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Issue for consideration: NCDRC whether justifi ed in passing the impugned order holding that the respondent-insurance company was under no contractual or legal obligation to reimburse the appellant for the loss suff ered by it on account of sinking of the vessel as the Class Certifi cate was obtained by the appellant by concealing vital information, with respect to the damage to the vessel, from the Classifi cation Society. Consumer Protection – Marine Hull Insurance Policy – Nonreporting of the damage/defects to the Classifi cation Society before issue of the certifi cate, class Certifi cate if rendered invalid though issued earlier – Whether the owner is to inform this aspect or whether the verifi cation by the insurer is warranted – Warranty class, if violated: Held: In the instant case, prior to the instant policy(covering the period between 09.11.2006 to 08.11.2007), the vessel was covered under a policy for the period 09.11.2005 to 08.11.2006 – During the subsistence of the earlier insurance policy, there was a damage to the engine crank shaft and connecting rods and on the recommendation for replacement, the insurer-respondent had reimbursed the amount for that purpose – Though the immediate voyage with repairs were brought to the knowledge of the insurer, the replacement was to be made in due course – No material brought on record by the appellant to indicate that the damage to the engine crank shaft which was required to be replaced and on account of which payment was obtained, was replaced or if it had not been replaced, whether it was reported to American Bureau of Shipping (ABS) so that the Classifi cation Society would have thereafter assessed as to whether even in that circumstance where the replacement had not been made, whether the repairs carried out were suffi cient to certify the seaworthiness of the vessel – On being aware, an informed decision was to be taken to issue the Class Certifi cate – Entire onus cannot be on the insurer to check as to whether subsequently the engine had been replaced by utilising the amount received – In such situation when the replacement, in fact was not made, the onus was entirely on the appellant to bring it to the notice of the Classifi cation Society and in that circumstance when the Class Certifi cate was issued, the warranty class had in fact been violated by the appellant and the exclusion as indicated would apply and make it invalid – Appellant failed to establish that the warranty class had not been breached by them and in that context the seaworthiness or otherwise at the point of accident is not of relevance – Impugned order passed by NCDRC does not call for interference – Marine Insurance Act, 1963. [Paras 18 and 24] Marine Insurance Act, 1963 – ss.35, 37, 41(5) and 55 – Warranties requirement – Rules for Building and Classing: Held: If the requirement is not complied with, then the insurer is discharged from liability as from the date of breach of warranty but without prejudice to any liability incurred before that date. In a time policy, there is no implied warranty that the ship shall be seaworthy at any stage 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 – In view of the warranty requirement, the assured is expected to bring to the notice of the Classifi cation Society the shortcomings or the defects if any, before the issue of such Class Certifi cate since the insurance coverage to be provided by the insurer is based on such Class Certifi cate which is assumed to have been issued by the Classifi cation Society after keeping in view all aspects including the defects if any brought to their notice. [Para 16] Consumer Protection – Marine Hull Insurance Policy – Surveyor recommended rejection of the claim of the appellant – Plea of the appellant that the word of the surveyor is not fi nal: Held: Such plea would not assist the appellant – The surveyor recommended rejection of the claim mainly on the reason that the earlier defect with reference to seaworthiness was not brought to the notice of the Classifi cation Society – It is in that regard the surveyor referred to the inquiries made by him from the Classifi cation Society and indicated that the persons representing the Classifi cation Society stated that the said defi ciencies were not brought to their knowledge – Though it was contended that such indication in the surveyor’s report being hearsay cannot be relied upon, in the absence of any material on behalf of the appellant to indicate that they had intimated the Classifi cation Society, there was no obligation in terms of the legal position for the insurance company to make such inquiry – Therefore, the inquiry made by the surveyor was an additional factor which was not rebutted or controverted with any other evidence by the appellant. [Para 20] Consumer Protection – Marine Hull Insurance Policy was subject to the vessel possessing a Class Warranty – Knowledge on the part of the insurer that there was breach of warranty, if amounts to a waiver: Held: Mere knowledge on the part of the insurer that there was a breach of warranty would not amount to a waiver in the absence of an express representation to that eff ect – Though during the subsistence of the insurance policy for the earlier term there was a claim lodged towards damage to the main engine of the port and crank shaft, based on the recommendation of the surveyor substantial amount had been paid, on account, to the appellant since such advancement of the amount was towards the replacement of the engine crank shaft – Except for the knowledge of the insurer that in view of the waiting period prescribed by the manufacturers for supply of the engine crank shaft for replacement, repairs were carried out and a voyage would be undertaken for urgent delivery of the cargo during the subsistence of the earlier policy period, there is nothing on record to indicate that prior to the issue of the instant insurance policy for the period 09.11.2006 to 08.11.2007 or during subsistence the replacement of the engine had been waived – Thus, when the respondent insurance company relied upon the Class Certifi cation to issue the policy there was no express or implied waiver – Appellant has not established that the defects were brought to the notice of the Classifi cation Society and thereafter the certifi cate was obtained – Thus, when it is subsequently noticed that these defects were not intimated and the warranty class had not been complied, the Classifi cation Certifi cate would automatically become invalid – In fact, the fact that the replacement of the engine crank shaft had not been made came to the knowledge of the insurer only when the fi nal surveyor report was submitted on 19.02.2007 after the policy had already been issued on 09.11.2006 and the accident had occurred on 03.12.2006 – As such there was no waiver on the part of the respondent insurer in this case. [Para 21] |
