National Consumer Disputes Redressal
Loyal Marines vs National Insurance Co. Ltd. on 13 September, 2006
Equivalent citations: IV(2006)CPJ250(NC), AIR 2007 (NOC) 134 (N.C.C.-N.D.) = 2006 (6) ALJ 474, 2006 (6) ALJ 474
ORDER
M.B. Shah, J. (President)
1. The complainant, M/s. Loyal Marines, a partnership firm, purchased a Deep Sea Fishing Trawler by obtaining a loan of Rs. 25 lakh from the State Bank of Travancore. The said Trawler was put into operation in the month of June 1992 and remained in operation till it met with an unfortunate accident on 24.8.1996 at 3 Kms. South off Paradip Light House in Orissa. It may be noted that the complainant is operating from Visakhapatnam (Andhra Pradesh) and the incident took place in Paradip in Orissa
2. It is admitted that the complainant has taken a Marine Hull Insurance Policy from the opposite party for sum of Rs. 40 lakh for the period from 15.6.1996 to 14.9.1996. Interest payable by the complainant to the Bank was also insured as per the Slip attached, which provided:
it is hereby declared and agreed that at the request of insured, the interest of State Bank of Travencore, Broadway, Ernakulam, is included in the within-mentioned Hull Policy as financiers with effect from 15.6.1996. All other terms, conditions and exceptions of the Hull Policy remain unaltered.
3. It is contended that the Trawler/vessel, during its operation, met with an accident and the vessel could not be salvaged and went beyond repair/redemption. Hence on the claim made by the insured, the Insurance Company appointed M/s. J.B. Boda. Surveyors Pvt Ltd. as Surveyors. However, it failed to pay the amount as assessed by the Surveyor and repudiated the claim by letter dated 11.2.2002 by stating as under:
With reference to the above, we regret to inform you that the above claim was not approved for settlement by the Competent Authority due to the following reasons:
1. You have failed to comply with the terms and conditions of the policy issued namely the "Duty of the Assured" Clause of the ITC Hulls (Total Loss Only) where it is absolutely necessary that the insured and their servants/agents should take reasonable steps to avert a total loss of the vessel in the event of a loss occurring to the insured vessel.
2. Through your deliberate actions in not providing security for the safety of the vessel in spite of our repeated requests for the same, the damage would ordinarily have been a partial loss not coming within the scope of the policy issued, was aggravated into a total loss resulting in your claim.
Based on the above reasons, it is regretted that the claim is not admissible at our end.
4. The learned Counsel appearing on behalf of the Insurance Company vehemently submitted that the insured has not taken appropriate steps for avoiding the total loss of the vessel and this being 'Marine Insurance Policy' having the specific condition that the sum assured was payable only in case of 'total loss' the Insurance Company rightly repudiated the claim.
5. Undisputedly, the complainant has taken 'Marine Hull Policy' for the period between 15.6.1996 and 14.9.1996. The sum assured was Rs. 40 lakh. As stated above, there is a slip attached with regard to insurance coverage for interest of the State Bank of Travancore. There is also a specific provision for "Terms of Cover: Warranted insured against loss or damage subject to Total Loss, Constructive Total Loss, Salvage charges, Sue and Labour Charges.
6. On facts it is pointed out from various correspondence that on 20th August, 1996 the Vessel sailed out for its fishing voyage from Paradip Port, and, in the morning of 24th August, 1996 at about 8.30 a.m., the Master of the vessel came and reported that the vessel had been grounded/beached at 3 Kms. South off Paradip Light House at about 2.00 a.m. and the place of occurrence was isolated and deserted. At about 5.00 a.m. on the same day a group of hooligans, threatened the crew members with knife, sword, iron rods and looted the entire movable items along with the prawn catch. It is also pointed out that the complainant reported the matter to the Police Station at Paradip vide letter date 25th August, 1995 and to the Insurance Company and State Bank of Travancore on 26.8.1996.
