Madras High Court
M/S. Indian Potash Limited vs The Divisional Manager on 27 January, 2021
Author: P.T. Asha
Bench: P.T. Asha
CS.No.629 of 2007
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON : 27.11.2020
PRONOUNCED ON : 27.01.2021
CORAM
THE HONOURABLE Ms. JUSTICE P.T. ASHA
CS.No.629 of 2007
M/s. Indian Potash Limited
having office at
"Ambai Building'', Third Floor,
727, Anna Salai,
Chennai -600 006.
...Plaintiff
Vs
The Divisional Manager,
M/s. United India Insurance
Company Limted
Divisional Office I
Third Floor "Dare House Extn."
No. 17, Rajaji Salai
Chennai- 600 001.
... Defendant
1/46
https://www.mhc.tn.gov.in/judis/
CS.No.629 of 2007
PRAYER: Suit is filed under Order IV Rule 1 of O.S. Rules read with
Order VII Rule 1 of C.P.C praying for:
a) the recovery of a sum of USD 5,85,000 (equivalent to Indian
Rupees of Rs.2,45,70,000/-) covered under Marine Cargo Insurance Policy
bearing No.010100/21/80114 together with interest at the rate of 24 % per
annum from the date of plaint till date of payment of the money
b) For damages which the plaintiff quantify as Rs.10,00,000/-
c) For the cost of the Suit
For Plaintiff : Mr. K.V. Babu
For Defendant : Mr. Venkataraman
for M/s. Nageswaran & Narichania
JUDGMENT
The above suit is filed for recovery of a sum of US Dollar 5,85,000 (Rs.2,45,70,000/-) covered under the Marine Cargo Insurance Policy together with interest at the rate of Rs.24 per cent per annum from the date 2/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 of Plaint till the date of payment of the money and also damages of a sum of Rs. 10,00,000/-.
The pleadings are extracted in a nutshell hereinbelow:
2. Contents of the Plaint:
a) The plaintiff had entered into an agreement with M/s. Arab Potash Company Limited for purchasing 7,500 mt. of Muriate of Potash (MOP) for US Dollars 9,33,000/-. The cargo was loaded in the vessel M.V. Waferah.
The vessel was to set sail from Aqaba in Jordan and was expected to arrive at the Indian Port on 23.01.2004. The defendant had agreed to insure cargo and the plaintiff had paid a premium of Rs.49,601/- by cheque dated 21.10.2004. The defendant has thereafter issued a marine cargo insurance policy bearing number 010100/21/03/80114 and undertook to cover a risk to the extent of Rs.4,23,76,860/-. The risks covered included ICC (C) i.e., Institute Cargo Clause (C) including war and SRCC.
3/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
b) The vessel had set sail on 19.01.2004 and while proceeding to the port of destination namely Mumbai Port on 04.02.2004 developed a major engine trouble. The Indian agent of M/s. Arab Potash Company Limited, one M/s. Tradex India Corporation, by their message dated 06.02.2004 informed the plaintiff about the engine trouble and had also informed the plaintiff that in case the defects could not be rectified then it would result in the declaration of a General average. The letter would further keep the plaintiff informed that if the vessel cannot set sail once again then the owners of the vessel would have to tow the same to the nearest safe port. On 10.02.2004, they had received communication from the Indian agent of their seller that a General average had been declared by the owners of the vessel which fact was also intimated to the defendant vide their letter dated 16.02.2004. In the said letter, the plaintiff had requested the defendant to advise them about the next course of action.
c) By their letter dated 26.02.2004, the defendant had agreed for a General average claim. Meanwhile, the vessel had also drifted to the port at 4/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 Salalah, Oman.
d) By their letter dated 01.03.2004, the defendant had directed the plaintiff to take immediate action to co-ordinate with the ship owners for the delivery of the cargo so as to mitigate the loss. They had also directed the plaintiff to issue notice to the vessel owners holding them fully liable for the delivery and consequential loss arising out of such delay in delivery. They had also informed the plaintiff if they wanted the risk to be covered till the cargo is delivered they should request the defendant to continue the cover for the risk on paying additional premium. The plaintiff had accordingly requested the defendant to extend the Cover and had also paid additional premium. Meanwhile, the plaintiff had also engaged the service of M/s. Cargo Recovery Consultants for bringing the cargo to the safest port. The plaintiff had to take steps since there was every likelihood of the cargo sustaining damages on account of the monsoon that was due to set in. 5/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
e) The plaintiff would contend that they had a series of meetings with the defendant and with their tacit approval, the plaintiff had entered into a contract with the Cargo Recovery Consultancy, London to bring the cargo from the port at Salalah to the Mumbai Port. The plaintiff had also kept the defendant apprised about the charges. The plaintiff would submit that they had to incur additional charges for this transhipment, however contrary to the initial assurance the defendant had repudiated the claim of the plaintiff vide their letter dated 26.10.2005. The plaintiff would submit that the risk is covered under the provisions of Clause 1.2.1 of the ICC(C). It was only on the repeated demands of the defendant that the plaintiff had ensured such a quick delivery of the goods from Salalah to Mumbai.
