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.

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 agreedto 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 2^nd 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 Petitione