7. On 12th September, 1996, the complainant wrote a letter to the the Branch Manager, National Insurance Company, Ernakulam Branch, stating that on 24th August, partner of the complainant, Mr. K.J. Joseph rushed to the spot and took stock of the situation. He noticed that the vessel was totally tilted. In order to salvage the vessel from further damage, he immediately arranged 15 local expert Khalasis with Chain Pully and other accessories on a total contract of Rs. 50,000. On payment of advance of Rs. 20,000 they started work and continued for three days. The tilted vessel was straightened to some extent, but it was not possible to keep it in that position due to heavy tidal waves that lashed the vessel continuously. Further, in order to drain out the water from the engine room and fishhold, a 5 HP pump was hired and used, but on the night of 29.8.1996, eight people came with deadly weapons and beat the crew members who were on watch duty and took away the 5 HP diesel pump set. For that also, a complaint was lodged at Paradip Police Station on 30th August, 1996. Police protection was also sought to protect the hull and machineries It was also pointed out that the vessel was deeply buried upto the deck level and it was filled with sand and water. All the deck fittings were pilfered/stolen. They have also spent Rs. 50,000 towards the salvage attempt and they were in financial difficulties. They requested the Insurance Company for making "on account payment".
8. Subsequent to this, there are number of letters written by the complainant informing the Insurance Company for making payment and also for finalizing the survey. A number of affidavits were filed and copies thereof were given to the Surveyors.
9. Senior Divisional Manager of the Insurance Company by letter dated 29th January, 1998 (page 97) wrote a registered letter (Without Prejudice) to the Complainant requesting them to send a copy of the Registration Certificate (both sides) of the vessel immediately to enable their higher office to process the claim. This was also supplied by the complainant. A number of letters were written by the complainant to the Insurance Company, but the claim was not settled. Hence, this complaint was filed by the complainant on 4th May, 2001.
10. Thereafter, on 2nd January, 2002, the Insurance Company filed an application for extension of time for filing written version Subsequently, as quoted above, the Insurance Company repudiated the claim by letter dated 11th February, 2002 and filed its written version Findings:
11. In our view, in the present case, apart from various letters written by the complainant to the Insurance Company and the Surveyor's Report dated 13th September, 1997 fully justifies the claim of the insured.
12. As stated in the survey report, M/s. J.B. Boda Surveyors Pvt. Ltd., visited the site of incident on 6th September, 1996 and the relevant part of the exhaustive report is as under:
The said report establishes that:
(i) the accident site was not accessible by road or water. One has to walk the entire distance on the sand of the beach;
(ii) it was an isolated place;
(iii) the vessel was buried in the sand upto main deck level;
(iv) the engine room and fish holds were completely filled with sand;
(v) the sea waves were pounding the vessel constantly and the vessel was sinking deeper in the sand;
(vi) on 25th August, 1996, the insured brought a gang of 15 labourers to bring the vessel upright. On 28th August, 1996 the labourers went back by expressing their inability to continue their work further;
(vii) on 29th crew were beaten and the villagers forcefully stole the diesel pump brought to pump out the water from the engine room,
(viii) Police was unable to provide security as it was far from Paradip;
(ix) local salvage contractors declined to undertake the operation, which according to their opinion was beyond scope of salvage;
(x) the vessel was stranded in desolate and inaccessible area where lawlessness prevailed;
(xi) insured was completely helpless and became mute spectator to the happenings;
(xii) Port authorities declined to render salvage assistance as it was beyond their port limit;
13. This would be clear from the following relevant part of the survey report submitted by the Surveyors who visited the site thrice:
The vessel had beached/grounded about 3 Kms South of Paradip Light House. The accident site is not accessible by road or water. One has to walk the entire distance on the sand of the beach. The place has no shelter of any kind. Food and drinking water have to be carried from Paradip. We visited the site on 6 September, 1996 (Please Refer Our Letter No.BBR/INS/596/96 DT. 9.9.1996 on receiving the instructions. However, we could not find any Insured's representative or watch/ward people at site. The condition of the vessel was noted as follows: Please Refer To Letter No.BBR/1NS/598/96 DT. 14.9.1996).
(Please Refer To Photographs Forwarded With Letter).
(1) The vessel was buried in sand upto main deck level on the starboard side and part of the port side hull was visible.
(2) Engine room and fish holds were completely filled with sand.
(3) All deck fittings movable and portable items had been taken out.
(4) The sea waves were pounding the vessel constantly and the vessel was sinking deeper in the sand.
Again on 13 September, 1996, we along with the representatives of M/s. Loyal Marine visited the site of accident. Our findings were as follows:
(1) The vessel was further embedded in sand.
(2) Main deck engine room and fish holds were completely filled with sand.
(3) Heavy tidal waves were lashing all over the vessel"
14. It is also stated that they have interrogated and recorded the statements of a number of persons. Thereafter, with regard to action taken by the complainant for minimizing the loss, it has been stated by the Surveyors as under:
M.F.V. 'LOYALEM-IX' was beached on 24 August, 1996 at 0200 hours. Before day-break the villagers from the surrounding area came and started forcefully looting the trawler. The crew were helpless. On 25th August, 1996 the Insured brought a gang of 15 labourers to bring the vessel upright. Due to constant lashings by the waves the labour managed to bring the vessel in a nearly upright position.
On 28 August, 1996 the labour went back to Paradip expressing their inability to continue further. On 29th August, 1996 the crew were beaten and the villagers forcefully stole the diesel pump brought to pump out the water from the engine room. The trawler's crew left the place on 30 August, 1996 as they were being constantly threatened/beaten/manhandled. The Police were unable to provide security as it was far from Paradip. He contacted local salvage contractors who declined to undertake such operation which according to their opinion was beyond scope of salvage. He also approached local sona boat owners to pull out the vessel, but the sona boat owners declined, as the accident site was not approachable from sea wards. Mr. K.J. Joseph visited Visakhapatnam the Salvors from there expressed their umoillingness to undertake this job.
From the above it is clear that in this desolate and inaccessible area lawlessness prevails. The Insured was completely helpless and became a mute spectator to the happenings.
The Insured also requested the Deputy Conservator, Paradip Port Trust for salvage assistance, but port authorities declined to extent the same, as it was beyond their port limit.
15. With regard to disposal of the Wreck, it has been stated as under:
The Insured expressed his inability/helplessness to proceed further in salvaging for reasons which were beyond his control. We have recommended to the Insured after consultation with Mr. P.C.James, Senior Divisional Manager, National Insurance Co. Ltd., Cochin D.O., Kochi and Mr. Kurup of M/s. National Insurance Co. Ltd., Regional Office, Kochi, during their visit to Paradip on 28 November, 1996 to dispose the embedded hull with machineries on "AS IS WHERE IS BASIS'.
Accordingly, three quotations were forwarded to us by M/s. National Insurance Co. Ltd., Divisional Office, Cochin, which were received by them from the prospective buyers. We scrutinized the quotations details of which are as follows:
16. The Insurance Company received three quotations and maximum quotation was for Rs. 11,000.
17. For the sue and labour/salvage expenses the bills were verified and they arrived at the conclusion that the complainant has paid Rs. 20,000 for salvage of the boat, and, in all, they opined for Rs. 22,000, even though the complainant has claimed Rs. 66,779. Thereafter, with regard to value of the new Hull they referred to the three quotations received by the insured for the same, fitted with all required machineries. The relevant portion of the same is as under:
From the above, we can compute that the fishing vessel of this type with same kind of machineries would cost as follows:
(1) Lower quotation for new hull & machineries Rs. 70 lacs (2) Fishing gears (Add) Rs. 2 lacs _________________ Rs. 72 lacs _________________ Thus, the cost of new vessel fitted with machineries & fishing gear (lowest) =Rs. 72 lacs SURVEYOR'S REMARKS:
The vessel had run aground on a desolate section of the sea beach. This area is inaccessible by road and by sea. The valuable handy items were reportedly removed and taken away by use of force by the local miscreants within three to four hours of the casualty. All the deck fittings except fixed superstructures have forcibly been taken within two to three days. They were armed with deadly weapons, threatened the insured, his representatives and crew. However, the insured employed a local salvage contractor to bring the vessel upright and remove the sand from the engine room spaces. The Salvage Contractor worked for 2/3 days and seeing the very very slow progress felt that it was beyond his scope of salvage. Constant pounding of sea waves and j ingress of sand/water into the vessel made her go further down in sand. The salvage equipments i.e. 5 HP motor pump was stolen by miscreants. The watch and ward had, to be withdrawn because their life! was at risk. The insured did not give up hopes to salvage. He explored all the possibilities by bringing the expert salvage contractors from Visakhapatnam who declined to undertake such risky operation. In the meantime, the hull/deck was gas cut by the miscreants and removal of other machineries by them cannot be ruled out. The insured lodged complaints in Police Station for the protection of hull and machineries, but nothing fruitful was achieved.
Since it is beyond scope of salvage and most of it has been forcefully cut and stolen, the insured was forced to abandon the vessel. Thus it may reasonably be concluded that the insured vessel M.F.V. "Loyalem-IX" became a "ACTUAL TOTAL LOSS.
18. Further, apart from the aforesaid Survey Report, we would refer to letter dated 27th September, 1996 written by J.B,. Boda Surveyors Pvt. Ltd. to the Insurance Company, wherein they have stated that they had recorded the statement of Operations Manager of M/s. Loyal Marines, Skipper, Engineer and the crew members of MFV "LOYALEM IX". Thereafter they have stated as under:
(2) MFV 'LOYALEM IX' has grounded/stranded on the beach about 3 Kms. South of Paradip Port Trust Lighthouse. There is no road leading to the site. One has to walk over the sands to go to the spot. It is a plain open beach without any shelter.
3. We are forwarding you the photographs taken of the condition of the vessel. We met the officials of M/s. Loyal Marines and have impressed upon them that all efforts must be made to salvage the vessel immediately. We have also advised them that they are free to call on us for any assistance in refloating of the same.
While on the subject, we wish to inform you that we have contacted few Salvors who are not prepared to carry out the refloating operation on the basis of 'No Cure No Pay', they would like to undertake the job for a fixed sum. They also insist that the above money would be paid as an advance prior to undertaking the job. In such case, the possibility of the Salvors making an effort and then giving up cannot be ruled out. In that case, the funds advanced or given would have to be written off.
19. Further, it is also to be stated that on the basis of the FIR lodged by the complainant, police arrested six miscreants who were, however, released on bail.
20. The complainant has also pointed out as to how the accident took place and submitted various affidavits of all the crew members stating therein about the actual happenings on the trawler after it met with the accident and also about the reasons of the accidents (in all Annexure -18 collectively). Claim form was also submitted on 17.2.1997 with the necessary details as mentioned in Annexure-19 collectively. The complainant received letter dated 16.5.1997 from the Insurance Company alleging that Surveyor was still awaiting some documents. Thereafter, by letter dated 17.5.1997 complainant pointed out that all the desired documents were submitted in the month of February, 1997 and requested the Insurance Company to finalize the claim as the complainant has to settle its account with the Bank. By letter dated 29.7.1997 Insurance Company acknowledged the said letter and assured for expeditious action. Thereafter, the Insurance Company informed the complainant by letter dated 21.10.1997 that the Survey Report was received but certain clarifications were required from the complainant. On receipt of the said letter, complainant replied all the queries by registered letter dated 24.11.1997 and clarified the situation. Thereafter, on 26.1.1998 complainant was asked to furnish copy of the Registration Certificate which was also sent by post on 5.2.1998. The complainant also furnished two final investigation' reports submitted by the police.
