JUSTICE V.K. JAIN, PRESIDING MEMBER

        The complainant company purchased 5000 MT of Syrian Rock Phosphate from Euro Asian Ventures FZE Dubai, to be loaded at Port of Tartous in Syria and to be discharged at Port of Kochi in India, from where the goods had to be transported to the factory of the complainant at Coimbatore. Vide letter dated 05.5.2010, dispatched on 06.5.2010, the complainant sent a cheque of Rs.35,248/- to the opposite party, for insuring the aforesaid goods from Syrian port to Kochi port in India. The calculation of premium annexed to the letter included the average premium for the age of the ship which was to carry the goods from Syria to India however, was not disclosed in the letter.  The opposite party issued a Marine Cargo Specific Voyage policy, effective from 04.10 hours on 05.5.2010, to the complainant, on 06.5.2010. The ship carrying the goods from the Syria port, however, had already sailed on 03.5.2010 before the complainant sought insurance of the goods. The complainant vide its letter dated 16.6.2010, informed the insurer that the ship was anchored at Port Said and also sought the help of the opposite party in finding out the correct position of the ship.  Vide letter dated 23.6.2010, The OP advised the complainant to take necessary steps “as a prudent uninsured” in the matter.

 2.    Vide letter dated 28.7.2010, the complainant informed the opposite party that the ship was stuck at Suez Canal Entry Point for the past 85 days,  the suppliers were unable to make the ship sail towards Tuticorin Port and were taking it back to Tartous port in Syria for re-discharging of the cargo and for reshipment of the same through some other ship.  The insurer was asked to make a note of the diversion and cover the risk involved in this regard by issuing the necessary endorsement.  The insurer was requested to debit the additional premium required in this regard to current account of the complainant.  It was further stated that in case of reshipment of the cargo through some other ship, the complainant would arrange to take a fresh policy, by providing the details of the ship.   

3.     Responding to the aforesaid letter of the complainant, the opposite party vide its letter dated 30.7.2010 informed the complainant that since the voyage had taken an undue delay for the reasons unknown to the insurer, it was deemed to be terminated as per the terms and conditions of the policy.  The complainant was further informed that the voyage from unknown location near Suez Canal to Tartous port in Syria was treated to be as a fresh voyage.  The complainant was further informed that any coverage would be possible only after pre-insurance certificate of the cargo and seaworthiness of the ship.  The complainant vide letter dated 31.7.2010 again stated that the suppliers were unable to sail the ship to Tuticorin port and might take it back to Tartous for re-discharging of the cargo and reshipment through some other ship. In this letter, the complainant took the stand that vide letter dated 28.7.2010, they had only conveyed the possibility of diversion of the ship, though in the letter dated 28.7.2010 there was an unambiguous request made to the insurer to make a note “of diversion”.  The request to note the diversion was also coupled by the request to cover the risk involved in this regard by issuing the necessary endorsement after charging additional premium from the complainant.

4.     Vide letter dated 27.8.2010, the opposite party pointed out to the complainant that (i) though as per their contract with the overseas sailor the ship could not have been more than 35 years old, they did not rescind the contract of purchase of the goods despite having come to know that the age of the ship in question as more than 35 years; (ii) the voyage which had commenced before inception of the policy had come to a standstill on 4.5.2010, the ship having been stranded in Mediterranean  almost in the same location on account of mechanical breakdown which prevented the voyage being continued, and that (iii) the insurance had terminated in terms of Clause No.9 of the ICC(A).  The aforesaid clause was reproduced in the letter of the insurer.  The complainant was notified that the policy was void ab-initio for want of good faith.

