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Judgment
A.P. Sahi, President Member
The dispute relates to a claim arising out of Marine Transit Risk Insurance Policy under which the Appellant was claiming a loss as against the Respondents No.1 and 2 jointly and severally to the tune of Rs.8.5 Lakh for which the goods were insured under the Insurance Policy dated 27.11.1998.
The claim was repudiated by the Insurance Company. Thereafter, a Claim Petition was filed before the State Consumer Disputes Redressal Commission, Maharashtra at Mumbai. It was partly allowed vide order dated 04.04.2012 against the Opposite Party No.2 (Respondent No.2 herein)-M/s. Shree Hari Shipping Pvt. Ltd. but was dismissed as against the Opposite Party No.1 (Respondent No.1 herein)-M/s New India Assurance Company Limited.
Aggrieved the present Appeal has been filed questioning the correctness of the impugned order on the ground that the State Commission has committed an error in absolving the Insurance Company in spite of the fact that loss and damage of goods stand proved. The Appellant contends that the Insurance Company was negligent and deficient in its services as such the liability of the loss of goods was equally on the Insurance Company as well.
The Appeal was admitted. Notices dispatched but the Opposite Party No.2 has not chosen to contest this Appeal in spite of service of notice and proof of notice on record. The Insurance Company has filed its Written Version and pleadings have been exchanged between the parties whereafter arguments were heard finally and order was reserved.
The Country Craft M.S.V. Shreemathi was hired for carriage of 500 M.T. of Bentonite Lumps in 13,000 cement bags that was to be shipped from Mundra to Mangalore port. The booking was done through the Agent of the Opposite Party No.2 Shipping Company namely M/s.Sirius Shipping Company Limited. The goods to be shipped were sought to be secured by a Policy issued by the Respondent No.1 Insurance Company in favour of the Appellant on 27.11.1998. The Policy covers the risk of the goods as insured which included strike, riots and civil commotion causes, a copy of the Policy is on record which also indicates that loss or damage due to the sinking of the vessel would also be covered under the Policy.
It seems that the Complainant was reasonably expecting the cargo to be delivered within time, but since the consignment was being delayed, the Complainant has contended that they called upon the Shipping Company vide letter dated 16.12.1998 seeking information about the exact date of arrival of the vessel delivering the cargo and also inform about the present location of the vessel. This letter dated 16.12.1998 was filed as Ex.C before the State Commission.
It appears that the vessel had developed some problem and on the same date, the Appellant informed the Insurance Company vide letter dated 16.12.1998 through a fax message informing that they have learnt from the owners representatives that a major leakage problem in the vessel has occurred that might result in the goods being effected by moisture rendering then unusable. The letter dated 16.12.1998 addressed to the Insurance Company by the Appellant is extracted hereinunder:
“The New India Assurance Co. Ltd.,
Mumbai
Date: 16/12/1998
Kind Attn: Mr. Pravin Shetty.
Dear Sirs,
Sub: Your Marine Cargo Policy No: 112500/21/98/23864
dated 27/11/98, M.S.V. Sreemathi
Please refer copy of the letter dated 16/12/1998 faxed to you today addressed to the Owners of M.S.V. Sreemathi.
We telephonically understand from Owners representative that M.S.V. Sreemathi is anchored at Karwar Port in Karnataka due to major leakage problems in the Country Craft/bad weather.
If the leakage in the Country Craft is excessive material is bound to get wet. Wet material is not at all usable.
We request you to inform your Karvar D.O. to inspect the same immediately. We also verbally understand that Craft may not be in a position to proceed further.
However the accurate details was not available with the owners representative and awaited from Country craft officials proceeded to Karvar and no sooner received from them will be forwarded to you.
Meanwhile you are requested to do the needful under intimation to us.
Thanking You,
Yours Faithfully,
For SIMEX MARKETING SERVICES PVT. LTD.,
S.M. SHETTY.
MANAGING DIRECTOR”
This message was sent by fax at the fax number that was the official link of the Company.
The agent of the Shipping Company, namely, Sirius Shipping Company Ltd. vide their fax message dated 22.12.1998 also informed the Complainant that the vessel was having some problem off Mangalore Port and that work was being undertaken to rectify the problem. The significant part of this letter is that it was also received by the New India Assurance Co. Ltd and the said document which is at page 299 also bears the stamp of receipt by the Insurance Company.
