeller of the ship Jagvikas with the Barge which led to ingress of sea water and flooding of after deck compartment. He concluded that during the period of sustained contact damage by sudden movement of propeller of the ship Barge was punctured, holed and flooded with sea water. Though master of the vessel Jagvikas maintained that the vessel was not responsible for hitting the Barge, the said statement obviously was not accepted by the surveyor in the preliminary loss report dated 18.10.2001.

The final survey report dated 29.11.2004 submitted by M/s JB Boda Surveyors Pvt. Ltd. interalia, reads as under:-

"On 18th October, 2001, early morning dive, the sunk barge inspection revealed that,

a) Cracks visible at places within one square meter area, in way of (after) peak tank at the stern.

b) These were apparently cuts/gashes created by rotatory movement of a propeller of the (large) Vessel, (as opined by inspection agency).

c) It was lying with its fore and facing South-West and the stern portion facing North-East.

d) Cargo Coal in bulk was 1.5 meter below hatch coaming capping level.

e) Depth of water: @ Low tide - 16.6 Mtrs. (54.464 feet)

@ High tide - 22.8 Mtrs. (74.48 feet)

f) Due to dense turbid (muddy) water and poor visibility under surface, photography was not feasible.

Comments : Sunk barge was located, and salvaging it was feasible being fair weather season prior April, 2002. As per diving agency report, the damage at the stern was due to cuts/ gashes made probably by rotating movement of the propeller of a ship. (Ref. Diving inspection report of R.R. Marine Services dated 25.10.2001-SH-002)."

It would thus been seen that the divers when they inspected the Barge soon after the incident of drowning, found damages which, in their opinion, had been created by rotary movement of a propeller of a large vessel. The Diving Inspection Report was submitted by M/s RR Marine Services. Though the said report is not on record having not been filed by either party, it was seen by the surveyor and finds incorporation in his report. I see no reason to reject the underwater inspection report submitted by the diving agency M/s RR Marine Services. The said report in my opinion clearly shows that the Barge had been hit by the propeller of the ship and that had led to its getting sunk.

The surveyor also recorded the statement of Sarang helsman of HT Bhagwati. In his statement to the surveyor he interlia stated as under:-

v) The Vessel (HAGVIKAS) was getting ready for sailing (from port). The tug's engines was started, the barge towline was secured on the hook at after end, and at around 1115 hours proceeded towards the shore (Okha Port). The towline was about 30 M long and he was attending onto the steering and the driver was standing at the door after end.

vi) Berge crew signalled to stop the tug. Engine speed was reduced, the barge was slight distance off the Vessel. Approaching closer to the barge, it was known that due to striking of propeller of the ship, there was ingress of water therein. Barge was observed to be settling down by the stern (after part) and was sinking.

NOTE OF PROTEST

The Tindel, Shri Arif Ansari, had also lodged a Note of Protest, making a statement of fact, regarding the loss and damage sustained by contract of propeller of the Vessel, M.V. "JAGVIKAS" at anchorage of Okha Port, on 9-10-2001. That due to constant flooding, also shipping water over deck, the barge sank alongwith the cargo of coal etc.

I see no reason to disbelieve the statement of the helsman of HT Bhagwati he being a third party and the statement having been recorded by the surveyor himself. The statement of helsman of HT Bhagwati of MT Bhagwati is very clear as regards the cause of Barge getting damaged and sinking into the sea.

As far as the incident report prepared by the MV Jagvikas and the logbook of the said vessel are concerned, since nobody is likely to speak prejudicial to his own interest, he was not expected to admit his own lapse by admitting that it was his vessel MV Jagvikas propeller of which had hit the Barge. Therefore his report is only a self-serving document which cannot in my opinion be the basis of discarding the claim of the complainant if otherwise found to be genuine.

The learned counsel for the insurer has drawn my attention to the salvage progress reports submitted by Sealord Diving services who were later engaged to salvage the Barge. The said report as extracted in the surveyor report and relied upon by the learned counsel for the insurer, reads as under:-

SALVAGE PROCEDURE AND PROGRESS REPORTS:

Salvage operations commenced by 14-10-2003, and the position of the sunk barge was located.

First progress Report dated 24-10-2003 (SH-024):

i) Divers found damage along starboard side after part in way of after peak tank, around 2 Mtrs. below weather deck, size appx. 1.75 x 0.40 M

ii) Wing buoyancy tank and after peak tank covers opened out and made watertight. Pump out fitting welded into manhole covers.

Second progress Report dated 10-11-2003 (SH-025):

i) Slow progress of salvage due to barge plating condition not good, and water deep at the working site, i.e. @ high tide-27 M (88.6 ft.) and at low tide-23 M(75.5 ft.)

ii) Cargo hold tank top plating (D.B. tank top) damaged along the centre line after part, 5 M X 0.15 M.

iii) Sand and mud in fore peak and after peak tanks, same removed out.

iv) 5 Nos. submersible pumps placed in fore peak and wing tanks.

