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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
Sandeep V. Marne, J.
Reliance General Insurance Company Ltd. - Petitioner
Versus
Seven Islands Shipping Ltd. and ors. - Respondents
Writ Petition No. 12656 of 2023
Decided On : 08-04-2025
(A) Consumer Protection Act, 1986 - Sections 14(2), 16(1B), and 18 - Jurisdictional error - Insurance claim repudiation - The Petitioner-Insurance Company challenged the orders of the NCDRC and SCDRC regarding the validity of an insurance policy and the claim made by Seven Islands Shipping Ltd. The NCDRC upheld the SCDRC's decision, which directed the Petitioner to pay the claim amount along with interest and compensation. (Paras 1, 8, 19, 40)
(B) Insurance Policy - Warranty and disclosure - The Petitioner contended that the First Respondent's warranty regarding no claims in the last five years was violated, justifying repudiation of the claim. The court found that the warranty was not part of the signed proposal form and that the claim was for routine wear and tear, not an accident. (Paras 12, 19, 25, 30)
(C) Jurisdiction - The Petitioner raised a jurisdictional objection regarding the SCDRC's decision by a single member, which was not previously contested. The court held that the issue was not raised in the appeal and that the NCDRC's decision was valid. (Paras 10, 39, 46)
Facts of the case:
The Petitioner-Insurance Company issued a Marine Hull Insurance Policy to Seven Islands Shipping Ltd. for its vessel, M.T. Crystal. After an incident causing engine failure, the Petitioner repudiated the claim based on alleged warranty violations. The SCDRC ordered the Petitioner to pay the claim, which was upheld by the NCDRC. (Paras 2-8)
Findings of Court:
The court found no merit in the Petitioner’s claims of warranty violation and upheld the concurrent findings of the lower courts. The claim was for normal wear and tear, not an accident, and the warranty was not part of the initial agreement. (Paras 19, 40)
Issues: The main issues included whether the SCDRC's decision by a single member was valid and whether the claim was rightly repudiated based on warranty violations. (Paras 10, 39)
Ratio Decidendi: The court ruled that the warranty was not part of the signed proposal and that the claim was for wear and tear, not an accident. The jurisdictional objection was not valid as it was not raised earlier. (Paras 19, 40)
Result: Petition dismissed without any order as to costs.
JUDGMENT:
A. THE CHALLENGE
1) The Petitioner-Insurance Company has invoked jurisdiction of this Court under Article 227 of the Constitution of India for assailing judgment and order dated 31 July 2023 passed by the National Consumer Disputes Redressal Commission dismissing First Appeal No.849/2021 filed by it and confirming the judgment and order dated 22 September 2021 passed by the Presiding Judicial Officer of State Consumer Disputes Redressal Commission, Maharashtra, Mumbai in Complaint No. CC/16/235.
B. FACTS
2) The first Respondent-Seven Islands Shipping Ltd. (Seven Islands) is an Indian shipping company operating its cargo and tanker ships for carriage of goods including oil to offshores of the country. Petitioner is a private insurance company engaged in the business of providing general insurance coverages of various types. It is duly licensed by the Insurance Regulatory and Development Authority of India since 23 October 2000. Respondent No.2 operates as an insurance intermediary and had facilitated the issuance of the insurance policy between the Petitioner and Respondent No.1.
3) Seven Islands, through its agent-Respondent No.2, expressed interest in seeking insurance coverage so as to secure the possible perils associated with one of its tanker vessels ‘M.T. Crystal’ in November 2006. The insurance policy covering all the risk was agreed to be provided by Petitioner at the annual premium of Rs. 6,72,528/- payable in quarterly installments of Rs.1,68,132/- in addition to payment of stamp duty. Respondent No.1 paid first installment on 6 November 2006. The insurance cover commenced w.e.f. 9 November 2006. Accordingly, an undated letter was issued by the Petitioner to Seven Islands confirming holding of the risk for the vessel-M.T. Crystal, subject to submission of signed proposal form.
4) A proposal form was subsequently sent to Seven Islands, which was duly filled up and submitted to Respondent No.2 on 23 November 2006. Under the heading ‘General’ in the proposal form, information regarding accidents to any of the vessels owned by Seven Islands in the last 3 years was required to be disclosed. Under a belief that no accident had happened to any of its vessels during the last three years, Seven Islands filled up the said column with the remark ‘N.A.’ (Not Applicable).
5) Thereafter Respondent No.2 forwarded to the Petitioner the signed proposal form alongwith class certificate copy vide letter dated 23 November 2006. Petitioner issued ‘Marine Hull Insurance Policy’ bearing No. 1101062511000011 (the Policy) for all risks associated with Seven Islands Vessel-M.T. Crystal. The policy contained list of terms, conditions and warranties and according to the Petitioner, Warranty No. 8 was about non-making of any claim in respect of any of the vessels in Seven Islands fleet during the last five years. The policy was sent by Respondent No.2 to Seven Islands vide letter dated 14 December 2006.
6) The vessel-M.T. Crystal departed from Fujairah Port on 4 September 2007 towards Kandla Port. On 5 September 2007 at about 16.00 hours when the vessel had reached around 190 nautical miles away from the coast of Okha, the 2nd Engineer pulled the engine lever astern which action damaged the bearing of the Tanker and the Lube Oil pressure of the main engine dropped to lower levels. Upon inspection of the main engine, it was found that some white metal had crept inside the crankcase. Seven Islands thereafter towed the vessel to the nearest port where workshop facility was available. Seven Islands issued email dated 6 September 2007 to Respondent No.2 intimating it of the aforesaid incident. On 7 September 2007, Respondent No.2 as agent, informed the Petitioner of such incident and it is the case of Seven Islands that Petitioner had confirmed that it was counter guaranteeing the payment of towage charges restricted to its share of general average. The Seven Islands engaged an Average Adjuster in respect of the claim and duly informed the Petition
The warranty in an insurance policy must be explicitly part of the agreement; claims for routine wear and tear do not constitute accidents under the policy.
The warranty of no claims in insurance does not apply to routine wear and tear; claims must be interpreted favorably to the consumer under contra proferentem.
(1) Declaration made by Opponent no.1 that insurance policy issued by Opponent no.1 is void-ab-initio is illegal.(2) Only the insurance policy given by Opponent no.1 to complainant will come into exi....
Insurer's repudiation of claim based on non-disclosure of prior claims was illegal, as warranties were not binding and material facts were not concealed.
The High Court emphasized the importance of concurrent findings of fact, the limited scope of the High Court's supervisory jurisdiction, and the interpretation of insurance policy clauses in reaching....
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