Case: M/S. Sea Lark Fisheries Vs. United India Insurance Co.

2. Appellant was the owner of a Sea Vessel known as. The vessel was engaged for fishing purposes. Appellant obtained a loan from Canara Bank (Bank). At the time of sanction of loan, the Bank obtained an insurance policy from the respondent no. 1 in respect of the said vessel. It was insured on 12.04.1979 to cover the period from 12.04.1979 to 12.04.1980. It was later on renewed for the period 12.04.1980 and 11.04.1981. The vessel sunk on 21.07.1980. A claim was made in that behalf, which having been repudiated by the respondent No. 1, a civil suit marked as Suit No. 333 of 1983 was filed by the appellant and the Bank before the High Court of Judicature at Madras. Respondent no. 1 in its written statement inter alia contended that the vessel was notissues were framed. Issues No. 2 and 4 which are relevant for our purpose are asWhether the defendant is liable to pay the suit claim?4. Whether the defendant is right in repudiating liability under theThe suit was decreed by a learned Single Judge of the High Court inter alia on the premise that one Hemchandra Babu who was the agent of the insurer and who had filled in the form, kept blanks therein for which the Bank could not be held responsible. An appeal preferred by the respondent no. 1 against the said judgment, however, has been allowed by a Division Bench of the Madras High Court.4. Appellant is, thus, before us.

Court's reasoning:
17. Where there has been a suppression of fact, acceptance of the policy by an officer of the insurance company would not be binding on it. The Division Bench of the High Court, in our opinion, having regard to the statutory provisions, has rightly held that the plaintiff suppressed the material fact. Moreover, in view of the statutory rules, the court would have no other option but to hold that the vessel was not seaworthy.The Division Bench of the High Court has noticed Rule 31 of the Tamil Nadu Minor Ports Harbour Craft Rules, 1953 which mandates posting of a Master or Serang and one Engineer or Engine Driver in every mechanically propelled vessel, when used. The driver is required to possess a certificate of training issued by the Department of Fisheries. Rule 32 of the said Rules prescribes the method of obtaining a certificate of competency as Master or Serang. Not only did the proposal for insurance not contain the said details but also no evidence in that behalf was brought on records.11. The submission of the learned counsel that the appellant was not allowed to furnish information cannot be accepted as such a plea was not raised in theinspection report is dated 17.04.1980. A survey was conducted by a surveyor (weknow at whose instance) on 25.11.1979 at 6 p.m. For what purpose such a survey was conducted is not known. Why a report was submitted after more than four months from the date of conducting the survey is also beyond our comprehension.Section 19 of the Act states that insurance is uberrimae fidei. Section 20 provides for disclosures by the assured. The question as to whether a particular circumstance which is not disclosed is material or not is essentially a question of fact. What facts need to be disclosed and what need not, have clearly been laid down in(2) and (3) of Section 20 respectively. Section 21 of the Act provides for the disclosure by an agent effecting the insurance. The Bank having acted as an agent, thus, had a responsibility to disclose all material facts. The insurance policy was marked as Ext.It was also referred to in the plaint. We have noticed hereto before the material part thereof.