HON’BLE SRI JUSTICE VILAS V. AFZUL PURKAR A.S. No.863 of 1994 and A.S. No.208 of 1994 Date: August 13, 2010 A.S. No.863 of 1994 Between: 1. Lanka Krishnavenamma and 4 others. … Appellants And 1. United India Insurance company Ltd., rep. by its Manager, Madras & 3 others. … Respondents * * * A.S. No.208 of 1994 Between: United India Insurance Co., Limited, Represented by its Manager, Madras. … Appellant And 1. Lanke Krishnavenamma & 7 others. … Respondents * * * HON’BLE SRI JUSTICE VILAS V. AFZUL PURKAR A.S. No.863 of 1994 and A.S. No.208 of 1994 COMMON JUDGMENT: Both these appeals are directed against the judgment and decree of the learned I Additional Subordinate Judge, Kakinada, in O.S. No.357 of 19883 dated 16.10.1993. While A.S. No.208 of 1994 is preferred by the Insurance company, which was arrayed as first defendant in the suit, the appeal A.S. No.863 of 1994 is preferred by the plaintiffs to the extent of disallowed claim. 2. Both the appeals have been heard together and the learned counsel for appellant-plaintiff as well as the learned counsel for Insurance company have made detailed submissions with respect to their separate appeals. 3. For the sake of convenience, the parties are referred to as plaintiffs and defendant No.1 as they are arrayed in the suit. 4. The facts in brief, which may be noted for appreciation of the contentions, are as follows: The plaintiffs are owners of a shipping vessel in the name of M.S.V. Lankeswar. First plaintiff is the wife of Lanke Balarama Murthy who was a well experienced person in navigation and plaintiffs 2 to 4 and defendant No.4 are his children. First plaintiff’s husband constructed a vessel in May 1975 for which State Government i.e., defendant No.2 granted loan to him wherein ¾ of the cost of construction was covered by the said loan. The design for construction of the vessel was approved by the Port Authorities and the husband of the first plaintiff constructed a ship accordingly which was later approved by the Director General of Shipping. He, however, died in November 1978 and second plaintiff completed the rest of the work of construction of the vessel. The vessel was granted licence on 03.02.1979 and was registered as M.V.S. Lankeswar K.K.D. 201 on 27.3.1979. Ex.B-25, Ex.B-26 and Ex.B-27 are the relevant certificates dated 27.3.1979 showing the registration as well as free board certificate required for sailing vessel given by the Government of India as well as the certificate of inspection of the sailing vessel. 5. The said vessel was insured with the first defendant for the period from 19.4.1979 to 05.6.1979 for a sum of Rs.5.00 lakhs under cover note dated 06.6.1978 which was filed and marked as Ex.B-15 dated 06.6.1978 and the insurance policy as such was marked as Ex.B-33. The vessel has undertaken a voyage from Kakinada to Calcutta with load of rice. There is evidence on record that while loading the goods in the vessel it was supervised by the port authorities and the officers of D-1 insurance company as well. The vessel started journey on 19.4.1979, but sank on 29.4.1979. According to the plaintiffs, after the initial insurance under Ex.B-15 read with Ex.B-33 dated 06.6.1978 referred to above covering the period from 05.6.1978 to 05.6.1979, the plaintiffs had corresponded with D-1-insurance company to increase the insurance coverage to Rs.10.00 lakhs. It is also their case that under the letter of D-1- insurance company Ex.B-20 dated 20.4.1979 D-1 asked them to pay extra premium for additional coverage of 5 more lakhs. The plaintiffs sent the cheque for the said additional coverage to D-1 under Ex.B-23 dated 26.5.1979. The plaintiffs therefore instituted the present suit against D-1- insurance company seeking recovery of Rs.10.00 lakhs by alleging that they had premium for Rs.10.00 lakhs under the correspondence referred to above and that the first defendant- insurance company having denied its liability, they filed the present suit for recovery of the said amount. It is also admitted that since the State Government, defendant No.2, granted the loan to the plaintiffs they are beneficiaries in the insurance policy in the first instance. 6. The said suit was resisted by D-1-insurance company by claiming that the vessel was not sea worthy nor it could be called as a vessel on the date of insurance and it was only a hulk on which the vessel was built subsequently. They also claimed that the vessel is not sea worthy was established by the admissions of second plaintiff in response to the questionnaire Ex.B-68 issued by the surveyor of the D- 1-insurance company and the liability to pay insurance was denied. They also claimed to the extent of additional coverage of Rs.5.00 lakhs, that the correspondence as well as the payment of premium being subsequent to the accident, which was not disclosed, the insurance company is not liable for the additional coverage of Rs.5.00 lakhs. 