f) The plaintiff had issued a legal notice on 18.01.2007 to the defendant which was received by them, however there was no response to the same leaving the plaintiff with no other option except to proceed to file the suit for the reliefs stated herein below :
" a) the recovery of a sum of USD 5,85,000 6/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 (equivalent to Indian Rupees of Rs.2,45,70,000/-) covered under Marine Cargo Insurance Policy bearing No.010100/21/80114 together with interest at the rate of 24 % per annum from the date of plaint till date of payment of the money;
b) For damages which the plaintiff quantify as Rs.10,00,000/- ;
c) For the cost of the Suit."
3. Written statement of the defendant:
a) The defendant would deny their liability on the ground that as per the terms of the policy of insurance availed by the plaintiff, the claim of the plaintiff cannot be indemnified as the risk is not covered by the Insurance Policy. The defendant had adopted a stand that the claim under Clause 1.2.1 of the ICC (C) (General Average) was not applicable to the plaintiff and consequently not payable. The defendant would contend that at no point of time during the correspondence with the plaintiff, had they accepted their 7/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 liability for payment of the claim. The long and short of the defendant's defense was that the towage charges for the transhipment of the goods from Salalah to the Mumbai port was not covered under the terms of the Marine Cargo Insurance policy availed by the plaintiff.
b) The defendant would submit that it was the unseaworthiness of the vessel that had resulted in the breakdown of one of the two engines and consequently came within the exclusion clause. They would contend that there was no operation of a maritime peril which had resulted in the damage to the engine which would warrant the declaration of a General average or a General average contribution. The fact that the plaintiff had subsequently entered into an agreement with the Cargo Recovery Consultancy for bringing the cargo from the port at Salalah to the Mumbai port would clearly show that the plaintiff has abandoned their claim of General average. The defense was that the cover extended by the defendant was only to indemnify vehicle damage, deterioration of the cargo and not for expenses which the plaintiff would incur for protecting the cargo and to 8/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 ensure its safe transit. The payment of additional premium on the directions of the defendant cannot be taken as an acknowledgment of liability by the defendant. The defendant refuted the various allegations contained in the plaint and would ultimately submit that the suit was to be dismissed as claim was not covered under the policy taken by the plaintiff.
4. Issues framed:
The following issues have been framed by orders of this Court dated 24.08.2009:
"1. Whether the plaintiff's claim is payable and covered under clause 1.2.1 Institute Cargo Clauses under the Policy issued by the defendant?
2. Whether the vessel suffered damage during transit which led to unseaworthiness of the vessel and for declaring of General average ?
3. Whether there was a maritime peril which lead to declaration of general average or 9/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 general average contribution ?
4. Whether the agreement between the plaintiff and a third party establish that the owner did not insist upon any general average claim and abandonment of their claim ?
5. Whether the alleged survey conducted is valid ?
6. Whether the plaintiff protected the right of recovery under the policy of insurance under Section 79 of Marine Insurance Act ?
7. Whether the plaintiff is entitled to recover a sum of Rs.2,45,70,000/- (Rupees Two Crores forty five lakhs and seventy thousand only) under the Marine Cargo Insurance Policy bearing No.010100/21/03/80114 together with interest ?
8. Whether the plaintiff is entitled to 10/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 damages to the tune of Rs.10,00,000/- (Rupees Ten Lakhs Only) ?
9. To what other reliefs the plaintiff is entitled ?
5. The parties have also adduced oral evidence and marked documents. The authorized signatory of the plaintiff company one Sitan Abrahan was examined as PW1 and he had marked Exs. P1 to P20. On the side of the defendants, the Assistant Manager of the defendant one V. Raghavan had adduced evidence as DW1. The defendant had marked Ex.D1 and D2 through PW1 and Ex.D3, through DW1.
6. Submissions:
a) Mr. K.V. Babu, learned counsel appearing on behalf of the plaintiff not only made oral submissions but had also given written submissions. 11/46
https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
b) The thrust of the arguments of the plaintiff was that the transhipment of the goods was done by the plaintiff only upon the defendant expressly agreeing to indemnify the plaintiff for the loss that they had incurred on account of the mechanical problem that the vessel had encountered mid sea and particularly since the defendant had agreed to indemnify the plaintiff for any cost incurred for transporting the cargo to the port of destination. The attention of the Court was drawn to Ex.P6 which was a letter dated 01.03.2004 sent by the defendant to the plaintiff calling upon the plaintiff to bring the cargo to Mumbai even if transhipment charges are involved in this process.
c) The learned counsel would submit that the plaintiff was constrained to tranship the goods only on account of the failure of engines by reason of which the vessel got stranded near the Salalah port. The plaintiff was also asked to pay an additional premium which was also complied by them. The plaintiff was led to believe that by paying the additional premium the risk would be covered.
