C.Sivadasan vs The New India Assurance Co on 25 March, 2011

[Cites 40, Cited by 0]

Kerala High Court

C.Sivadasan vs The New India Assurance Co on 25 March, 2011

Author: P. Bhavadasan

Bench: Thottathil B.Radhakrishnan, P.Bhavadasan

       

  

  

 
 
  IN THE HIGH COURT OF KERALA AT ERNAKULAM

AS.No. 647 of 1994()



1. C.SIVADASAN
                      ...  Petitioner

                        Vs

1. THE NEW INDIA ASSURANCE CO.
                       ...       Respondent

                For Petitioner  :SRI.K.C.JOHN,K.K.JOHN,BENNY CHERIAN

                For Respondent  :SRI.M.P.R.NAIR,GEORGE.K.JOSEPH

The Hon'ble MR. Justice THOTTATHIL B.RADHAKRISHNAN
The Hon'ble MR. Justice P.BHAVADASAN

 Dated :25/03/2011

 O R D E R
              THOTTATHIL B. RADHAKRISHNAN &
                          P. BHAVADASAN, JJ.
                - - - - - - - - - - - - - - - - - - - - - - - - - - -
                         A.S. Nos. 647 of 1994 &
                                 331 of 1996
               - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
                Dated this the 25th day of March, 2011.                    C.R.

                                  JUDGMENT

P. Bhavadasan,J.

Two suits, namely, O.S. 23 of 1984, which was a suit for recovery of money and O.S.134 of 1984, which too was a suit for recovery of a debt due to the Bank were jointly tried and disposed of by a common judgment. O.S. 23 of 1984 was dismissed and O.S. 134 of 1984 was decreed. O.S. 134 of 1984 was by the fourth defendant in O.S. 23 of 1984 was directed against the plaintiff and three others including the Insurance Company, who is the third defendant in O.S.23 of 1984. O.S.23 of 1984 was to recover money on the basis of an insurance policy issued by the third defendant in the suit. A.S. 647 of 1994 arises out of the judgment and decree in O.S.23 of 1984 and A.S.331 of 1996 arises from O.S.134 of 1984. Since O.S.23 of 1984 was A.S.647/94 & 331/1996.

treated as the leading case, parties and facts are referred to as they are available in the said suit.

2. "Santhoshkumar", a fishing vessel owned by the plaintiff in O.S.23 of 1984, hypothecated to the fourth defendant Bank, and insured with the third defendant, hit the bottom of the sea on 21.4.1981. The plaintiff, on the terms of the insurance policy, laid a claim for money due on the policy. The Insurance Company repudiated the claim. That necessitated the suit by the owner of the vessel.

3. The defence of the Insurance Company was that the accident had not occurred as alleged by the plaintiff and he has concealed the true version of the incident. According to them, as per the investigations conducted by them through various agencies, have yielded convincing reports that the story put forward by the plaintiff is untrue. Since the version of the plaintiff is not as it had occurred, A.S.647/94 & 331/1996.

they had denied their liability to pay any amount to the plaintiff. The fourth defendant Bank in the meanwhile instituted a suit for recovery of money due on the loan advanced by them for the fishing vessel, which was also hypothecated to them.

4. As already stated, the suits were tried jointly. The evidence consists of the testimony of P.Ws.1 to 10 and documents marked as Exts.A1 to A24 series from the side of the plaintiff. The contesting defendants examined D.Ws.1 to 4 and had Exts. B1 to B31 marked. Exts. X1 to X3 were marked as third party exhibits. The trial court on a consideration of the materials before it came to the following conclusions:

i) The true version of the incident in which the vessel had capsized has not been put forward by the plaintiff.

A.S.647/94 & 331/1996.

ii) There was serious doubt regarding the manner in which the accident had occurred.

iii) Versions given by the witnesses examined on behalf of the plaintiff were contradictory and inconsistent.

iv) It was found that it was due to negligent acts of the crew that the incident might have occurred. On the basis of these findings, the claim of the plaintiff as against the Insurance Company was rejected. As far as the other suit was concerned, the trial court came to the conclusion that the Bank is entitled to realize the amount claimed by them in O.S. 134 of 1984.

5. As regards A.S. 331 of 1996, which arises from O.S. 134 of 1984 is concerned, there is not much to be said in favour of defendants 1 to 3 in that suit. It is the fact that the vessel was hypothecated to the Bank and the Bank had A.S.647/94 & 331/1996.

advanced money on that basis. It is also not in dispute that the first defendant and guarantors had defaulted payment due from them.

6. The main dispute is regarding the issues involved in A.S.647 of 1994. There, the appellant, who is the plaintiff in O.S. 23 of 1984, claims that the findings of the trial court regarding the accident is baseless and contrary to the evidence on record.

7. After hearing both sides, it is felt that the following issues arise for consideration:

i) Whether the suit is bad for mis-joinder of causes of action or mis-joinder of parties?

ii) Whether the court fee paid is proper?

iii) Whether the finding of the trial court that the Insurance Company is not liable since the accident A.S.647/94 & 331/1996.

had not occurred in the manner as alleged by the plaintiff sustainable?

iv) What, if any, are the reliefs to be granted to the parties?

8. Learned counsel appearing for the appellant pointed out that there was no reason as to why the version given by the plaintiff could not be accepted. Even assuming that the story of rain and wind put forward by the plaintiff in O.S.23 of 1984, which were the causes for the accident were not acceptable, still the Insurance Company was liable under the terms of the policy. It is significant to notice, according to learned counsel that the investigators of the Insurance Company were also not able to ascertain the actual cause for the accident, but the only version given by the investigators is that it might not have occurred as alleged by the plaintiff. That, according to learned counsel, is insufficient to repudiate the policy. The trial court had come A.S.647/94 & 331/1996.

to the conclusion that in all probability, it was the negligence on the part of the crew that could have caused the accident. Assuming it to be so, still, the Insurance Company will be liable going by the terms of the policy. Learned counsel for the appellant placed considerable reliance on Section 55 of the Marine Insurance Act. As regards the contention that the suit filed by the plaintiff in O.S.23 of 1984 is bad for mis-joinder of parties and cause of action, learned counsel pointed out that even assuming it to be so, that is not a ground to dismiss the suit. There is a distinction between non-joinder and mis-joinder of parties. The suit may be bad for non-impleadment of necessary parties. That may be fatal. But as far as mis-joinder of parties and causes of action are concerned, the court has the option to direct the plaintiff to file separate suits or to go on with the trial of the suit. It is the discretion of the court. In support of his case, learned counsel for the appellant relied on the decision reported in Prem Lala Nahata v. Chandi Prasad (2007 (1) A.S.647/94 & 331/1996.

K.L.T. 910). As regards the contention regarding the deficiency in the court fee raised by the counsel for the respondent, counsel for the appellant contended that the court fee payable is to be ascertained with reference to the date of the suit and not with reference to the date of appeal. If that be so, the court fee paid is proper. Learned counsel relied on the decision reported in Usha v. Food Corporation of India (1997(1) K.L.T. 264). Learned counsel went on to point out that it could not be said that the suit is bad for mis-joinder of causes of action or mis-joinder of parties. If as a matter of fact, the plaintiff in O.S. 23 of 1984 succeeds in his attempt to make the Insurance Company liable, then as far as the Bank is concerned, the Insurance Company may be in the position of a garnishee. Therefore it could not be said that there was no connection between the two causes of actions. At any rate, according to learned counsel, the trial court was not justified in non-suiting him on the basis of the finding that A.S.647/94 & 331/1996.

the accident had occurred in a different manner. As long as it is not established that it was due to the deliberate act of the owner of the vessel or his crew, the Company is liable.

9. Learned counsel appearing for the respondents in her well prepared and well presented, persuasive arguments pointed out that the suit is bad for mis-joinder of cause of action and mis-joinder of parties. According to the learned counsel, the cause of action of the plaintiff in O.S.23 of 1984 against the Insurance Company is distinct and independent of the cause of action against the Bank and there are no common issues in the suits Two causes of action are distinct and independent and the suit ought to have been dismissed on that ground. It was highly irregular and improper on the part of the lower court to hold that the trial of the suit should go on in the above circumstances. Even if the lower court was inclined to proceed with the suit, learned counsel went on to say that the plaintiff should have A.S.647/94 & 331/1996.

been put to election. That was also not done. The finding of the court below that the suit is not bad for mis-joinder of parties and causes of action cannot be sustained. In support of her contention, learned counsel relied on the decisions reported in Ishwar Bhai C.Patel v. Harihar Behera ((1999) 3 SCC 457), Dwarke Prasad v. Kishan Lal (AIR 1986 Allahabad 174), (1994(3) CCC 542) and H.P.S.I.D. Corporation Ltd. v. Gobind Pharm Chem Pvt. Ltd. (AIR 2007 H.P. 3).