7. On these rival pleadings, the trial court framed the following issues: 1) Whether the suit is not maintainable under law without succession certification in favour of plaintiff Nos.2 to 5 as pleaded by defendant No.1? (2) Whether the suit is bad for mis-joinder of parties? 3) Whether the plaintiffs are entitled for the suit amount from defendant No.1? 4) To what relief? The following additional issue was also framed: 1) Whether the plaintiff violated warranty conditions in sailing beyond north of Visakhapatnam and if so, whether they are disentitled to the suit claim? 8. Second plaintiff examined himself as P.W.1, whereas the insurance company examined D.W.1, the Port Officer, and D.W.2, Officer of D-1 company. On behalf of plaintiffs Exs.A-1 to A-14 were marked, whereas D-1 marked Exs.B-1 to B-70 and reference to the important documents has already been made in the paragraphs above. 9. The court below, on consideration of the oral and documentary evidence, came to the conclusion that the vessel was established as sea worthy and having requisite licences and permissions and that it was not overloaded at the time of commencement of journey and there was a valid insurance coverage on the date of accident to the extent of an amount of Rs.5.00 lakhs. The Court below however did not accept the plaintiffs’ case that they are entitled to additional coverage of Rs.5.00 lakhs on the basis of premium paid by them, subsequent to the accident and to the extent of initial coverage Rs.5.00 lakhs, therefore a decree was passed against first defendant. 10. In this appeal, the learned counsel for the plaintiffs contends that the correspondence, particularly Exs.B-18 to B-20, between the plaintiffs and D-1 ultimately culminated into defendant No.1 asking the plaintiffs to pay extra premium for additional Rs.5.00 lakhs under the letter Ex.B-20 dated 20th April 1979. The said extra premium was further paid by the plaintiffs under Ex.B-23 dated 26.5.1979 and the said cheque having been encashed by defendant No.1 on 28.5.1979, the first defendant-Insurance company cannot avoid its liability to the extent of additional Rs.5.00 lakhs as well. He also submits that the evidence on record establishes that the insurance company was involved right from the initial stage and had insured the vessel from time to time under various insurance policies before the policy Ex.B- 33 with which we are now concerned. The learned counsel therefore submits that the attempt on the part of the insurance company to disown its liability to the extent of additional coverage of Rs.5.00 lakhs is clearly not sustainable and the decree to that extent ought to have been granted to the plaintiffs. 11. Learned counsel for D-1-insurance company contends that the plaintiffs themselves have suppressed the accident dated 29.4.1979 and almost a month thereafter they had paid an extra premium for the additional coverage of Rs.5.00 lakhs. It is therefore established that on the date of payment of additional premium the vessel itself was no more and as such the insurance coverage to the extent of additional risk of Rs.5.00 lakhs could not have been procured. The learned counsel for insurance company also contends that the very grant of decree for Rs.5.00 lakhs on the basis of Ex.B-33 policy also is not justified inasmuch as plaintiff No.2 admits in the questionnaire Ex.B- 68, Annexure-J, that the water started seeping in to the vessel right from the date of journey and they had to employ mechanical forms to pump out the water from the vessel. The learned counsel, therefore, submits that the very sea worthiness of the vessel itself was in serious doubt and the risk of the insurance company in such case ought not to have enforced against the insurance company. He also submits that on the date on which the policy was taken, it was only a hulk and the vessel was built later thereon. He also points out the questionnaire, Annexure-J, referred to above that even according to second plaintiff the construction of the vessel was not in accordance with the specifications. He therefore submits that no vessel was in existence on the date of insurance policy and as such the said policy cannot be enforced against D-1. 