12/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
d) The learned counsel would also submit that since on inspection it was found that the cost of repairing the engine would be very steep, the idea of repairing the ship was abandoned.
e) The learned counsel would further submit that in all the meetings between the plaintiff and the defendant, the plaintiff was led to believe that the defendant would make good the loss. The plaintiff would submit that the claim is very much within the risk covered in ICC (C) and therefore the contention of the defendant that they were not liable to make good the loss is to say the least absurd. Therefore, the claim as made should be allowed and the suit decreed.
f) He also relied on the following Judgments:
i) "Peacock Plywood Pvt. Ltd. vs. The Oriental Insurance Co. Ltd reported in 2006 (12) SCC 673";
ii) "New India Assurance Company Limited vs. 13/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 Andhra Fishermen Central Co-operative Society Limited reported in [AIR 2003 AP231]"
iii) "United India Insurance Co. Ltd. vs. Pushpalaya Printers reported in [AIR 2004 SC 1700]"
g) Mr. Venkataraman, learned counsel appearing for the defendant would submit that the plaintiff has based his pleadings on General average but during his arguments the same has been abandoned. It is his case that there was no maritime peril which compels the defendant insurance company to indemnify the plaintiff. He would further submit that no document whatsoever has been produced on the side of the plaintiff to prove declaration of General average or to prove payment of the amounts claimed in the plaint. He would submit that the plaintiff's witness PW1 has himself admitted during his cross examination that no documents have been filed into court to show that the plaintiff had incurred a sum of US Dollars 3,50,000 towards towing charges or a sum of US Dollars 35,000 towards demurrage. He would also submit that the plaintiff have not proved their 14/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 ownership to the cargo.
h) The learned counsel would further submit that mechanical glitches will not amount to a maritime peril. He would draw the attention of this Court to Ex.P14 and would also point out the admission of PW1 during cross examination that the claim in the plaint is not one for a General average.
i) The learned counsel would submit that even under Ex.P20, which was a letter dated 26.02.2004 sent by the defendant to the plaintiff in response to various letters addressed by them, the defendant had asked them for certain documents for preparing the guarantee towards the General Average claim. He would therefore submit that all along the claim of the plaintiff even in their plaint was a claim of General average, however this plea has been given a go by during the arguments.
15/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
j) He would submit that there is no clarity in the claim in as much as the plaintiff is guilty of taking different stands one in the plaint, one while adducing evidence and one at the time of arguments. It is also the contention of the defendant's counsel that the person who has signed the pleadings and who has adduced evidence have not been authorised to do so. He would therefore seek to have the suit dismissed.
k) Mr. K. V. Babu, learned counsel for the plaintiff, by way of reply would submit that the issue of ownership or proof of payment has not been raised in the written statement and it is raised for the first time only during the arguments. Had such a defense been taken the plaintiff would have filed further documents.
l) The learned counsel would reiterate that the claim is not one under the head of General average but towards the cost incurred for towing the cargo from the port at Salalah to the Mumbai Port as the vessel had been stranded due to an engine failure which was squarely covered by Clause 16/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 1.1.2 of the ICC (C) Clause.
m) He would further submit that the agreement entered into between the plaintiff and CRC International Essay dated 28.04.2004 had been forwarded to the defendant. He would therefore submit that the suit should be decreed as prayed for.
7. Discussion:
Issue Nos. 2 and 3:
a) The case of the plaintiff and the Exhibits filed would show that the vessel M.V. Waferah had set sail on 19.01.2004 and after sailing for over 16 days on 04.02.2004, developed a major engine trouble, by reason of which the vessel was stranded 800 miles away from the destination port namely the Mumbai port and 200 miles away from the port at Salalah (Oman). The vessel had thereafter slowly drifted towards the port at Salalah. 17/46
https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
b) The defendant has taken a defense that they are not liable to indemnify the plaintiff since the insurance policy taken by the plaintiff clearly excludes any loss/damage or expenses that arise on account of an unseaworthiness of the vessel or craft.
c) The dictionary does not define unseaworthiness therefore we have to see the meaning of the word seaworthiness. Seaworthiness according to the Oxford dictionary is "in a suitable condition to sail". Therefore unseaworthiness would mean the ship is not in a condition to sail. The Black's Law dictionary would define seaworthiness as "properly equipped and sufficiently constructed and tied to restrict the perils reasonable incident to the voyage for which the vessel is insured." The opposite therefore would mean that the vessel is improperly equipped and insufficiently constructed and not in a condition to restrict the perils of the voyage.