10. It was also contended on behalf of the Insurance Company that the court fee paid in O.S.23 of 1984 is quite inadequate. While court fee had been paid for the amount due from the Insurance Company, as regards the second prayer, which relates to an injunction restraining defendants 4 to 7, the Bank and the revenue authorities, from proceeding against the plaintiff in O.S.23 of 1984 for realisation of the amount due from him, the suit was valued A.S.647/94 & 331/1996.

only at Rs.150/- and court fee was paid only as per Section 27(c) of the Kerala Court Fees and Suits Valuation Act. Infact the plaintiff should have paid court fee for the amount that is sought to be recovered by the Bank by resorting to revenue recovery proceedings. On that ground also, the suit is bad. It was then contended that the trial court was fully justified in declining to grant relief to the plaintiff in O.S.23 of 1984 against the Insurance Company. It is very evident from a scrutiny of the evidence in the case that the version given by the plaintiff for the mishap of the vessel is totally untrue and is highly suspicious. The story put forward at the evidence stage is different from the one contained in the pleadings and the investigators deputed by the Insurance Company have categorically found that the accident had not occurred as alleged by the plaintiff. According to the learned counsel, the burden is on the plaintiff to show that the act, which led to the sinking of the vessel was due to the perils covered by the policy and the Insurance Company was A.S.647/94 & 331/1996.

liable for the loss. There is absolute want of evidence in this regard. Learned counsel emphasized that a careful reading of the evidence will show that the whole affair was a stage managed one so as to secure amount from the Insurance Company to wipe off the debt due to the Bank. The trial court was able to see through the game played by the plaintiff and according to the learned counsel no interference is called for with the judgment and decree of the trial court dismissing O.S.23 of 1984.

11. We shall first deal with the contention relating to mis-joinder of cause of action and mis-joinder of parties. This issue was infact raised before the trial court also. The court below was of the opinion that even assuming that there is mis-joinder of cause of action and parties, that is not a ground to dismiss the suit. The finding is very vehemently attacked by the learned counsel for the respondent before this court. Learned counsel referred to the relevant A.S.647/94 & 331/1996.

provision in the Code of Civil Procedure and pointed out that the suit could not have been proceeded with.

12. It will therefore be useful to refer to the relevant provisions. Order I Rule 3 reads as follows:

"3. Who may be joined as defendants.- All persons may be joined in one suit as defendants where-

(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and

(b) if separate suit were brought against such persons, any common question of law or fact would arise."

Order I Rule 3-A reads as follows:

"3-A. Power to order separate trials where joinder of defendants may embarrass or delay trial.- Where it appears to the Court A.S.647/94 & 331/1996.

that any joinder of defendants may embarrass or delay the trial of the suit, the court may order separate trials or make such other order as may be expedient in the interests of justice." Order II Rule 3 reads as follows:

"3. Joinder of causes of action.- (1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiff having causes of action in which they are jointly interested against the same defendant or the same defendants jointly may unite such causes of action in the same suit.

(2) Where causes of action are united, the jurisdiction of the Court as regards the suit shall depend on the amount or value of the aggregate subject-matters at the date of instituting the suit."

Order II Rule 6 reads as follows:

A.S.647/94 & 331/1996.

"6. Power of court to order separate trials.- Where it appears to the court that the joinder of cause of action in one suit may embarrass or delay the trial or is otherwise inconvenient, the Court may order separate trials or make such other order as may be expedient in the interests of justice."

Order II Rule 7 reads as follows:

"7. Objections as to misjoinder.- All objections on the ground of misjoinder of causes of action shall be taken at the earliest possible opportunity and, in all cases where issues are settled, at or before such settlement, unless the ground of objection has subsequently arisen, and any such objection not so taken shall be deemed to have been waived."

Order II Rule 8 reads as follows:

"8. Plaint to be amended.- (1) Where an objection duly taken has been allowed by the Court, the plaintiff shall be permitted to select the cause of action with which he will proceed, and A.S.647/94 & 331/1996.

shall, within a time to be fixed by the Court, amend the plaint suitably.

(2) When the plaintiff has selected the cause of action with which he will proceed, the Court shall pass an order giving him time within which to submit the amended plaint for the remaining cause of action and for making up the court fees that may be necessary. Should the plaintiff not comply with the Court's order, the court shall proceed as provided in Rule 18 of Order VI and as required by the provisions of the Court Fees Act."

13. Section 99 of the Code of Civil Procedure may also have some relevance in this regard. It reads as follows:

"99. No decree to be reversed or modified for error or irregularity not affecting merits or jurisdiction.- No decree shall be reversed or substantially varied, not shall any case be remanded, in appeal on account of any misjoinder or non-joinder or parties or causes of action or any error, defendant or irregularity in any proceedings in the suit, not affecting the merits of the case or the jurisdiction of the Court:

A.S.647/94 & 331/1996.

Provided that nothing in this second shall apply to non-joinder of a necessary party."

14. Before entering into a discussion regarding the above provisions, one may refer to the decisions relied on by the learned counsel for the respondents. In the decision reported in Ishwar Bhai C. Patel's case (supra) it was held as follows:

"The purpose of order 1 Rule 3 is to avoid a multiplicity of suits. This rule, to some extent, also deals with the joinder of causes of action inasmuch as when the plaintiff frames his suit, he impleads persons as defendants against whom he claims to have a cause of action. Joinder of causes of action has been provided in Order 2 Rule 3, Order 1 Rule 3 and Order 2 Rule 3 if read together indicate that the question of joinder of parties also involves the joinder of causes of action. The simple principle is that a person is made a party in a suit because there is a cause of A.S.647/94 & 331/1996.

action against him and when causes of action are joined, the parties are also joined."

15. In the decision reported in Dwarke Prasad's case (supra) it was held as follows:

"As for the causes of action, O.2, R.3(1) provides that a plaintiff may unite in the same suit several causes of action against the same defendants or the same defendants jointly. In the instant case, there are distinct causes of action against the co-sharers in the property in the first place and the two separate tenants on the other. These causes of action cannot be said to arise against the various defendants jointly. Therefore, O.2, R.3 does not permit a joinder of causes of action as resorted to in the present. On account, thus, of the mis-joinder, both the parties and causes of action, the action suffers from multifariousness.

It is wrong to hold that since O.2, R.6 does not apply to a case, a claim for election could not be made. It is true that to attract O.2, R.6 the A.S.647/94 & 331/1996.

joinder of causes of action should be such as is not bad initially on the basis of multifariousness. But then the Court ought not to lose sight of S.151, C.P.C.. In order that the ends of justice do not suffer and the action set up is not defeated due to a technical difficulty arising it was both just and incumbent upon the Court below to have accorded on its own motion and in any case on the prayer made for the plaintiff, the opportunity to make the election. The situation may have been different in case the plaintiff had failed to avail of such opportunity."

16. The decision reported in Anil Kumar Singh's case (supra) deals with the case of necessary parties.

17. Coming back to the provisions of the CPC, Order 1 Rule 3 stipulates as to who all can be joined as defendants in a suit. Rule 3A gives ample power to the court when it finds that in a case joinder of some of the defendants may embarrass or delay the trial of the suit to A.S.647/94 & 331/1996.

order separate trial. Order 1 Rule 9 specifies that no suit shall be defeated by the reason of mis-joinder or non-joinder of parties. It enables the court to proceed against those persons and to grant reliefs as against those defendants. It will not be out of place here to refer to Order 1 Rule 13 also. The said provision stipulates that the objection on the ground of non-joinder and mis-joinder of parties shall be taken at the earliest opportunity. If not done, the objection will be deemed to have been waived. Coming to Order II Rule 3, that deals with joinder of causes of action. Like in the case of Order I Rule 3A, in Order II Rule 6 the court is given ample power to order separate trial when it is found that the joinder of causes of actions may embarrass or delay the trial or is otherwise inconvenient. Order II Rule 7 like Order I Rule 3 stipulates that the ground of mis-joinder of causes of action shall be preferred at the earliest possible opportunity. Order II Rule 8 provides that when the objection of the defendants regarding mis-joinder of causes A.S.647/94 & 331/1996.

of action is upheld, the plaintiff shall be given an opportunity to amend the plaint.

18. Coming to the facts of the case, in O.S.23 of 1984, it is true that the Insurance Company, from whom amount is claimed by the plaintiff, and the Bank, which has proceeded against the plaintiff in the suit for recovery of the amount due from him are joined as parties. It may prima facie appear that the two causes of actions are distinct, different and independent. It is also true that one is based on enforcement of a policy and the other is based on enforcement of a debt. The grievance as against the fourth defendant in O.S.23 of 1984 as highlighted in the suit is that the Bank is proceeding to recover the amount due from the plaintiff by resorting to revenue recovery proceedings. But as rightly pointed out by the learned counsel for the appellant, if the plaintiff in O.S.23 of 1984 succeeds in enforcing the liability of the Insurance Company, then the A.S.647/94 & 331/1996.

Insurance Company may be in the position of garnishee vis a vis the Bank. To that extent there may be some common element.

