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2024 Supreme(Online)(Mad) 61621
IN THE HIGH COURT OF JUDICATURE AT MADRAS
R.SUBRAMANIAN, R.SAKTHIVEL, JJ
The Oriental Insurance Co. Ltd., Regional Office, UIL Building, Fourth Floor, No.4, Esplanade, Chennai – 600 108. – Appellant
Versus
M/s.Acme Commodities Pvt. Ltd. – Respondent
OSA (CAD) NO.133 OF 2023 | CMP NOS.23503 AND 29484 OF 2023 | C.S.No.399 of 2017
For the Appellants/Petitioners: Mr.Venkatraman for M/s.Nageswaran & Narichania
For the Respondent: Mr.K.Krishnaswamy
The court upheld the validity of the insurance policy and ruled that the plaintiff was entitled to recover damages, rejecting claims of non-disclosure and unseaworthiness by the defendants.
Headnote:(A) Commercial Courts Act, 2015 - Section 13 - Marine Insurance Act, 1963 - Issues of territorial jurisdiction, verification of the plaint, non-joinder of necessary parties, suppression of material facts, and seaworthiness of the vessel were addressed. The court held that the policy was valid, and the plaintiff was entitled to recover damages incurred due to water damage and loss of cargo. (Paras 11-49)
(B) Insurance Contracts - The principle of utmost good faith requires disclosure of material facts; however, the plaintiff did not suppress facts relevant to the claim. (Paras 31-34)
(C) The implied warranty of seaworthiness was waived by the defendants under the policy terms. (Paras 38-38.1)
(D) The court decreed the suit in part, awarding Rs.2,03,34,587/- with interest at 9% per annum. (Paras 49)
Facts of the case:
The plaintiff, a commodity trading company, entered into contracts for purchasing cashew nuts and faced losses when the vessel encountered engine problems, leading to a claim against the insurers. The defendants denied liability based on alleged non-disclosure and unseaworthiness.
Findings of Court:
The court found jurisdiction based on the involvement of the first defendant and ruled that the plaintiff had not suppressed material facts. The policy was valid, covering the loss incurred.
Issues: The main issues included jurisdiction, verification of the plaint, non-joinder of necessary parties, suppression of material facts, and seaworthiness of the vessel.
Ratio Decidendi: The court ruled that the insurance policy was valid, and the defendants could not repudiate the claim based on non-disclosure when the plaintiff had acted in good faith.
Result: The appeal was partly allowed, and the defendants were ordered to pay Rs.2,03,34,587/- with interest.
R.SAKTHIVEL, J.
Assailing the judgment and decree dated June 27, 2023 passed by the learned Single Judge of this Court in C.S.No.399 of 2017, the appellants / defendants have preferred this Original Side Appeal under Section 13 of Commercial Courts Act, 2015 read with Clause 15 of the Letters Patent, praying to set aside the judgment and decree.
2.For the sake of convenience, the parties will be referred to as per their array in the suit.
Case of the plaintiff:
3.Plaintiff, a reputed commodity trading company, entered into two contracts for purchase of Dried Raw Cashew Nuts in shell (Fresh Crop 2014) from ‘M/s.SNK General Trading LLC, Dubai and SNK General Trading Pte. Ltd, Singapore’ (henceforth collectively referred to as ‘sellers’). The sellers agreed to sell 3500 Metric Tonnes (M.T.) +/- 10% of the Cashew Nuts which were to be shipped from Port Guinea Bissau to Port Tuticorin in the vessel ‘MV Golden Endurance’ (henceforth ‘subject vessel’ for convenience and clarity) chartered by the seller through ‘M/s. St. John Logistics LLC, Dubai’ (henceforth ‘Charterer’). Apart from the plaintiff’s cargo, cargoes containing cashew nuts from a few other sellers were also to be loaded on the same vessel (subject vessel).
3.1.Upon the instance of the sellers, essential credentials of the subject vessel were made available to the plaintiff by the charterer vide Emails dated June 26, 2014 (Ex-P.5).
3.2.Since both contracts were on Cost and Freight basis (C&F contract), the plaintiff had to procure an insurance to save their own interest in the cargo. Accordingly, the plaintiff approached the Insurance Broker, who in turn approached the second defendant on June 26, 2014 along with all the essential certificates and credentials of the subject vessel, proposing to avail an “all risks” cover on warehouse-to-warehouse terms for the plaintiff’s cargo, which was to be loaded into the subject vessel. There were discussions and the plaintiff had furnished all the relevant information regarding cargo, vessel and the voyage, before the loading commenced at Port Bissau on June 29, 2014. Upon the defendants’ approval of the vessel and acceptance of the insurance proposal, the plaintiff paid a premium of Rs.2,22,474/- on July 2, 2014 through cheque. Then the defendants issued the voyage policy dated July 3, 2014 covering the plaintiff’s cargo of all risks on warehouse-to-warehouse terms subject to ‘Institute Cargo Clauses (A)’ [henceforth ‘ICC (A)’] and ‘Institute Theft, pilferage and Non-delivery Clause’. The entire plaintiff’s cargo was insured for 33 Crores, having been valued at their C&F Value + 10% towards their incidentals.
3.3.While so, loading of cargo as per the contract began on June 29, 2014. Plaintiff’s cargo was packed in 41472 bags each containing approximately 80Kg of Cashew Nuts. When the subject vessel reached its draught limit, it sailed on its own power and reached a deeper berth on July 17, 2014, which shows that the subject vessel was seaworthy. Loading of 3350.069 M.T. of plaintiff’s cargo and 1857.854 M.T. of other buyers’ cargo was completed on July 19, 2014. Upon completion of loading, the Master of the subject vessel issued 37 Nos. of Bills of Lading on July 20, 2014.
3.4.Right before her voyage on July 20, 2014, the subject vessel encountered a problem with her engine and the voyage was abandoned. The non-negotiable copies of Bills of Lading were sent by the plaintiff to the Insurance Broker on July 26, 2014, who in turn forwarded nd the same to the 2 defendant. After due incorporation of the Bills of nd Lading numbers and the dates, the 2 defendant released the policy document on August 7, 2014.
3.5.The plaintiff, on receiving communication from the charterer on August 8, 2014 about the frustration of the voyage and contemplation about transhipment of the cargo to Port Tuticorin through another vessel, gave notice of the same through the Insurance Broker to the defendants on the next working day viz., August 11, 2014. Defendant