18/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
d) In the instant case, the vessel had set sail in a seaworthy condition and had developed a technical snag, viz; the engine failure, only 16 days after it had set sail. Therefore going by the definitions above, it is clear that the vessel when it set sail from Jordan was not unseaworthy. In fact, in a judgment of this Court reported as early as in the year 1913, "20 Ind Cas 546 = 25 MLJ 162" Kariadam Kumber vs The British India Steam Navigation Co.Ltd, the Learned Judge had quoted Arnould on Marine Insurance (Vol II) on seaworthiness, wherein it is stated:
" The Warranty of seaworthiness which is implied as to the ship does not extend to lighters employed to land the cargo. It is enough to satisfy this warranty (of seaworthiness) that the ship be originally seaworthy for the voyage insured when she sails on it; the assured makes no warranty that the ship shall continue seaworthy in the course of it "
Applying the above to the instant case, it is seen that the vessel carrying the plaintiff's cargo had set sail on 19.01.2004 at which time the vessel was seaworthy and it had continued sailing for 16 days. It is also not 19/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 the case of the defendant that the vessel was unseaworthy when its set sail. It is only on account of the mechanical failure namely the failure of the engine that had caused the vessel to be stranded in the high seas. Although, the vessel had been stranded on the high seas, the cargo in it was intact. The records would reveal that initially the agent of the plaintiff suppliers had been informed by the owner of the vessel that the vessel developed engine trouble en-route and they had declared a formal General average. This information was communicated by the plaintiff to the defendant vide their letter dated 10.02.2004, Ex.P4 which was received on the very same day at the defendant's office. The plaintiff by their letter dated 16.02.2004, Ex.P5 addressed to the defendant had enclosed a xerox copy of the General Average Declaration dated 07.02.2004 issued to M/s. MISR Insurance Company and P & I Club and all other concerned parties. In response to these letters, the defendant had sent a letter dated 01.03.2004, Ex.P6 to the plaintiff asking them to take immediate steps to protect the cargo and co- ordinate with the ship owners for delivering the cargo. The defendant had directed the plaintiff to ensure quick delivery of the cargo even if 20/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 transhipment was required. The defendant at this juncture has not taken out a plea that they are not liable since the vessel was unseaworthy. Considering the fact that the cargo was intact, the situation for declaring a General average did not exist. Therefore my finding with reference to the Issue No.2 is that the damage suffered by the vessel did not render the same unseaworthy and did not give rise to a situation for declaration of a General average.
e) Now coming to Issue No.3 it has to be examined if there existed a maritime peril for declaring a General Average. In order to appreciate the above, it is necessary to find out as to what constitutes or gives rise to a situation for declaring a General average. Section 66 (2) of the Marine Insurance Act 1963 defines when there is a General Average act as "where any extraordinary sacrifice or expenditure is voluntarily or reasonably made or incurred in time of peril for the purpose of preserving the property in imperilled in the common adventure." In other words the General average is a principle of Maritime Law whereby "all stakeholders in a sea 21/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 venture (voyage) proportionally share any losses resulting from a voluntary sacrifice of part of the ship or cargo" The facts in the instant case would also indicate that it was only the cargo of the plaintiff that had been loaded in the vessel and no damage had occurred to the cargo which has been ultimately towed and unloaded at the Mumbai port.
f) Next let us examine the definition of "Maritime Perils". Section 2
(e) of the Marine Insurance Act, 1963 defines Maritime Perils as follows:
"e) “maritime perils” means the perils consequent on, or incidental to, the navigation of the sea, that is to say, perils of the sea, fire, war perils, pirates, rovers, thieves, captures, seizures, restraints and detainments of princes and peoples, jettisons, barratry and any other perils which are either of the like kind or may be designated by the policy."
22/46
https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 In the instant case, none of the above contingencies had occurred and it was only an engine failure which had caused the vessel to be stranded in the high seas. Therefore a maritime peril warranting the declaration of a General Average did not occur although initially the plaintiff was informed that a General Average declaration could be made. Therefore Issue No. 3 is also answered against the defendant.
Issue No.1:
g) In order to render a finding regarding Issue No.1 it is necessary to peruse the term of the Institute Cargo Clause (C) of the Marine Policy, Ex.P.2 which are relevant for the case on hand. Clause 1.2.1 of the ICC (C), Ex. P2 relates to General average. Clause 1.1.2 relates to Insurance cover in the case of a vessel or craft being stranded, grounded, sunk or capsized.
h) The plaintiff's claim, on a reading of the entire plaint is for reimbursement of the charges paid by them to the Cargo Recovery Consultancy for towing the vessel from the port at Salalah to the Mumbai 23/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 port and consequently unloading at the Mumbai port. The plaintiff has not claimed under the head of General average which is covered under Clause 1.2.1. Therefore it is clear that the claim is not one under Clause 1.2.1 of the ICC (C) but would fall within Clause 1.1.2. The counsel for the defendant would submit that the plaintiff has in the pleadings made their claim on General Average and that this stand is given a go by during the evidence wherein PW1 would depose that the plaint is not one under General Average.
