Insurance Co. Ltd. Vs. M/S. Ozma Shipping Company & ANR.  INSC 1488
(25 August 2009)
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
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.
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 2 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
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.
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:-
3 "29. Valued Policy:- (1) A policy may be either valued or unvalued.
valued policy is a policy which specifies the agreed value of the subject
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.
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
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;
the policy be an unvalued policy, the measure of indemnity is the insurable
value of the subject- matter insured."
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
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.
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.
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.
The appellant insurance company submitted before the National
Commission that the valuation report of the Surveyor 5 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
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.
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.
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 6 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.
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/-.
premium was admittedly paid on that amount.
said vessel sank with the entire cargo.
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 7 National Commission also came to the definite finding
that the complainant was not guilty of any concealment of facts.
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 4 th April, 1991.
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.
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
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.
The tendency of approaching the Apex Court in every such case also
needs to be effectively curbed.
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)