* HIGH COURT OF DELHI : NEW DELHI
Judgment reserved on: April 04, 2011
Judgment pronounced on: May 02, 2011
+
C.S. (OS) No. 653/1980 &
I.A. No.8280/2006
% M/s. Impex Services & Anr. ... Plaintiffs
Through: Mr.Vijay Gupta and Mrs.Geeta
Goel, Advocates
versus
The Oriental Fire & General
Insurance Company Ltd. & Others ... Defendants
Through: Ms.Sunita Dutt, Advocate for
defendant No.1
Ms.Vidhi Goel, Advocate for
defendant No.4
Nemo for remaining Defendant
No. 2, 3, 5, 6 & 7.
CORAM:
HON'BLE MR. JUSTICE SUNIL GAUR
1. Whether the Reporters of local
papers may be allowed to see the
judgment?
2. To be referred to Reporter or not? No.
3. Whether the judgment should be
reported in the Digest?
SUNIL GAUR, J.
1. This suit for recovery of insured amount plus interest, i.e., Rs.23 lacs pertains to marine insurance policy taken by the plaintiffs from defendant No.1 in respect of their consignment of goods (PVC Resin) C.S. (OS) No. 653/1980 Page 1 shipped by defendants 2 and 3 from Singapore to the plaintiffs in India and the said goods were purportedly covered under these two Insurance Cover Notes of 19th June and 10th August, 1979 respectively. Purportedly, the first policy was in respect of cost, insurance and freight whereas the second policy was for the profits. It is plaintiff‟s projection that in pursuance to the Contract of 11th June, 1979 between the plaintiffs and defendants 2 and 3, aforesaid consignment valued at Rs.13,22,912/- was loaded on vessel "S.S.OH DAI" at Singapore for being delivered at Bombay under the contract of freightment contained in the Bill of lading of 1st September, 1979 issued by Union Shipping Ltd. i.e. defendant No.6 and the said consignment was insured with defendant No.1 who had issued provisional cover notes for Rs.14,55,200/- and Rs.5,29,200/- after taking premium of Rs.10,774/- and insurance policies were also issued by defendant No.1 but the same were not received by the plaintiffs when this suit was filed.
2. It is the assertion of the plaintiffs that defendant No.1 was informed by defendants 2 and 3 about the shipment of the plaintiffs‟ goods vide cable of 3rd September, 1979. It is further assertion of the plaintiffs that the consignment in question belonging to the plaintiffs was lost in the high seas and since the entire cost of consignment having been paid and there being a completed contract of insurance, the plaintiffs had vide Notice of Claim of 9th October, 1979 demanded Rs.19,84,000/- from the defendant with a request to have the loss C.S. (OS) No. 653/1980 Page 2 surveyed but defendant No.1 vide Reply of 15th February, 1980 had attempted to wriggle out of the contract of insurance, after the ship in question had sunk, on untenable plea that the vessel "OH DAI" was not approved one. Plaintiffs assert that defendant No.1 had certified the eligibility of vessel "OH DAI" by their act of accepting additional premium from the other parties whose goods were also shipped in the vessel "OH DAI", whereas no additional premium was demanded from the plaintiffs who would have willingly paid it. Interest @ 18% p.a. on the insured amount has been claimed by the plaintiffs in this suit, which is resisted by defendant No.1 by disputing the plaintiffs‟ claim and by asserting that since the consignment was not sent by approved vessel, therefore, they are not liable to pay any amount. Defendant No.4, banker of the plaintiffs has filed the written statement admitting that the plaintiffs had opened a letter of credit and stated that no relief has been claimed against defendant No.4. The remaining defendants had chosen not to contest this suit and were accordingly set ex-parte.
3. The issues claimed by the contesting parties are as under:-
i) Whether the plaint is signed, verified and instituted by a duly authorized and competent person?
ii) Whether the plaintiff entered into contract with defendants No.2 and 3 for purchase of P.V.C. Resin of the value of Rs.13,22,912/-. If so, on what terms?
iii) Whether the contract of insurance between the plaintiff and defendant is not enforceable?