i) On a complete reading of the plaint it is evident that the issue of General Average has been pleaded as a narration of the sequence of events commencing from the time the vessel sets sail, gets stranded in the high seas till it be unloaded at the port of destination. The thrust of the pleading is on the fact that the plaintiff on the specific instructions and the tacit approval of the defendant towed the vessel and unloaded the cargo at Mumbai port. The claim is for the towage/transhipment charges which the plaintiff had incurred on account of the vessel being stranded at the high seas. This 24/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 contingency is covered by Clause 1.1.2 of Ex.P2 Policy. Therefore it is clear that the claim is not one under 1.2.1 General Average. Issue Nos. 4, 5 and 6:
j) The defendant would contend that under Clause 13 of Ex.P8, Agreement, with the third party, the plaintiff have given up all claims against the vessel or the ship owners and the plaintiff has undertaken to provide CRC with an assignment of their rights against the ship owners for which they would provide a letter. The defendant would therefore contend that the plaintiff has abandoned their right to claim any loss against the owners of the vessel.
k) In the case on hand the waiver of rights is only from the date of discharge or transhipment of the cargo and that claims would not be made against third parties which would result in the claim being made against the ship owner. In fact as instructed by the defendant under Ex.P7, the plaintiff has also addressed the ship owner as seen in Ex.P13 letter dated 23.03.2004 25/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 holding them liable. Therefore the contention of the defendant that they have given up their rights may not be correct. The cargo shipped was intact and given back to the plaintiff. Therefore Issue No.4 is answered against the defendant.
l) The defendant have themselves submitted in their written arguments that the question of validity of survey does not arise as the plaintiff has failed to produce the document showing declaration of General Average. Having themselves stated in Ex.P7 that it is difficult to assume General Average as the condition for declaring so is not available the question of a survey does not arise. The survey conducted reported that the cost of repairing the engine would be too high. Issue No.5 is answered in the affirmative.
m) As regards Issue No.6, the draft of the Agreement that the plaintiff was to enter into with the Cargo Recovery Consultant was forwarded by the plaintiff to the defendant with request to make such changes as was required 26/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 vide Ex.P17 letter dated 19.04.2004. This letter was received by the defendant on the very same day by hand delivery and they have not made any suggestion. The plaintiff has at all stages kept the defendant informed.
The defendant by their silence had led the plaintiff to believe that their claim would be settled in terms of the policy. The defendant is therefore estopped from questioning the contents of the Agreement as being detriment to them. The defendant by their conduct has acquiesced to the plaintiff entering into such an agreement with CRC. The issue is answered against the defendant. Issue Nos. 7 to 9:
n) In order to give a finding with reference to Issue Nos. 7 to 9, it is necessary to describe the nature of the Insurance that the plaintiff had taken and the risks that are included under this policy, the exclusion clauses and the procedure for making the claim. Ex.P2 is the Insurance availed by the plaintiff. The Marine Insurance Certificate would indicate the risks covered, which is, ICC (C) including War and SRCC (Strike, Riots and Civil Commotion Clause). The terms of the Insurance are 27/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
(i) Institute Cargo Clause (C)
(ii) Institute Strikes Clauses (Cargo)
(iii) Institute Radioactive Contamination Exclusion Clause
(iv) Institute War Clauses (Cargo)
(v) Cargo ISM endorsement
(vi) Strike, Riots and Civil Commotion Clause.
o) The risks covered as detailed in the ICC (C) is detailed in Clause 1.1 to Clause 3. Clause 1.1.2 relates to risks occurring on account of the vessel or craft being stranded, grounded, sunk or capsized. Clause 1.2.1 relates to risks occurring on account of a General average. The exclusions are contained in Clauses 4 to 7. Clause 5.1 clearly specifies that there shall be no insurance cover for loss/damage or expense arising from unseaworthiness of vessel or craft.
p) Clause 8 spells out the duration of the policy. Clause 8.3 provides that the insurance shall remain in force during delay beyond the control of 28/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 the Assured subject to the terms of Clause 8.1 and 8.2 and Clause 9 in case of any deviation, forced discharge, reshipment or transhipment and during any variation in adventure. Clause 9 states that in case of a premature termination insurance would also terminate unless prompt notice is given to the Insurance company for continuation of cover subject to payment of additional premium. Clause 11 stipulates that in order to recover under the Contract of Insurance the Assured should have an insurable interest in the subject matter at the time of loss. Clause 12 clarifies that in the event of the occurrence of a risk covered under the Insurance, the Insurer (the defendant herein) will reimburse the assured, (the plaintiff herein) charges properly and reasonably incurred in unloading, storing and forwarding the subject matter to the destination to which it is insured hereunder.
q) It is also necessary to examine the nature of the claim made by the plaintiff, particularly in the light of the defense that the claim made in the pleading has been given a go by during arguments. Before going into the said discussion a brief chronicle of the dates and events commencing from 29/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 the date of the vessel setting sail from Jordan till the repudiation of the claim by the defendant is extracted hereinbelow so as to enable us to appreciate the respective pleadings of the parties to the suit. 19.01.2004 (Ex.P2): Marine Cargo Insurance Policy issued by defendant to plaintiff.
