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2025 Supreme(Online)(NCDRC) 2553
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
MR. JUSTICE A. P. SAHI, PRESIDENT, MR. BHARATKUMAR PANDYA, MEMBER
M/s. Viraj Impex Pvt. Ltd. – Appellant
Versus
The Oriental Insurance Co. Ltd. – Respondent
NC/CC/132/2012 | NC/CC/133/2012 | NC/CC/134/2012
For the Appellants/Petitioners: Mr. Syed Naqvi
For the Respondents: Mr. Abhishek Gola, Mr. Anshul Mehral
The insurer's liability is discharged automatically upon breach of warranty regarding vessel classification, and failure to provide accurate classification details leads to repudiation of claims.
Headnote:(A) Marine Insurance Act, 1963 - Sections 35 and 36 - Institute Cargo Clauses - Breach of warranty - Claims for loss of cargo denied by insurer on grounds of vessel's non-compliance with classification requirements - Insurer's liability discharged due to breach of warranty regarding vessel classification and seaworthiness. (Paras 1-3, 6-8, 19-24, 31, 35, 42, 43, 62, 67, 92, 104, 116)
(B) Waiver - Insurer's failure to object to vessel's classification prior to loss does not constitute waiver of warranty requirements under the Marine Insurance Act. (Paras 43-46, 118-120)
(C) Prompt Notification - Assured's obligation to provide accurate vessel classification details is crucial; failure to do so leads to repudiation of insurance claims. (Paras 19, 22-23, 116-117)
Facts of the case:
Three complaints filed regarding insurance claims for lost consignments carried by the vessel Khalijia-III, which was not classified with a recognized classification society as per the insurance policy. The insurer denied liability citing breach of warranty.
Findings of Court:
The insurer was justified in denying claims based on the vessel's non-compliance with the classification clause, and the claims were dismissed.
Issues: Whether the insurer's liability was discharged due to breach of warranty regarding vessel classification and seaworthiness, and whether waiver was applicable.
Ratio Decidendi: The court held that the insurer's liability was automatically discharged upon breach of warranty, and the failure to provide accurate vessel classification constituted grounds for repudiation of the claim.
Result: Complaints dismissed.
Key Points: - The insurer’s liability is automatically discharged upon breach of the ICC classification warranty. (!) (!) - The judgment discusses whether waiver by the insurer can apply, including conduct or contractual waivers, and findings that waiver did not occur in the present facts. (!) (!) (!) - Prompt notice and accurate classification are emphasized as crucial; failure can lead to repudiation or held covered considerations. (!) (!) (!) - The decision distinguishes between different policy types (Single Voyage vs Open Cover) and how classification requirements apply to each. (!) (!) - The evidence surrounding whether the vessel was classed with a recognized society (IACS member) and the status of IRS/LR classifications affects coverage. (!) (!) (!)
What is the effect of breach of warranty regarding vessel classification under the Marine Insurance Act on insurer’s liability?
What is the status of waiver or held covered in relation to breach of ICC classification in marine insurance claims?
What factors determine whether prompt notification and correct vessel classification by the insured can sustain or defeat coverage under Institute Classification Clause?
| Table of Content |
|---|
| 1. insurance claims related to marine cargo. (Para 1 , 2 , 3 , 4 , 5 , 6 , 7) |
| 2. arguments regarding the validity of insurance claims. (Para 8 , 9 , 10 , 11 , 12 , 13 , 14 , 15 , 16) |
| 3. court's analysis and observations on the case. (Para 17 , 18 , 19 , 20 , 21 , 22 , 23 , 24 , 25 , 26 , 27 , 28 , 29 , 30 , 31 , 32 , 33 , 34 , 35 , 36 , 37 , 38 , 39 , 40 , 41 , 42 , 43 , 44 , 45 , 46 , 47 , 48 , 49 , 50 , 51 , 52 , 53 , 54 , 55 , 56 , 57 , 58 , 59 , 60 , 61 , 62 , 63 , 64 , 65 , 66 , 67 , 68 , 69 , 70 , 71 , 72 , 73 , 74 , 75 , 76 , 77 , 78 , 79 , 80 , 81 , 82 , 83 , 84 , 85 , 86 , 87 , 88 , 89 , 90 , 91 , 92 , 93 , 95 , 96 , 97 , 98 , 99 , 100 , 101 , 102 , 103 , 104 , 105 , 106 , 107 , 108 , 109 , 110 , 111 , 112 , 113 , 114 , 115 , 116 , 117 , 118 , 119 , 120 , 121 , 122 , 123 , 124 , 125 , 126 , 127 , 128) |
| 4. legal reasoning and principles established. (Para 129 , 130 , 131 , 132) |
ORDER
JUSTICE A.P. SAHI, PRESIDENT
1. These are three Complaints regarding an insurance claim in respect of the loss of three consignments of the Complainants which they allege were insured with the Opposite Party Oriental Insurance Company, and upon the loss having occurred during the duration of the policy, the same was liable to be indemnified under the terms of the policy for the sums as insured respectively in all the three cases. The claims were declined by the Insurance Co. giving rise to the complaints that were filed alleging deficiency.
2. The consignments sailed on a ship named Khalijia-III from China to its destination in Mumbai. The consignment consisted of Rolled Steel Coils. There were other importers who had booked their separate consignment on the same vessel that commenced its journey from Caofeidian Port, China to be discharged at Mumbai Port, India. All the Appellants had secured a Marine Insurance Policy covering all risks as per the Institute Cargo Clauses (A) and the ship arrived safely at Mumbai Port on 06.07.2010. It was given a berth at Mumbai Port on 14.07.2010 for discharge of the cargo but on account of the failure of the crane of the vessel during the discharge operations, the same got disrupted.
3. The vessel was moved out for repairs and in the intervening night of 18/19/07/2010, it unfortunately collided with another naval ship and ran aground.
4. It may be pointed out that the policy in CC No.132 and 133 of 2012 are Marine Cargo Single Voyage Policies but in CC No.134 of 2012, the policy is an Open Cover Insurance Policy. The nature of the policy, its issuance and the communication in between are the contentions of the parties and shall be discussed in detail hereinafter. The events that followed the vessel having run aground would also be discussed but at the outset what needs to be spelt out is that the claim of the Complainants as well as the other importers was declined by the Insurance Company on the ground that the Vessel on which the consignments were being shipped was not classed in accordance with the classification clause attached to and forming part of the policy Insurance issued to the Complainants confirming its seaworthiness.
5. It was therefore notified by the insurance company that since there was a breach of the terms and conditions of the policy, they had no liability and on 20.08.2010, the Complainants were intimated that the General Average and Salvage Guarantee issued and arranged by the Insurance Company were being withdrawn. In essence, the claim was repudiated as a consequence of the conclusion that the vessel was not classed in accordance with the classification as envisaged under the policy, as such it was not seaworthy which fact was undisclosed.
6. This gave rise to the filing of separate complaints by all the importers whose consignment was loaded on the ship before this Commission including the present three complaints. One of importers M/s. Rajankumar & Bros. had filed CC No. 200 of 2012 that was dismissed by this Commission on 12.11.2013 reported in 2013 SCC OnLine NCDRC 998
7.
