M/S. Impex Services & Anr. vs The Oriental Fire & General ...
2011 Latest Caselaw 2336 Del

*                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
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C.S. (OS) No. 653/1980                                            Page 12