19.01.2004: M.V. Waferah, the vessel in which the cargo of 7500 MTS MOP had been loaded sets sail from the port at Jordan towards its destination port -the Mumbai Port.
04.02.2004: Vessel suffers a major engine trouble and the vessel gets stranded on the high seas.
06.02.2004: Trades India Company Limited, the Indian agent of the supplier informs the plaintiff about the engine trouble faced by the vessel and keeps them informed that any failure to rectify the trouble could result in the declaration of General Average.
10.02.2004 (Ex.P4): The plaintiff immediately conveys the above information to the defendant and encloses the fax message that they received from the Indian agent and requests the defendant to advise them on 30/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 the further course of action.
16.02.2004 (Ex.P5): Plaintiff forwards to the defendant a xerox copy of the General Average declaration dated 07.02.2004 addressed by the owner of the vessel to M/s. MISR Insurance Co., P & I Club and all concerned parties.
26.02.2004 (Ex.P20): Defendant in their letter to the plaintiff requests certain documents for preparing the guarantee for General Average and encloses a specimen copy of the guarantee.
1.03.2004 (Ex.P6) : Defendant addresses a letter to the plaintiff in continuation of their letter dated 26.02.2004 informing them that any loss or damage arising out of a delay is not covered under the policy even though the delay might be caused by an insured peril and the Insured (the plaintiff) should act as if uninsured to ensure quick delivery of the cargo even if transhipment is involved.
12.03.2004 (Ex.D1) : Plaintiff forwards the Fax they received from the Indian agent of their supplier to the defendant. This fax extracts the message of the owners of vessel calling upon the plaintiff to report the action taken 31/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 so far by their cargo underwriters viz; the defendant. 18.03.2004 (Ex.P7): I reply to the Fax dated 12.03.2004, the defendant would state that appointing surveyors would arise only if they have a clear indication on the occurrence of an insured peril falling within the terms of the policy. They would also state that unless a proper General Average notice is given indicating the appointment of General Average Adjusters, declaration of value and demand for underwriters guarantee to release the cargo it is difficult to assume General Average. They also informed the plaintiff that if they want a continuation of policy then they should follow the procedure contemplated under Clause 8.3 of the policy. The defendant had also referred to Clause 12 of the policy and directed the plaintiff to lodge a notice of claim on the steamer company to protect full interest. 23.03.2004 (Ex.P13) : Plaintiff's reply that they have not received any communication from the ship owners or any other person asking them or their underwriter to furnish a bond as per rules. They also reminded the defendant that they had earlier communicated with them asking them to take premium for the additional cover from out of their deposit available with the 32/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 defendant for which they had not received any reply. They had also forwarded the notice that they had issued to the ship owner as directed by the defendant asking them to arrange to unload the cargo into another vessel and complete the voyage.
23.03.2004 (Ex.P14) : Letter from plaintiff to M/s. New Marine Shipping and Forwarding Co., the owner's agent with copy marked to defendant in which they would state that there is no scope for declaring a General Average as the conditions for declaring a general average has not arisen. They directed the shipper to arrange a substitute vessel to bring the cargo. They also put in writing the salient features of the discussion they had with the India Agent of the Ship Owner. One of the terms is the alternate vessel for loading and bringing the vessel to the port at Mumbai is that it is without General Average contribution from owners. Cargo consultants have quoted USD 5,45,000 for bringing the Ship along with cargo to any port on the west coast of India [WCI Port] nominated by the plaintiff. This includes cost for towing the vessel to Mumbai/Mangalore/Kandla which would be the most economical option.
33/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 31.03.2004 (Ex.P9) : Letter from plaintiff to defendant stating that the ship owners have appointed an Average Adjuster and asking the defendant to get in touch with them to work out a viable solution for safe delivery of the cargo at Mumbai Port. They also informed the defendant that they have received messages from recovery consultants as well. 16.04.2004 (Ex.P16) : Plaintiff to defendant that they are in touch with two cargo recovery specialists and that they have called them for a discussion at the plaintiff's office at New Delhi on 22.04.2004. The offer given by them was enclosed and the plaintiff had requested the defendant to depute one of their representatives for this discussion.