5.     The ship was allegedly taken to Cyprus by its crew where it was got arrested for securing payment of their outstanding wages.  The complainant then obtained special permission from Cyprus Court to discharge the cargo which was then sold to M/s. Sun International Dubai.  A claim was lodged by the complainant with the insurer for reimbursement of the loss suffered by it in the aforesaid transaction. The claim having not been paid, the complainant is before this Commission, seeking payment of Rs.1,76,77,019/-, being the value of the cargo, along with interest quantified at Rs.9,06,613/- for the period from 19.5.2011 and compensation for mental agony quantified at Rs.10,00,000/-

6.     The complaint has been resisted by the opposite party which has taken a preliminary objection that the complainant is not a consumer as defined in section 2(1)(d) of the Consumer Protection Act, it having taken the insurance for commercial purpose. On merits, it is alleged that there was lack of good faith and non-disclosure of material facts on the part of the complainant since the voyage had already commenced on 3.5.2010 and the vessel was anchored at Entry Point of Suez Canal on 4.5.2010 whereas the letter seeking insurance cover was dispatched on 6.5.2010. It is alleged that there was no insurance cover available on 3^rd or 4^th May, 2010 when the voyage came to an end either due to the financial default of the ship owner or the mechanical breakdown of the ship, the peril having  operated even prior to inspection of insurance cover. It is also alleged that the vessel was not seaworthy when it commenced the voyage and the owners of the ship were not capable of meeting their financial obligations, required for the safe passage of the vessel through Suez Canal. According to the OP, there was not only breach of good faith and suppression of material facts, there was also breach of the implied warranty of seaworthiness of the vessel.

7.     Admittedly, the complainant filed a petition under section 9 of the Arbitration and Conciliation Act against M/s  Euro Asian Ventures FZE, the overseas seller of the goods, before the Principal District Judge, Coimbatore. An affidavit of Shri S. Velumani, Executive Director of the complainant company was filed in the aforesaid petition. It was stated in para 8 of the said affidavit that the loading of the cargo had finished and the ship had sailed from Port of Tartous in Syria on 3.5.2010 after the vessel had been changed at the last minute. It was further stated in the said affidavit that the seller was required to send the goods in a performing vessel, whereas M.V. St.Sophia was a 38 years old ship and was not a performing vessel. It was claimed in the said affidavit that the change of vessel was made without the consent of the complainant and in contravention of the terms agreed between the parties. Paras 14, 15(b) and 16 of the said affidavit to the extent they are relevant, read as under:-

“14.  I submit that through the respondent’s various mails, the respondent set out several reasons for non-arrival of the cargo.  Initially the respondent cited a general piracy alert in the Gulf of Aden as the reason for the delay, by a subsequent e-mail, the respondent had stated that due to the piracy scare, the crew had to be changed.  Thereafter, when the petitioner wrote to the respondent, after independently ascertaining that the ship is still stuck on the Western side of the Suez Canal, the respondent informed that the owners of the vessel had some dispute with the ‘Port’ authorities regarding DA payments.  Thereafter, the petitioner was informed by the respondent that the dispute had been sorted out and advance transit fee had also been remitted to the authorities at the Suez Canal.  Subsequent to this, the respondent had stated that the vessel had not been permitted to cross the Suez Canal on account of her age and would be permitted to do so only if she is towed by two tugs and a huge amount had to be paid for this.  I further submit that subsequently the respondent sent several mails stating that all problems with the Suez Canal authorities had been sorted out and that the vessel would soon cross the canal and the delay was due to congestion in the canal.  Not being satisfied with the range of excuses as set out above, in early July 2010, the respondent stated that the reason for delay is on account of repairs for two diesel generators in the ship. 

15.   (b) The vessel fixed by the respondent was not a performing vessel and contrary to the agreed terms, the vessel was fixed without ascertaining if it meets with all the norms of Suez Canal and without ensuring that she will pass through the canal without any problem.  Knowing very well that there is a regulated canal enroute, the ship has to necessarily pass only through it and the canal authorities are enforcing strict regulations, foolproof and failsafe care should have been taken before chartering the vessel.  The term ‘performing vessel’ stipulated the contract fully takes care of this requirement.

16.   This being so, there can be no doubt that right from the beginning, the respondent was well aware that the vessel was technically unsound and never set sail with the intention of reaching the port of discharge and remained at ‘Port Said’ upto 20.7.2010, which became known to the petitioner only in the second week of August 2010 from the website ‘digital-seas.com’.  The petitioner is given to understand that the vessel is still lying in the same place.”