Seventh & Final Letter Report dated 15th March, 2004 (SH-30): -

This letter was directly addressed to us, in reply to our query as to why there was delay in resuming salvage operations. Salient points mentioned therein were.

Found underwater plate condition very weak.

Deck plating on weather deck very weak with pitting and holes at various places.

Coal was removed from Port side wing tanks, divers reported wing tanks not water tight and connected to double bottom.

Coal was also found in double bottom tank.

Cargo hold after port, tank top appeared damaged 4.7 M X 15.2 Cms. As the tank top plate was open coal and water would have gained entry into the double bottom tank.

M/s Sealord Diving Agencies had suggested for underwater video photography to the Insureds, but since the cost involved was Rs.90,000/-, latter declined due to high cost involved!"

In my opinion, considering that the Barge was already under deep water for more than two years when it was inspected by the above-referred agency not much reliance can placed on the damages to the Barge noticed by them, since damages are bound to happen to a Barge which remains under deep water for such a long period. The said reports in my opinion does not in any manner rule out the probability of the Barge having been hit by the propeller of the vessel, namely, MV Jagvikas.

The learned counsel for the insurer submits that the complainant had deliberately delayed the salvage process so that the Barge may not be taken out and may not be inspected after being taken out. This was not a ground for repudiating the claim and, in any case, I find no poof of such an assumption. The record does not indicate such an attempt on the part of the insured though it could certainly have expedited the appointment of the agency.

The extracts from the survey report would show that as early as on 18.2.2002, the insured had informed of a quotation received from an agency quoting Rs.18 lakhs. Even Sealord Diving services who were eventually engaged had submitted their offer on 19.2.2002. This would clearly show that the quotations for appointment of the agency were invited prior to February 2002. Initially, M/s RR Marine Services were appointed by the insured, but, since they did not complete the work, it was assigned to M/s Sealord Diving Agency. There is no report even from the second salvage agency to the effect that had the salvage operation started earlier it would have been possible to refloat the Barge. Therefore, in my opinion, the alleged delay in appointment of the salvage agency cannot be said to be deliberate and aimed at ensuring that the Barge cannot be refloated by the agency. In fact, the agency would not have even started the operation had they seen no prospect of salvaging the Barge, since it is admitted before me that they were to be paid only in case they were able to salvage the Barge. This indicates that in their opinion there was a possibility of the Barge being salvaged, though eventually they did not succeed.

For the reasons stated hereinabove, I am satisfied that the State Commission was justified in holding that the Barge was hit by the ship which led to its getting sunk into the sea.

Coming to the quantum of compensation, admittedly the Barge was insured for Rs.27 lakhs. The State Commission was under a wrong impression that the Barge was insured to the extent of Rs.30 lakhs. It made a deduction of Rs.11.50 lakhs on the ground that the agency appointed to retrieve the salvage was given a contract for Rs.11,50,000/- to undertake the said operation and they were not able to salvage the Barge. In my opinion, such a deduction was not justified since the fact and circumstances do not show that the complainant or even the agency appointed by them had deliberately not taken out the Barge from under the sea. However, the Barge having not been taken out, it would be unfair to the complainant to deduct the charges which the agency had to take for carrying out the said operation. In fact, even the charges payable to the agency would have been borne by the insurer, had the operation been successful. The value of the salvage was not likely to be more than Rs.11.5 lac, which would have been payable to the Agency, had it been able to refloat the Barge. Therefore, it is difficult to say that the insurer would have gained, had the Barge been refloated.

Though it is pointed out by the learned counsel for the insurer, that the insured did not sue the owner of the ship that in my opinion would not disentitled him for seeking reimbursement from the insurer. If such an incident happens, the human tendency is to peruse a soft course by seeking reimbursement from the insurer, instead of having a long drawn litigation with the offender, which is bound to dispute his liability.

For the reasons stated hereinabove, FA/420/2011 filed by the National Insurance Co. Ltd. is dismissed and the FA/233/2011 filed by the complainant is allowed to the extent that the insurer is directed to pay a sum of Rs.27 lakhs to the complainant alongwith interest on that amount at the rate awarded by the State Commission w.e.f. 3.2.2006.

The complainant shall execute the subrogation letter and all such documents as may be required by the insurer before the claim is paid so as to give a clear and unequivocal title and right to the insurer to avail such remedy as may be open to it in law against the owner of the vessel. The statutory deposit made by the insurer with this Commission shall be released to the insurer with interest which may have accrued on that amount, after the insurer has complied with this order.