C.S. (OS) No. 653/1980 Page 3
iv) Whether the suit is bad for misjoinder of parties or
causes of action?
v) Whether the policy of insurance is void ab initio on
account of suppression of material facts as alleged in paras 1 and 2 of the written statement of defendant No.1?
vi) Whether the policy of insurance is liable to be avoided on account of fraud as alleged in para 3 of the written statement on merits?
vii) Whether the policy of insurance is liable to be avoided on account of the fact that the 'Oh Dai' is not a first class/approved vessel as alleged in para 6 of the written statement of defendant No.?
viii) Whether any purported consignment of PVC resin, allegedly insured, or at all, was loaded and shipped on board the vessel S.S. OH DAI at Singapore?
ix) Whether the plaintiffs were buyers of any goods or the owners of PVC resin worth Rs.13,22,912 or any other amount?
x) Whether the purported goods/consignment ever existed, and if so, did the plaintiffs have insurable interest and property in the goods?
xi) Whether the suit is maintainable against defendant No.4?
xii) Whether the plaintiff is entitled to any amount against the defendants? If so, against which of the defendants? OPP
xiii) Whether the plaintiff is entitled to interest? If so, on what amount, at what rate and for what period? OPP
xiv) Relief.
C.S. (OS) No. 653/1980 Page 4
4. At the trial, plaintiff No.2-Shri P.N. Piplani had stepped into the witness box as PW.1 to depose in support of the averments made in the plaint. The two witnesses of defendant No.1-Company are Shri P.K.
Nagpal DW.1, who has deposed in support of the stand taken by defendant No.1 in the written statement and Shri T.S. Sawhney DW.2, who has maintained that vessel-„OH DAI' is not an approved vessel and is a junk ship purchased by the exporter and is got sunk in the high seas. No other evidence has been led by either side.
5. When this matter was heard, learned counsel for the contesting parties had not only made their submissions but had also extensively referred to the evidence on record and with their able assistance, the conclusion arrived at, on the issues framed is herein as under:- Issue No.(i)
6. There is no worthwhile challenge to the valid institution on this suit by plaintiff No.2, a registered partner of plaintiff No.1-firm on the basis of 'Form A' Ex.PW.1/A and „Form-C' Ex.PW.1/A-1. Thus, it is held that this suit is validly instituted on the strength of the aforesaid documents. This Issue stands answered accordingly. Issue Nos.(iv) & (xi)
7. These two Issues of mis-joinder and maintainability were framed on the basis of the preliminary objections taken by defendant No.4 in the written statement. At the hearing, Issue No.(iv) was not pressed and since no relief has been claimed against defendant No.4, therefore, not C.S. (OS) No. 653/1980 Page 5 much was said even on Issue No.(xi) by learned counsel for defendant No.4. In any case, it transpires that if even defendant No.4 is not a necessary party, was at least a proper party for effective adjudication of the disputes. Therefore, it is held that this suit does not suffer from any mis-joinder of parties and is maintainable. These two issues are accordingly answered.
Issue Nos.(ii) & (ix)
8. In pursuance to the Contract of 11th June, 1979 (Ex.PW-1/B), as per Invoice of 1st September, 1979 (Ex.PW-1/C-3) by Defendant No. 2 to the Plaintiff, the consignment in question worth Rs.13,22,912/- was dispatched by Defendant No. 2 to the Plaintiff vide Bill of Lading (Ex.PW-1/D4), Certificate of Origin/Processing (Ex.PW-1/C-5) on 1st September, 1979 and intimation of the same was given by Defendant No. 2 to the Plaintiff on the same day vide Communication (Ex.PW-1/C-
1) and the Plaintiff had instructed its Banker - Defendant No. 4 to honour the Letter of Credit and to make the payment as per the aforesaid Invoice to Defendant No. 2, which was accordingly done and the intimation of the same was given by the Banker - Defendant No. 4 to the Plaintiff vide Communication of 28th February, 1980.
