M/S. Peacock Plywood Pvt. Ltd vs The Oriental Insurance Co. Ltd

The relevant clauses of the said contract are as under:

The ship developed engine troubles and was held up at Singapore Port till 13th March, 1988. It sailed for Port of Calcutta thereafter. It was, however, immobilised on reaching high sea at Anadamans. It underwent repairs but eventually returned back to Malaysia. Indisputably, Appellant kept Respondent Insurance Company informed all through. While at Malaysian Port, the ship was arrested at the instance of one Gobsobs, one of the owners of the cargo in May, 1988. Appellant filed a caveat in the said proceedings with a view to take appropriate steps to have the logs belonging to it released.

The Malaysian Court discharged the order of arrest on 30th December, 1988 and the ship eventually proceeded again towards Singapore. At Singapore, the ship became stranded. On 3rd January, 1989, it offloaded its cargo and did not resume its journey. Appellant, however, with a view to minimise its loss due to non-delivery, took steps to recover the cargo or its value and on an application filed by it, the High Court of the Republic of Singapore in suit No. 711 of 1989 passed an order on 9th June, 1989 allowing the sale of the cargo. Admittedly, Appellant had received a sum of Rs. 20,01,743.53 out of the sale proceeds.

Aggrieved thereby, Respondent filed an intra-court appeal before a Division Bench of the said High Court which was marked as APD No. 363 of 2000. The High Court held that the repudiation of claim having been made on 8th July, 1988, subsequent correspondences having been marked as 'without prejudice', the same would not amount to extension of period of limitation as the suit was filed on 7th August, 1992. In regard to the correspondences passed between the parties, it was opined:

(b) the cost of recovering the ship or goods, as the case may be, would exceed their value when recovered; or

In estimating the cost of repairs, no deduction is to be made in respect of general average contributions to those repairs payable by other interests, but account is to be taken of the expense of future salvage operations and of any future general average contributions to which the ship would be liable if required; or

towards freight and other charges like loading into ship etc. at Singapore i.e. US $75/- per CBM i.e. 2057.73 CBM x US $ 75 $1,54,329.75 x Rs. 16.90 = Rs. 26,08,172.77

b) Expenditure to be borne by us towards Duty and clearing expenses i.e. Rs. 721/- CBM i.e. 2057.73 CBM x Rs. 721/- per CBM comes = Rs.

14,83,623.30 Total = Rs. 40,91,796.07 The best price that we can get for the said Cargo in Calcutta is Rs. 1942/- per CBM.

Therefore, the total sale realization will be as under:

The said decision cannot be said to have any application in this case in view of the extended terms of policy. Non-delivery of goods may be on any account. It need not always be a 'case of reasonably abandoned'. The meaning of the expression 'peril insured against' would depend upon the terms of the policy. The policy was extended to a case where the costs of transportation would be more than the value of the goods. Marine Insurance Act is subject to the terms of insurance policy. Where the insurer takes additional premium and insure a higher risk, no restrictive meaning thereto need be given. A term of the policy must be given its effect. While construing a contract of insurance, the reason for entering thereinto and the risks sought to be covered must be considered on its own terms.

This leaves us to the question as to whether the exclusionary clauses contained in the insurance policy are attracted.

For the reasons aforementioned, the appeal is allowed and the impugned judgment of the Division Bench is set aside and the judgment and order of the learned Single Judge is restored. Appellant shall be entitled to costs throughout. Counsel's fees in this appeal assessed at Rs. 10,000/-.