The Complainant on 23.12.1998 finally reported to the Insurance Company that the vessel had sunk near Mangalore Port with the cargo on board which has resulted in total loss of the material. Through this letter a request was made for getting a spot survey conducted and other requirements to be completed in order to enable the Complainant to lodge his claim. The said letter is also extracted hereinafter:
“The New India Assurance Co. Ltd.,
Mumbai
Date: 23/12/1998
Kind Attn: Mr. D. Kanthara, Senior Divisional Manager.
Dear Sirs,
Sub: Your Marine Cargo Policy No: 112500/21/98/23864 dated 27/11/98, M.S.V. Sreemathi
Reference above marine policy Country Craft MSV Sreemathi has still not come to berth and further enquiry understand that MSV Sreemathi is sunk near Mangalore Port with our material.
Hence this is total loss of material resulting in a claim.
Please instruct your DO Office in Mangalore urgently, repeat Mangalore for necessary on the spot survey and other requirement to be completed. Xerox copy of Policy Document enclosed for ready reference.
Thanking You,
Yours Faithfully,
For SIMEX MARKETING SERVICES PVT. LTD.,
Authorised signature”
Thereafter, vide letter dated 28.12.1998 the Insurance Company from its Manglore Office dispatched a letter regarding the claim of the Complainant which records the information regarding sinking of the vessel in question and also informing that Mr.P. Narayan of Mangalore was entrusted with the task of an independent surveyor who was to be contacted by the Complainant for giving details. The letter dated 28.12.1998 is extracted hereinunder:
“Ref. No.MGCIAIM/GVK/98
DECEMBER 28, 1998
Sr. Divisional Manager,
The New India Assurance Co. Ltd.,
D.O. No.112500,
Manimahal, IIIrd Floor,
11-21, Mathew Road,
MUMBAI: 400004.”
RE: Marine Claim (Cargo) under your Pol. No.212500219823864
We confirm having received Fax copy from our Bangalore R.O. regarding sinking of country craft MSV “SREEMATHI” carrying cement bags. We have entrusted the survey to independent surveyor Mr. P. Narayan, 7-3-214, Matadakeni, III Cross Road, ‘Manglore-575006, Phone No.457326 (0824). You are requested to advise the insured contract our surveyor Mr. P. Narayan to give correct location of the sinking vessel and other details for conducting immediate survey and investigation.
DIVISIONAL MANAGER
C.C. to : MCFO, Bangalore, R.O.
Kind Attn.: Mr. R. Rajendran for information.”
Thereafter, letters were exchanged between the Insurance Company and the Surveyor informing the Complainant about the survey being undertaken and some information was sought, the letter dated 11.01.1999 by the Insurance Company is on record calling upon the Complainant to provide 14 informations documentary and otherwise regarding the claim under the Marine Cargo Policy. The surveyor had also called upon the Complainant to provide information through the letter dated 02.02.1999. The contents of the letter dated 02.02.1999 are extracted hereinunder:-
“Regd. With Ack. Due.
2nd February, 1999
Messrs. Simax Marketing Services Pvt. Ltd.,
Mittal Tower, ‘B’ Wing, 7th Floor,
Nariman Point,
Mumbai- 400021.
Dear Sirs,
Re: Reported Marine Cargo Claim under Policy No.112500/21/98/23864.
This has further reference to letter No.670800/GVK/99 dated 11th January 1999 addressed to you by the Now India Assurance Co. Ltd., Mangalore with a request to comply with certain of the requirements and note that, I have received only a few of the documents.
Kindly therefore arrange to send the following original documents in due formal.
Original Invoice.
Receipt for freight paid.
Shipping bill.
Bill of Lading.
Export General manifest.
Marine Sea Protest by the Tindel before a duly competent Authority.
Non delivery certificate issued by the carriers.
Copy of claim letter sent by Registered Post Acknowledgment due to the carriers lodging monetary claim.
Postal Acknowledgment card received for the above claim letter in original..
A Report from Mercantile Marine Department.
A report. from Meteorological Department, Bombay, for the weather prevailing during the course of transit.
Any other documents in support of the claim.
Certified copy of cancellation of the certificate of Registration of the vessel if the vessel is a Total Loss.
Claim bills in triplicate.
You may also kindly let me know the name of the Firm who intended to use the consignment.
Thanking you,
Yours faithfully,
C.C.to: The Divisional Manager,
New India Assurance Co. Ltd., Mangalore.”
After the information was given, the surveyor had also tendered some information to the Insurance Company. The same was taken into consideration as also the various intimations received from time to time regarding the sinking of the vessel and loss caused and a query was raised by the Insurance Company on 25.06.1999 calling upon the Complainant to explain as to why different dates of the incident of sinking of the vessel had been given. In this letter, the Insurance Company admits having received the Fax dated 23.12.1998 referred to hereinabove. It is relevant to mention that the Complainant had also dispatched a message on 21.12.1998 where the previous reference to the Fax dated 16.12.1998 is mentioned. Another significant aspect is that the very said fax number is mentioned at which the previous letters were sent to the Insurance Company.