9. In support of the aforesaid documentary evidence, Plaintiff‟s witness - Mr. P.N. Piplani, PW-1 has deposed in no uncertain terms and I find that there is no worthwhile cross-examination of this witness by the Defendant in respect of the aforesaid documents except that C.S. (OS) No. 653/1980 Page 6 Plaintiff has pleaded ignorance about criminal investigation being carried out in respect of the aforesaid documents. However, the Defendant in the evidence of P.K. Nagpal (DW-1) has asserted that Defendant No.3, partner of Defendant No. 2 alongwith another partner Mr. Bhagwan Singh was convicted by the Singapore Court in a case of cheating, etc. for negotiating false export documents and copy of the Judgment of the aforesaid criminal case is stated to be on record of Suit No. 1/1982. Interestingly, the Defendant has got examined the Plaintiff of Suit No.1/1982 - Mr. T.S. Sawhney, as DW-2, but he has not stated anything about the conviction of Defendant No. 3 in the aforesaid criminal case nor it has been shown by the Defendant as to whether the aforesaid documents in question were the subject matter of the above said criminal case, therefore, in the opinion of this Court, the Defendants have clearly failed to establish that the aforesaid documents (Ex.PW-1/C-1 to PW-1/C-5) are forged or fictitious. Accordingly, it is held that the Plaintiff succeeds in proving that the consignment in question was dispatched by Defendant No. 2 from Singapore to the Plaintiff vide aforesaid documents and the Plaintiff was the buyer of the aforesaid consignment for a consideration of Rs.13,22,912/-. Accordingly Issue No. (ii) & (ix) are answered in favour of the Plaintiff. Issue Nos.(iii), (v) to (viii) & (x)
10. These six Issues are inter-related and are being taken up together. The crucial Issue is Issue No.(vii), which pertains to the C.S. (OS) No. 653/1980 Page 7 validity of the insurance of the consignment in question. Though no policy of insurance was issued by Defendant No.1 in respect of the Cover Notes of 19th June, 1979 (Ex.PW-1/E & Ex.PW-1/F) regarding the consignment in question, but the existence of the aforesaid two Cover Notes is not in dispute. What is disputed, is the enforceability of these two Cover Notes because the vessel - "OH DAI" vide which the consignment in question was dispatched, was not a first class/approved vessel. From the Communication of 11th September, 1979 (Ex.P-3) of the Defendant to the Plaintiff, it becomes evident as to which kind of vessels are first class/ approved vessels. It is not in dispute that the vessel "OH DAI" in question, vide which the consignment was dispatched by Defendant No. 2 to the Plaintiff, was not a first class/approved vessel. The endeavour of the Plaintiff has been to show that the vessel "OH DAI" in question comes within the third category - 'and/or conveyance (particulars of which to be declared)', as disclosed in the Cover Notes (Ex.PW-1/E & Ex.PW-1/F).
11. During the course of hearing, learned Counsel for the Plaintiff had proceeded to rely upon unexhibitted documents of the Defendant- Insurance Company, i.e., a letter and two telegrams of 18th September, 1979, and letters of 14th September, 1979 and 24th September, 1979, sent by the Plaintiff to the Defendant - Insurance Company, and letter of 22nd September, 1979 (Ex.P2) by the Defendant - Insurance Company to the Plaintiff, letter of 4th October, 1979 by Defendant No. 4 C.S. (OS) No. 653/1980 Page 8 to Defendant - Insurance Company as well as Legal Notice of 10th October, 1979 by the Plaintiff to Defendant - Insurance Company to assert that the aforesaid correspondence clearly establishes the bona fides of the Plaintiff in this matter and the protest of the Plaintiff against attempts of the Defendant - Insurance Company to wriggle out of its liability under the aforesaid Insurance covers.
