Report No. 21
Clause 2.--"Contract of marine insurance"
This is a formal definition, inserted to make the definition clause exhaustive.
Departure from the English Act.
Clause 2.-"Freight"
Needs no comments, except that the word "other" has been inserted before "movables" though not found in section 90, English Act. Compare section 3 (2) (a) of the English Act.
Departure from the English Act.
Clause 2.-"Insurable property"
This has been put in the definition clause, for comprehensiveness.
Clause 2.-"Marine adventure" and "marine perils"
These have been put in the definition clause, to make the clause exhaustive
(i) Marine adventure.-The importance of the concept of marine adventure lies in the fact that under section 5(1) of the English Act, only a person who is interested in the marine adventure has an insurable interest. A person who has no interest in the ship may still be able to insure the venture under which the ship is engaged. For example, a person may be interested financially in laying an Atlantic cable through a ship, though he has no interest in the ship or cable as such.
(ii) Frustration.-There may be cases where the cargo is not damaged, but the adventure is frustrated by the operation of the insured perils. This is usually discussed in the text-books under the doctrine of "frustration".
(iii) The adventure must be lawful. As to the warranty of legality, see section 41 of the English Act.
(iv) Section 506 of the (English) Merchant Shipping Act, 1894, provides that an insurance effected against the happening, without the owner's actual fault or privity, of those ship-owner's liabilities in respect of which a statutory limit of liability is effective, that is to say, roughly, liability for collisions etc, shall not, by reason of the nature of the risk insured, be invalid. This section has been referred to in section 7 of the Indian Stamp Act also.1,2,3
(v) The Inchmaree case.-As to "perils of the sea", see the "Inchmaree case" .4
Lord Herschell in the Inchmaree case5 attempted to put forth a number of definitions of the expression "perils of the sea". He thought that the following definition given by Lord Ellenbrough was right:-
"All cases of marine damage of the like kind with those specially enumerated, and occasioned by similar causes".
The following definition given by Lopes L.J. in Pandorf v. Hamilton, 16 QBD 629 (633), was considered "very good":-
"In a sea-worthy ship damage to goods by the action of the sea during transit, not attributable to the fault of any body, is a damage from a peril of the sea."
Lord Herschell himself thought that the following definition might suffice:-
"All perils, losses and misfortunes of a marine character or of a character incident to a ship as such".
The case, of course, arose before the Act. The facts were, that a steamer was insured by a policy in the ordinary form on the ship and her machinery including the donkey engine. For the purposes of navigation, the donkey engine was being used for pumping water into the boilers, when, owing to a valve being closed which ought to have been kept open, water was forced into and split the air-chamber of the donkey pump. The closing of the valve was either accidental or due to the negligence of an engineer, and was not due to ordinary wear and tear.
It was held by the House of Lords, reversing the decision of the Court of Appeal, that the injury was not covered by the policy, because such a loss did not fall under "perils of the seas", nor under the general words "all other perils, losses and misfortunes that have or shall come to the detriment or damage" (of the subject-matter of the insurance). A long line of cases was cited by the House of Lords (Lord Halsbury, Lord Bramwell, Lord Herschell and Lord Macnaghten) to show that the general words had to be limited to the perils etc. similar in nature to those specifically enumerated.
1. Construed in A Reference, 1903 ILR 30 Cal 565.
2. See also section 352, Merchant Shipping Act, 1958.
3. See note at the end entitled "Suggestion regarding section 7(1) of the Indian Stamp Act" for a detailed discussion.
4. Thames and Mersey Marine Insurance Co. v. Hamilton, Fraser and Co., 1887 AC 484, particularly Lord Halsbury, pp. 490, 491.
5. Thames and Mersey Marine Insurance Co. v. Hamilton, Fraser and Co., 1887 AC 484 (492, 493).
Inchmaree Clause, or Additional Perils Clause.-It was as a result of this decision that the "Inchmaree Clause" came to be inserted in marine policies for adding certain perils which are not, strictly speaking, marine perils. The clause1 specially covers loss or damage caused by
(i) accident in loading, discharging or shifting cargo or fuel;
(ii) explosions on ship on board or elsewhere;
(iii) bursting of boilers, breakage of shafts or latent defect in the machinery or hull;
(iv) contact with aircraft (This was added in 1938);
(v) negligence of masters, officers, crew or pilots:
Provided such loss or damage has not resulted from want of due diligence by the assured, owners or managers.
Masters, officers, crew or pilots are not to be considered as part owners within the meaning of this clause, even if they hold shares in the vessel.
1. The clause will be found reproduced in Dover, Handbook, pp. 247 and 182.
Meaning of "misfortune" (Indian Cases).-In a recent case1 the Madras High Court held, that where goods are shipped on a particular ship and are not delivered at the destination, the insurance company is liable under the expression "misfortune" used in the policy even if the cause of the loss is not known. In that case four drums of English sodium sulphite and five drums of sodium hydro-sulphite were shipped from Bombay to Madras. When the ship arrived at Madras and the clearing agents of the plaintiff (purchasers) went to clear the goods, the goods had not been landed.
The shipping company was informed and made search to find out if the goods had been over-carried to Colombo or Calcutta; but nothing tangible resulted from the search. The plaintiffs claimed for the value of the goods (about Rs. 2,000) against the shipping company as well as against the insurers. The defence of the shipping company, namely, that they were exempted from a certain clause excluding liability, was negatived. The defence of the insurers, that the goods were excluded by the "Free from particular average" clause was negatived, because the clause was not relevant to a case of total loss.
The further defence of the insurers, that they were not liable unless the peril, etc was of the particular type referred to in the insurance policy, was negatived in these words: "The term 'misfortunes' after having mentioned all the other perils of the sea, is found in the relevant clause in the insurance policy. It is difficult to say how the loss of the total goods on board the ship when once it is proved that they were put on board could be excluded from the scope and meaning of the word 'misfortune'.
I do not think the rule of ejusdem generis will apply in the present case when almost all the kinds of the perils of the sea have been exhaustively given in the list and when in addition to that the word 'misfortune' is also included. Merchants insure the goods with the company to cover any risk in their being safely landed in the port of destination, and if the goods are not so landed, when once they were put on board and if the loss of the goods has arisen, then certainly it is a loss and a misfortune which is covered by the terms of the policy".
In the absence of a statutory provision, the Court had interpreted the word "misfortune" according to its ordinary meaning on general principles. But under English Law the general words come to bear a restricted connotation-see rule 12 of the Rules of Construction in the Schedule to the English Act.2 The position under this Bill would be the same as in England.
1. Home Insurance Company Limited v. Ram Nath, (1955) AIR 1955 Mad 602 (Basheer Ahmed Sayeed, J.).
2. For a discussion on rule 12, see Dover, p. 246.
Clause 2.-"Moveables"
Needs no comments.
Clause 2.-"Policy"
Needs no comments.
Clause 2.-"Ship"
A definition of "ship" as including sailing vessels has been added in order to cover ships propelled by oars.1
1. For reasons see the body of the Report, para. 5.
Departure from the English Act
Clause 2.-"Suit"
Use of word "suit"-This follows section 90 of the English Act. The definition of "action" has been replaced by the definition of "suit"; the English Act uses the word "action" in the substantive sections-section 50(2), section 56(4) and section 80. In India, however, the word "suit" is used and has, therefore, been defined here.
