KESHVLAL NARANJI Vs. ORIENTAL INSURANCE CO LTD

JUDGEMENT

(1.) THIS complaint is filed by the Firm which is duly registered through its partners against the Insurance Company alleging deficiency in service on its part. According to complainant, they had taken two polices in respect of dump steel barge called Kena -1. One policy was in respect of total loss of barge and other policy was in respect of expenses and damage incurred by the complainant in repairs and trying to make seaworthy said barge. In respect of total loss of barge, complainant has filed separate complaint. According to complainant, the barge was constructed in 1997 and it was originally owned by Ardeshir B. Curostji and Sons Private Limited. Said owners sold the barge to Ghai Shipping and Transports Private Ltd. and from them the complainant had purchased the said barge on 4.12.1990. Initially it was called ABC.X, but complainant changed name of the barge to Kena -1. On 5.3.1991 they received approval for the change of the name from Mercantile Marine Department, Bombay district Government of India. The certificate of registration has been issued by the Registrar of Indian Shipping, Bombay on 28th June, 1991 in lieu of certificate dated 23rd April, 1977 on account of transfer of ownership. In May 1992 the barge was to be toured from Bombay to Rozi Port, Jamnagar, Gujarat State. It was being towed by vessel called Dhanprasad. Accordingly on 20th May, 1992 a valuation report in respect of said barge was prepared by Dave and Associate, registered marine surveyors. They valued the barge at about Rs. 19,50,000 and they opined that barge was in seaworthy condition. Said valuers also inspected Dhanprasad, the vessel which was to tow Kena -1 and found that Dhanprasad was also in seaworthy condition. The copy of agreement of towing the Kena -1 and copy of survey report prepared by Dave and Associates has been placed on record. Similarly, the complainant also made ultrasonic survey of the barge on 21.5.1992. Copy of said report is at Exhibit -D. On 22.5.1992 complainant got Kena -1 insured with Oriental Insurance Co. Ltd. for its voyage from Bombay to Jamnagar under towing by Dhanprasad and insurance was in respect of hull and machinery for assured amount of Rs. 19,50,000. Complainant paid premium of Rs. 16,257 to the Insurance Company and policy was issued on 22.5.1992. On 22.5.1992 Dhanprasad along with Kena -1 left Bombay port for Jamnagar. During the voyage part of the machine called manifold broke down. Hence on 27.5.1992 said barge was taken to Veravalport. Complainant informed said fact to the Insurance Company. At Veraval machine was repaired and on 2.6.1992 after getting ship cleared, the barge proceeded to Rozi port, Jamnagar with the help of towing ship Dhanprasad. On way to Jamnagar, the connected shed and Hedni valve start of the engine broke down due to which the barge on 4.6.1992 along with the vessel were taken to Mangrol. After repairing the ship on 12.6.1992 the vessel along with the barge proceeded to Jamnagar. When the ship left Mangrol at Jamnagar, sea was calm, weather was peaceful. However, at midnight sea became violent and strong, wind started blowing from western direction. Due to this and purely due to natural causes, the connection between the vessel and barge broke down and the barge started getting dragged towards Mangrol. The Tandel and other crew of the vessel changed the direction of the ship and tried to catch the barge but because of bad wheather, they could not catch the barge. On 13.6.1992 the barge went adrift and landed on shore near Mangrol port but since there was shallow water, the vessel Dhanprasad could not reach the barge. The crew members from the barge jumped down for safety. Thereafter, the crew from Dhanprasad went to Mangrol port and tried to rescue the barge by tying the connecting ropes. This was not possible as there was major damage in the bottom part of the barge because of it having collided with the shore. The complainant addressed a letter dated 15.6.1992 to Insurance Company and informed that barge has been grounded near Magrol port and requested for a survey of the barge to enable the complainants to arrange for removal of the barge to a safer place and avoid further damage. Copy of the letter dated 15.6.1992 is annexed hereto and marked Exhibit -F. For avoiding further damage on 22.6.1992 Sea Scan Services Private Limited the Surveyor acting for the opponent on instructions of the opposite party addressed letter to the complainant asking them to call quotations for shifting the barge to a safer place where thorough inspection could be conducted. On 23.6.1992 the Sea Scan Services Pvt. Ltd. recorded the fact that they had taken personal investigation of the barge and had given certain instructions regarding shifting the barge to a suitable place. On 24.6.1992 the opponents referred to this letter dated 23.6.1992 and asked the complainant to send a cheque of Rs. 31,785.50 being the five months premium to enable them to cover the risk. On 10.7.1992 further policy of Rs. 19,50,000 was executed by opposite party in favour of the complainant in respect of Kena -1 barge for the hull for the period from 10.7.1995 to 9.7.1993. All the premium amounts in respect of said policy had been paid by the complainant.