21. Mr. Vishnu Mehra, the learned Counsel appearing on behalf of the Insurance Company submitted that the insured has to establish that there was 'Actual Total Loss'. Unless there is a total loss as per the policy, the complainant is not entitled to recover any reimbursement. For this purpose, he has placed reliance upon the terms of the policy which warranted the insured against loss or damage subject to "Total Loss, Constructive Total Loss, Salvage charges, Sue and Labour charges.
22. Section 57 of the Marine Insurance Act, 1963 gives meaning to 'Actual Total Loss" by providing that where the subject matter insured is destroyed, or so damaged as to cease to be a thing of the kind insured, or where the assured is irretrievably deprived thereof, it is an 'actual total loss'. In the present case, the vessel is damaged in such a way that it stranded in the sand in the beach so that it could not be moved out of it and it is damaged to such an extent that the assured was irretrievably deprived of the vessel. In their survey report, the Surveyors have concluded that the insured vessel became ACTUAL TOTAL LOSS.
23. Further, the Survey Report quoted above leaves no doubt that this case falls under the arena of 'Actual Total Loss' as the vessel could not be retrieved. It is also stated in the said report that for disposal of the empty hull with machineries on 'as is where is' basis, quotations were invited by the Insurance Company and that the Insurance Company received three quotations -one for a sum of Rs. 9,500; the second for Rs. 8,000; and, the third for a sum of Rs. 11,000. Therefore, this also establishes that this was a case of 'actual total loss' and the value of the salvage was only between Rs. 8,000 and Rs. 11,000.
24. However, the learned Counsel for the Insurance Company submitted that the complainant had deliberately not taken action to prevent the actual total loss of the vessel, and, therefore, the Insurance Company rightly repudiated the claim. This submission is also against the evidence on record, particularly, the Survey Report. The Survey Report has narrated various steps taken by the complainant to prevent any further loss. Not only this, it is abundantly clear from the above that the salvage contractors refused to undertake the said work and in any case, as per the Surveyor's letter dated 27th September, 1996 written to the Insurance Company, nobody was prepared to do the work on 'No Cure No Pay'. The complainant had also paid Rs. 20,000 for salvaging the vessel and had promised to pay the remaining amount of Rs. 30,000. That had also not worked out. In these set of circumstances, it cannot be said that the complainant had not taken any steps to prevent 'Total Loss'. In any case, when the vessel stranded/grounded and deeply buried upto the deck level and it was filled with sand and water, it was difficult to straighten it. In these set of circumstances, repudiation by the Insurer is unjustified. In the result, the Insurance Company is required to reimburse the complainant for the loss suffered by it.
Quantum:
25. The next question is as to how much amount the complainant is required to be reimbursed. As per the policy, the sum assured is Rs. 40 lakh. Further, the Insurance Company has also given insurance cover for the interest payable by the complainant to the State Bank of Travancore, Ernakulam. The loan taken from the bank was for a sum of Rs. 25 lakh. The amount was taken in the year 1992. The loss occurred on 24.8.1996. Till today, the Insurance Company has not paid any amount to the complainant despite the clear survey report. The Bank has also filed a suit for recovering the amount with interest before the Debt Recovery Tribunal.
26. Further, as per the Surveyor, for purchasing a new vessel of the same type, the complainant is required to spend from Rs. 70 lakh to Rs. 74 lakh. Considering this aspect and the fact that there is a total loss of the vessel complainant is entitled to reimburse for a sum of Rs. 40 lakh. With regard to interest payable to the Bank also he is required to be reimbursed.
27. In this view of the matter, the complaint is partially allowed. The Insurance Company is directed to pay a sum of Rs. 40 lakh with interest at the rate of 12% p.a. from the date of survey report i.e. 13th September, 1997, which is more than one year after the date of the accident. The Insurance Company is directed to pay a sum of Rs. 50,000 as costs. The costs shall be deposited with the Registrar of this Commission for being deposited in the Consumer Welfare Fund.