National Consumer Disputes Redressal
New India Assurance Co. Ltd. vs S. Jeyarajan Thamp And Ors. on 25 September, 2002
ORDER
Rajyalakshmi Rao, Member
1. This appeal arises out of the order dated 13.6.2001 by the State Commission, Kerala whereby the appellant - New India Assurance Company Ltd., was directed to pay a sum of Rs. 4,14,560/-along with interest @ 17.25% w.e.f. April, 1999 to respondent No. 3 - State Bank of Travancore and to adjust the outstanding amount of the respondent No. 1 account with them and pay the complainant if any balance remains after the said adjustment and costs of Rs. 2,000/- to be paid to the complainant.
2. The brief facts of the case are :
The complainant insured a fishing vessel with the opposite party - the appellant No. 1 for which he availed loan of Rs. 6,00,000/- from State Bank of Travancore - respondent No. 3. The above policy was taken for one year starting from 24.7.1998 for an amount of Rs. 8,00,000/-and accordingly the first premium was paid by respondent No. 3. On 11.9.1998, the complainant employed the insured vessel for fishing and due to mechanical defect of the engine, it moved towards the rocks and got hit and sank into the sea. The appellants visited the spot within few hours and directed the complainant to start salvage operations.
3. The Surveyor assessed the loss at Rs. 8,00,000/- and submitted the report on 30.12.1998 and supplementary reports were submitted on 4.3.1999 and 18.3.1999. The weather report from the Meteorological Department, Chennai observed that on 11.9.1998 there was weather warning for the fishermen indicating strong winds of 45-55 km./hr. The letter from the Director of Fisheries clarified that the Red flag indicates and implies that the vehicles are prohibited from engaging in fishing activities as long as these signals are displayed. Further the Port Officer, Neendakara certified that Red flag was hoisted on 10th and 11th September, 1998 from prohibiting fishermen from engaging fishing activities in the sea.
4. The learned Counsel for the appellants submitted that this is a clear case of breach of warranty by the complainant and, therefore, the claim was liable to be repudiated. The said conditions applicable of the warranty are reproduced below :
"General Warranty-
(b) Warranted vessel shall not be employed during adverse weather condition notified by the concerned Port Authorities.
(c) Warned during adverse weather, vessel shall remain in safe water properly moored; and
(d) If already at sea, shall return forthwith, as soon as they become aware of the adverse weather warning."
5. However, when the complainant lodged the claim the opposite party appointed a Surveyor immediately and he assessed the loss at Rs. 8,00,000/-. The learned Counsel for the appellant submitted that it is a clear case of breach of warranty because the respondent No. 1 employed the vessel when there was/were clear signals of weather warning as mentioned above. In spite of this, the appellants took a lenient view and considered the same as Non-standard Claim and settled at 60% which amounted to Rs. 3,39,240/-. The break-up is given below:
6. With respect to the salvage value of Rs. 2,10,000/- and the salvage operation cost of Rs. 30,000/- it is submitted that the insured agreed for the same vide letter dated 22.12.1998. The respondent No. 1 sold the salvage later for an amount of Rs. 63,500/- on 30.7.2000 and the appellants stated that the value of salvage deteriorated due to the time lapse of one-and-a-half years. With respect to the present policy it is submitted that the same was paid only for the first instalment and the balance two instalments amounted to Rs. 32,670/-which was also recoverable from the respondent No. 1.
7. The discharge voucher for full and final settlement was signed by the Bankers (opposite party No. 4) the 3rd respondent and issued a receipt on 5.5.1999 for Rs. 3,39,240/-. Aggrieved by the action of the Insurance Company the complainant filed the complaint and the State Commission has accepted his contentions that the claim was settled as non-standard and that the said payment to the Bank was the result of coercive bargaining and allowed the complaint. In the appeal, the opposite party No. 1, the present appellant raised the same issues again and we frame them in the following manner :
(1) Whether there was breach of warranty in respect of weather warning on the part of the respondent No. 1 complainant.
(2) Whether the appellant adopted coercive bargaining tactics in settling the claim.
(3) Whether the amount awarded by the State Commission is fair or not.
8. Our observations are in favour of the respondent in answering the above issues. After hearing the arguments and the records produced before us, to begin with the first issue, it has come on record that there was no weather warning during the night falling between 10th and 11th September, 1998 showing Red Light during the night time. On 11th September, 1998 there was no signal following Red Light warning to prohibit the fishing operation. Neither the appellant nor the Surveyor have disputed the fact which fortifies respondent's case that there was no signal by Red Light which allows him to go on with the fishing operations according to their rules. In addition to this is, the clinching clarification given by the Port Officer goes in favour of the respondent because their's is clearly a mechanical vessel. The said warning of R-flag when the speed was 45-55 km./hr. is not applicable for Mechanical Fishing Vessels and hence there is no breach of policy condition. Besides, the weather certificates used by the Post Officer, Kollam for the weather conditions prevailed at Neendakara on 10.9.1998 and 11.9.1998 the state of the sea was calm at 8.00 a.m. and 4.00 p.m. The Red Light signal to alert the fishermen during the night hours as warning was not turned on while clearly disproves the version of the appellant that respondent No. 1 did not pay heed to these warnings and repudiated the claim on the grounds of breach of warranty condition of the policy in question.
9. Having concluded that there was no breach of warranty, we also answer the question of coercive bargaining. While settling the claim it is clear that the appellants took advantage of the weak financial position of the respondent and settled it. Similarly, there is a coercive bargaining in fixing the salvage value very low. We agree with the salvage value approved by the State Commission as non-standard claim basis. Besides, the appellants settled the claim with respondent No. 3 the Banker directly without the consent of respondent No. 1 although they had originally directed the respondent Nos. 1 and 3 to duly sign and counter-sign the loss voucher. Respondent No. 1 brought it to our notice that he did not sign the same. Although we appreciate the fact that the vessel is hypothecated to the Bank respondent No. 3, and that is the only reason why the appellants settled the claim with them, we find it is not fair to the actual owner of the vessel that he was not given a chance to decide whether he should accept the settled amount or not. The appellants' contentions such as action of breach of warranty and ignoring the warning signals which was the prima facie cause for repudiating the claim has no meaning.
10. We are of the view that respondent No. 1 is eligible for the insured amount of Rs. 8.00 lakhs of the total loss basis and with the deduction of the salvage was rightly computed to and assessed at Rs. 7,53,800/- according to the State Commission, In the present circumstances of this case, we find the discharge voucher executed by the Bank alone cannot be binding on the actual claimant. Admittedly, the complainant-respondent No. 1 did not accept any amount or sign the discharge voucher. As rightly directed by the State Commission, the balance amount of Rs. 4,14,560/- should be paid by appellant Nos. 1 and 2 to the Bank with interest at 17.25% from April, 1999. The appellant No. 4 would credit this amount against the outstanding balance due from respondent No. 1 and further, the balance, if any, will be paid to respondent No. 1. We dismiss the appeal with costs assessed at Rs. 5,000/-.