12. I have considered the aforesaid submissions and after hearing both the learned counsel, the following issues arise for consideration: 1) Whether plaintiffs’ claim for coverage of initial Rs.5.00 lakhs under Ex.B-33 is sustainable? 2) Whether the plaintiffs are entitled to additional coverage of Rs.5.00 lakhs on the basis of payment of extra premium under Ex.B-23 dated 26.5.1979. 13. Point No.1: So far as first point is concerned, the evidence of D.W.1 would clearly answer the contentions of the learned counsel for the insurance company that the vessel was not sea worthy. D.W.1 was the Port Officer at the relevant point of time. He states in his evidence that Ex.B-1 is the plan for construction of the vessel approved by the Director General of Shipping, Government of India and it is the duty of P.W.1 as Port Officer to inspect the construction of the vessel at every stage. He confirms that he has supervised the construction and certified that the vessel is constructed as per specifications. Ex.B-25 is the certificate issued by him. He also states that marginal variations in the length, width or depth of the vessel while constructing will not affect sea worthiness of the vessel. He also exhibited Ex.B-34, office copy of sea trials report, regarding the vessel in question. He also filed Ex.B- 35 further report and confirms that at the time of loading of cargo in the vessel he along with the staff as well as staff of D-1 company were present. He therefore certifies that on being satisfied of the sea worthy condition of the vessel, the same was registered and permitted to carry the load. 14. As against the aforesaid evidence of D.W.1 there is no contra evidence on the part of defendant No.1-insurance company and the said evidence coupled with the officials’ certificate marked cannot be brushed aside and it cannot be said that the vessel was not sea worthy. The reliance of the learned counsel for defendant No.1 on the answers given by plaintiff No.2 in Annexure-J of Ex.B-68 therefore has to be appreciated in the light of the evidence of D.W.1 referred to above. 15. Whether the seepage of water as alleged would have resulted in the accident is also doubtful in view of the admitted fact that the vessel was on the journey in the sea from 19.4.1979 to 29.4.1979 i.e., a period of ten days when it actually sank. There is also evidence that the vessel sank on account of condition of weather near Calcutta and the weather reports were also filed. The court below had considered the said evidence and has come to the conclusion that the accident was caused only on account of act of God. The contentions of the insurance company regarding doubting the sea worthiness of the vessel are therefore liable to be rejected. 16. It is also not disputed that under the said policy there was no condition restraining the voyage of the vessel in any particular mode. In that view, the findings of the court below that D-1 insurance company is liable to the extent of initial coverage of Rs.5.00 lakhs covered under Ex.B-33 read with Ex.B-15, cannot be said to be vitiated by any error and therefore I am of the view that point No.1 is to be decided in favour of the plaintiffs. 17. Point No.2: To the extent of vessel coverage, the correspondence Exs.B-18 to B-20 and in particular Ex.B-20, letter of D-1 insurance company, is dated 20th April 1979; 9 days thereafter the vessel sank. The plaintiff had not paid any premium as soon as they received Ex.B- 20 and the premium was actually paid by cheque of the plaintiffs under Ex.B-23 dated 26.5.1979. As mentioned above, the said payment is almost a month after the vessel sank on the date of payment of extra premium. The plaintiff knew that the vessel is no more and has already sunk on 29.4.1979. Even if D-1 insurance company has acted on the basis of the said payment by encashing the cheque on 28.5.1979, the vessel as such was not in existence on the date of payment of premium. The plaintiffs, therefore, knowing the aforesaid facts have not disclosed the said fact while paying the premium. The trial court was therefore right in concluding that the extra coverage of Rs.5.00 lakhs cannot be claimed by the plaintiffs. I have therefore no reason to take different view that the one taken by the trial court. Point No.2 is accordingly answered against the plaintiff. 18. In view of the above, the appeal filed by the plaintiffs is liable to be dismissed. It is accordingly dismissed and further the appeal filed by the insurance company also fails, the same is also dismissed. There shall be no order as to costs. ____________________________ VILAS V. AFZULPURKAR, J Date: August 13, 2010. BSB