In para 17 of the aforesaid affidavit, the complainant itself termed the claim against the insurer as fraudulent. The said paragraph to the extent it is relevant, reads as under:-

“17.  I further state that from the respondent’s mails it is apparent that once the respondent realized that the client was aware of the truth, the respondent started drawing up plans for pushing the petitioner to make a false claim with their insurer.

8.     In view of expressed averment made in para 17 of the affidavit as extracted hereinabove, the complaint is liable to be dismissed on account of the claim with the insurer having been admitted to be a false claim. In fact the complaint need not be examined further in view of the aforesaid admission made in the affidavit of the Executive Director of the complainant.

9.     The insurance policy issued by the opposite party to the complainant was a Voyage Policy in terms of section 27 of the Marine Insurance Act, 1963.  Even otherwise the policy was expressly described as Marine Cargo Specific Voyage Policy. Section 41(1) of the Marine Insurance Act provides that in a voyage policy there is an implied warranty that at the commencement of the voyage the ship shall be seaworthy for the purpose of particular adventure insured.  Sub-section(4) of Section 41 provides that that a ship is deemed to be seaworthy when she is reasonably fit in all respects to encounter the ordinary perils of the seas of the adventure insured. However, the material available on record shows that the vessel St. Sophia was not in a seaworthy state, since it was not reasonably fit in all respects, to withstand the ordinary perils of the sea upto Kochi Port in India. The complainant itself informed the insurer vide its letter dated 28.7.2010 that the vessel was stuck at Suez Canal Entry Point near Port Said area for past 85 days. The report of the Crew available on Vessels Wiki would show that the technical condition of the ship was bad, water was seeping in and the propulsion engine was already below water. A stern tube bearing had cracked and was out of order which constituted a great danger to the ship. An ordinary rope was holding the lever of the valve closed and in the event of the rope failing, the vessel to be afloat for a maximum period of two hours. The report further shows that it was impossible to stop the water and the ship had no power. It was apprehended that in such a condition the  ship could sink in two or three days. The report also shows that the ship St. Sophia had been at a remote roadstead at Port Said near Suez Canal since May 5, 2010 and the port authorities had not allowed the ship to enter Suez Canal for repairs, because the owners of the vessel had not paid their debts. It further shows that inspection by Suez Canal had claimed that the ship was not seaworthy. A letter dated 6.7.2010 was written by Neo Impex Corporation to the Charters of the ship. As owners of the ship they guaranteed that the vessel would enter Suez Channel after completion of repair works.

10.   The above-referred documents coupled with the affidavit filed by the complainant before the Principal District Judge, Coimbatore clearly shows that the ship was not seaworthy for undertaking the voyage from the Syrian Port upto Kochi Port in India.

11.   The learned counsel for the complainant drew my attention to the tracker report of the vessel which shows that the ship was moving at the speed of 5.5 knots on 4.5.2010 and at the speed of 5.2 and 5.8 knots on 5.5.2010. The aforesaid report further shows that the speed of the ship was ‘zero’ w.e.f. 7.5.2010 to 1.6.2010. The speed on 6.5.2010 is not recorded in the said report. The very fact that the no speed of the ship is recorded after 5.5.2010 clearly shows that the ship was not in a position to move thereafter and was just floating around in the Mediterranean. In any case, the ship was not at all sailing even on 6.5.2010 when the letter seeking insurance cover for the consignment was dispatched by the complainant to the opposite party. In fact, considering the affidavit filed by the complainant before the Principal District Judge, Coimbatore it would be difficult for the complainant to even dispute that the ship was not at all seaworthy for undertaking a long voyage from Syria to India, though it might be in a condition which would keep it afloat for 2-3 days after it had sailed from Syrian Port. I am therefore, satisfied that since there was a breach of the implied warranty of seaworthiness of the ship, the insurer is not liable to reimburse the complainant for the loss suffered by it on account of the unworthiness of the ship to complete the voyage upto India.  

12.   Clause 9 of ICC (A) which applied to this insurance cover, reads as under:-

“If owning to circumstances beyond the control of the assured either the contract of carriage is terminated at a port or place other than the destination named therein or the transit is otherwise terminated before delivery of the goods as provided for in Clause 8 above, then this insurance shall also terminate unless prompt notice is given to the underwriters and continuation of cover is requested when the insurance shall remain in force, subject to an additional premium if required by the Underwriters, either.”

        As noted earlier, the complainant vide its letter dated 28.7.2010 informed the insurer that the ship was stuck at Suez Canal Entry Point for past 85 days and the suppliers who were unable to make it sail towards Tuticorin Port were taking it back to Tartous Port in Syria for re-discharging of the cargo and for reshipment of the same through some other ship. The insurer was asked to make note of the aforesaid diversion and cover the risk involved on payment of additional premium. Based upon the aforesaid information, the insurer asked the complainant to deem the voyage to be terminated, making it clear that the voyage from the location near Suez Canal to Tartous Port in Syria would be treated as a fresh voyage. In their letter dated 31.7.2010, the complainant stated that the suppliers were unable to sail the vessel to Tuticorin Port and might take it back for Tartous  Port for discharging of the cargo and for reshipment of the same through some other vessel. It is an admitted position that the ship did not sail towards India after it was stuck at the Entry Point of Suez Canal in Port Said area. Admittedly, the ship remained stuck at Suez Canal entry Point for a long period and thereafter it reached Cyprus where it was allegedly got arrested by its crew for recovery of their dues. It is not known in what circumstances the ship had travelled from the Entry Point of Suez Canal upto the Limassol Port in Cyprus. Though the case of the complainant is that the crew had taken the ship to Cyprus, no evidence to prove the said assertion has been produced. However, the fact remains that the ship had moved to a route other than the route to India, meaning thereby that the ship was not destined to Tuticorin Port in Kochi, when it left the point where it was stuck in Port Said area. No document from the ship owner or from the crew of the ship has been filed by the complainant to prove the proposed destination of the ship at the time it left Port Said area.

        It was contended by the learned counsel for the opposite party that since the ship while leaving the point where it was stuck in Port SAID area was not destined to Tuticorin port in Kochi, the Contract of Carriage got terminated in terms of Clause 9 of ICC (A) and since the insurer did not agree to continue the cover on payment of additional premium, in terms of the request made by the complainant, it is not liable to reimburse the complainant for the alleged loss.  The learned counsel for the complainant on the other hand, submitted that the voyage to India having not been abandoned, and ship having been forcibly taken by its crew towards Cyprus, the Contract of Carriage did not get terminated.  In support of his contention, the learned counsel for the complainant relied upon the decision of the Hon’ble Supreme Court in Peacock Plywood (P) Ltd. Vs. Oriental Insurance Co. Ltd. (2006) 12 SCC 673.  The learned counsel for the insurer submitted that the ship in Peacock Plywood (supra) had not abandoned the voyage to Calcutta before it was got arrested when it returned to Malaysia from the high seas where it had got immobilized, whereas in the present case, the ship having terminated the voyage to Kochi and having left for some other destination, which might by Cyprus, the decision in Peacock Plywood (supra) is distinguishable on facts.  However, I need not go into the question as to whether in the present case Contract of Carriage had got terminated before the ship was got arrested or not, since the complaint is otherwise liable to be dismissed on the ground that the complainant itself has admitted before the Principal District Judge, Coimbatore that the claim against the insurer is fraudulent and it has also been found that the ship was unseaworthy for undertaking the long voyage to Kochi, when it left the Port of Syria.

13.   The learned counsel for the complainant, also referred to a decision of the Hon’ble Supreme Court in Metal Powder Company Limited Vs. Oriental Insurance Company Limited (2014) 5 SCC 771.  The aforesaid decision however, would not applicable where the Contract of Carriage is sought to be treated as terminated in terms of Clause 9 of ICC (A).    

14.   For the reasons stated hereinabove, the complaint is hereby dismissed with no order as to costs.