The Complainant has urged that in spite of all efforts and replies given which are on record, regarding documents as desired by the Insurance Company and its surveyor, no appropriate assessment either of the loss or damage or the documents filed by the Complainant were made. The Insurance Company, on an erroneous consideration, repudiated the claim of the Appellant long thereafter on 14.03.2001. The said repudiation clearly states that there is a default on the part of the Complainant and the goods carrier, and even went on to the extent of saying that the incident appears to have been stage managed. The repudiation letter is quoted hereinbelow:
“Without Prejudice
14th March 2001
M/s. Simex Marketing Services P. Ltd.,
B'71, Mittal Tower, 7 Floor,
Nariman Point,
Mumbai 400 021.
Re: Claim No. 112500/21/99/00001
Policy No. 112500/21/98/23864
500 M.T. Bentonite by MSV Sreemathi
Kindly refer to your letter dtd. 21/12/2000 enclosing a certified copy of the Casualty Report.
Since details as called for from you, were not coming forth for very longtime, we had entrusted the matter to independent surveyors for facilitating the issue. While they were carrying out their jobs, in the meantime when we received The Marine Casualty Report dl. 8/1/99 (certified copy did. 14/12/2000) from you, we forwarded the same to them. Based on their enquiries, investigations of the matter with various Authorities, they have come out with the following findings:-
Although as per the statements of the Tindal/Crew members/owners of the MSV Sreemathi and as per the Marine Casualty Report the date of casualty is 24/12/98. The actual verification of the documents/facts from the competent authorities reveals that the casualty took place on 19/12/98. There is also evidence to show that the owners/tindal/crew members have committed willful and unlawful misconduct in order to get a claim under the Hull Insurance Policy.
It is surprising that you are submitting casualty report showing the date of casualty as 24/12/98 whereas your claim intimation to us itself dt. 23/12/98.
The Port Officer had visited the grounded vessel on 20/12/98 yet he has issued a report to MMD Chennai stating the vessel had grounded on 24/12/98. However after the intervention of the investigators, the Port Officer issued the letter correcting the date.
Since the actual date of occurrence was misrepresented the alleged casualty itself seems to have been staged managed. The vessel owners/crew members intentions appeared malafide as they have also not shown any interest or made any effort to remove/save the vessel and/or cargo though the vessel was in stranded condition from 19/12/98 to 29/12/98.
There was unusual delay in prosecution completion of voyage. Under the circumstances you should have followed up with the owners of the vessel and alerted Coast Guard and Post Authority and should have intimated to us about the anticipated loss, unless you heard from the carriers that everything was sale. Besides, you have contended that the carriers have not co-operated with you in issuing the non-delivery certificate. But no proper steps including lodging police complaint etc. have been taken by you to show that you acted as if a Prudent) uninsured.
As you were also consignees of the goods and the news of the grounding of the vessel was already there, had you put some efforts probably the entire cargo could have been salvaged. It may be noted that the vessel was only stranded and the deck line was above the water line till 29/12/98. Even if it is assumed that you came to know about incident on 23/12/98, you have not taken steps viz - due diligence etc. in avoiding and/or minimizing the loss.
In view of the above there is a mis-representation and clear violation of the "Duty of Assured Clause" and "Reasonable Discharge Clause" incorporated in the policy.
Further based on all figures and findings the loss falls within the exclusion number (2)2.2 of the Sailing vessel Clause, the relevant extract of which is reproduced hereunder for your ready reference.
"In no case shall this insurance cover loss, damage or expenses willfully caused by or due to unlawful conduct or negligence or misbehavior on the part of the tindal or crews or the owner of the craft or shippers of consignees."
In view of the above we regret our inability to entertain your claim which kindly note.
Thanking you,
Yours faithfully,
Divisional Manager”
The aforesaid repudiation seems to be based on the investigation report of the surveyor M/s. J. Basheer & Associates Surveyors Pvt. Ltd. who seems to have submitted a final survey report on 09.03.2001. There is however no indication about the spot survey and the report submitted by Mr. P. Narayan.