19.04.2004 (Ex.P17) : Letter from plaintiff to defendant that they are finalising the agreement with Cargo Recovery Consultants, Surrey, England to tow the vessel as dead ship movement to any port on the West Coast of India. The draft tripartite agreement is also forwarded and changes if any to be made to the draft was requested to be indicated by the defendant. 28.04.2004 (Ex.P8): Agreement between Indian Potash Ltd. and CRC International SA for arranging to tow the vessel M.V. Waferah to the port of 34/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 destination (Mumbai). The plaintiff was required to offer a standby letter of Credit or Bank guarantee for USD 5,50,000 within 5 working days of the date of signing and a sum of USD 35,000/- as Security for any demurrage to be incurred in case of delay in getting a berth for the vessel or delay in discharge of cargo. The Cargo Recovery Consultant was to obtain a release from the ship owner that there is no claim against the plaintiff and that they were abandoning the claim in respect of general average or against any other charges arising out of the voyage from Aquaba Port.
21.05.2004 (Ex.P18) : Defendant issues letter to plaintiff repudiating their liability on the following grounds:
(i) Voyage has been abandoned and the liability under the Insurance Policy for General Average costs or expenses incurred after abandonment is not admissible.
(ii) Engine breakdown is not a named peril
(iii) Till abandonment of voyage, owner of the vessel may seek guarantees for General average expenses.
(iv) Since declaration of General Average was valid any expenses 35/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 incurred post the abandonment of voyage like transhipment cannot be claimed in General Average.
14.06.2004 (Ex.P19): Plaintiffs detailed response to the repudiation. 26.10.2005 (Ex.P10): Final repudiation by the defendant. 18.01.2007 (Ex.P11) : Legal notice issued by the plaintiff to the defendant which is acknowledged in Ex.P12. The defendant has filed Ex.D2 the reply dated 19.05.2007 though no proof of the same having been received has been filed. The plaint was originally filed on 27.04.2007.
r) From a perusal of the above chronology, it is clearly evident that although the ship owners had originally expressed their intent to declare a general average ultimately the same was not done as that cargo was intact and the circumstances/conditions for declaring a general average did not occur. This fact is confirmed by the defendant themselves in Ex.P-7 – Letter, dated 18.03.2004, wherein they have stated as follows :-
"2. Since we are not very clear about the declaration of General Average, we may not be in 36/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 a position to execute any act in this regard.
However, we would like to narrate that the GA Act is supposed to take place consequent upon the occurrence of insured peril as per the policy issued to the insured. Unless a proper General Average notice is given indicating the appointment of General Average Adjusters, Declaration of value and demand for Underwriter's guarantee to release the cargo, it is difficult to assume the act of General Average.
Further, our ICC (C) clause 12 (Forwarding Charges Clause) also provides for your incurring expenditure in order to forward the cargo from the port of distress to the intended destination, provided the termination of contract of carriage resulted by circumstances beyond the control of the assured other than the act of General Average. The expenditure had to be incurred by you and the reimbursement will be made available on your establishing the cause of loss, which should be under the scope of the 37/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 policy.
Under these circumstances, you are advised to lodge a notice of claim on the Steamer Company for the following to protect your full interest:
(a) Non-prosecution/Non-completion of the voyage which is agreed as per the contract of Carriage.
(b) Possible non-delivery/short
delivery/damaged delivery of the cargo by them
when they ought to have delivered the consigned
quantity in good order to you at the agreed
destination."
s) Thereafter, Ex.P13, P.14, P.16 and P.12 would indicate that the plaintiff had been in discussion with cargo recovery consultants to tow the cargo or arrange for its transhipment. Therefore, it is clearly evident that the claim is not one under general average covered under Clause 1.2.1 of the 38/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 ICC(C) but a risk which would fall under Clause 1.1.2 – Vessel being stranded. Further, the defendant by their conduct has given out that they would honour their obligations under the policy. Further, PW-1, in his cross examination has clearly and categorically stated that the claim is not one under General Average. Even in the pleadings the reference to General Average is only as a narration of the events. From the correspondence between the two parties and the plaint this reference to General Average cannot be analyzed in isolation and the pleading as a whole has to be considered. The plaintiff has been keeping the defendant informed at every stage and had also shared the draft agreement that they were to enter into with the Cargo Recovery Consultancy, under Ex.P.17. The petitioner had also requested them to make such changes as were required, to which also there was no response from the defendant and it is only thereafter that the plaintiff has executed Ex.P8 agreement for towing the cargo from the port at Salalah to the Port of destination. It is to be remembered that the defendant had directed the plaintiff to pay additional premium so as to extend the period of the policy and the plaintiff has also complied with this direction. 39/46
https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
t) The Hon'ble Supreme Court in the judgment in "Peacock Plywood Ltd. vs. Oriental Insurance Co.Ltd. - [2006 (12) SCC 673]", was considering the claim of the plaintiff therein against the defendant Insurance company towards constructive total loss that had occurred owing to the vessel not reaching the port of destination on account of engine troubles. Though repairs had been effected and the vessel had set sail however ultimately it was stranded at Singapore. Ultimately the plaintiff had to sell that cargo at Singapore as a result of which the plaintiff therein had sustained a loss. The defense taken was that unseaworthiness of the vessel will not come within the peril insured and the policy was not an all risk policy. The plea of limitation was also taken. The learned Judges relied on Clause 1.1.2 of the policy which included the risk of the vessel or craft being stranded or grounded and after discussing at length the meaning of the word “strand” held that the vessel had been stranded. They observed that “the purpose and object for which goods are insured must be given full effect. In a case of an ambiguity, the construction of an insurance policy 40/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 should be made in favour of the Insured and not Insurer”. The learned Judges also took note of the additional premium paid by the plaintiff and observed as follows :-
“Marine Insurance Act is subject to the terms of the Insurance Policy where the insurer takes additional premium and insures a higher risk, no restrictive meaning thereto need be given. A term of the policy must be given its effect”.
