NATIONAL INSURANCE COMPANY LIMITED COIMBATORE Vs. LAKSHMI VILAS BANK LIMITED A REGISTERED BANKING COMPANY

JUDGEMENT

(1.) THE 6th defendant is the suit is the appellant. THE suit is for the recovery of a sum of Rs. 2,31,709. 25. THE plaintiff is the banking company. THE first defendant is a partnership firm. Defendants 2 to 5 are partners of the firm. Defendants 2 to 5 applied for loan to the plaintiff bank for purchase of a trawler for fishing trade. THE plaintiff bank sanctioned a loan of Rs. 1,80,000 by its order dated 31. 1. 1977. THE defendants executed a letter of hypothecation on 11. 3. 1977 in respect of the trawler in favour of the bank. It was also stipulated as a condition that defendants 1 to 5 shall insure the trawler with the insurance company. Accordingly, the trawler was insured with the 6th defendant. THE first policy was for the period 27. 4. 1977 to 26. 4. 1978. After the expiry of the first policy, the second policy, which was in renewal of the first policy, was for the period 27. 4. 1978 to 26. 4. 1979. THE first defendant was never regular in payments of the monthly instalments towards the discharge of loan and there was a balance of Rs. 2,31,709. 25 including interest. THE plaintiff was informed that the trawler was sunkon ll. l2. 1978 and the 5th defendant was also informed of it. As the trawler is insured with the 6th defendant, the plaintiff has filed the suit against all the defendants contending that the 6th defendant is also liable.

(2.) IT is not necessary to set out the defence raised by defendants 1 to 5, as they have not preferred any appeal against the decree passed against them. The 6th defendant filed a written statement disputing its liability on the following grounds: (1) The policy specifically provided permission to ply within port limits only during prohibited periods of monsoon, viz. , 1st November to 31st January on Tamil Nadu coasts and the port limits extend only upto 6 fathoms, but the boat sank at a place called "arichakadal' ' and, therefore, the 6th defendant cannot be made liable for the loss of the boat as it had entered the prohibited area. (2)The first defendant had leased the boat to one Balu Shanmugam under an agreement dated 11. 9. 1978 and handed over possession of the vessel to the said lessee. As the vessel was not in the possession and control of the first defendant on the date on which the boat sank, the policy became void under clause 5 of ISTLO Clause (Hulls ). Thus, the policy lapsed and was not in force on 11. 12. 1978. (3) The owners of the boat had not taken reasonable steps to recover and protect the property as is the custom and usage. (4) The vessel was deliberately sunk in the high seas in order to make a fraudulent claim on the defendant.

(3.) ON the other question as to whether the parties deliberately sunk the trawler, again there is no evidence. Excepting some suggestions made in the cross-examination, which have been denied, there is nothing worthy of acceptance to substantiate the case of the appellant. Hence, we confirm the finding of the trial court on that question also.