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CASE NO.: Appeal (civil)  803 of 2008

PETITIONER: Sea Lark Fisheries

RESPONDENT: United India Insurance Co. & Anr.

DATE OF JUDGMENT: 30/01/2008

BENCH: S.B. Sinha & Harjit Singh Bedi

JUDGMENT: J U D G M E N T  

[Arising out of  SLP (Civil) No. 4974 of 2006]

S.B. SINHA, J :          1.      Leave granted.

2.      Appellant was the owner of a Sea Vessel known as \021Sea Lark\022.  The  vessel was engaged for fishing purposes.  Appellant obtained a loan from   Canara Bank (Bank).  At the time of sanction of loan, the Bank obtained an  insurance policy from the respondent no. 1 in respect of the said vessel.  It  was insured on 12.04.1979 to cover the period from 12.04.1979 to  12.04.1980.  It was later on renewed for the period 12.04.1980 and  11.04.1981.  The vessel sunk on 21.07.1980.  A claim was made in that  behalf, which having been repudiated by the respondent No. 1, a civil suit  marked as Suit No. 333 of 1983 was filed by the appellant and the Bank  before the High Court of Judicature at Madras.  Respondent no. 1 in its  written statement inter alia contended that the vessel was not seaworthy.                    Several issues were framed.  Issues No. 2 and 4 which are relevant for  our purpose are as under:

\0232.  Whether the defendant is liable to pay the  suit claim? 4.      Whether the defendant is right in repudiating  liability under the policy?\024

3.      The suit was decreed by a learned Single Judge of the High Court  inter alia on the premise that one Hemchandra Babu who was the agent of  the insurer and who had filled in the form, kept blanks therein for which the  Bank could not be held responsible.  An appeal preferred by the respondent  no. 1 against the said judgment, however, has been allowed by a Division  Bench of the Madras High Court.   

4.      Appellant is, thus, before us. 5.      Mr. Vipin Gogia, learned counsel appearing on behalf of the  appellant, inter alia submitted that the Division Bench of the High Court  committed a serious error in passing the impugned judgment insofar as it  failed to take into consideration that the question as to whether the Master of  the ship had the requisite qualification or not having not been raised in the  written statement, the plaintiff- appellant did not have any opportunity to  meet the same.

6.      Mr. S.M. Suri, learned counsel appearing on behalf of Respondent  No. 1, on the other hand, supported the judgment.   

7.      The question which arose for consideration in the suit as also before  the Division Bench of the High Court was as to whether there had been

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material suppression or mis-representation of facts, the relevant details  whereof had not been furnished to the insurer.  Admittedly, as against the  column relating to particulars of Master and Crew, the following were  required to be indicated:

\023Particulars of Master and Crew:-

1.(a) Is the vessel in charge of a  qualified master? (a) Yes (b) State his qualifications (b)\005 (c) How long has he been in your  employ? (c)\005 (d) Will he live abroad the Vessel (d)\005 (e) If not incharge of a qualified  Master state brief details of the  person who will be in charge of the  vessel\024 (e)\005

8.      An application for insuring the vehicle was filed by the Bank.  It  supplied some information to the agent of the Insurer being one Hemchandra  Babu.  He examined himself as DW-1.  It has been admitted by the Bank in  its representation before the Chairman and the Managing Director of  Respondent No. 1 \026 company that there had been some omissions;  explanation, however, in respect thereof was sought to be furnished in the  following terms:

\023Naturally this marine policy was also passed on to  United India Insurance.  The signed proposal form  was handed over to the agent and in all occasions,  he filled up the particulars himself and issued the  policy.  He is almost a daily visitor to our branch  for his business.  In this case, only that as the party  was away from Madras, we suggested to accept the  premium and issue the cover note and that we  would give the proposal form as soon as party  returned.  However, as suggested by the agent, we  signed the proposal to enable him to issue the  policy on 12.4.79, so that there would be no break  in insurance cover.  Nothing was kept away from  him\005\024   9.      Any information which could be furnished by the Bank to the insurer  was only on the basis of the information received by it from the appellant.   The Bank could not have any independent information in that behalf.  We  have noticed hereinbefore that several columns which were material for the  purpose of entering into a contract of insurance were left blank.   

10.     The Division Bench of the High Court has noticed Rule 31 of the  Tamil Nadu Minor Ports Harbour Craft Rules, 1953 which mandates posting  of a Master or Serang and one Engineer or Engine Driver in every  mechanically propelled vessel, when used.  The driver is required to possess  a certificate of training issued by the Department of Fisheries.  Rule 32 of  the said Rules prescribes the method of obtaining a certificate of competency  as Master or Serang.  Not only did the proposal for insurance not contain the  said details but also no evidence in that behalf was brought on records.   

11.     The submission of the learned counsel that the appellant was not  allowed to furnish information cannot be accepted as such a plea was not  raised in the plaint.

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12.     Mr. Gogia submitted that the survey conducted by the insurance  company established that the vessel was seaworthy.  The inspection report is  dated 17.04.1980.  A survey was conducted by a surveyor (we don\022t know at  whose instance) on 25.11.1979 at 6 p.m.  For what purpose such a survey  was conducted is not known.  Why a report was submitted after more than  four months from the date of conducting the survey is also beyond our  comprehension.

13.     A marine insurance policy requires an implied warranty of  seaworthiness as is evident from Sub-section (3) of Section 41 of the Marine  Insurance Act, 1963 (for short \023the Act\024) which governs the terms of a  contract of insurance.  It may be true that the notice dated 9.11.1981  repudiating the claim did not contain any details in regard to the purported  misrepresentation of material facts but the same was not decisive.  It was for  the plaintiff not only to plead but also establish that the vessel in question  was seaworthy.

       In the plaint, it was merely stated:

\02310. The plaintiffs had issued a notice through  their counsel dated 7.1.1983 calling upon the  defendant to make the payment.  Though the said  notice was received and acknowledged by the  defendant, so far has not made any payment.  On  the other hand the defendant had sent a reply dated  15.3.83 raising incorrect and unsustainable  contentions.\024 14.     There is no averment even in the plaint that the vehicle was  seaworthy.  In its written statement, Respondent No. 1 stated:

\0237\005The defendant submits that even the answers  which are handwritten were not filled by  Hemachandra Babu or any other person acting on  behalf of the defendant\005\024

15.     Section 19 of the Act states that insurance is uberrimae fidei.  Section  20 provides for disclosures by the assured.  The question as to whether a  particular circumstance which is not disclosed is material or not is  essentially a question of fact. What facts need to be disclosed and what need  not, have clearly been laid down in sub-sections (2) and (3) of Section 20  respectively.

       Section 21 of the Act provides for the disclosure by an agent effecting  the insurance.  The Bank having acted as an agent, thus, had a responsibility  to disclose all material facts.  The insurance policy was marked as Ext. D- 18.  It was also referred to in the plaint.  We have noticed heretobefore the  material part thereof.

16.     The terms of the contract of insurance, thus, being governed by the  provisions of a statute; non-disclosure of such material facts would render  the policy repudiable.  For this purpose, we may notice the depositions of  DW-1, which are in questions and answers form, which read as under:

\023Q. See the particulars of \023Master and Crew\024.   Then there is a heading \023general\024.  Under the first  heading, the answer to the question is \023Vessel  incharge of qualified master\024  What is the answer? A: Yes. Q. Under the heading \023general\024 there are three  questions.  Was any information furnished to you  with regard to the questions? A: They have not furnished any information for the  three questions. ***             ***                     *** Q. You said the proposal form was typed at your

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office.  Did you carry the information to your  office? A: I noted down the particulars in a paper and took  them to the office. Q. You would have had a discussion with the bank  officials about what are the information required. A: I have the proposal to them and whatever  information they gave, I noted down in a paper. Q. Do you have a paper in your possession? A: No. Q. How did you note the information given in the  paper wise or generally? A. Column-wise. Q. You find at the top of the proposal \02310.05  Meters\024 has been mentioned. Is it correct? A: Yes. Q. When was this writing in \023ink\024 made? A: After typing it, I took it back to the bank and  asked them to check the information whether they  are correct.\024  ***             ***                     *** Q. You got the name of the owner of the Board  from the Bank either orally or in writing. A: Orally. By Counsel: Q. Are you in the habit of accepting oral  representation? A: Yes Q. So if my learned friend says that the insurance  was issued only on the basis of the proposal is it  incorrect. A: No, it is not incorrect. Q. Are you the accepting authority? A: My branch manager is the accepting authority. Q. What did you do after taking the proposal to the  branch manager? A: I showed the proposal to the Branch Manager  and he asked me to issue the policy.\024

       Thus, even according to DW-1, necessary particulars were not  furnished to him by the plaintiff.  How DW-1 could act upon the purported  oral representation of the officers of the Bank is beyond anybody\022s  comprehension.  No reliance can, thus, be placed on his evidence.

17.     Where there has been a suppression of fact, acceptance of the policy  by an officer of the insurance company would not be binding on it.  The  Division Bench of the High Court, in our opinion, having regard to the  statutory provisions, has rightly held that the plaintiff suppressed the  material fact.  Moreover, in view of the statutory rules, the court would have  no other option but to hold that the vessel was not seaworthy.

18.    For the reasons aforementioned, we are of the opinion that there is no  infirmity in the impugned judgment.  The appeal is dismissed.  In the facts  and circumstances of the case, however, there will be no order as to costs.