The Complainant had also engaged the services of M/s. J.B. Boda Surveyors Ltd. who were also on the panel of the Respondent Insurance Company. The said surveyor had also tendered a report on 06.04.1999 where it has been clearly stated that they had been appointed by the Appellant immediately after the accident and they had visited the spot. This report dated 06.04.1999 was also tendered along with the documents in support of the claim by the Appellant. A perusal of the said report would indicate that the spot survey was conducted on 02.01.1999 and the survey/inspection as well as cause of loss are indicated hereinunder :-
“……
OUR SURVEY/INSPECTION:
Upon intimation received from Simex Marketing Services Pvt. Ltd., Mumbai, we proceeded and attended at North Wharf, Bunder, Mangalore, engaged a Fishing Vessel and proceeded to the site of accident on 2nd January, 1999. After half an hour voyage we reached the site of accident which located at the mouth of sea channel, Mangalore (Minor) Port where two rivers were meeting. We carried out a detailed survey/inspection and our findings are as follows :
The vessel M.S.V. "SREEMATHI" which carrying the consignment of Bentonite was completely sunk, only forecastle and small portion of the aft were visible.
On our closer observation, the vessel's hull found broken, gunwale capping around the vessel was missing and most of the frames were missing as far as we could see.
The vessel's forecastle was pitching according to wave direction which witnessing the hull of the vessel was broken.
We also measured the depth of water where the vessel had sunk and same was measured to be 15 feet. After returning from the site of accident, we proceeded to Old Mangalore Port Office and dis- cussed the matter with Port Officer Capt. Mohan Kudari and inference drawn is detailed as follows t
The above casualty reported at Port Office on 29th December, 1998 on receipt of casualty he himself proceeded to the site of accident. At the time of his visit, the vessel was sunk and forecastle was slightly visible. Based on his inspection he is of the opinion that the vessel is subjected to Total Loss along with the consignment.
We also interrogated Owner, tindel and available crew members of the sunken vessel M.S.V. "SREEMATHI" and inference drawn are corroborating the above mishap.
……..
CAUSE OF LOSS :
Based on our inspection, discussion with the Consignor’s Representative and owner/tindel of the vessel, we are of the opinion that the cargo of 500 M. Tons Bentonite lumps loaded on M.S.V. "SREEMATHI" was subjected to Total loss as the vessel sunk along with the consignment at sea channel Mangalore (Minor) Port. The wreck of the hull of captioned vessel still lying at the site of accident and obstructing sea passage of all fishing & sailing vessel operating at Mangalore (Minor) Part.
LOSS ASSESSMENT :
Based on our inspection/discussion, we are of the opinion that, the sunken consignment cannot be used for its intended purpose and any other alternative purpose as the Bentonite lumps looses its chemical property when it was getting contact with sea water. Therefore, in our opinion, the retrieving of the sunken cargo of Bentonite lumps is of no use. We also consulted the local salvor for the possibility of retrieving the consignment who declined to retrieve the same.”
The State Commission after having considered the documents on record as well as the aforesaid communications arrived at the conclusion that the Complainant had not made any effort to salvage the goods immediately on receiving the information of the damage that had it been done, the loss could have been reduced and the liability could have been minimized. The State Commission further found that it was the negligence of the crew of the shipping company and the vessel that led to its sinking. Hence, loss and damage to goods was entirely attributable to the Shipping Company and therefore the claim was liable to be allowed against them only. Consequently, the State Commission absolved the Insurance Company from its liability under the policy even though it was established that the vessel had sunk which loss was liable to be reimbursed against the risk insurance policy.
Before we proceed to analyze the evidence recorded by the State Commission certain facts need to be narrated in seriatum in order to appreciate the factual backdrop of the controversy and to exactly look at the shortcomings or otherwise lapses that have been debated at the bar in fixing the responsibility and liability of the accident.
The shipment was loaded on the Country Craft M.S.V. Sreemathi owned by the Opposite Party No.2 M/s.Shree Hari Shipping Pvt. Ltd., Chennai on being negotiated through its agent M/s.Sirius Shipping Company Ltd., Mumbai. Prior to the consignment being booked and loaded on 27.11.1998, a Marine Transit Risk Insurance Policy was applied for that was extended on 26.11.1998 and the receipt whereafter together with the policy conditions was issued on 27.11.1998. The vessel sailed on 29.11.1998 from Mundra Port, Gujarat for its destination to Manglore, Karnataka. During the voyage it developed major leakage problems which was intimated to the Appellant after they had sent a fax message to the Shipping Company on 16.12.1998 (page 296 of the paper book). The intimation was also sent to the Opposite Party No.2 New India Assurance Co. Ltd. on their fax on the same date conveying major leakage problems in the vessel and it’s anchoring at Karwar Port which is at page 297 of the paper book. Thus, prior information regarding leakage in the country craft had been intimated to the Insurance Company. The Appellant on 21.12.1998 dispatched another fax to the Insurance Company at their Mumbai Office referring to the earlier intimation dated 16.12.1998 that a survey be arranged for the consignment immediately before it is discharged from the country craft. This letter also states that the Appellant apprehends that if the material is affected by moisture it would not be usable and therefore, Divisional Office of the Insurance Company Mangalore should get the consignment surveyed immediately.
The agent of the shipping company namely M/s.Sirius Shipping Company also vide their message dated 22.12.1998 informed the Appellant about the vessel having moved towards Mangalore Port with problems. This intimation was also sent to the Opposite Party Insurance Company on 22.12.1998 that bears a stamp of receipt of the Insurance Company (page 299 of the paper book).
This was followed by information by the Appellant the very next day on 23.12.1998 that the vessel had sunk and a request for spot survey was made (page 51 of the paper book). The Mangalore Office of the Insurance Company intimated its Head Office in Mumbai that they were in receipt of information of the accident and the sinking of the vessel and that they had appointed Mr. P. Narayan as surveyor with information to the Appellant to tender requisite information. The Appellant also appointed their surveyor to visit the spot, namely. M/s. J.B. Boda Surveyors Ltd., who was also on the panel of the Opposite Party Insurance Company.
A request was made to the Port Officer Mangalore for total loss survey on 01.01.1999 but the Port Officer through information dated 05.04.1999 declined to issue the certificate at that stage as the wreck of the vessel had not been removed in spite of several notices. At this stage, it would be relevant to mention that the Port Officer later on 22.07.2000 issued the certificate indicating that the vessel had been grounded on 19.12.1998 at the mouth of the Mangalore Port with the entire cargo resulting in total loss. Needless to mention here that the vessel had grounded and ultimately sank on 24.12.1998. This fact of the vessel having finally sunk is also stated by the Tindal of the ship and the Director of the company in their affidavits that they had filed before the surveyor M/s. J. B. Boda which is also on record. The Tindal had categorically stated that the engine suddenly stopped on 24.12.1998 and the vessel went out of control and drifted as a result whereof it had touched the bed of the sea. He rushed to the engine room where he found that the hold of the ship was being flooded as water was gushing into the vessel.
The Insurance Company called upon the Appellant to submit their claim form vide letter dated 11.01.1999 and the Appellant submitted their claim on 14.01.1999. They simultaneously despatched a notice to the Shipping Company claiming damages for the loss suffered which document is at page 58 of the paper book. The Appellant sent a reply to the Insurance Company on 15.01.1999 and thereafter received a letter from the surveyor Mr. P. Narayan on 02.02.1999 (extracted hereinabove). The Appellant sought requisite documents from the Opposite Party No.2 vide their letter dated 10.02.1999 (page 63 of the paper book). A request was sent to the Mercantile Marine Department on 26.03.1999 requesting that the complete report was required to be tendered before the Insurance Company.
With all this information, a letter was sent to the Insurance Company on 09.04.1999 intimating them that in spite of best efforts, the owners of the vessel have not provided the non-delivery certificate for the consignment, the weather report of Mumbai was not applicable as the craft had sunk near Mangalore and thirdly, Mercantile Marine Department had not replied to their letter. However, along with this letter, the Appellant had tendered the survey report of M/s.J. B. Boda Surveyors Ltd. and a request was made for settling the dues. It is note worthy to mention that the report of the M/s. J.B. Boda Surveyors Ltd. categorically mentioned that the hull of the ship had broken and that most of the frames of the ship were missing but only the forecastle and small portion of the aft of the vessel were visible. It also states that the Port Officer had himself visited on 29.12.1998 and that the surveyor had visited the site on 02.01.1999.
The Insurance Company expressed its doubt about the date of accident and also called upon the Appellant to inform whether any steps were taken to salvage the cargo during the period of 10 days when the vessel experienced distress. A detail reply was given by the Appellant point-wise as to whether any steps had been taken by the Shipping Company to salvage the goods is not known. Regarding the destination of the cargo in paragraph 5 of the said letter it is stated that it was dispatched to “self” as the Appellant was the receiver of the cargo which was to be delivered by them to M/s.Kudremukh Iron Ore Co. Ltd., who are the purchasers of the consignment. Other documents as desired were also enclosed with said letter. It was also informed to them that a reminder had also been sent on 23.07.1999 after lodging the claim against the owners of the vessel on 14.01.1999. A further request was sent to them on 23.07.1999 to issue the non-delivery letter followed by another fax on 29.09.1999 but of no avail. These letters are on record and it was intimated to the Insurance Company vide letter dated 05.10.1999 that the original survey report of M/s. J.B. Boda was also sent on 18.11.1999 with a reminder again on 18.11.1999 to that effect.
