Case BriefsTribunals/Commissions/Regulatory Bodies

National Consumer Disputes Redressal Commission (NCDRC): Anup K. Thakur (Presiding Member) dismissed a consumer complaint against the insurance company in case of a Marine Cargo Specific Voyage Policy, holding that it was for the insured/complainant to ensure full compliance of all the policy conditions in its own interest and that the principle of utmost good faith in the present case favoured the insurance company strongly.

Complainant, Mauria Udyog Ltd. and Jotindra Steel & Tubes Ltd. purchased marine cargo-specific voyage insurance policy from United Insurance Co. Ltd., Noida (OP-1) and facts in both the cases are identical.

Issue for Consideration:

Whether the OP had committed any deficiency in service by withdrawing the guarantee and impliedly, denying the insurance claim on the ground that the Marine Vessel (M.V )was not a classified M.V ad did not satisfy the condition mentioned in the policy viz. “Institute Classification Clause with deletion of held cover provision”.

Bench stated that both parties claimed that they had acted in good faith.

OP’s case was that it depended entirely on the information furnished by the insured to issue the policy and when it came to know that the M.V. was not a classified M.V., it immediately withdrew the guarantee it had extended to the adjusters and informed the complainant.

Complainant, on the other hand, argued that it supplied information on the M.V. when it came to it’s knowledge as it was only one of the importers of cargo, on CIF basis, it had no means of knowing the classification of the vessel any sooner. Further, it was not it’s responsibility alone to have ascertained the classification of the M.V. and the implied seaworthiness or otherwise. OP too could have and should have ascertained the M.V.’s classification status, as per it’s own internal circulars. That the OP singularly failed to do so was a deficiency in service and the complainant should not have to suffer repudiation of its genuine claim on this account.

Insurance contract is a contract of utmost good faith, as laid down by the Supreme Court.

CRUX:

Whether the principle of good faith was violated?

Bench on perusal of the records found that M.V. was old and that at the time of it’s engagement in the instant case, it was not classed with any approved society under the International Association of Classification Societies (IACS).

This finding of the surveyor has not been disputed. Indeed, complainant’s argument has remained confined to claiming that it was not as if the vessel was not classified at all; rather, it was listed in the International Register of Shipping. OP has, on the other hand, firmly held that the vessel was not classified as required by the policy clause “Institute Classification Clause with deletion of held cover provision”. Indisputably, therefore, it can be safely concluded that as per OP’s policy clause, the vessel was not worthy of being insured. Yet, it was.

Should the OP have insured the complainant’s cargo, without full knowledge of the vessel and its classification?

Bench held that the complainant failed to establish it’s case.

Reasoning:

It was the complainant, the importer, who had purchased the insurance cover. It was, therefore, reasonable that it had to be vigilant about all the conditions of taking an insurance cover.

The complainant, a regular importer, ought to have known the terms and conditions accompanying a Marine Cargo Specific Voyage Policy.

Although was for the OP to do the necessary due diligence on the classification of the vessel, but, It was the complainant whose cargo was to be insured against all risks associated with the marine voyage. It was therefore for the complainant to have ensured full compliance of all the policy conditions, in it’s own interest.

Hence, merely a cover note, with details of vessel and voyage left blank, on “To Be Declared” basis, from the OP-insurance company, could not have meant that the complainant could then have assumed the contract of insurance as complete and taken no further steps other than a mere communication of details of the shipment, including the vessel’s name, to the OP.

Bench, however, added that it was unreasonable for the OP insurance company to proceed on good faith and issue the insurance policy, in the hope that all the terms and conditions would be complied with, if and when a claim were to be filed.

OP displayed the good faith in issuing the insurance policy, leaving the box in the policy schedule blank.

Utmost Good Faith

The principle of utmost good faith, in the instant case, favours the OP strongly. It was the complainant’s responsibility, first and foremost, to have kept the OP fully apprised of the classification status of the M.V. as soon as it came to know.

In view of the above discussion, the instant consumer complaint was dismissed. [Mauria Udyog Ltd. v. United India Insurance Company Ltd., 2021 SCC OnLine NCDRC 16, decided on 28-01-2021]


Advocates for the parties:

For the Complainant:  Joy Basu, Sr. Advocate with T.S. Ahuja, Advocate

For the Opposite Parties: Amit Kr. Singh, Advocate

Case BriefsHigh Courts

Calcutta High Court: A Single Judge Bench comprising of Ashis Kumar Chakraborty, J., ordered a marine vessel to be arrested while deciding on the affidavit of arrest filed in an admiralty suit.

The plaintiff prayed for arrest of a marine vessel M.T. Aquarius, flying with Barbados flag, lying at Haldia Dock within the jurisdiction of Calcutta High Court. Plaintiff alleged to have a maritime claim against the defendant vessel of Rs 28,06,31,328 on account of her failure to deliver the cargo of gas oil to the plaintiff at the port of Mukalla, Yemen. It was the case of the plaintiff that the defendant vessel, instead of delivering the said gas oil cargo at Makalla, delivered the same to a third party at Hamriyah, UAE.

The High Court, considering all the facts and circumstances, was of the view that the plaintiff had made a prima facie case and balance of convenience also lie in its favour. The Court also found favour with the submission of the plaintiff that its claim gave rise to a maritime claim under Section 4(1)(f) of the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017. It was also noted that the defendant’s vessel was likely to leave Indian Territorial Waters during the next few days. Accordingly, the Court ordered arrest of the defendant vessel, M.T. Aquarius, along with her tackle, hull, engine, equipments, apparels, furniture and all movables lying on board. However, it was clarified that on payment of the amount stated hereinabove as security with the Registrar of the Court, the order of arrest shall stand vacated. The application was made returnable on a further date.  [Quick Time General Trading LLC v. Owners and Parties Interested in the Vessel M.T. Aquarius,2018 SCC OnLine Cal 5363, dated 10-08-2018]

Case BriefsHigh Courts

Bombay High Court: A Single Judge Bench comprising of K.R. Shriram, J. decided an admiralty suit wherein it was held that the claim of charges on the sale proceeds of MT Pratibha Bheema (marine vessel)  constituted maritime lien.

The said vessel was anchored outside Panaji Port, it had developed a technical snag; in view of the impending monsoon, the plaintiff State of Goa towed MT Pratibha Bheema to Mormugoa Port. While anchored at the port, the vessel was sold. Since, at the time of sale, the vessel was within the limits of area controlled by the plaintiff, it demanded various charges from the sale proceed. The question before the Court was whether plaintiff’s claim was secured by maritime lien on sale proceeds of MT Pratibha Bheema. According to the plaintiff, its claim was a maritime claim within the meaning of Article 1(l) of International Convention for the Unification of Certain Rules Relating to the Arrest of Sea going Ships, 1952 and Article 1(n) of International Convention on the Arrest of Ships, 1999.

At the outset, High Court noted that plaintiff produced all the documents to substantiate its claim; and in fact, the defendants conceded that heads of claim had been sufficiently proved. The Court referred to Article 4(1)(d) of International Convention on Maritime Liens and Mortgages, 1993 which reads, “claims for port, canal, and other waterway dues and pilotage dues”. It was noted that India is a signatory to the Convention. Following its earlier decision, the Court held that said Convention could be said to be part and parcel of Indian law or to have force of law in India. Moreover, Section 4(1)(n) of Admiralty (Jurisdiction and Settlement of Maritime Claims) Act 2017, provides that dues in connection with any port, harbour, canal, dock or light tolls, other tolls, waterway or any similar kind chargeable under any law for the time being in force, will be a maritime claim. Also, Section 9 provides for inter se priority on maritime lien. The Court held that Section 4(1)(n) read with Section 9(1)(d) of Admiralty Act provides that plaintiff’s claim will be in the nature of maritime lien. Plaintiff’s claim was allowed with interest of 12% pa. The suit was disposed of accordingly. [State of Goa v. Sale Proceeds of the Vessel MT Pratibha Bheema,  2018 SCC OnLine Bom 1320, dated 07-06-2018]