19. Defendants 1 to 3 in O.S.23 of 1984 had taken objection regarding mis-joinder of cause of action and mis-joinder of parties in their written statement. So they have complied with the statutory requirements. However, except for highlighting that the mis-joinder of cause of action and parties has caused inconvenience and hardship and even harassment to respondents 1 to 3, they are unable to show how they were prejudiced. Evidence was taken jointly and the matter was disposed of by a common judgment. A reading of the provisions already quoted leaves one in no doubt that a suit cannot be dismissed merely on the ground of mis-joinder of cause of action or parties unless it is shown that such mis-joinder has affected the merits of the case or jurisdiction of the court. It will be apposite here A.S.647/94 & 331/1996.

to refer to the decision reported in H.P.S.I.D. Corporation Ltd.'s case (supra). In the said case, almost an identical situation arose and being a suit against the Bank, the Insurance Company was also impleaded as a defendant in that suit. It was held that the Insurance Company in the said suit might be a just party but not a necessary party, but the suit cannot be said to be bad for mis-joinder. In the decision reported in Prem Lala Nahata's case (supra) it was held as follows:

"The Scheme of Order I and Order II clearly shows that the prescriptions therein are in the realm of procedure and not in the realm of substantive law or rights. That the Code considers objections regarding the frame of suit or joinder of parties only as procedural, is further clear from S.99 of the Code which specifically provides that no decree shall be reversed in appeal on account of any mis-joinder of parties or causes of action or non-joinder of parties unless a Court finds that the non-joinder is of a necessary party. This is on the A.S.647/94 & 331/1996.

same principle as of S.21 of the Code which shows that even an objection to territorial jurisdiction of the Court in which the suit is instituted, could not be raised successfully for the first time in an appeal against the decree unless the appellant is also able to show consequent failure of justice. The Suits Valuation Act similarly indicates that absence of pecuniary jurisdiction in the Court that tried the cause without objection also stands on the same footing. The amendment to S.24 of the Code in the year 1976 confers power on the Court even to transfer a suit filed in a Court having no jurisdiction, to a Court having jurisdiction to try it. In the context of these provisions with particular reference to the Rules in O.I and O.II of the Code, it is clear that an objection of mis-joinder of plaintiffs or mis-joinder of causes of action, is a procedural objection and it is not a bar to the entertaining of the suit or the trial and final disposal of the suit. The Court has the liberty even to treat the plaint in such a case as relating to two suits and try and dispose them off on that basis. On the scheme of the Code, there is no such prohibition or a prevention at the entry of a A.S.647/94 & 331/1996.

suit defective for mis-joinder of parties or of causes of action. The court is still competent to try and decide the suit, though the court may also be competent to tell the plaintiffs either to elect to proceed at the instance of one of the plaintiffs or to proceed with one of the causes of action. On the scheme of the Code of Civil Procedure, it cannot therefore be held that a suit barred for mis-joinder of parties or of causes of action is barred by a law, here the Code."

20. There is a distinction in law between 'just and proper parties' and 'necessary parties'. If it is found that in a suit necessary parties have not been impleaded, it may be fatal. Necessary party has to be impleaded because an effective decree cannot be passed without that person on the party array. His presence is absolutely necessary for an effective resolution of the dispute also. In such cases, if the necessary party is not brought on the party array, it may be difficult to maintain the suit. That is not so in the case of a A.S.647/94 & 331/1996.

proper party or in the case of mis-joinder of cause of action or parties.

21. In the decision reported in Kanakarathanammal v. Loganatha (AIR 1965 SC 271) it was held as follows:

"It is true that under O.1 R.9 of the Code of Civil Procedure no suit shall be defeated by reason of the mis-joinder on non-jonder of the parties, but there can be no doubt that if the parties who are not joined are not only proper but also necessary parties to it, the infirmity in the suit is bound to be fatal. Once it is held that the two brothers are co-heirs in respect of the properties left intestate by their mother, the suit partakes of the character of a suit for partition and in such a suit clearly the plaintiff alone would not be entitled to claim any relief against the defendants."

A.S.647/94 & 331/1996.

22. At the risk of repetition, one may notice Section 99 of CPC. A reading of the said provision clearly show that unless the mis-joinder of causes of action or parties or any error, defect or irregularity in any proceedings in the suit, which has affected the merits of the case or the jurisdiction of the court, it cannot be treated as fatal and will not be a ground to reverse or modify the judgment of the trial court. Viewed in the light of the above principle and facts and circumstances disclosed in this case, it could not be said that O.S.23 of 1984 should fail on the ground of mis-joinder of parties and causes of action.

23. It was then contended that the court fee paid before the court below and before this court in the suit by the appellant herein is inadequate and insufficient. In the plaint in O.S.23 of 1984 the amount due from the Insurance Company was shown, as regards the second relief, that is, regarding the permanent prohibitory injunction against A.S.647/94 & 331/1996.

defendants 4 to 7 restraining them from proceeding against the plaintiff for realization of the amount is insufficient. The valuation shown is Rs.150/- and the court fee had been paid only on the same. According to learned counsel, going by the explanation to Section 27(c) of the Kerala Court Fees and Suits Valuation Act, 1959, the plaintiff ought to have paid the court fee for the amount that was sought to be recovered from him. In support of the above contention, learned counsel for the respondents relied on the decision reported in In re Lakshminarayana Chettiar's (AIR 1954 Madras 594). Learned counsel also went on to point out that even assuming that the court fee paid in the lower court is correct, at any rate, the court fee paid before this court on the reliefs sought for against defendants 4 to 7 in the lower court in O.S.23 of 1984 is insufficient. Learned counsel for the appellant brought to the notice of this court the words used in Section 52 of the Court Fees Act, and contended that the court fee to be paid is what is payable in A.S.647/94 & 331/1996.

the lower court. Learned counsel relied on the decision reported in Kochappu v. Somasundaran Chettiar (1991 (1) K.L.T. 657).

24. Learned counsel appearing for the appellant pointed out that the above contentions are without any merit whatsoever. The suit was of the year 1984 and the amendment to Section 27(c) was brought about only in 1991. It is well settled that the said amendment cannot have retrospective operation and therefore the court fee paid on the basis of Section 27(c) as is existed as on the date of the suit is proper. In support of his contention, learned counsel relied on the decisions reported in Procurator, R.C.Diocese, Calicut v. State of Kerala (2003(1) K.L.T. 618) and Usha v. Food Corporation of India (1997(1) K.L.T. 264). As regards the contention based on Section 52 is concerned, learned counsel pointed out that, that too is equally without force. The rights of the A.S.647/94 & 331/1996.

parties are to be determined as on the date of filing of the suit and the filing of the suit carries with it the right of appeal. At the appellate stage the plaintiff cannot be placed in a more onerous position and therefore the said contention too should fail. In support of his contention learned counsel relied on the decision reported in Usha's case (supra)

25. At the outset itself one may say that the contentions raised in this behalf by the learned counsel for the respondents have to fail. As rightly contended by the learned counsel for the appellant, the suit was of the year 1984. Section 27 of the Court Fees Act as it then stood reads as follows:

"27. Suits for injunction.- In a suit for injunction-

(a) Where the reliefs sought is with reference to any immovable property, and

(i) where the plaintiff alleges that his title to the property is denied, or A.S.647/94 & 331/1996.

(ii) where an issue is framed regarding the plaintiff's title to the property.

fee shall be computed on one-half of the market value of the property or on rupees One hundred and fifty, whichever is higher;

(b) where the prayer relates to the plaintiff's exclusive right to use, sell, print or exhibit any mark, name, book, picture, design or other thing and is based on an infringement of such exclusive right, fee shall be computed on the amount at which the relief sought is valued in the plaint or on rupees two hundred and fifty, whichever is higher.

) in any other case, whether the subject matter of the suit has a market value or not, fee shall be computed on the amount at which the relief sought is valued in the plaint or on rupees one hundred and fifty, whichever is higher."

26. In the decision reported in Procurator, R.C.Diocese, Calicut's case (supra), it was held as follows:

"It has been held by the Supreme Court that the proceedings in the Reference court itself is an A.S.647/94 & 331/1996.

original proceeding (See Chimanlal Hargovinddas v. Special Land Acquisition Officer, Poona and another (AIR 1988 SC 1652) and, therefore, date of reference is the crucial date. After the amendment of S.25 of the Land Acquisition Act, the claimants are not even bound by the amount claimed before the Collector but only on the amount claimed before the Court. Special Land Acquisition Officer (NHW) Dharwad v. Kallangouda and others (AIR 1994 Karnataka 112). Once a reference is made before court, the parties will get substantial right of appeal under S.52. That right cannot be impaired or taken away except by valid legislation. Since the Ordinance is not introduced with retrospective effect, the court fee payable in the land acquisition appeal is the court fee payable at the time of reference unaffected by the amended provisions which enhanced the court fees. The right of appeal under S.54 of the Land Acquisition Act is a substantive provision and right of appeal is not impaired in Ramesh Singh v. Cinta Devi ((1996) 3 SCC 142). In Ramesh Singh's case (supra) the Apex Court held as follows:

A.S.647/94 & 331/1996.

"........unless the new Act expressly or by necessary implication makes the provisions application in Tribunal of first instance and that vested right of appeal would not be dislodged by the enactment of the new Act."

A Division Bench of this Court in Kunnappadi Kalliani v. Lekharaj (1996(2) K.L.T. 106) followed the above decision. There the question was regarding application of Civil Courts (Amendment) Act. While making the amendment of 1996 the Legislature has enhanced the valuation of the subject matter for filing an appeal from the Subordinate Judge's Court to District Court from Rs.25,000/- to Rs.2 lakhs with effect from27.3.1996 and from that date the appeals will lie to the High Court only if the amount is above Rs.2 lakhs. This Court held that appeals from decree of Subordinate Judge's Courts in suits instituted prior to 27.3.1996 would continue to lie in this Court, if they were maintainable in this Court prior to 27.3.1996, as right of appeal is a substantive right. From the above direction it is clear that as the Ordinance is not retrospective, in appeals filed from the reference court, court fee A.S.647/94 & 331/1996.

shall be paid only as per the unamended provisions of the act as existing on the date of reference, otherwise enhancement of court fees while filing the appeals will impair the substantive right of parties."