The Insurance Company instead of disclosing the spot survey report, if any, by Mr. P. Narayan proceeded to appoint M/s. J. Basheer & Associates Surveyors Pvt. Ltd. as investigator and to submit a final survey report. M/s. J. Basheer & Associates Surveyors Pvt. Ltd. tendered a report after two years of the accident on 09.03.2001.
A marine casualty report has also been filed which is of January, 1999 and is at page 230 to 235 of the paper book signed by the Enquiry Officer, Port Officer, Mangalore. The same indicates that the ship was grounded and suffered total loss. The date of its sinking is mentioned as 24.12.1998. The cause of the casualty has been indicated as engine failure and breakdown as a result whereof the vessel could not be controlled and due to strong currents ran aground at the bar. The vessel suffered breakage of bottom plank, and suddenly heavy sea water entered into the engine room resulting in a forced abandonment by the crew to save their lives.
Having traversed the facts which are on record, we now come to the findings recorded by the State Commission. The first doubt expressed by the State Commission is with regard to a major lacunae, the alleged mispresentation of the actual date of accident. For this the State Commission refers to the Mangalore Port Officer’s confirmation about the grounding of the vessel on 19.12.1998 and then indicates that the vessel sank totally later on. This doubt expressed by the State Commission has been answered by it at internal page 10 of the order where it has been recorded “From the various documents it is clear that vessel had drifted and grounded on 19/12/1998 and it had ultimately sunk somewhere on 24/12/1998”. This finding of the State Commission therefore leaves no room for doubt to believe that the leakage in the vessel had commenced earlier, most probably on 16.12.1998 when the Appellant had sent a fax to the Shipping Company and it had sent another fax on the same date to the Insurance Company at Mumbai about the experience of operational distress to the vessel. This distress ultimately developed into more problems and it is for this reason that the Appellant sent a message to the Insurance Company on 21.12.1998 with a request to conduct survey immediately and this letter also refers to the earlier letter dated 16.12.1998. The fact that the Insurance Company had knowledge of this problem in the vessel and the distress faced by it gets affirmed by the document dated 22.12.1998 which is a message by the agent M/s. Sirius Shipping Company acknowledging the defects in the vessel. The document has been received by the Insurance Company with a stamp of receipt on it. This document and the above series of communications therefore demonstrate that there is no doubt about the manner in which the vessel gradually faced distress, was grounded at Mangalore and ultimately sank there on 24.12.1998. The State Commission has not mentioned about the document dated 22.12.1998 in its entire assessment of the documents on record even though it has recorded a finding that the vessel had drifted and grounded on 19.12.1998 and ultimately sank on 24.12.1998. Thus, the doubt expressed while recording reasons about the date of accident is clearly not substantiated by the own findings of the State Commission as also the documents on record.
The second fact that needs to be assessed is about the promptness of the information to be given as envisaged in terms of the clause 14 of the provisions of Sailing Vessels Tariff conditions that are part of the policy. From the facts narrated above, it is evident that the Appellant had been intimating the Insurance Company and the Shipping Company as well right from 16.12.1998 when the vessel experienced its first distress. Thus, there is no delay on the part of the Appellant in sending timely intimation about the status of the vessel and the damage suffered by it. Had the surveyor reached immediately on receipt of fax dated 21.12.1998, he could have assessed as to whether the goods are capable of being salvaged or not. The Insurance Company therefore appears to have defaulted in its services by not timely sending the surveyor on the spot immediately. It was almost after 5 days of the sinking of the vessel that the 1st letter was despatched on 28.12.1998 appointing the spot surveyor. The deficiency on the part of the Insurance Company is writ large. The attempt to blame the consignor for not taking steps to salvage the goods comes much later with no advise or indication of a possible lapse in the letter dated 22.12.1998 of the Company or any such query by the spot surveyor in his letter dated 02.02.1999, both extracted hereinabove. The Insurance Company at that stage nowhere expressed any such concern nor is there any explanation to that effect. As a matter of fact, had the report of Mr. P. Narayan been brought on record or disclosed, the same would have thrown light more accurately on this aspect but no effort was made by the Insurance Company to disclose this document either before the State Commission or even before the National Commission in this Appeal. It is later on that this issue was raised and was replied to by the Complainant.