u) In my view that ratio laid down in that aforesaid case would apply on all fours to the case on hand as the instant case also falls within Clause 1.1.2 of the ICC (C) as the vessel was stranded and not abandoned.
v) The defendant had not raised any doubt with reference to the ownership of the cargo in question or the payment made to the cargo recovery consultancy in their written statement. However, in the written arguments, such a plea has been taken. As a result, the defendant had deprived the plaintiff of an opportunity to file the documents to support the 41/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 above. Be that as it may, the defendant was very much aware of the ownership of the cargo they having insured the same. Further, the Marine Insurance Policy effective from 19.01.2004 contains the details of the cargo. As regards payment to the Cargo Recovery Consultant, Ex.P8 would indicate the charges payable to the Cargo Recovery Consultant for towing the vessel, including demurrage was to be paid by way of an standby letter of credit or Bank Guarantee within five working days of the Agreement. The letter of credit became payable when the vessel tenders notice of arrival to the agents nominated by the plaintiff. It is an admitted fact that the vessel had been towed into the port at Mumbai and the cargo unloaded. The defendant has not denied this fact in their pleading or evidence.
w) Therefore, the plaintiffs are entitled to recover the sum of Rs.2,45,70,000/- under the Marine Cargo Insurance Policy bearing No.010100/21/03/80114 together with interest at the rate of 9% from the date of plaint till date of decree and thereafter at the rate of 6% per annum till date of payment. Issue No.7 is answered in favour of the plaintiff. 42/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007
x) As regards Issue No.8, the same is rejected as no evidence in this regard has been let in by the plaintiff.
y) Issue No.9:
In the result the suit is decreed. The defendant shall pay a sum of Rs.2,45,70,000/- to the plaintiff together with interest @ 9 % per annum from date of plaint till date of decree and thereafter @ 6 % p.a. till date of payment. The defendant shall pay costs to the plaintiff. The plaintiff is not entitled to the sum of Rs.10,00,000/- towards damages.
27.01.2021 mrn Index : Yes/No Speaking order/non-speaking order 43/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 List of Exhibits marked on the Plaintiff's side:-
Ex.P-1 - Authorisation Letter dated 19.07.2010 Ex.P-2 - Insurance Policy dated 19.01.2004 Ex.P-3 - Receipt for payment of premium dated 21.01.2004 Ex.P-4 - Letter dated 10.02.2004 Ex.P-5 - Letter dated 16.02.2004 Ex.P-6 - Letter dated 01.03.2004 Ex.P-7 - Letter dated 18.03.2004 Ex.P-8 - Agreement dated 28.04.2004 Ex.P-9 - Letter dated 31.03.2004 Ex.P-10 - Letter dated 26.10.2005 Ex.P-11 - Legal notice dated 18.01.2007 Ex.P-12 - Post Acknowledgement Card dated 07.02.2007 Ex.P-13 - Letter dated 23.03.2004 Ex.P-14 - Letter dated 23.03.2004 Ex.P-15 - Letter dated 14.04.2004 44/46 https://www.mhc.tn.gov.in/judis/ CS.No.629 of 2007 Ex.P-16 - Letter dated 16.04.2004 Ex.P-17 - Letter dated 19.04.2004 Ex.P-18 - Letter dated 21.05.2004 Ex.P-19 - Letter dated 14.06.2004 Ex.P-20 - Letter- defendant to plaintiff dated 26.02.2004 List of Exhibits marked on the defendants's side:-
Ex.D-1 - Fax Transmission dated 14.03.2004
Ex.D-2 - Reply Notice dated 19.05.2007
Ex.D-3 - Authorisation letter dated 28.02.2011
45/46
https://www.mhc.tn.gov.in/judis/
CS.No.629 of 2007
P.T.ASHA, J,
mrn
CS.No.629 of 2007
27.01.2021
46/46
https://www.mhc.tn.gov.in/judis/