Report No. 21

The Schedule

Rule 15 of the Rules of Construction

Departure from the English Act. -The English Act does not cover specifically the case of a ship driven by power other than steam. To cover such ships, a change has been made by adding appropriate words.1

Suggestion regarding section 7 (1) of the Indian Stamp Act, 1899

Section 506, Merchant Shipping Act, 1894 (57 and 58 Vict, c. 60) runs as follows:-

"506. Insurance of certain risks not invalid.-An insurance effected against the happening, without the owner's actual fault or privity, of any or all of the events in respect of which the liability of the owner is limited under this Part of the Act shall not be invalid by reason of the nature of the risk".

Chalmers2 explains this as follows:-

"Part VIII limits the liability of the owner of British ships. The object of this section is to make it clear that although the liability of a ship-owner is limited, he is still at liberty to insure". In other words, the "want of interest" objection is avoided.3

So far, there is no difficulty. But, curiously, section 7 of the Indian Stamp Act [following section 93, (English) Stamp Act, 18911 excepts contracts governed by section 506, Merchant Shipping Act from its operation. As pointed out by Chalmers,4 the saving effected by this section (the English section) is curious. The object of the Merchant Shipping Act was to make it clear that although the ship-owners' common law liability was limited by the Act, he was nevertheless entitled to insure against this limited liability-but the apparent effect of the saving is to dispense with the necessity of a policy in those cases.

Suggestion.-In view of this criticism, which applies equally to section 7, Indian Stamp Act, the mention of section 506, Merchant Shipping Act in that section should be deleted. Further, there is no provision in the (Indian) Merchant Shipping Act, 1958 (44 of 1958), corresponding to section 506, English Merchant Shipping Act (though provisions limiting the liability occur in section 352 of the Indian Act).5 Hence the mention of section 506, Merchant Shipping Act, has become obsolete in the Indian Stamp Act.

1. Cf Section 16 of the English Act and the departure proposed therefrom-clause 13.

2. Chalmers, p. 164, footnote 1.

3. See the following note in 5th Edn., p. 341.

"This section appears to have been inserted in the Act of 1862 ex abundance cautela to allay any apprehension there might be that such insurances could be impugned on the ground of want of interest or illegality. It seems, however, clear that they are valid apart from this section. See Hansard, Parl. Deb., Vol. 166, p. 2227."

4. Chalmers, p. 160, footnote 2.

5. Section 352 of the (Indian) Merchant Shipping Act, 1958 corresponds to section 503, Merchant Shipping Act, 1894.