The third ground indicated in the impugned order is that the Appellant did not immediately lodge the claim with the Shipping carriers. This fact does not appear to be correct as the claim was lodged immediately after the accident though the letter dated 14.01.1999. Even though, the said letter that was sent by Registered Post is stated to have been returned back by the Shipping Company, yet after receiving the letter dated 02.02.1999 from Mr. P. Narayan the surveyor, the Appellant on 10.02.1999 again sent this information and also sought documents from the Opposite Party No.2 i.e. the shipping company. Thus, the conclusion that the Appellant had failed to lodge their claim with the Opposite Party No.2 is incorrect and contrary to the evidence on record.
There is yet another doubt expressed that the shipping company did not take care to find out the status of the vessel. The letter dated 22.12.1998 sent by M/s. Sirius Shipping Company who are agents of the Opposite Party No.2 had acted upon the information and informed the Insurance Company as well as the Complainant about the same. This letter may have been sent before the vessel finally sank, but it was definitely a step taken by the Shipping Company through its agent to offer information about the status of the vessel.
There is another vital omission by the State Commission which needs to be mentioned while assessing the steps taken by the Appellant. The State Commission has ignored the report dated 06.04.1999 of the M/s. J. B. Boda Surveyors Ltd. extracted hereinabove which records very vital facts after spot inspection was made by the said surveyor on 02.01.1999 where the details of the forecastle and its visibility has been indicated. The vessel was stranded and it ultimately sank. The State Commission has relied completely on the report tendered by M/s. J. Basheer & Associates appointed by the Opposite Party Insurance Company which mentions that the deck line is above the water line as per newspaper report. In our opinion, while relying upon the same, the Insurance Company ought to have also looked into the report of M/s. J.B. Boda as well as the Port Officer’s report dated 22.07.2000 and the State Commission also ought to have assessed the same after analyzing their contents which has not been done. The said documents having been not appreciated, any conclusion drawn without its consideration vitiates the impugned order.
Thus, non-production of the report of the Mr. P. Narayan, ignoring the report of the surveyor M/s. J. B. Boda Surveyors Ltd. dated 06.04.99 appointed by the Appellant and non-appreciation of the Port Officer’s report dated 22.07.2000 therefore renders the impugned order invalid for non-consideration of relevant material.
One of the major findings recorded which also appears to be the main ground of repudiation by the Insurance Company is of the alleged default on the part of the crew members, the shipping company and also of the Appellant in not taking due care and caution to salvage the goods during the period the vessel had experienced distress from 19.12.1998 till it finally sank on 24.12.1998. This is clearly evident from the reasons indicated in the repudiation letter dated 14.03.2001 which has been made the basis of the findings for the same reason by the State Commission.
Learned Counsel for the Appellant has relied on several judgments to support his claim. He has invited the attention of the Bench to the judgment of the Apex Court in the case of New India Assurance Co. Ltd. Vs. Protection Manufacturers Pvt. Ltd., III (2010) CPJ 40 (SC) to contend that M/s. J. Basheer & Associates is known for submitting unreliable and tailor made reports and was reportedly indicted in a Criminal Case. This deserves to be noticed keeping in view the fact that the impugned order also heavily relies on M/s. J. Basheer’s report which we have found to be unsubstantiated. Learned Counsel has also relied upon other judgments to contend that investigator’s report on the basis whereof the claim of the Appellant has been repudiated, is founded on unconfirmed assumptions and the State Commission committed an error by ignoring the report of M/s. J. B. Boda Surveyors Ltd. He has also invited to other judgments and contends that the Insurance Company cannot plead beyond the grounds taken in the repudiation letter and any kind of evidence in the absence of pleadings cannot come to the aid of the Opposite Party.
We have perused and examined the repudiation letter as well as the evidence recorded by the State Commission. It is clear as recorded above that intimation was promptly given to the Insurance Company and there is no doubt about the dates that have been recorded hereinabove which establish that the vessel had started experiencing distress due to leakage right from 16.12.1998 onwards whereafter it arrived off Mangalore Port on 19.12.1998 and it started drifting. The engine finally stopped working on 24.12.1998 after the vessel had touched the bed of the sea and was experiencing hull damage when finally the vessel sank on 24.12.1998.
The first doubt in the repudiation letter dated 14.03.2001 about the crew having committed willful and unlawful misconduct to get gains under the hull Insurance Policy was not approved in the findings of the State Commission but what has been recorded is that they did not take due care and caution as per the report of the surveyor to salvage the goods so as to minimize the loss in terms of the clause 11.1 and 11.2 of the insurance policy cover.
