1 SSK IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION APPEAL NO. 449 OF 2006 in SUIT NO.581 OF 1984 Smt. Shamina Amirali Mukadam .....Appellant Vs. The New India Assurance Company Limited .....Respondent Ms. Harshad Trivedi a/w. Mr. A.P. Wachasundar i/b. Mr. Dave for Appellant. Mr. F. Dubash with Ms. Meeta Dagli i/b. M/s.Mulla & Mulla & C.B. & C. for Respondent. CORAM : D. K. DESHMUKH & R. V. MORE, JJ. DATE : 29TH APRIL, 2010. P.C.: The original plaintiff takes exception to the judgment and decree dated 3rd August, 2004 passed by the learned Single Judge in suit no. 581 of 1984. 2 2. The brief facts giving rise to the present appeal are as follows: The plaintiff’s case is that she is the owner of Motor Vessel “Maimoona” (AL RIYAZ) and in respect of the said vessel the defendants had issued a policy of insurance coverage under policy no.822912009. The said vessel was loaded at Porbunder Port with cargo and consigned to M/s.Snowcem India Ltd. The vessel sailed from Porbunder Port on 27th November, 1981 at about 15.00 hours. The vessel sunk near Madwad Light House on 30th November, 1981 at about 16.00 hours due to heavy and stormy weather. The plaintiff was able to save the machine and other parts to the extent of the value of Rs.34,000/- only. The plaintiff arranged for a survey by an independent surveyor- M/s. Mathuradas Damodar & Company who made a survey report dated 27 July, 1982. The plaintiff’s case proceeds further that she informed the defendants about the above incident and requested them to pay the amount under the above policy of insurance. The defendants, however, refused to make payment on the ground that the plaintiff failed to pay the insurance premium on time. It is also the case of the plaintiff that after making necessary enquiries, the defendants issued policy for the year 1981-82 stating the value of the vessel to be Rs.2,50,000/-. The defendants agreed to the payment of premium in instalments and the plaintiff paid the first two instalments of the premium. It is the specific case of the plaintiff that the 3rd and 4th instalments 3 of the premium were forwarded under covering letter dated 26th November 1981 and the same must have been received by the defendants by the end of November, 1981. The plaintiff informed the defendants that the vessel was lost due to the perils of the sea by telegram dated 2nd December, 1981. The defendants thereafter by their letter dated 20th May, 1982 rejected the plaintiff’s claim and returned the cheque. The defendants in their letter informed the plaintiff that they received the letter dated 26th November, 1991 on 4th December, 1981 i.e. after the vessel was lost. The plaintiff’s case therefore, is that she made no default in payment of the premium and therefore, the defendant/Insurance Company is liable to make good the loss, and hence the above suit is filed to recover the amount of Rs.2,50,000/- together with interest in respect of the insurance claim. The defendants admitted that the proposal was received for insuring the vessel against risk inter-alia of total loss effective from 19th February, 1981 to 18th February, 1982. The premium was worked at 5% of the value of the vessel declared in the proposal form which was Rs.2,50,000/- and therefore, premium payable at 5% was Rs.12,500/- plus a stamp fee of Rs.62.50 paise. The defendants also admitted that they granted facility to the plaintiff to pay the premium in instalments. However, it is the specific case of the defendants that the plaintiff was required to pay 40% of the premium amount as and by way of the 1st instalment of 4 premium alongwith stamp fee of Rs.62.50 paise. The plaintiff however made payment of Rs.4387.50 on 19th February, 1981 towards the first instalment and payment of Rs.2,175/- towards the second instalment was made on 22nd May, 1981. The payment of 3rd and 4th instalments of premium was not paid on the scheduled dates and same was also short. In the above circumstances, it is the defendants’ case that in view of clause 2 of the said policy, the policy ceased to operate. Thus, in short, the defendants’ case is that the plaintiff is not entitled to claim any amount from the defendants for non-payment of premium in accordance with the said policy. 3. The learned Counsel for the plaintiff submits that payment of 1st and 2nd instalments was made on 19th February, 1981 and 22nd May, 1981. The payment of 3rd and 4th instalments was due on 19th August, 1981 and 19th November, 1981. The payment was forwarded alongwith the covering letter dated 26th November, 1981 prior to the date on which the vessel sunk. The payment must have been received by the defendants by the end of November, 1981. The defendants, therefore, deemed to have waived the delay occurred in forwarding the 3rd and 4th instalments. He further submitted that the Insurance Policy was never issued by the defendants to the plaintiff and therefore, the plaintiff was not aware of the terms of clause 2 of the said policy. It was also further submitted that in the absence of 5 knowledge of clause 2 of the said policy, the plaintiff could not have expected to comply the same. The learned Counsel appearing for the plaintiff lastly submitted that clause 2 of the said policy is contrary to the provisions of section 23 of the Marine Insurance Act and therefore, on the basis of the said clause, the plaintiff’s claim cannot be rejected. 4. The learned Counsel for the defendants on the contrary supported the impugned judgment and decree. He submitted that the plaintiff has not only defaulted payment of instalments of premium but the payment of each of the instalments was short. He kept reliance on clause 2 of the said insurance policy to support defendants’ contention that the policy ceased to operate for non-payment of instalments of premium on time. The learned Counsel for the defendants pointed out that the defendants specifically denies waiver of non-payment of premium in accordance with the said policy. The learned Counsel for the defendants relied upon provisions of section 54 of the Act, in order to justify non- issuance of the policy to the plaintiff. In sum and substance, it is the case of the defendants that the plaintiff has committed default in payment of instalments of premium of the Insurance Policy and therefore, the defendants are not liable for any claim which arose out of loss of the said vessel. 6 5. Having heard the learned Counsel appearing respective parties and having gone through the impugned judgment and decree alongwith the documents and evidence of the parties, we find no merit in the appeal. There is no dispute that the defendants received the plaintiff’s proposal form for insuring the said vessel against risk interalia of total loss effective from 19th February, 1981 to 18th February, 1982. There is also no dispute that the premium was worked out at 5% of the value of the vessel as declared in the proposal form. In the proposal form the value of the vessel was declared as Rs.2,50,000/-. If the above figures are taken into consideration, then, the premium payable at 5% would be Rs.12,500/- in addition to the stamp fee of Rs.62.50 paise. The defendants granted facility to the plaintiff for paying the premium in four instalments i.e. 40% of the premium amount alongwith stamp fee was to be paid by way of 1st instalment and remaining 3 instalments were to be paid after every three months after the payment of the 1st instalment. If the above figures are taken into consideration, the amount of 1st instalment would be 5062.50 paise, the amount of 2nd, 3rd and 4th instalments would be Rs.2500/- respectively. The plaintiff paid a sum of Rs.4387.50 paise on 19th February, 1981 and thereafter payment of Rs.2,175/- was made on 22nd May, 1981. The payment of 1st instalment was short of Rs.675/- and the payment of 2nd instalment was short of Rs. 325/-. So far as 3rd and 4th instalments are concerned, the plaintiff did not pay those instalments on due dates. However, alongwith the covering letter 7 dated 26th November, 1991, she sent a cheque for an amount of Rs.4387/- which according to the defendants was received only on 4th December, 1981. The clause 2 of the Insurance Policy reads as follows: “2. Notwithstanding the provisions of the preceding clause, upon non-payment of any instalment on its due date, the whole of the amount of premium of the balance as the case may be shall become immediately due and payable and without prejudice to the right of the insurer to recover the same, this policy, from the time and date of the default in payment of instalment shall cease to operate, and as from that time no liability shall attach to the insurer under the policy, nor shall any claim arising hereafter be entertained or be payable under the policy.” Perusal of the above clause makes it clear that in the event of any default in payment of the premium, the whole of the amount of the premium or the balance amount, as the case may be shall become payable immediately. The consequences are also provided for non-payment of 8 premium viz. in the event of default in payment of premium, the policy shall cease to operate and no liability shall attach to the defendant under the policy. If the schedule of payment by the plaintiff towards instalments of premium and Insurance Policy is considered alongwith clause 2 of the policy, then, we find merit in the defendants’ case that the policy ceased to operate. The plaintiff made payment of the 1st instalment on 19th February, 1981, however, same was short of Rs.675/-. The payment of 2nd instalment of premium was short of Rs.325/- and payment of 3rd and 4th instalment was not only made belatedly but was also short by Rs.612.50 paise. Thus, the plaintiff made short payment aggregrating to Rs.1612.50 paise and therefore, automatically clause 2 of the said policy comes into effect and the policy ceases to operate. 6. The learned Counsel for the plaintiff submitted that the policy of insurance was never issued to the plaintiff and therefore, she was not aware about clause 2 of the said policy under which the policy ceased to operate for non-payment of instalments of premium on time. We find submission is without any merit. The provisions of section 54 of the Marine Insurance Act, which reads as under: “S.54. When premium payable. - Unless otherwise agreed the duty of the assured or his 9 agent to pay the premium, and the duty to the insurer to issue the policy to the assured or his agent, are concurrent conditions, and the insurer is not bound to issue the policy until payment or tender of premium”. The above provisions makes it abundantly clear that the actual policy is not liable to be handed over by the defendants to the plaintiff until payment of premium is made. Admittedly, the premium was not paid on time and therefore, the defendants were justified in non-issuance of the policy. At this stage, it is worth to note that the plaintiff could not substantiate her case that terms and conditions of the Insurance Policy were never brought to her notice. The plaintiff has not examined herself. In our view, the fact that plaintiff was not aware of the terms and conditions of the Insurance Policy was within exclusive knowledge of the plaintiff and therefore, it was necessary for her to have stepped into the witness box and asserted to that effect. In the absence thereof, an adverse inference is required to be drawn against her to the effect that she was aware and considered herself to be bound by the terms of the policy including the said sub-clause 2 of the Insurance Policy. 10 7. This takes us to consider the question of waiver by the defendant. Under clause 2 of the Insurance Policy, the defendants were entitled to recover any balance amount due and payable towards premium but in the event of any default in payment of any premium, the whole of the amount of premium or the balance, as the case may be, shall become payable immediately. The consequence of non-payment of premium in terms of the policy, results in policy being ceased to operate and from that time no liability shall be attached to the defendants under the said policy, nor shall any claim thereafter be entertained or be payable under the policy. Thus, the effect of the policy ceasing to operate and the defendants right to recover the balance amount are independent and without prejudice of each other. The policy, in other words, not only ceases to operate upon default in payment of premium but further in such event, the defendants are entitled to recover the balance premium payable. In our view, the alleged acceptance of the 3rd and 4th instalments by the defendants after the date on which the vessel was lost will not amount to waiver of clause 2 of the Insurance Policy by the defendants. Mere acceptance of the premium which has been paid belatedly or paid short would not construe waiver on the part of defendants. 8. The learned Counsel for the plaintiff submitted that clause 2 of the Insurance Policy is contrary to the provisions of section 23 of the Marine 11 Insurance Act. This argument is advanced for the first time at the time of hearing of the appeal. The defendants specifically relied upon clause 2 of the Insurance Policy and infact same was quoted in their written statement. The plaintiff thereafter amended the plaint, however, failed to challenge the validity of the said clause on the ground that it is contrary to the provisions of section 23 of the Marine Insurance Act. This ground of objection was not advanced before the learned Single Judge by the plaintiff and therefore, inter-alia there is no discussion on the said aspect in the impugned judgment and decree. The said point is also not taken in appeal memo by the plaintiff and the plaintiff, therefore, at the stage of final hearing of the appeal cannot be allowed to agitate the said point. We therefore, find no merit in the submission in this regard. Taking over all facts and circumstances into consideration, we find that the learned Single Judge has appreciated the facts and arrived at correct conclusion. We do not find any error in the impugned judgment and decree after re-appreciating the facts of the case. The appeal is without any merits and therefore, deserves to be dismissed. Appeal is accordingly, dismissed. (D. K. DESHMUKH, J.) (R. V. MORE, J.)