2019 Supreme(Bom) 1332

IN THE HIGH COURT OF JUDICATURE AT BOMBAY
K.R. SHRIRAM, J.
Elecon Engineering Company Limited - Plaintiff
Versus
Rickmers Dubai and Ors - Defendants
Admiralty Suit No.2 of 2006
Decided On : 23-08-2019

The onus is on the insurer to prove that the information regarding the loading of the said consignment on the deck was a material fact, that if it had been disclosed despite issuing an open cover, the defendant would have still refused to cover or cancelled the cover to the said consignment or at least increased the premium payable, and that the material fact was known to the assured, i.e., the plaintiff, before the contract was concluded.

Headnote:

MARINE INSURANCE - OPEN COVER POLICY - DISCLOSURE - MATERIAL FACT - ON DECK STOWAGE - BURDEN OF PROOF - LOSS COVERED - QUANTUM OF DAMAGES - INTEREST - COSTS.

Fact of the Case:

Plaintiff, a manufacturer and importer of bulk material handling equipment, settled the suit with defendants 1 to 7 and withdrew the suit against them. Defendant 8, an insurance company, covered a consignment imported by the plaintiff. The consignment was shipped on deck without the plaintiff's knowledge. The consignment was damaged during the voyage. The plaintiff claimed insurance from the defendant, which was denied. The plaintiff filed a suit against the defendant for recovery of the insurance claim.

Finding of the Court:

1. The open cover policy incorporated ICC(A), which is an all-risk policy, except for certain exclusions provided in clauses 4 to 7 of ICC(A). Clause 4.3 excludes loss, damage, or expense caused by insufficiency or unsuitability of packing or preparation of the subject-matter insured. However, the defendant did not plead or prove that the loss occurred due to the exclusion under clause 4.3. 2. An open cover policy is a contract to insure cargo that may be shipped by a merchant during a period, usually 12 months, at rates fixed in the beginning itself, irrespective of the total value of the goods that may be sent. The assured is required to declare every item that falls within the scope of the cover and does not have the option to place such risks elsewhere should he consider it advantageous to do so. Thus, the open cover is an obligatory contract binding both parties to its terms. 3. The defendant failed to prove that the plaintiff was aware of the on-deck stowage of the consignment before the declaration was made on 6-10-2004. The onus was on the defendant to prove that the information regarding the loading of the said consignment on the deck was a material fact, that if it had been disclosed despite issuing an open cover, the defendant would have still refused to cover or cancelled the cover to the said consignment or at least increased the premium payable, and that the material fact was known to the assured, i.e., the plaintiff, before the contract was concluded. 4. The plaintiff proved that the loss is covered under the insurance policy issued by the defendant. The defendant failed to prove that the plaintiff's were aware and/or deemed to be aware that the suit consignment was carried on the deck of the vessel, and, the defendant failed to prove that the plaintiff has committed a breach of Sections 19 and 20 of the Marine Insurance Act 1963. Therefore, the defendant is liable to indemnify the plaintiff for the loss caused to the said consignment.

Issues: 1. Whether the plaintiff was aware and/or deemed to be aware that the suit consignment was being carried on the deck of the vessel? 2. Whether the defendant is liable to indemnify the plaintiff for the loss caused to the aforesaid consignment? 3. Whether the plaintiff has suffered any loss or damage amounting to Rs.67,83,177/- or any other amount and whether the plaintiffs are entitled to an order and decree as prayed for in the plaint together with interest and if so at what rate and for what period?

Ratio Decidendi: 1. The onus is on the insurer to prove that the information regarding the loading of the said consignment on the deck was a material fact, that if it had been disclosed despite issuing an open cover, the defendant would have still refused to cover or cancelled the cover to the said consignment or at least increased the premium payable, and that the material fact was known to the assured, i.e., the plaintiff, before the contract was concluded. 2. In an all-risk policy, the class of insured perils is so wide that the assured will be able to prove the casualty by necessary inference. If the goods are shipped sound and arrive damaged, and the damage is of such a kind as to raise a presumption of some external cause, there is prima facie evidence of loss by an insured peril and the burden is on the underwriter to prove that the loss in fact occurred in some way for which he is not liable.

Final Decision: The suit was decreed in favor of the plaintiff. The defendant was directed to pay Rs.1,00,94,290.30 to the plaintiff along with interest at 12% per annum from the date of judgment until payment/realization. The plaintiff was also awarded costs of Rs.5,00,000/-.