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Report No. 67

6.48. Inland transport.-

The second question to be considered relates to insurance in respect of inland transport. The definition in the Stamp Act-vide the words that appear in brackets-specifically cover transport by inland waters. In this connection, it is to be pointed out that under the Marine Insurance Act1 also, a contract of marine insurance "may be extended" to cover transport on inland waters.

1. Section 4, Marine Insurance Act, 1963 (supra),

6.48A. Inland risks.-

On a comparison of the definition of "sea insurance" in the Stamp1 Act and that of "Marine insurance" in sections 3, 4 and 5 of the Marine Insurance Act, 1963, it appears that, broadly speaking, the only kind of risk which may not conceivably be covered by the provision in the Marine Insurance Act is a risk arising from an adventure which is carried on purely on inland waters and not as incidental to a marine voyage. It could, for example, be argued that the insurance of a steamer carrying goods only on a particular river and not touching the sea at all at any point may not fall within the definition in section 4 of Marine Insurance Act, 19632, though it falls within the definition in the Stamp Act. Even the existence of this point of difference is doubtful, because it is hardly likely that the draftsman in 1899, when using the expression "sea insurance", was concerned with purely inland navigation.

1. Para. 6.30, supra.

2. Para. 6.30, supra.

6.48B. Taxing entry-sea insurance.-

Moreover, whatever be the scope of section 2(20) which defines "policy of sea insurance", it is to be noted that the taxing entry in Article 47 speaks only of "sea insurance" and makes a reference to section 7. The expression "sea insurance" should be given its ordinary meaning. Section 7(1)-now repealed-provides that no "contract for sea insurance" (other than such insurance as is referred to in section 506 of the Merchant Shipping Act, 1894), shall be valid unless the same is expressed in a "sea policy". The taxing entry in Article 47 refers to section 7, and since neither section 7 nor Article 47 defines "sea insurance", as such recourse should be had only to its ordinary meaning.

Now, the expression "sea insurance", according to ordinary parlance, would not cover a risk purely of river navigation. Since there is no definition of "sea insurance", it can be taken in its ordinary meaning. On that approach, it would not include purely inland navigation. The result is that though the definition of "policy of sea insurance" in section 2(20) of the Stamp Act is wide in regard to inland navigation (as explained above), the charging provision in Article 47 does not appear to be so wide.

6.48C. Therefore, the fact that the definition in the Marine Insurance Act does not include pure inland adventures, is of no consequence. Of course, as a matter of commercial practice, policies of insurance of vessels on inland navigation are sometimes executed in the form normally used for marine policies. But even that fact would not attract section 7(1) of the Stamp Act or Article 47. Thus, the adoption of the definition in the Marine Insurance Act and the deletion of the present definition will make no radical change in the tax.

6.48D. Even if the above exposition of the position is not correct, the practical aspect should not be over-looked.

6.49. Thus, there should be no serious objection if the Marine Insurance Act is referred to in the definition in the Stamp Act. It may be emphasised that that Act is the principal enactment of relevance to marine policies.

6.50. Suggested re-draft.-

The following rough draft indicates the main lines on which the definition should be revised,1 if the above approach is accepted-

"(20) Policy of marine insurance which satisfies the requirements of the Marine Insurance Act, 1963."

1. Some consequential changes may be necessary in section 7(4), Article 47 etc.

6.51. As regards section 24, Marine Insurance Act, 1963, it may be noted that the latter part of the section does not allow a suit. It merely recognises the fact that there may be an interval between the conclusion of the contract and the issue of a policy of marine insurance.

6.52. The statutory provisions could be analysed into-

(i) those regulating stamp duties, and

(ii) others.

Section 24, Marine Insurance Act is in the second category.

The proviso to the General Exemption below Article 47, Stamp Act, also does not confer substantive right to sue for a policy. If such a right exists by the substantive law, then the want of full stamp duty should not come in the way. That in all that the proviso permits.

6.53. Insurance Act, 1938.-

We have already referred to the relevant provisions of the Marine Insurance Art, 1963.1 The insurance Act, 1938, which regulates the business of Insurance, provides that2 "Marine Insurance business"-means "the business of effecting contracts of Insurance upon vessels of any description, including cargoes, freights and other interests which may be legally insured, in or in relation to such vessels, cargoes, and freights, goods, wares, merchandise and property of whatever description insured for any transit by land or water, or both, and whether or not including warehouse risks or similar risks in addition or as incidental to such transit, and includes any other risks customarily included among the risks insured against in Marine Insurance policies3."

1. Para. 6.30, supra.

2. Section 2(13A), Insurance Act, 1938.

3. See Alliance Assurance Co. Ltd. v. Union of India, (1957-58) 62 CWN 539: AIR 1959 Cal 190.

6.54. The last paragraph of the definition in the Stamp Act may now be considered. Normally, under the law relating to the carriage of goods by sea, the person issuing a bill of lading does not undertake liability in respect of loss of goods by maritime perils. But he may undertake this liability if he is paid additional freight. This is one of the situations to which section 2(20), last paragraph of the Stamp Act, is addressed. In the Indian Carriage of goods by Sea Act, 1925, the Schedule, Article IV, paragraph 2, constitutes the relevant provision on the subject, and the material portion is quoted below-

"2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from-

(a) Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship;

(b) Fire, unless caused by the actual fault or privity of the carrier;

(c) Perils, dangers and accidents of the sea or other navigable waters;

(d) Act of God;

(e) Act of war;

(f) Act of public enemies;

(g) Arrest of restraint of princes, rules or people, or seizure under legal process.1

The payment of "additional freight" (or other sum) referred to in section 2(20), Stamp Act, last paragraph, constitutes the consideration for the ship owner undertaking this liability specifically.

1. The remaining clauses are not material.

6.55. The present wording of the last para of section 2(20), has lost its utility, because the expression 'contract for sea insurance' has now lost its importance after repeal of section 7.

6.56. On a consideration of the various points made above, we recommend that the definition of policy of sea insurance should be revised as indicated above. 1

1. Para 6.50, supra.

Indian Stamp Act, 1899 Back

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