27. Therefore the proviso, which was brought in by way of amendment by Act 6 of 1991 can have no impact on the suit filed in 1984. Therefore, the court fee paid before the court below in respect of the second relief seems to be adequate and sufficient. Such an issue does not appear to have been raised before the court below due to the fact that at the relevant time the law was otherwise.

28. As regards the contention based on Section 52 is concerned, that too is without basis. Section 52 reads as follows:

"52. Appeals.- The fee payable in an appeal shall be the same as the fee that would be A.S.647/94 & 331/1996.

payable in the court of first instance on the subject matter of the appeal:

Provided that, in levying fee on a memorandum of appeal against a final decree by a person whose appeal against the preliminary decree passed by the Court of first instance or by the Court of appeal is pending, credit shall be given for the fee paid by such person in the appeal against the preliminary decree."

29. The contention of the learned counsel for the respondents appears to be that the court fee payable on the appeal is not the court fee that is paid before the court below, but the fee payable in appeal. According to learned counsel appearing for the respondents, the court fee that is payable at the time of filing of the appeal or when it comes up for admission is governed by the provisions applicable at that point of time and not as that on the date of suit. The appeal having been filed in 1994, it should comply with the amended provision, or in other words, according to learned A.S.647/94 & 331/1996.

counsel, the court fee payable in respect of the second relief sought for in O.S.23 of 1984 must be valued in the appeal as the amount that is claimed by the Bank from the plaintiff, which is sought to be recovered by resorting to revenue recovery proceedings.

30. It is true that in the decision reported in Kochapu v. Somasundaran Chettiar (1991(1) K.L.T. 657) it was held that in an appeal filed after 5.12.1990 but before the amendment came into force as appeal came up for admission after amendment, the amended provision of the Court Fees Act will apply. But it must be noticed that in the said case the court fee had actually been reduced and that in no way prejudiced the appellant and on that basis it was held that the amended provisions will apply.

31. The issue as to whether a higher valuation will have to be shown in the case of appeals of such nature is A.S.647/94 & 331/1996.

considered in the decisions reported in Usha's case (supra) and in Procurator, R.C.Diocese, Calicut's case (supra).

32. In the decision reported in Usha's case (supra), an appeal was filed against the award passed in an arbitration O.P. under the Motor Vehicles Act. It appears that the Registry of the court raised an objection regarding the court fee paid on the appeal. On demand by the appellant's counsel, the matter was placed before this court. The contention of the appellant was that the appeal being a continuation of the suit, the court fee payable will have to be determined as on the date of the filing of the suit. This court relying on the decisions reported in State of Bombay v. M/s. S.G.Films Exchange (AIR 1960 SC 980), Hossein Kasam Dada (AIR 1953 SC 221) and Garikapatti Veeraya (AIR 1957 SC 540) held as follows:

"An impairment of the right of appeal by putting a new restriction thereon or imposing a A.S.647/94 & 331/1996.

more onerous condition is not a matter of procedure only; it impairs or imperils a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment. In the present case, certainly the appellant has to pay higher court fee on the basis of the amended provision. In this case, the right of appeal is imperilled by enhancing the rate of court fee. The appellant is liable to pay court fee on the basis of the unamended provision."

33. In the decisions reported in Kunnappadi Kalliani v. Lekhraj (1996(2) K.L.T. 106) and in Ramesh Singh v.Cinta Devi ((1996) 3 SCC 142) it was held that unless the amendment brought to the Court Fees Act is specifically stated to have retrospective effect, that can only have prospective effect. Thus it can be seen that the contention based on the inadequacy or insufficiency of the court fee cannot be entertained in the case on hand. A.S.647/94 & 331/1996.

34. That brings us to the most important issue in the appeal, that is, whether the finding of the court below that the Insurance Company is not liable as the incident is not as alleged by the plaintiff is sustainable.

35. It is not in dispute that the insurance on hand is covered under the Marine Insurance Act, 1963 (hereinafter referred to as 'the Act'). Ext.A1 is the policy issued by the third defendant in O.S.23 of 1984. Ext.A1 makes mention of the fact that the terms of the policy are as per the schedule provided to the Act as per Section 24 o the Marine Insurance Act. Section 2(a) defines what is the 'contract of marine insurance'. It means a contract of marine insurance as defined by Section 3. Section 2(d) defines 'marine adventure' as follows:

             "(d)    "marine    adventure'   includes   any

      adventure where -

A.S.647/94 & 331/1996.
                                  40

(i) any insurable property is exposed to maritime perils;

(ii) the earnings or acquisition of any freight, passage money, commission, profit or other pecuniary benefit,or the security for any advances, loans, or disbursements is endangered by the exposure of insurable property to maritime perils;

(iii) any liability to a third party may be incurred by the owner of or other person interested in or responsible for, insurable property by reason of maritime perils."

Section 2(e) defines 'maritime perils' and Section 2(g) defines 'policy'. Section 2(h) defines 'ship'. Section 3 reads as follows:

"3. Marine insurance defined.- A contract of marine insurance is an agreement whereby the insurer undertakes to indemnify the assured, in the manner and to the extent thereby agreed, A.S.647/94 & 331/1996.

against marine losses, that is to say, the losses incidental to marine adventure."

Section 19 incorporates the principle of uberrimae fidei. Section 20 deals with the obligation on the part of the assured to disclose all necessary facts. Section 24 says that a contract of marine insurance shall not be admitted in evidence unless it is embodied in the marine policy in accordance with the Act. Section 25 deals with matters which are to be specified in the marine policy. Section 29 deals with the valuation of the policy, it may be either valued or unvalued. Section 32 deals with construction of terms in policy. It has some relevance in the context. It reads as follows:

"32. Construction of terms in policy.- (1) A policy may be in the form in the Schedule.

(2) Subject to the provisions of this Act, and unless the context of the policy otherwise A.S.647/94 & 331/1996.

requires, the terms and expressions mentioned in the Schedule shall be construed as having the scope and meaning assigned to them in the Schedule."

Section 55 reads as follows:

"55. Included and excluded loses.- (1) Subject to the provisions of this Act, and unless the policy otherwise provides, the insurer is liable for any loss proximately caused by a peril insured against, but, subject as aforesaid, he is not liable for any loss which is not proximately caused by a peril insured against.

(2) In particular -

(a) the insurer is not liable for any loss attributable to the wilful misconduct of the assured, but, unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, even though the loss would not have happened but for the misconduct or negligence of the master or crew;

A.S.647/94 & 331/1996.

(b) unless the policy otherwise provides, the insurer on ship or goods is not liable for any loss proximately caused by delay, although the delay be caused by a peril insured against;

) unless the policy otherwise provides, the insurer is not liable for ordinary wear and tear, ordinary leakage and breakage, inherent vice or nature of the subject-matter insured, or for any loss proximately caused by maritime perils." Section 78(4), which was also relevant in the context reads as follows:

"78. Suing and labouring clause.-

......... ............

(4) It is the duty of the assured and his agents, in all cases, to take such measures as may be reasonable or the purpose of averting or minimising a loss."

36. It may be useful here to refer to the findings of the court below. The relevant findings are contained in A.S.647/94 & 331/1996.

paragraphs 19 and 20 of the judgment. The finding is to the effect that it was the action of the crew men that caused the boat loose depth. It is also further observed as follows:

"Even if at such a time a breaker lashed in, the proximate cause for the sinking of the vessel cannot be the action of the breaker because but for the action of the crewmen mentioned earlier, the breaker could not have caused the vessel to sink. In short I am inclined to hold that the fishing boat MFV Santhoshkumar sank to the sea not due to any maritime peril insured against and any such peril was not the proximate cause for the sinking of the vessel."

The court below also chose to disbelieve the claim of the plaintiff regarding the various payments made by him.

37. One may here recollect that the definite case of the plaintiff is that while his vessel was engaged in fishing, the net get caught on some object beneath the sea A.S.647/94 & 331/1996.

and in the act of retrieving the net, the boat sunk when a wave lashed at the boat. This specific claim of the plaintiff has been found against by the court below. The contention urged before this court is that even assuming that the allegation regarding sinking of the boat put forward by the plaintiff is not true, the fact remains that the vessel sunk and even assuming it to be due to the negligence of the crew men, still it is covered by the perils of the sea. At any rate, according to the learned counsel for the appellant the negligent act of the crew is covered by the definition of 'maritime peril'. Specific reference was made to Section 55 of the Act, which has already been quoted. Reliance is also placed on Section 55(2)(a) of the Act. According to learned counsel Section 55(2)(a) brings within the ambit of the insurance policy any peril that had occurred due to the negligence or misconduct of the master or crew. Learned counsel pointed out that the investigation conducted by the Insurance Company only revealed that the incident might A.S.647/94 & 331/1996.

not have occurred as alleged by the plaintiff. But there is no finding by the investigating agency deputed by the Insurance Company that there was either scuttling or any fraud as such played by the plaintiff. Therefore, it is contended that by no stretch of imagination it could be said that the act which resulted in the vessel going down the sea could be taken out of the term 'peril of the sea'.

38. Learned counsel appearing for the Insurance Company on the other hand contended that it is very evident from a reading of the evidence that the whole incident is a stage managed one. Learned counsel referred to the evidence on record and pointed out that the plaintiff had no consistent case. There were different versions by different witnesses regarding the incident and the witnesses are not uniform and consistent. The story of wave lashing the boat is only a figment of imagination which will be revealed by a close scrutiny of the evidence. At any rate, A.S.647/94 & 331/1996.

the incident was not caused by the peril of the sea and was due to the action of the inexperienced and unqualified crew employed by the plaintiff.