(2.) COMPLAINANT thereafter invited quotations from various contractors for shifting and repair of barge and the lowest quotation received from Popular Enterprise, Jamnagar was forwarded to Sea Scan Services Private Limited by the complainant through their letter dated 6.11.1992. In the meanwhile on 19.9.1992 the statement of the Tandel concerning the accident to the barge was recorded in the Port Officer's office and a copy of the statement is annexed at Exhibit - L. Thereafter attempts were made to shift the barge for repairs but those attempts failed therefore on 10.2.1993 the complainant addressed a letter to the M/s. Sea Scan Services Pvt. Ltd. On 26.2.1993 complainant further wrote a letter to the opposite party regarding the efforts made to shift the barge and opined that barge was not refloatable and unsalvageable, copy of which is marked at Exhibit -M. Subsequently on 16.3.1993 Sea Scan Private Limited addressed a letter to the complainant asking the complainant to get barge checked and repaired from one Venkatesh Engineering Works, Jamnagar. Even Venkatesh Engineering came to the conclusion that the barge was unfloatable and finally it was decided to treat the barge as unfloatable and sell it as scrap. Thereafter with consultation in terms of letter with Sea Scan Services Pvt. Ltd. which is annexed hereto and marked Exhibit -N, on 30th April, 1993 the complainant wrote a letter to the opponent to the effect that if the opponent found the amount offered by the parties contacted the complainant directly as inadequate, the opponents were free to advertise and get a higher price for the scrap value of the barge. In the meanwhile on 11.5.1993, complainant wrote a letter to the port officer, Veraval for cancellation of Registry Certificate. Finally offer was received for Rs. 3 lakh to purchase the said barge as scrap. This was conveyed to opponent company and ultimately, said barge was sold for Rs. 3 lakh and with the permission of opposite party, they had received consideration of Rs. 3 lakh for the barge, sold as scrap. In the second week of May, 1994 complainant submitted a claim to the opposite party claiming cost of material and labour for salvage payment at Mangrol, Gujarat as per second policy. Claim in present complaint is in respect of these amounts. Complainant came to know that opposite party had referred the claim of the complainant to Richards Hog International Limited, Bombay for adjustment of loss and for scrutiny of the claim. They wrote one letter to Richards Hog International Limited, Bombay calling upon them to expedite the matter. On 7.4.1995 opponent wrote a letter to Dave and Associates, Valuers and Surveyors raising certain queries. Complainant gave reply to all the queries. However, for two years there was no response whatsoever. On 27.6.1997 complainant addressed letter to the opponent making a grievance regarding delay in processing the claim. For the first time after four years on 22.7.1997, opposite party replied to the complainant informing that they had not taken approval from MMD before commencing the voyage and there was no towing approval for commencing towing from Veraval. Complainant pleaded that objections taken by the opposite party were totally unsustainable and unreasonable. They were taken as an afterthought solely to deny the complainant's lawful claim. According to complainant, he had taken all the necessary steps and mandatory permissions and still flimsy objections were taken by the opposite party to deny the claim. The complainant then met officers of the opposite party explaining said officers correct position. Complainant No. 2 personally met Mr. Chakravarty, Divisional Manager of the opposite party, who informed him orally that insurance claim, has been rejected and within one week the complainant would receive formal rejection letter. Only in November 1998 complainant was finally told that claim in policy had been rejected and, therefore, complainant pleaded that they had filed the present complaint for claiming reimbursement of the expenses incurred by them for the salvage of the barge. The entire salvage operation was done under the inspection of the opposite party officers or their agents. Despite this fact, the barge could not be salvaged. The complainant has claimed Rs. 5,69,413 towards the salvage of the barge. Said amount is being claimed with interest @ 18% p.a. and said interest amount comes to Rs. 5,71441.34 and, thus, the total claim of the complainant for which complaint has been filed is of Rs. 11,40,854.64. They also claimed an amount of Rs. 1 lakh towards damages for mental trauma and loss of definite time. They also claimed cost of Rs. 50,000 and complainant also filed certain documents and affidavit in support of this claim.

(3.) OPPOSITE party filed written statement and contested the claim. According to opposite party, there has been breach of warranties on the part of complainant firm and, therefore, present complaint is not maintainable. Opposite party also pleaded in written version that complainant has mala fide and vexatious complaint and it must be dismissed with costs. Opposite party pleaded that one of the essential conditions or warranties contained in the policy is that the complainant shall obtain the approval from the Mercantile Marine Department for towing the Kena -1 from the port of Mumbai to Rozi Port. Complainant failed to obtain this approval from the Mercantile Marine Department. It had not obtained the approval from that department. Breach of warranty entitles the Insurance Company i.e. the opposite party to avoid the contract of insurance and in this particular case, in view of the breach, opposite party rightly repudiated the claim of the complainant. Opposite party also pleaded that after the incident of drifting and grounding of Kena -1 at Magrol, the surveyors were appointed by Insurance Company. The surveyors i.e. opposite party advised the complainants to take prompt steps to remove the barge Kena -1 to a safer location where it would not be exposed to the rough seas prevalent during the monsoon period. Opposite party further stated that complainants were also advised that the rough monsoon period could adversely affect the condition of the barge and despite being informed so, complainant took no steps to move the vessel to a safer location and the barge continued to remain exposed to the vagaries of weather which caused further deterioration. So, this was a clear -cut case of breach of one of the conditions of warranty of the policy. It pleaded that said policy was issued to the complainant subject to Institute Voyage Clauses (Hull) with additional trading warranties/conditions which read as under: