Oriental Insurance Co. Ltd vs M/S. Ozma Shipping Company & Anr

valuation certificate. The Surveyor after inspecting the vessel

certified that the market value of the vessel was Rs.

21,50,000/-. The Surveyor gave a very comprehensive report

and took note of the fact that a major over-hauling of the

engine and accessories and reconditioning and painting of the

Hull had been carried out during 1987. It may be pertinent to

mention that the Surveyor had considered all relevant factors

in its report.

4. Sections 29 and 68 of the Marine Insurance Act, 1963

are relevant in connection with the present controversy

involved in this case. It would be appropriate to set out both

these sections:-

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"29. Valued Policy:- (1) A policy may be either valued or unvalued.

(2) A valued policy is a policy which specifies the agreed value of the subject matter insured.

(3) Subject to the provisions of this Act, and in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured, whether the loss be total or partial.

(4) Unless the policy otherwise provides, the value fixed by the policy is not conclusive for the purpose of determining whether there has been a constructive total loss."

Section 68 reads as under:-

"Total Loss - Subject to the provisions of this Act, and to any express provision in the policy, where there is a total loss of the subject matter insured-

(1) if the policy be a valued policy, the measure of indemnity is the sum fixed by the policy;

(2) if the policy be an unvalued policy, the measure of indemnity is the insurable value of the subject- matter insured."

5. It is clear from the section 29(3) that the value fixed by

the policy between the insurer and the assured is conclusive of

the insurance value.

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6. The vessel sailed from Beypore to Kavarati loaded with

goods at around 3 p.m. on 23.4.1988. The said vessel sank

with the entire cargo.

7. Respondent no.1 lodged the insurance claim with the

appellant insurance company on 6.5.1989. The appellant

insurance company immediately deputed the Surveyor and

carried out the spot survey. The Surveyor submitted the

report advising carrying out proper investigation. The

appellant insurance company agreed to settle the claim of

respondent at Rs.15 lacs.

8. Respondent no.1 filed a complaint before the National

Consumer Disputes Redressal Commission (For short, the

`National Commission'). The complainant prayed that the

insurance company be directed to pay the entire insured

amount of Rs.21,50,000/- with 18% rate of interest from the

date of calamity i.e. from 23rd April, 1988 along with the

compensation and costs.

9. The appellant insurance company submitted before the

National Commission that the valuation report of the Surveyor 5

of M/s Ozma Shipping Company was not correct because the

value of the said vessel was not more than Rs.15 lacs,

therefore, respondent No.1 is not entitled to an amount more

than Rs.15 lacs.

10. It was stated by the appellant company that in the

proposal form it was nowhere stated that it had remodeled and

reconditioned the vessel by spending a sum of over Rs.5 lacs

in the year 1989 and it was alleged for the first time vide

order dated 28th February, 1990.

11. According to the appellant insurance company the

market value of the vessel would decrease year after year and

it could not enhance to such an exorbitant figure by mere

reconditioning, painting and remodeling. The insurance

coverage was obtained for a higher sum insured than the

actual cost by deliberately concealing the material facts.

These pleas of the appellant company are totally devoid of any

merit when the Surveyor appointed by the insurance company

found the value of the vessel as Rs.21,50,000/- and the

appellant company accepted the insurance premium on

Rs.21,50,000/-. According to the National Commission, as the 6

Surveyor took note of the fact that a major overhauling of the

engine and accessories and reconditioning and painting of the

Hull had been carried out during 1987, there seems to be no

justification from deviating from that figure.

12. There are following undisputed and uncontroverted facts

in this case:-

(I) vessel sailed form Beypore to Kavarati loaded

with goods on 23.4.1988 and according to the

Surveyor after inspecting the vessel he certified

the market value of the vessel as

Rs.21,50,000/-.

(II) The premium was admittedly paid on that

amount.

(III) The said vessel sank with the entire cargo.

13. The National Commission held that on consideration of

the relevant factors the valuation of the vessel was valued as

Rs.21,50,000/-. On the basis of the valuation, the insurance

premium was paid on the amount of Rs.21,50,000/-. The 7

National Commission also came to the definite finding that the

complainant was not guilty of any concealment of facts.

14. On consideration of the totality of the facts and

circumstances, the impugned judgment of the National

Commission is absolutely correct and the National

Commission was fully justified in directing the insurance

company to pay the value of the entire vessel Rs.21,50,000/-

with interest at the rate of 12% per annum from 4 th April,

1991.

15. It may be pertinent to mention that when the valuation of

the vessel had been carried out by the Surveyour of the

insurance company who came to the conclusion that the value

of the vessel would be Rs.21,50,000/- then the Insurance

Company should not hesitate to pay the amount which is

legitimately due to the complainant particularly when there is

no dispute that the entire vessel with cargo insured with the

appellant sank while the vessel was sailing from Beypore to

Kavarati.

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16. We have heard the learned counsel for the parties and

carefully perused the impugned judgment. In our considered

view no interference is called for. We make it clear that in

case the entire amount in the sum of Rs.21,50,000/- has not

been paid to the respondent company, the same would be paid

as expeditiously as possible and in any event within six weeks

from the date of communication of this judgment. If some

amount has been paid by the appellant insurance company to

respondent No.1 in that event they would ensure that the

adjustment of that amount is done and the remaining amount

be paid to respondent No.1 within six weeks from the date of

this judgment along with interest.

17. Before parting with this case we would like to observe

that the insurance companies in genuine and bona fide claims

of the insurers should not adopt the attitude of avoiding

payments on one pretext or the other. This attitude puts a

serious question mark on their credibility and trustworthiness

of the insurance companies. Incidentally by adopting honest

approach and attitude the insurance companies would be able

to save enormous litigation costs and the interest liability. 9

18. The tendency of approaching the Apex Court in every

such case also needs to be effectively curbed.

19. The appeal being devoid of any merit is accordingly

dismissed with costs which is quantified at Rs.25,000/- to be

also paid by the appellant Insurance Company to respondent

No. 1 within six weeks from today. The appeal is accordingly

disposed of.

............................................J. (Dalveer Bhandari)

...........................................J. (Harjit Singh Bedi)

New Delhi;

August 25, 2009