39. It will be useful at this juncture to refer to the oral evidence adduced in the case.

40. The plaintiff examined himself as P.W.2. He says that his vessel was insured with the third defendant and was hypothecated to the Bank, who is the fourth defendant. According to him, on 21.4.1981 his vessel had gone to the sea as usual. At about 10 a.m. in the morning he was given to understand that his vessel was hit the bottom of the sea and that his employees were fortunate enough to escape. He speaks about his various actions thereafter. He speaks in detail regarding the various steps taken by him about informing the Insurance Company, police officers, the Port authorities etc. He also says that he A.S.647/94 & 331/1996.

had managed to send two other boats 'Sreedevi' and 'Dominic Kattuvila' in search of his vessel. His employees had accompanied the crew on those two boats. He says that he had surrendered his licence to the Port office as per Ext.A15. He then speaks about the claim made by him and the various steps undertaken by the Insurance Company. He says that the Insurance Company did not honour his demand. In cross examination, he would say that he had not produced any document to show that the weather was rough or whether there was rain at the relevant time. He speaks about the various statements given by him before the authorities deputed by the Insurance Company and various other authorities. It is suggested to him that it was due to the negligence of his crew that the incident had occurred. The suggestion to him that he had over-valued his vessel was also denied by him.

A.S.647/94 & 331/1996.

41. P.W.4 was the shrank of the ill-fated vessel. He would depose that on 21.4.1981 he had taken the vessel for fishing to the see. They had thrown the net and when engaged in fishing, they found that the net got entangled in some object. He would say that they tried to retrieve the net. At that time, according to him, there was strong wind and rain. He would say that while they were trying to retrieve the net a wave lashed on the boat, which took it down. Hearing their cry, a country boat which was engaged in fishing came near them and retrieved them from the sea. He then speaks about the statement given by him before the various authorities. In cross examination he was asked whether he had the necessary licence to function as the shrank of the boat. Though initially he says that he did not have the licence, later he says that he had the necessary licence and he is prepared to produce the same. In cross examination he deposed that when they were trying to retrieve the net, which had caught on some object beneath A.S.647/94 & 331/1996.

the sea, the boat began to sink. He says that they tried all possible methods to retrieve the vessel. He admitted in cross examination that there were several vessels and country boats, which were engaged in fishing nearby. He would depose that two of his crew members jumped into the sea while he and another person remained in the vessel. But however, all of them were fortunate enough to reach the shore alive.

42. P.W.5 was functioning as the deck lander at the relevant time. He too gives a similar version of the incident like P.W.4. He was cross examined regarding his claim of rain and wind at the relevant time and he speaks about heavy rain and wind. He says about a huge wave then lashed against the vessel, which forced it go down the sea. It was suggested to him that it was due to their negligence and inexperience that the incident had occurred, which he denied.

A.S.647/94 & 331/1996.

43. P.W.6 was also a deck lander at the relevant time. His version in the chief examination is the same as the other crew members in the vessel. In cross examination it was brought out that he was a recently recruited crew member of the boat. He too admitted in cross examination that there were other boats and country boats engaged in fishing nearby. He would say that he jumped into the sea to escape.

44. P.W.7 is one Sukesan, who, according to the plaintiff and his crew members, had occasion to save the members of the crew of the ill-fated vessel. He would say that while he and his country boat was engaged in fishing, he happened to hear the wails of the crew of the ill-fated vessel and he went near them and retrieved them from the sea.

45. P.W.8 is the owner of the vessel 'Sreedevi', which, according to the plaintiff, was sent by him to verify the incident reported to him.

A.S.647/94 & 331/1996.

46. P.W.9 is a resident nearby, who says that he happened to see few people being brought to the shore in a country boat and they looked exhausted. When he enquired about the matter, he came to understand that a boat had sunk in the sea and those persons were the crew members of the ill-fated boat.

47. D.W.1 was engaged to investigate by the Insurance Company. He was to assess the loss also. He is unable to see the reason for the mishap, but his conclusion is that the incident had not occurred in the manner alleged by the plaintiff and recommended a detailed investigation.

48. D.W.3 is the Chief Investigator deputed by the Insurance company on the recommendation made by D.W.1. It will be useful to refer to his evidence. He says about the non-co-operation of the plaintiff and the various steps taken by him during investigation. His conclusion is A.S.647/94 & 331/1996.

also that the incident had not occurred as alleged by the plaintiff. He also came to the conclusion that the members of the crew of the ill-fated boat were not retrieved as claimed in the plaint or by the witnesses for the plaintiff. However, he too was unable to give the definite cause for the mishap.

49. The lower court has scrutinized the evidence of the witnesses and has come to the conclusion that it is not possible to believe the version given by the plaintiff. The claim in the plaint is that when the vessel was engaged in fishing the net got caught in some object and while trying to retrieve the same a strong wave lashed against the vessel and took it down. There is no whisper about any strong wind or rain in the plaint. But at the time of evidence, there is a development of the case and the plaintiff and his crew members came out with a version that there was rain and wind at the relevant time. As rightly A.S.647/94 & 331/1996.

noticed by the lower court there is no independent evidence to establish that there was rain and wind. The lower court is also right in its conclusion that the story of strong wave lashing against the vessel cannot be true as there are other vessels and country boats were engaged in fishing nearby, which did not experience such a wave. There is no reason to take a different view from the conclusion reached by the trial court in that regard.

50. However, from the trend of cross-examination of the plaintiff's witnesses and the evidence adduced by the Insurance Company, it would appear that the case of the Insurance Company is that the incident had not occurred as alleged by the plaintiff and therefore they are not liable. Their case seems to be that it was the gross negligence on the part of the members of the crew of the vessel that might have caused the mishap. They have suggested to the members of the crew that if proper measures had been A.S.647/94 & 331/1996.

taken, they could have saved the vessel. Their case seems to be that the vessel went down due to the negligence on the part of the members of the crew of the ill-fated vessel. The suggestion to the witnesses of the plaintiff was that when they found that the net could not be got released, they should have cut the chain or rope off so as to save the vessel. The crew members who were examined before court replied that they bonafide believed that they will be able to retrieve the net and in the process the vessel sank. Probably the crew members could have done what was suggested to them, but the fact that they did not do it does not mean that it was a deliberate act or that they were motivated by malice. Response to a particular situation will differ from person to person. There is no strait jacket formula of behaviour.

51. It is significant to notice that there is no evidence to show that there was any scuttling or that the A.S.647/94 & 331/1996.

whole incident was the result of a conspiracy or deliberate malafide action on behalf of the members of the crew of the vessel and the owner with the intention to make unlawful gains. One cannot omit to note that the reports of D.Ws.1 and 3 are only to the effect that the incident has not occurred as alleged by the plaintiff. But they did not have a case that the sinking of the vessel was due to the deliberate act on the part of the plaintiff or members of his crew. They were infact unable to specify the reason. However they do not rule out the possibility of vessel sinking due to the act of net getting entangled in some object in the sea and consequently endangering the vessel.

52. The fact remains that the vessel had hit the bottom of the sea. Assuming that the incident had not occurred as alleged by the plaintiff, but was due to the negligence on the part of the members of the crew of the A.S.647/94 & 331/1996.

vessel, the question still remains whether the policy will cover the said peril.

53. Before going into that aspect, one fact needs to be noticed. Learned counsel for the appellant relied on the term barratry occurred in maritime perils defined under Section 2(e) of the Act to contend that the policy covers such a peril. The contention taken was that even if it was due to the deliberate act of the crew with the intention of causing loss to the owner, the policy covers such a contingency also.

54. The term barratry means that some wilful misconduct or action on the part of the members of the crew or any other person with a deliberate intention to bring loss to the owner of the vessel. In Black's Law Dictionary 5th Edn, the term is defined as follows:

"Barratry. The offence of frequently exciting and stirring up quarrels and suits, either at law or otherwise."

A.S.647/94 & 331/1996.

55. In Stroud's Judicial Dictionary 6th Edn. Vol.1 at page 243 the word is defined as follows:

"BARRATRY. "The word 'barratry' is derived from the Italian barratrare, to cheat. An illegal, fraudulent, or knavish conduct of the master or mariners of a ship by which the freighters or owners are injured, is, by our law, barratry... In order to constitute barratry, the act must, generally, be done fraudulently and with a criminal intent; and it is not sufficient that it is merely against the interest of the owner."

56. In Halsbury's Laws of England 4th Edn., Vol. 25 at page 104 para 161 the word is defined as follows:

"161. Barratry. 'Barratry' includes every wrongful act wilfully committed by the master or crew to the prejudice of the owner, or, as the case may be, the charterer, and this is so whether the master's act is induced by motive of benefit to himself, malice to the owners, or a disregard of A.S.647/94 & 331/1996.

those laws which it was his duty to obey and upon his observance of which his owners relied."

57. Going by the above definitions, it would appear that barratry is a term applied to such intentional or wilful conduct on the part of the members of the crew or any other person designed to result in loss to the owner of the vehicle. That means, there should be a mental element involved in the act committed by the person. It must be with an oblique intention, to be more specific criminal intention of causing loss to the owner. The evidence of P.W.2 will clearly show that he did not believe that the action which resulted in the sinking of the vessel was a deliberate act committed by the members of his crew or any other person. So the application of barratry to the facts of this case does not arise.

58. However, it remains to be considered, if negligence of the crew is the cause for the sinking of the A.S.647/94 & 331/1996.

vessel, whether that can be brought under the term maritime perils or perils of the sea. In Halsbury's Laws of England 4th Edn., Vol. 25 at page 98 paragraph 151 the meaning of the term perils of the sea is dealt with as follows:

"The term 'perils of the seas', as used in a marine policy, does not include every casualty which may happen to the subject matter of the insurance on the sea; it must be a peril of or due to the sea. It does not, for instance, cover fire or capture at sea; or any loss proximately caused by insects, or the wilful scuttling of a ship. Again, unless the policy otherwise provides, it will not cover damage done by the bursting of the air- chamber of a donkey-engine, owing to a valve being closed which ought to be kept open, with the result that water is forced up into the air-chamber and causes an explosion.

Moreover, the purpose of a marine policy is to secure an indemnity against accidents which may happen, not against events which in the ordinary course of things must happen. Therefore, in general, the term 'perils of the seas' A.S.647/94 & 331/1996.

refers only to fortuitous accidents or casualties of the seas, and does not include the ordinary action of the winds and waves.

However, where there is an accidental incursion or sea water into a vessel at a part of the vessel, where, an in a manner in which, it is not expected to enter in the ordinary course of things, and there is consequent damage to goods insured, there is prima facie a loss by perils of the seas, and if the cargo has been properly stowed, the insurer will not escape liability by proving that the weather was such as might reasonably have been anticipated, for it is the damage due to the weather and not the weather itself which provides the element of the fortuitous. Loss caused by an action necessarily and reasonably taken to prevent a peril of the sea from affecting the insured goods is a loss due to perils of the seas."

59. In Halsbury's Laws of England, 4th Edn. Vol. 25 at page 106 paragraph 164, it reads as follows:

A.S.647/94 & 331/1996.

"163. Accidents in loading, bursting of boilers, breakage of shafts, negligence of master, etc. It is now usual to include in policies a clause expressly making the policy cover loss of or damage to the subject matter insured directly caused by accidents in loading or discharging cargo or fuel explosions; breakdown of or accident to nuclear installations or reactors; bursting of boilers, breakage of shafts or latent defects; negligence of master, officers, crew, pilots or repairers; contact with aircraft, land conveyance, dock or harbour equipment or istallation; earthquake, volcanic eruption or lightning; provided that 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 considered part owners for this purpose if they hold shares in the vessel."

60. The issue arises as to whether the negligence of the crew can constitute peril of the sea. Here again, one may refer to Halsbury's Laws of England, 5th Edn., Vol.25, at Page 115 para 177, which reads as follows:

A.S.647/94 & 331/1996.

"177. Wilful misconduct or negligence. The insurer is not liable for any loss attributable to wilful misconduct on the part of the assured, but unless the policy otherwise provides, he is liable for any loss proximately caused by a peril insured against, and is liable even though the loss would not have happened but for the misconduct or negligence of the master or crew. The same result follows when the negligence of any other person (including the assured himself) contributes to the loss."

61. In Corpus Juris Secondum Vol.46 at page 380 it is observed as follows:

"On the other hand, unless the policy expressly so provides, negligence ordinarily will not defeat recovery under a policy. Hence where the immediate cause of a loss is a peril insured against, and the master, crew, and equipment are competent and sufficient at the commencement of the voyage, the underwriters are liable A.S.647/94 & 331/1996.

notwithstanding a contributing or remove cause of the loss is the negligence of insured, or that of the master, crew or other agents or servants, or notwithstanding the accident would not have occurred but for the negligence of the master, crew, or other agents or servants. However, this doctrine has never been extended to the case of voluntary deviation."

62. Learned counsel appearing for the respondent Insurance Company placed considerable reliance on the decision reported in J.M.F. Sea Foods v. National Insurance Co. (AIR 1992 Kerala 202) and contended that negligence of the crew cannot constitute peril of the sea.

63. Peril of the sea ordinarily means a fortuitous accident or casualties of sea and does not constitute ordinary action of the wind and waves. The question is whether the negligent act complained of falls within the scope of Section 55(2)(a). There is of course the principle of A.S.647/94 & 331/1996.

Inchmaree clause. That is a clause inserted usually in marine policy beyond the basic marine perils. In the more recent hull policies, the clause is now identified as the 'additional perils' clause. The original clause originated out of a law suit brought in 1887 by the owner of the ship 'Inchamaree'.

64. The authors seem to be uniform in observing that it will be quite unsafe for anyone to try to completely define the parameters of the expression 'perils of the sea' because in the practice of marine insurance, the question of 'what is a peril of the sea?' is inextricably interwoven with another question 'whether the loss was proximately caused by the sea peril?' Therefore while finding out what constitute perils of the sea, one cannot avoid but to answer whether the peril of the sea is the proximate cause. It is said that a peril that qualifies to be enumerated under the expression 'perils of the sea' and not a peril 'on the sea'. The A.S.647/94 & 331/1996.

schedule to Marine Insurance Act and Rules provides that in a marine policy peril of the sea means fortuitous accident or casualties of the sea. It does not include ordinary actions of the winds and waves. Usually the term fortuitous accident of casualties means not intentional or not inevitable.

65. In the decision reported in J.M.F. Sea Foods' case (supra) relied on by the learned counsel for the respondent Insurance Company, it is true that the act complained of in the said case was held to be not falling within the term peril of the sea. That was a case where the vessel of the plaintiff in the said case was anchored near Alleppey Port on 12.2.1980 after the day's fishing operation. On the next day, when the crew of the vessel wanted to take the vessel for fishing, they found it missing. The matter was reported to the plaintiff. Port and police authorities were informed. Extensive enquiries were held at Quilon, Thottappally, Cochin etc. On 13.2.1980 in the evening the A.S.647/94 & 331/1996.

plaintiff was given to understand that some country boat fishermen had seen the sinking of the plaintiff's boat at about 8 a.m. On the facts of the case, it was held that there was nothing to show that the vessel had capsized due to the peril of the sea. The court observed that the term refers only to fortuitous accident and casualties of the sea and does not include the ordinary action of the winds and waves. The court had also occasion to hold that the term 'other perils' in Rule 12 includes only perils similar to the perils specifically mentioned by the policy.

66. The principle laid down in the above decision can have no application to the facts of this case. Recollecting the facts of the case, though it is true that the incident might not have occurred as alleged by the plaintiff, it is quite evident that the case of the Insurance Company was that the mishap of the vessel was due to the negligence A.S.647/94 & 331/1996.

on the part of the crew members. That is very obvious from the trend of cross examination of the plaintiff's witnesses.

67. The issue as to whether negligence on the part of the members of the crew can constitute peril of the sea is considered by the Supreme Court of Canada in the decision reported in C.C.R. Fishing Ltd. v. British Reserve Insurance Co. ((1990) 1 S.C.R. 814). In the said case a fishing vessel, which had been safely berthed for more than an year, sank because of a sudden ingress of sea water due to the failure of cap screws due to corrosion and due to the failure to close a valve which would have stopped the ingress of the sea water. The appellant in the said case was provided with a coverage for perils of the sea. There too, it was observed that the term perils of the sea refers to only fortuitous accident or casualties of the sea. In the said case, the trial judge held that the accident was fortuitous and therefore constitute peril of the sea. The conclusion A.S.647/94 & 331/1996.

drawn was that the failure to close valves was found to be the consequence of negligence. When the matter reached before the Apex Court, it was held as follows:

"A peril of the sea must be both fortuitous and of the sea. Fortuitous means the cause of the loss was not intentional or inevitable. A sinking resulting from the ingress of sea water due to a fortuitous act has always been found to be an accident "of the sea".

The loss resulted from an accident "of the sea". The defect which started the casual chain that led to the loss need not be one that could only occur at sea. Rather the accident itself must be one that could only occur at sea.

The failure of the cap screws did not result from "ordinary wear and tear", so as to be excluded from the definition of fortuitous, but from the negligent act of the repairers who installed them. Ordinary corrosion might fall within the definition of "ordinary wear and tear" but not corrosion caused by the negligent use of wrong materials.

A.S.647/94 & 331/1996.

The failure of the screws was not caused by an inherent vice -- loss stemming from qualities inherent in the thing lost. The cause was external and unrelated to those qualities because the screw caps were installed through the negligence of the repairers. The loss was not the inevitable produce of a quality inherent in the vessel and therefore was fortuitous.

Too much emphasis should not be placed on the distinction between proximate and remote cause. Section 56 of the Insurance (Marine) Act does not limit the cause of the loss to a single peril. Several factors may combine to result in loss at sea. That one of the causes of the loss was ordinary wear and tear or inherent vice did not matter, provided that an effective cause of the loss was fortuitous. Foreseeability of loss was not a necessary condition of recovery. It was not necessary to consider whether there would be liability apart from the negligence demonstrated here.

The following procedure should be followed in determining whether a loss was proximately caused by a peril of the sea. First, the cause or A.S.647/94 & 331/1996.

causes of the loss should be ascertained. It should then be determined whether the loss is fortuitous in that it would not have occurred but for an accident or unforeseen event brought about by negligence or adverse or unusual conditions. The loss will not be fortuitous if the exclusions in s.56 (2) or in the definition of 'perils of the seas' in the schedule to the Act are established. If the loss is fortuitous then the policy applies."

68. The issue as to whether negligence as such can constitute peril of the sea is considered in the decision reported in Martin Maritime Ltd. v. Provident Capital Indemnity Fund Ltd. (1998 (2) Ly.L.R. 652). In the said case the plaintiff had insured his vessel with the defendants under a policy of marine insurance incorporating the Institute Time Clauses (Hulls). The policy contained an additional machinery deductible clause which provided inter alia:

"......a claim for loss or or damage to any machinery, shaft..... arising from any of the perils A.S.647/94 & 331/1996.

enumerated in clause 6.2.2 to 6.2.5 inclusive of the Institute Time Clauses (Hulls)....... shall be subjected to a deductible."

In the said case, the vessel lost her rudder at Abidjan and sustained damage. It was the common ground that the loss of the rudder was caused as a result of negligence of some act on the part of the ship repairers who dismantled the rudder and reassembled it for the purpose of examining the tail shaft when the vessel was drydocked. In the said decision it was held as follows:

"There was very little, if any, evidence in the material before the Court to suggest exactly what was wrong with the vessel when she left the repairers yard; it was common ground that the loss of the rudder was caused by negligence on the part of the repairers but the precise nature of that negligence and the manner in which it manifested itself and indeed the precise manner in which it led to the loss of the rudder had not been identified; it was difficult to see precisely what the nature of the deficiency was; and the A.S.647/94 & 331/1996.

evidence before the Court was not sufficient to give rise to a triable issue as to whether or not the vessel was in fact unseaworthy at the commencement."

69. It will be useful to refer to the decision reported in Canada Rice Mills Ltd. v. Union Marine and General Insurance Co. Ltd. (1941 AC 55) wherein the question as to what constitute perils of the sea was considered in detail. In the said decision, it was held as follows:

"The first question, whether on the evidence the jury were justified in finding that there was a peril of the sea, depends on the meaning to be attached to those words in a policy of marine insurance. The trial judge directed the jury that the words referred to fortuitous accident or casualty of the seas, but did not include the ordinary action of the wind and wave. In British Columbia the law of marine insurance is not to be found in the Marine Insurance Act, R.S.B.C., 1936, c.134, which is for all practical purposes the same A.S.647/94 & 331/1996.

as the English Marine Insurance Act, 1906, which was a codifying Act. In considering the material questions it is helpful in the first instance to assume that the ventilation was not closed, but that the sea or spray had actually wetted the rice and caused the damage. The other question, that of the causa proxima, can then be considered separately. The view of Sloan J.A. seems to be that there was no peril of the sea because, in his opinion, the weather encountered was normal, and such as to be normally expected on a voyage of that character, and that there was no weather had enough to endanger the safety of the ship if the ventilators had not been closed. But these are not the true tests. In the House of Lords in Wilson, Sons & Co. v. Owners of Cargo per the "Xantho"

which was a bill of lading case, but has always been cited as an authority on the meaning of the same words in policies of marine insurance, (see per Lord Bramwell in Hamilton, Fraser & Co. v. Pandrof & Co.) Lord Herschell said: "The purpose of he policy is to secure an indemnity against accidents which may happen, not against events which must happen. It was contended that those A.S.647/94 & 331/1996.

losses only were losses by perils of the sea, which were occasioned by extraordinary violence of the wind or waves. I think this is too narrow a construction of the words, and it is certainly not supported by the authorities, or by common understanding. It is beyond question, that if a vessel strikes upon a sunken rock in fair weather and sinks, this is a loss by perils of the sea." In Thames and Mersey Marine Insurance Co. v. Hamilton, Fraser &Co Lord Macnaghten said that it was impossible to frame a definition of the words. In Hamilton, Fraser &Co. v. Pandorf & Co., where a rat had gnawed a hole in a pipe, whereby seater entered and damaged the cargo, there was no suggestion that the ship was endangered, but the damage to the cargo of rice was held to be due to a peril of the sea. There are many contingencies which might let the water into the ship besides a storm and, in the opinion of Lord Halsbury in the case last cited, any accident that should do damage by letting in sea into the vessel should be one of the risks contemplated.

Where there is an accidental incursion of seawater into a vessel at a part of the vessel, and A.S.647/94 & 331/1996.

in a manner, where seawater is not expected to enter in the ordinary course of things, and there is consequent damage to the thing insured, there is prima facie a loss by perils of the sea. The accident may consist in some negligent act, such as improper opening of a valve, or a hole made in a pipe by mischance, or it may be that sea water is admitted by stress of weather or some like cause bringing the sea over openings ordinarily not exposed to the sea or, even without stress of weather, by the vessel heeling over owing to some accident, or by the breaking of hatches or other coverings. These are merely a few amongst many possible instances in which there may be a fortuitous incursion of seawater. it is the fortuitous entry of the sea water which is the peril of the sea in such cases. Whether in any particular case there is such a loss is a question of fact for the jury. There are many deck openings in a vessel through which the seawater is not expected or intended to enter and, if it enters, only enters by accident or casualty. The cowl ventilators are such openings. If they were not closed at the proper time to prevent seawater A.S.647/94 & 331/1996.

coming into the hold, and seawater does accidentally come in and do damage, that is just as much an accident of navigation (even though due to negligence, which is immaterial in a contract of insurance) as the improper opening of a valve or other sea connection. The rush of sea water which, but for the covering of the ventilators, would have come into them and down to the cargo was in this case due to a storm which was sufficiently out of the ordinary to send seas or spray over the orifices of the ventilators. The jury may have pictured the tramp motor vessel heavily laden with 5000 tons of rice driving into the heavy head seas, pitching and rolling tremendously and swept by sea or spray. Their Lordships do not think that it can properly be said that there was no evidence to justify their finding. On any voyage a ship may, though she need not necessarily, encounter a storm, and a storm is a normal incident on such a passage as the segundo was making, but if in consequence of the storm cargo is damaged by the incursion of the sea, it would be for the jury to say whether the damage was or was not due to a peril of the sea. They are entitled to A.S.647/94 & 331/1996.

take a broad commonsense view of the whole position. How slight a degree of the accidental or unexpected will justify a finding of loss by perils of the sea is illustrated by Mountain v. Whittle, where a houseboat, the seams of which above the water-line had become defective, was towed in fine weather and in closed water in order to be repaired. A powerful tug was employed, and this caused a bow wave so high as to force water up into the defective seams. There was no warranty of seaworthiness. "Sinking by such a wave", said Lord Sumner, "seems to me a fortuitous casualty; weather formed by passing steamers or between tug and tow, it was beyond the ordinary action fo wind and wave, or the ordinary incidents of such towage." In the same way storms at sea may be frequent, in some cases seasonal, like typhoons in the China Seas, a ship may escape them, and they are outside the ordinary accidents of wind and sea. They may happen on the voyage, but it cannot be said that they must happen. In their Lordships' judgment, it cannot be predicated that where damage is caused by a storm, even though A.S.647/94 & 331/1996.

its incidence or force is not exceptional, a finding of loss by perils of the sea may not be justified.

There remains the second question, whether the damage which was caused not by the incursion of sea water, but by action taken to prevent the incursion, is recoverable as a loss by perils of the sea. It is curious that, so far as their Lordships know, there is no express decision on this point under a policy of marine insurance. But , in their Lordships' judgment, the question should be answered in the affirmative, as they think the jury did. The answer may be based on the view that where the weather conditions so require, the closing of the ventilators is not to be regarded as a separate or independent cause, interposed between the peril of the sea and the damage, but as being such a mere matter of routine seamanship necessitated by the peril that the damage can be regarded as the direct result of the peril. In The Thrunscoe, where a cargo of oats and maize had been damaged by the closing of the ventilators owing to heavy weather, it was held that the damage was caused by perils of the sea. The severity of the weather (there referred to A.S.647/94 & 331/1996.

an exceptional, though the adjective is immaterial) was described by Jenune P. as the proximate cause of the damage because the closing of the ventilators was due to that cause, and Gorell Barnes J. described it as the direct cause. It is true that the case dealt with the exceptions in the bill of lading, to which the doctrine of cause proxima does not apply in the same way as in insurance law. But it is now established by such authorities as Leyland Shipping Co. v. Norwich Union Fire Insurance Society, and many others, that causa proxima in insurance law does not necessarily mean the cause last in time, but what is "in substance" the cause, per Lord Finlay, or the cause "to be determined by "common-sense principles/" per Lord Dunedin. The same rule has been reiterated by the House of Lords several times since then, most strikingly, perhaps, in P. Samuel & Co. v. Dumas , where it was held by a majority of the Lords that where a ship insured by the mortgagee was lost by being scuttled by the deliberate act or procurement of the mortgagor, it was not in insurance law to be deemed a loss by perils of the sea. The proximate cause was the A.S.647/94 & 331/1996.

intentional and fraudulent act which let in the sea water and sank the vessel. In cases of fire insurance it has been said that loss caused from an apparently necessary and bona fide attempt to put out a fire, by spoiling goods by water, and in other ways, is within the policy, per Kelley C.B. in Stanley v. Western Insurance Co. Their Lordships agree with this expression of opinion, and accordingly are prepared to hold that the damage to the rice, which the jury have found to be due to action necessarily and reasonably taken to prevent the peril of the sea affecting the goods, is a loss due to the peril of the sea and is recoverable as such."

