REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 6289 OF 2001

Oriental Insurance Company Ltd.    .. Appellant

Versus

M/s Ozma Shipping Company & Another         .. Respondents

J U D G M E N T

Dalveer Bhandari, J.

1. This  appeal  is  directed  from  the  judgment  dated  25th  

April,  2001  passed  by  the  National  Consumer  Disputes  

Redressal Commission, New Delhi in Original Petition No.79 of  

1995.

2. The brief uncontroverted facts in nutshell are as under:-

Respondent No.1, M/s Ozma Shipping Co. is the owner of  

a sailing vessel.  The same was insured on 14.12.1987 for a

sum of Rs.21,50,000/-.  A total premium of Rs.40,832.50 was  

paid for  the  period covering 14.12.1987 to  13.3.1988.   The  

insurance  was  extended  from  14.3.1988  to  13.6.1988  by  

paying a premium of Rs.30,383/-.

3. It  may be pertinent to mention that before issuing the  

policy  the  Surveyor  appointed  by  the  appellant  Insurance  

Company  thoroughly  inspected  the  vessel  and  issued  a  

valuation certificate.   The Surveyor after inspecting the vessel  

certified  that  the  market  value  of  the  vessel  was  Rs.  

21,50,000/-.  The Surveyor gave a very comprehensive report  

and  took note  of  the  fact  that  a  major  over-hauling  of  the  

engine and accessories and reconditioning and painting of the  

Hull had been carried out during 1987.  It may be pertinent to  

mention that the Surveyor had considered all relevant factors  

in its report.

4. Sections 29 and 68 of the Marine Insurance Act, 1963  

are  relevant  in  connection  with  the  present  controversy  

involved in this case.  It would be appropriate to set out both  

these sections:-

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“29.  Valued  Policy:-  (1)  A   policy  may  be  either  valued or unvalued.

(2) A valued policy is a policy which specifies the  agreed value of the subject matter insured.

(3) Subject to the provisions of this Act, and in the  absence of fraud, the value fixed by the policy  is,  as  between  the  insurer  and  assured,  conclusive of the insurable value of the subject  intended  to  be  insured,  whether  the  loss  be  total or partial.

(4) Unless the policy otherwise provides, the value  fixed  by  the  policy  is  not  conclusive  for  the  purpose  of  determining  whether  there  has  been a constructive total loss.”

Section 68 reads as under:-

“Total Loss – Subject to the provisions of this Act,  and to any express provision in the policy,  where  there is a total loss of the subject matter insured-

(1) if the policy be a valued policy, the measure of  indemnity is the sum fixed by the policy;

(2) if the policy be an unvalued policy, the measure  of  indemnity  is  the  insurable  value  of  the  subject- matter insured.”

5. It is clear from the section 29(3) that the value fixed by  

the policy between the insurer and the assured is conclusive of  

the insurance value.

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6. The vessel sailed from Beypore to Kavarati  loaded with  

goods at around 3 p.m. on 23.4.1988.  The said vessel sank  

with the entire cargo.   

7. Respondent  no.1  lodged  the  insurance  claim  with  the  

appellant  insurance  company  on  6.5.1989.  The  appellant  

insurance  company  immediately  deputed  the  Surveyor  and  

carried  out  the  spot  survey.   The  Surveyor  submitted  the  

report  advising  carrying  out  proper  investigation.   The  

appellant  insurance  company  agreed  to  settle  the  claim  of  

respondent at Rs.15 lacs.      

8. Respondent  no.1  filed  a  complaint  before  the  National  

Consumer  Disputes  Redressal  Commission  (For  short,  the  

‘National  Commission’).    The  complainant  prayed  that  the  

insurance  company  be  directed  to  pay  the  entire  insured  

amount of Rs.21,50,000/- with 18% rate of interest from the  

date  of  calamity  i.e.  from  23rd April,  1988  along  with  the  

compensation and costs.   

9. The appellant insurance company submitted before the  

National Commission that the valuation report of the Surveyor  

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of M/s Ozma Shipping Company was not correct because the  

value  of  the  said  vessel  was  not  more  than  Rs.15  lacs,  

therefore, respondent No.1 is not entitled to an amount more  

than Rs.15 lacs.

10. It  was  stated  by  the  appellant  company  that  in  the  

proposal form it was nowhere stated that it had remodeled and  

reconditioned the vessel by spending a sum of over Rs.5 lacs  

in the year 1989 and it  was alleged for the first  time  vide  

order dated 28th February, 1990.

11. According  to  the  appellant  insurance  company  the  

market value of the vessel would decrease year after year and  

it  could  not  enhance to  such an exorbitant  figure  by  mere  

reconditioning,  painting  and  remodeling.   The  insurance  

coverage  was  obtained  for  a  higher  sum  insured  than  the  

actual  cost  by  deliberately  concealing  the  material  facts.  

These pleas of the appellant company are totally devoid of any  

merit when the Surveyor appointed by the insurance company  

found  the  value  of  the  vessel  as  Rs.21,50,000/-  and  the  

appellant  company  accepted  the  insurance  premium  on  

Rs.21,50,000/-. According to the National Commission, as the  

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Surveyor took note of the fact that a major overhauling of the  

engine and accessories and reconditioning and painting of the  

Hull had been carried out during 1987, there seems to be no  

justification from deviating from that figure.   

12. There are following undisputed and uncontroverted facts  

in this case:-  

(I) vessel sailed form Beypore to Kavarati loaded  

with goods on 23.4.1988 and according to the  

Surveyor after inspecting the vessel he certified  

the  market  value  of  the  vessel  as  

Rs.21,50,000/-.

(II) The  premium  was  admittedly  paid  on  that  

amount.   

(III) The said vessel sank with the entire cargo.

13. The National Commission held that on consideration of  

the relevant factors the valuation of the vessel was valued as  

Rs.21,50,000/-.  On the basis of the valuation, the insurance  

premium was paid  on  the  amount  of  Rs.21,50,000/-.   The  

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National Commission also came to the definite finding that the  

complainant was not guilty of any concealment of facts.   

14. On  consideration  of  the  totality  of  the  facts  and  

circumstances,  the  impugned  judgment  of  the  National  

Commission  is  absolutely  correct  and  the  National  

Commission  was  fully  justified  in  directing  the  insurance  

company to pay the value of the entire vessel Rs.21,50,000/-  

with  interest  at  the  rate  of  12% per  annum from 4th April,  

1991.   

15. It may be pertinent to mention that when the valuation of  

the  vessel  had  been  carried  out  by  the  Surveyour  of  the  

insurance company who came to the conclusion that the value  

of  the  vessel  would  be  Rs.21,50,000/-  then  the  Insurance  

Company  should  not  hesitate  to  pay  the  amount  which  is  

legitimately due to the complainant particularly when there is  

no dispute that the entire vessel with cargo insured with the  

appellant sank while the vessel was sailing from Beypore to  

Kavarati.

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16. We have heard the learned counsel for the parties and  

carefully perused the impugned judgment. In our considered  

view no interference is called for.   We make it clear that in  

case the entire amount in the sum of Rs.21,50,000/- has not  

been paid to the respondent company, the same would be paid  

as expeditiously as possible and in any event  within six weeks  

from the date  of  communication of  this  judgment.   If  some  

amount has been paid by the appellant insurance company to  

respondent  No.1  in  that  event  they  would  ensure  that  the  

adjustment of that amount is done and the remaining amount  

be paid to respondent No.1 within six weeks from the date of  

this judgment along with interest.

17. Before parting with this case we would like to observe  

that the insurance companies in genuine and bona fide claims  

of  the  insurers  should  not  adopt  the  attitude  of  avoiding  

payments on one pretext or the other.  This attitude puts a  

serious question mark on their credibility and trustworthiness  

of the insurance companies. Incidentally by adopting honest  

approach and attitude the insurance companies would be able  

to save enormous litigation costs and the interest liability.   

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18. The  tendency  of  approaching  the  Apex  Court  in  every  

such case also needs to be effectively curbed.

19. The  appeal  being  devoid  of  any  merit  is  accordingly  

dismissed with costs which is quantified at Rs.25,000/- to be  

also paid  by the appellant Insurance Company to respondent  

No. 1 within six weeks from today.  The appeal is accordingly  

disposed of.  

……….…………………………….J.                                       (Dalveer Bhandari)

..……..….………...……….…….J.                                       (Harjit Singh Bedi)

New Delhi; August 25, 2009

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