CANARA BANK Vs. UNITED INDIA INSURANCE COMPANY LIMITED

JUDGEMENT

(1.) THE suit against the defendant is to recover a sum of Rs. 3, 66, 830 with interest at 19. 5 per cent. from the date of plaint with costs. THE brief facts of the case as gathered from the plaint are stated hereunder : THE first plaintiff is the nationalised banking institution which provided every financial assistance to the second plaintiff, a registered partnership firm carrying on the business of running a boat engaged in fishing in the sea. THE defendant, incorporated under the General insurance Act, is an insurance company in which, both the plaintiffs have taken an insurance policy for the fishing boat of the second plaintiff, which was named Sealark-I. Thus, the second plaintiff is the customer of the first plaintiff who availed of various loan facilities and thereby purchased the mechanised fishing boat by name Sealark, engaged in fishing off the east coast sea. THE said vessel had been insured in order to protect the same with its interest and damage to the vessel, if any happened, on April 12, 1979, through one hemachandra Babu, an agent of the defendant, who provided all help and amenity to complete the insurance cover with the defendant. THE first plaintiff then proposed and had the insurance completed with the help of its senior branch manager, Mr. Gurpur, and thus an insurance policy has been issued to the second plaintiff for its mechanised boat to the value of Rs. 2, 35, 000, to cover the period from April 12, 1979, to April 11, 1980. To issue the policy by the defendant a frank and full disclosure of all the materials and particulars with the signature of the plaintiffs has been provided to the defendant. Accordingly, the policy was renewed from April 12, 1980, to April 11, 1981. THE various terms and conditions of the policy were prayed to be treated as part of this plaint. Pursuant to the terms of the policy, the defendant undertook to indemnify the plaintiff among other things to pay a sum of Rs. 2, 35, 000 in case of total loss of Sealark-I. It was at this juncture, on the night of July 21, 1980, near Vallapallam on the Eastern sea, the vessel Sealark-I sank and whereupon a claim for total loss was duly made upon the defendant by the plaintiffs by furnishing all the information called for by the defendant. Despite repeated correspondence at the last the defendant had repudiated liability by its letter dated November 9, 1981, on the ground that the claim made was not bona fide and that it was the result of a wilful suppression of vital and material information with regard to the subject-matter of the policy and with regard to the alleged occurrence of loss and events that were stated to have followed. Denying the contention of the defendant, the plaintiffs'claim the insurance amount in a sum of Rs. 2, 35, 000 since the accident that happened to the fishing boat Sealark-I had resulted in total loss of the vessel as being the value of the insurance covered by the policy above referred to. Since the defendant had not complied with the lawful request of the plaintiffs in spite of the total loss of the vessel and the same had been insured for the above amount, special damages were claimed by the plaintiffs by way of interest on the said amount at the rate of 19. 5 per cent. which is the bank rate being invoked.

(2.) A legal notice on January 7, 1983, was issued to the defendant demanding to pay the suit claim, which was received and acknowledged by him but, however, the demand has not been complied with but a reply dated march 15, 1983, was given with incorrect and unsustainable contentions. Adding the interest calculated till the date of filing the plaint at the above rate on the sum of Rs. 2, 35, 000, which accrues to Rs. 1, 31, 830 the suit is laid for a total amount of Rs. 3, 66, 830 with subsequent interest at the same rate with costs on the basis of the above cause of action and allegations. The suit was resisted by filing a written statement on behalf of the defendant, in which, it was contended, inter alia, that in view of the second plaintiff being claimed as a partnership firm not having been registered as provided by the law, the suit filed on its behalf is not at all maintainable by virtue of section 69 of the indian Partnership Act and that the business transaction, particularly, the availing of the credit facilities from the first plaintiff by the second plaintiff is not admitted. However, the averments made in paragraph 4 of the plaint that the first plaintiff in order to protect its interest and damage to the vessel by name Sealark-I had insured the same along with the second plaintiff with the defendant on April 12, 1979, was admitted as substantially correct.

(3.) IN the light of the observation and discussion held by me above, the above section of law needs no more elaboration or discussion to the facts of the instant case for the very simple reasoning that the whole established fact will come within the total ambit of sections 57 and 60 of the marine INsurance Act, above quoted. IN Life INsurance Corporation of INdia v. Baidyanath singh 1979 (49) CC 653, 656; a Division Bench of the Patna High Court, had the occasion to observe the following, while dealing with the scope of avoidance of the insurance policy : ". . . whenever the Corporation wants to question the correctness of any statement made in the proposal form, it has to prove three things, (i) that the statement in question was in respect of material matter, or which was suppressed was material to disclose, (ii) it was fraudulently made, and (iii) the policy holder knew at the time of making it that such a statement was false or suppressed facts were material to be disclosed. If the three conditions are fulfilled, in view of section 45 of the INsurance act it is open to the Corporation to challenge the correctness of any such statement made in the proposal form, and section 45 of the INsurance Act is not a bar. . . . This is based on the principle that a contract of life insurance is uberrima fides and it is vitiated due to the non-disclosure and misrepresentation which are fraudulent in nature. " *