70. The Supreme Court of Canada had occasion to consider a similar question in the decision reported in Century Insurance Co. of Canada v. Case Existological Laboraties Ltd. ((1983) 2 S.C.R. 47). In the said case the vessel sank as a result of a member of the crew negligently permitting an air pressure control valve to remain open. It was found that the sinking of the vessel was due to the A.S.647/94 & 331/1996.

negligent act on the part of the crew. The Insurance Company disputed that the loss was due to the perils of the sea. Rejecting that argument, it was held that the loss was covered by the policy. It was held as follows:

"The loss was covered by the policy. The fact that there was negligence on the part of a member of the crew did not exclude liability on the policy. An act is not negligent in itself but only in relation to a foreseeable risk or harm. If that foreseeable risk of harm is a peculiarly marine risk, then the act, coupled with its foreseeable consequence, is a fortuitous accident of the seas, a peril of the seas and the proximate cause of the loss."

71. According to the principle of proximate cause, an Insurance policy is bound to provide compensation only for such loss as are caused by the peril covered by the policy. When the loss is the result of two or more causes, the proximate cause means the direct, most dominant and most effective of which the loss is natural consequence, in A.S.647/94 & 331/1996.

case of loss arising out of any of the mishap that should have taken place.

72. The proximate cause is defined as an action that leads to an unbroken chain of events ending in someone suffering loss.

73. The maxim causa proxima non remota spectatur is applicable to contracts of marine insurance. But it is well settled that when there are two or more causes contributing to the production of the loss, the proximate cause is not necessarily the cause nearest in point of time to the loss but it is the efficient, predominating cause of which the loss was natural and almost inevitable result. In Stroud's Judicial Dictionary 'proximate' is defined as follows:

"The proximate cause of the loss of a ship is the effective and predominant cause, ascertained by applying commonsense standards, and not A.S.647/94 & 331/1996.

necessarily the cause which operates last. See Yorkshire Dale Steamship Co. Ltd. v. Minister of War Transport (1942) A.C. 691 (ship engaged in a war operation held to be lost in consequent of "warlike operations" when the loss was due to a variety of causes, including a deviation of course under naval orders to avoid apprehended submarine attack, coupled with an unexpected set of the tide- negligence being disproved).

Negligence which is the proximate cause of a mistake as to work estoppel means that which is the real cause (Seton v. Lafone, 19 Q.B.D. 68). Cp. Contributory negligence, under Negligence."

74. In the decision reported in Global Process Systems v. Syarikat Takaful (2010 (3) All.E.R. 248) it was held as follows:

"The question whether both can be a proximate cause and, if so, what result that would produce depending on the terms of the policy, may also have to be considered. It is thus worth having in mind the basic rules if two causes are equally proximate as to which there is no issue. If A.S.647/94 & 331/1996.

there are two proximate causes one of which is covered by the policy and one of which is not but is not excluded, the policy must respond, but if there are two proximate causes one of which is covered and one of which is expressly excluded, the policy does not respond. It is this latter point which was floated by the respondents at the trial because under this policy inherent vice is specifically excluded.

In considering these questions, which I have found far from easy, I should immediately record my gratitude to Professor Bennett and an article he wrong in Llyod's Maritime and Commercial Law Quarterly 'Fortuity in the Law of Marine Insurance' from which I shall unashamedly borrow.

The starting point is the well known quotation from British and Foreign Marine Insurance Co.Ltd v. Gaunt, All ER Rep.447. Since it is helpful to see also what Professor Bennett says about it, I will quote from his article at p317:

"With respect to fortuity on the facts, the insurers argued that, it bales of wool are not properly covered, becoming wet if it rains is not fortuitous. It was held, however, that the failure to A.S.647/94 & 331/1996.

cover properly at a time of rain would supply the requisite fortuity. Responding to the insurer's argument and elaborating more broadly on fortuity in an all risks context, Lord Sumner stated as follows:

"All risks"........... includes the risk that when it happens to be raining the men who ought to use the tarpaulins to protect the wool may happen to be neglecting their duty. this concurrence is fortuitous; ....... it is not a thing intended but is accidental; it is something which injures the wool from without; it does not develop from within. It would not happen at all if the men employed attended to their duty.

There are, of course, limits to "all risks".

There are risks and risks insured against. Accordingly the expression does not cover inherent vice or mere wear and tear or British capture. It covers a risk, not a certainly; it is something which happens to the subject-matter from without, not the natural behaviour of that subject-matter, being what it is, in the circumstances under which it is carried. Nor is it a loss which the assured has brought about by his A.S.647/94 & 331/1996.

own act, for then he ha not merely exposed the goods to the chance of injury, he has injured them himself. Finally the description "all risks" does not alter the general law; only risks are covered which is lawful to cover...."

75. The proximate cause itself may not do any direct damage. The insurance policy may cover the proximate cause but not the event that actually causes the damage. It has been observed that simply taking the last event in point of time is not a judicious act but a routine process, a process of selection. In the decision reported in Mayban General Insurance BHD v. Alstom Power Plants Ltd. ((2004) 2 Ly.L.R. 609) it was observed as follows:

"The first is that in order to recover under the policy the insured must prove that the loss was caused by an accident or casualty of some kind. Insurers accept the risk, but not the certainty, of loss. The second is that although the A.S.647/94 & 331/1996.

insured must prove a loss by an accident of some kind, it is not necessary for him to go further and establish the exact nature of the accident by which it occurred. The third is that the policy does not cover the insured against loss due to wear and tear or the inherent vice of the thing insured, whether that loss was bound to occur or was fortuitous ion the sense that the its occurrence depended on the particular circumstances to which the goods happened to be exposed in the course of the voyage. these principles emerge clearly from the decision of the House of Lords in British and Foreign Marine Insurance Co. Ltd. v. Gaunt (1921) 2 A.C.41)."

76. It therefore follows that even if the loss is suffered due to the negligent act of the crew members of the vessel, that would fall within the ambit of perils of the sea. If that be so, the matter comes within the parameters of the loss as provided under Section 55(2)(a) of the Act. One may remember here that the definite stand of the Insurance A.S.647/94 & 331/1996.

company was that the accident was due to the negligence on the part of the members of the crew.

77. Of course, the evidence regarding various payments said to have been made by the plaintiff for the rescue operations etc. cannot be readily accepted. However, there is no dispute regarding the fact that the vessel was insured for an amount of Rs.1,10,000/-.

78. Learned counsel for the appellant pointed out that there are suspicious circumstances, which would make the claim doubtful. It was pointed out that the hurry shown by the plaintiff in first informing the Insurance Company rather than going to the police and port authorities is curious and strange. It is also pointed out that the medical records summoned did not show that any of the crew members suffered any manner of injury or any particular ailment of complaints. It was also pointed out that even after the A.S.647/94 & 331/1996.

certificate of licence had been surrendered to the Port Officer, the plaintiff had hypothecated the vessel under Ext.B8. Further, learned counsel highlighted that the story put forward by the plaintiff is untrue.

79. Of course, there are infirmities in the evidence furnished by the plaintiff. But the allegation that the vessel was hypothecated to the Bank even after the tragedy does not appear to be correct. While in the earlier hypothecation deed, the vessel is shown in the schedule, but in Ext.B8 the schedule is left blank. Of course the Bank had taken hypothecation deed from the plaintiff subsequent to the surrendering of licence. It was after the mishap had occurred and after the Bank had been informed about the same still they had chosen to obtain hypothecation deed.

80. One may recollect that there is absolutely no evidence of any conspiracy or any ill-motivated effort on the A.S.647/94 & 331/1996.

part of the plaintiff and crew members to deliberately sink the vessel. There was absolutely no evidence adduced by the Insurance Company to show that the vessel had sunk due to the deliberate act of anybody. One may remember that the infirmities indicated by the Insurance Company only show that the incident might not have occurred as alleged by the plaintiff. But they did not show that it was scuttling. In fact they are unable to give the reason for the tragedy. On the basis of the authorities already made mention of and other materials on record, unless it is proved that the mishap is a self generated peril, the Insurance Company may not be able to deny its liability. There is no evidence to show that if a net gets entangled and the crew tries to release it, the vessel will not sink. The fact that the crew could have done better things is not an answer. Merely pointing out certain circumstances by itself does not lead to the conclusion that the sinking of the vessel was a stage managed one. At best, it remains as a suspicion. Suspicion A.S.647/94 & 331/1996.

cannot take the place of proof. The court cannot be called upon to presume and assume facts so as to reach a conclusion that there may have been a conspiracy to sink the vessel by the plaintiff and members of his crew.

81. In the facts and circumstances of the case, we are unable to accept the finding of the court below that the plaintiff is not entitled to any relief. We feel that going by the provisions of the Marine Insurance Act and on the basis of Ext.A1 policy issued to the plaintiff, the act that caused the vessel to sink qualifies as perils of the sea.

In the result, A.S. 647 of 1994 is allowed, the impugned judgment and decree are set aside and a decree is passed in the following terms:

The plaintiff is given a decree to realise a sum of Rs.1,10,000/- from defendants 1 to 3 with 9% interest from A.S.647/94 & 331/1996.

the date of suit till realisation by proceeding against the assets of the Company. The plaintiff will be entitled to his costs in both the courts.

The other appeal, i.e., A.S. 331 of 1996 shall stand dismissed.

We record our appreciation for the commendable efforts taken by the counsel for the Insurance Company in defending the stand of the Company.

THOTTATHIL B. RADHAKRISHNAN, JUDGE P. BHAVADASAN, JUDGE sb.

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