IMPORTANT POINTS
(1) Breach of Uberrimae Fidei – The contract of insurance is one of utmost good faith. The “very urgent” nature of the Complainant’s evening request – made only hours after the vessel had actually suffered a casualty – suggested that material facts regarding the accident were known to the Complainant and deliberately withheld to secure coverage for a loss that had already occurred.
(2) Statutory Bar on Retrospective Risk – Under Section 64VB of the Insurance Act, 1938, an insurer is prohibited from assuming risk before the receipt of the premium. The Commission clarified that a “scanned copy” of a cheque sent via email does not constitute a valid negotiable instrument or payment; the risk only attaches once the physical cheque is received or the premium is otherwise legally tendered.
(3) No Retrospective Risk Without Valid Consideration – A policy cannot be given retrospective effect (e.g., from the midnight of the previous day) if the request for the policy was initiated after the peril had already occurred and the premium had not yet been paid. The “Lost or Not Lost” rule does not apply if the insured was aware of the loss and the insurer was not at the time of the contract.

ORDER

A.P. Sahi, President.—This Complaint raises interesting questions arising out of peculiar facts that has been very ably argued by Mr. Tripathi, learned Counsel for the Complainant and have been equally responded to with no less ability by Mr. Amit Kumar Singh, learned Counsel for the Insurance Company. The claim arising out of a declaration of General Average after a loss of goods in a marine transit, that has been repudiated by the O.P. vide letter dated 26.12.2009, is the subject matter of this Complaint. The contest put forth by the Insurance Company is that the question of applying the General Average does not arise inasmuch as the policy has been breached by the complainant by having obtained the policy on misrepresentation of facts regarding the casualty which had already taken place. The Insurance Company has taken a stand that the fact of the loss due to the accident and its occurrence which was in the knowledge of the Complainant that had been deliberately withheld to somehow the other obtain the policy and coverage for the loss which in fact had occurred within the knowledge of the Complainant even prior to the grant of policy. He further submits that the alleged Held Cover endorsement dated 03.12.2009 was also obtained in breach of good faith and is of no legal consequence nor can any benefit be claimed by the Complainant in as much as the premium of the policy which is the consideration of the contract had been paid one day after the accident, and as such there was no coverage existing as on the date of the incident, which is 02.12.2009. The Insurance Company has therefore contended that the repudiation is valid and that the benefits of the declaration of General Average cannot be availed of.

2. The policy had been taken through the broker M/s Edelweiss Insurance Brokers Limited and the facts regarding the acquisition of the policy and the issuance thereof apart from the endorsement needs to be analysed in the background that it is the consistent stand of the Insurance Company that the Complaint had not only the knowledge of the loading of the goods on the vessel, but they had also knowledge of the fact that it had already sailed, and in effect the accident of the vessel was well known to the Complainant. Instead, they with held the said information with a deliberate intent to cover up their latches of not having obtained the insurance immediately upon the declaration of the Vessel in the Sugar Charter-Party dated 17.11.2009. Mr. Amit Kumar Singh has also elaborated his submissions which we shall deal with later on stating that the charter of parties categorically requires the declaration of a vessel and the insurance coverage has to be taken on such declaration. He has argued that the declaration was made long back in November, 2009 but the Complainant failed to acquire the Insurance policy on such declaration which they were obliged to do. This was yet another breach and such a conduct coupled with the hurried manner with which the communications ensued through mails, demonstrates that the Complainant in order to overreach their own defects and deficiencies attempted to overcome the same by acquiring the policy without disclosing material and relevant facts of the accident that had already occurred.

3. Accordingly this matter was taken up and heard on 02.09.2025 when the following order was passed:—

“Heard Mr. S. M. Tripathi, learned counsel for the complainant who has, in brief, advanced his submissions contending that the issue involves the issue of General Average Contribution which claim has been declined by the opposite party – Insurance Company vide letter dated 26th December, 2009, and in his estimation, it has been done erroneously in spite of the fact that the policy had been negotiated and was endorsed by the Insurance Company w.e.f. 2nd December, 2009 itself.

He submits that the terms & conditions of the Marine Policy are such that if the policy has been issued and no fact has been suppressed