This fault as against the ship owners has been established and the liability incurred was accepted by the Commission and the Shipping Company has neither contested the claim further nor filed any appeal against the State Commission. The Appellant had clearly indicated that the carriers did not cooperate with the Appellant either by issuing the non-delivery certificate or otherwise. All appropriate steps were taken by them and it is for this reason that the State Commission has also found the shipping company to be liable for the loss.
The inference drawn that the Appellant was trying to misrepresent the dates so as to make the accident appear stage managed is incorrect for the reasoned findings given hereinabove.
The finding against the Appellant of not taking reasonable care is against the weight of evidence on record inasmuch as they have made every effort to inform all concerned including the Shipping Company which had failed to cooperate. The vessel had also drifted and stranded with water leakage and the breaking of hull before it finally sank. There was therefore no default on the part of the Appellant in not taking any steps. It was the obligation of the ship owners as per clause 11 and the Appellant had been duly intimating them. The Shipping Company and its agent were well aware of the distress of the vessel. The duty therefore was cast on them, and to that effect the Appellant had ensured every possible step that was required to be taken in that regard. Thus, shifting the blame on the Appellant does not appear to be justified either on the finding recorded in the repudiation letter or by the State Commission.
As a matter of fact, the Insurance Company did disservice and there is a clear deficiency on their part also by not processing the claim of the Appellant for about 2 years and then rejecting it on erroneous considerations. The liability of the Insurance Company under the policy is clear as the claim is reimbursable in terms of the risk cover under clause-1 of the schedule pertaining to the sinking of a vessel which is not disputed. The Insurance Company relied on the report of its surveyor by whom the learned Counsel for the Appellant has pointed out that his surveyor report has been criticized that a criminal case was also lodged against the said surveyor for offences of cheating and dishonesty. The surveyor report which has been also relief by the State Commission is based on the inferences which are against the wright of evidence on record and the liability of the insurance company has been incorrectly negated.
It has been urged by the learned Counsel for the Insurance Company that the fault on the part of the Appellant in not taking steps for salvage of the consignment on the stranded vessel is established. This argument has already been discussed by us hereinabove and we do not find any such visible fault on the part of the Appellant so as to deny them any such benefit of reimburse as against the insurance company. To the contrary the Appellant after exercising all genuine efforts submitted all the documents which was available within their possession and have been accepted as it is evident from the letter of repudiation dated 14.03.2001. The conclusion that the Appellant had not promptly taken steps for saving the goods is an assumption against logic.
The lapse of the Insurance Company in not promptly sending a surveyor and thereafter withholding, if any, spot survey report by Mr. P. Narayan and then expressing doubts on the Complainant about not taking steps for salvaging is a lame excuse. If the vessel had sunk and the goods irretrievable, classified as total loss in the survey report of M/s. J. B. Boda dated 06.04.1999 and the Port Officer’s report dated 22.07.2000 who had visited the spot on 29.12.1998, the only conclusion that can be drawn is that the consignment had been completely damaged along with the vessel that sank due to serious water leakage defects. The subsequent assumption by the final surveyor in his report of 2001 and the conclusion of the Insurance Company in its repudiation is without any cogent evidence to the contrary. The Insurance Company therefore for it’s deficiency and want of promptness with no plausible material to contradict the narrative of the Complainant was equally liable and could not have carved out an excuse of any lapse on the part of the Complainant to deny the claim.
The Insurance Company therefore was also equally liable for the loss suffered in terms of the risk cover under the policy and hence liable to pay damages in equal measure to the Appellant.
For the reasons stated above, we modify the impugned judgment dated 04.04.2012 while upholding the claim having been established against the Opposite Party No.2, the Opposite Party Insurance Company is equally liable to bear the loss and reimburse the Appellant to the extent of 50% of the liability. We accordingly direct that 50% of the claim amount with 9% interest per annum is liable to be reimbursed by the Insurance Company. Consequently, a sum of Rs.4,25,000/- with 9% interest per annum from the date of the complaint till its actual realization shall be paid by the Insurance Company, within a period of three months.
We have awarded this amount keeping in view the doctrine of proportionality more so, in the background that the Opposite Party No.2 in spite of service of notices has not chosen either put in appearance or contest this Appeal nor have they filed any Appeal on their behalf questioning the correctness of the impugned order. From the record, it also appears that the name of the shipping company has also been struck off from the rolls of the Registrar of Company and no address of the company is available.
In the background above, the Appeal is partly allowed to the aforesaid extent subject to the directions hereinabove. All the applications, if any, pending stand disposed of accordingly. The statutory amount, if any, deposited by the Appellant be refunded to it after due compliance.