Lark Fisheries Vs. United India Insurance Co. & Anr.  Insc 116 (30 January 2008)
Sinha & Harjit Singh Bedi
out of SLP (Civil) No. 4974 of 2006] S.B. SINHA, J :
Appellant was the owner of a Sea Vessel known as Sea Lark. 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.
issues were framed. Issues No. 2 and 4 which are relevant for our purpose are
as under: 2. Whether the defendant is liable to pay the suit claim?
Whether the defendant is right in repudiating liability under the policy?
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
Appellant is, thus, before us.
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.
S.M. Suri, learned counsel appearing on behalf of Respondent No. 1, on the
other hand, supported the judgment.
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 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:
of Master and Crew:- 1.(a) Is the vessel in charge of a qualified master? (a)
Yes (b) State his qualifications (b) (c) How long has he been in your employ?
(c) (d) Will he live abroad the Vessel (d) (e) If not incharge of a qualified
Master state brief details of the person who will be in charge of the
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 company that there
had been some omissions;
however, in respect thereof was sought to be furnished in the following terms:
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
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.
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.
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.
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
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 dont 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.
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 the Act) 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.
plaint, it was merely stated:
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
There is no averment even in the plaint that the vehicle was seaworthy. In its
written statement, Respondent No. 1 stated: 7The 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
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
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
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:
See the particulars of Master and Crew.
there is a heading general. Under the first heading, the answer to
the question is Vessel incharge of qualified master What is the
answer? A: Yes.
Under the heading general 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 office. Did you carry
the information to your office? A: I noted down the particulars in a paper and
took them to the office.
would have had a discussion with the bank officials about what are the
have the proposal to them and whatever information they gave, I noted down in a
you have a paper in your possession? A: No.
did you note the information given in the paper wise or generally? A.
find at the top of the proposal 10.05 Meters has been mentioned. Is
it correct? A: Yes.
When was this writing in ink made? A: After typing it, I took it back
to the bank and asked them to check the information whether they are
correct. *** *** *** Q. You got the name of the owner of the Board from
the Bank either orally or in writing.
you in the habit of accepting oral representation? A: Yes
if my learned friend says that the insurance was issued only on the basis of
the proposal is it incorrect.
it is not incorrect.
you the accepting authority? A: My branch manager is the accepting authority.
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.
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 anybodys comprehension. No reliance
can, thus, be placed on his evidence.
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.
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.