12. Upon perusal of the aforesaid Communication and scrutiny of evidence on record, I am of the considered view that the reliance placed by the Plaintiff on the aforesaid Communication does not advance the case of the Plaintiff for the reason that it is crucial for the Plaintiff to first establish that the consignment in question was sent by an approved vessel. On this aspect, Plaintiff has chosen to rely upon the deposition of T.S. Sawhney (DW-2), who is a Plaintiff of Suit No.1/1982, which is pending and from his evidence what is sought to be brought out by the Plaintiff herein is that on the payment of additional premium by Mr. Sawhney (DW-2), this very vessel "OH DAI" was insured by Defendant
- Insurance Company and in this regard the Communication (Ex.DW- 2/1) is referred to by learned Counsel for the Plaintiff to particularly point out that though the vessel "OH DAI" was admittedly over-aged but still, the Defendant - Insurance Company had insured it by taking additional premium whereas from the Plaintiff, no additional premium was ever demanded and so, the Defendant - Insurance Company cannot be permitted to turn around and deny the liability to pay the insured amount C.S. (OS) No. 653/1980 Page 9 under the insurance covers in question. Reliance was placed upon decision in United India Insurance Company vs. M.K.J. Corporation, (1996) 6 SCC 428, to contend that the contracting parties are under a duty to observe utmost good faith and the Defendant - Insurance Company is not acting in good faith by resorting to such tactics.
13. In the considered opinion of this Court, the question of demand of additional premium for insuring the vessel "OH DAI" in question would only arise when the Plaintiff succeeds in proving that the particulars of the vessel "OH DAI" in question were declared to the Defendant - Insurance Company. This was the requirement of the Cover Notes (Ex.PW-1/E and Ex.PW-1/F). Plaintiff‟s evidence is lacking on this vital aspect and therefore, the Plaintiff cannot be heard to say that for this very vessel "OH DAI" Defendant - Insurance Company in another matter had insured it by taking additional premium. In any case, the suit by T.S. Sawhney (DW-2) is subjudiced and therefore no implicit reliance can be placed upon his deposition to reach to a conclusion that because from him, additional premium was taken, therefore, the vessel in question "OH DAI" be taken to be an approved vessel. It would be pertinent to point out that this witness T.S. Sawhney (DW-2) in his evidence categorically stated that the vessel "OH DAI" is not an approved vessel and it was a junk ship purchased by exporter and was got sunk in the high seas. Though no admission was required by T.S.
C.S. (OS) No. 653/1980 Page 10 Sawhney (DW-2) regarding Defendant - Insurance Company being not liable to pay the claim, if there is a breach of the terms and conditions of the policy of insurance, because otherwise also, it is the settled law.
14. Since the Plaintiff has failed to prove that the Plaintiff had declared to the Defendant - Insurance Company that the consignment in question was being sent by vessel "OH DAI" therefore it is held that the Plaintiff has committed a breach of the crucial term - 'first class and/or approved steamer and/or conveyance (particulars of which to be declared)' as stipulated in the Insurance Covers (Ex.PW-1/E & Ex.PW-1/F). Accordingly, it is held that the Defendant - Insurance Company is not liable to pay the insured amount because of the aforesaid breach and thus, Issue no.(vii) is answered against the Plaintiff. Consequentially, Issue No.(iii) is also answered against the Plaintiff while holding that the Insurance Cover/Policy is not enforceable by the Plaintiff against the Defendant No.1 - Insurance Company. The burden to establish the insurance policy/cover being vitiated by element of fraud/suppression of facts was upon the Defendant - Insurance Company, which they have failed to discharged, therefore, Issue No.(v) & (vi) are answered against Defendant No.1 - Insurance Company.
15. In view of the aforesaid findings returned on Issues No.(iii) & (vii), it is held that there was no insurable interest in respect of the consignment in question, so accordingly, Issue No.(viii) and (x) are answered against the Plaintiff.
C.S. (OS) No. 653/1980 Page 11 Issue Nos.(xii) & (xiii)
16. Since in the preceding paragraphs, it has been held that the insurance in respect of the consignment in question is not enforceable against Defendant No.1- Insurance Company, therefore, consequentially, these two Issues of entitlement to recover the insured amount with interest have to be necessarily answered against the Plaintiff. It is accordingly done. Both these Issues are decided against the Plaintiff.
Issue Nos.(xiv)
17. In view of the findings returned as aforesaid, this suit and the pending application are dismissed while leaving the parties to bear their own costs.
Sunil Gaur, J.
May 02, 2011 pkb C.S. (OS) No. 653/1980 Page 12