M/S. PEACOCK PLYWOOD PVT. LTD. versus THE ORIENTAL INSURANCE CO. LTD.

Citation: [2006] SUPP. 10 S.C.R. 140 · Decided: 05-12-2006 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A· 
MIS. PEACOCK PLYWOOD PVT. LTD. 
·,I 
v. 
THE ORIENTAL INSURANCE CO. LTD. 
DECEMBER 5, 2006 
B 
[S.B. SINHA AND DAL VEER BHANDARI,JJ.] 
· Marine Insurance Act, 1963: Section 60. 
Constructive total loss-Marine insurance-Policy-Exclusion clauses-
C Applicability of-,-A company agreed to purchase logs from a foreign firm and 
the said logs were loaded on a vessel-The logs were insured by the company 
with an insurance company against the peril ans/or risk of non-delivery of 
the said goods-However, the ship was immobilized on reaching the high seas 
but eventually returned back to the originating port-While at the originating 
D port, the ship was arrested at the instance of one of the owners of the cargo 
and was detained there-The foreign court discharged the order of arrest and 
the ship eventually proceeded again to the second port-At the second port, 
the ship became stranded and , therefore, it offloaded its cargo and did not 
resume its journey-The company, however, with a view to minimising its 
losses due to non-delivery, received a certain sum out of the sale proceeds-
£ 
The claim raised by the company by way of constructive total loss was 
repudiated by the insurance company on 1.4.1991-The company filed suit 
against the insurance company on 7.8.1992-The High Court dismissed the 
suit holding that the sui( was barred by limitation, that the policy of insurance 
was not an all-risk policy and that the policy did not cover constructive total 
F loss-Correctness of-Held: The suit is within limitation in terms of Art. 44 
of the Limitation Act-An insurance policy is to be construed in its entiretly-
A marine insurance policy does not come to an end only because the ship 
became stranded at a port-The insurance policy included the risk of the 
vessel or craft being stranded or grounded-It also included the risk of institute 
theft, pilferage and non-delivery-Hence, exclusionary clauses contained in 
G the insurance policy are not attracted-The policy was an all-risk policy and 
also covered constructive total loss-Limitation Act, 1963, Art. 44. 
Words & Phrases: 
"Constructive total /oss"-Meaning of_ In the context of S. 60 of the 
H 
140 
' I 
• 
PEACOCK PLYWOOD PVf. LTD. v. THE ORIENTAL INSURANCE CO.LTD. 
141 
Marine Insurance Act, 1963. 
The appellant agreed to purchase logs from a foreign firm and the said 
logs were loaded on a vessel. The logs were insured by the appellant with the 
respondent - Insurance Company against the peril and/or risk of non-delivery 
A 
of the said goods. The ship left the foreign port and developed engine troubles 
soon thereafter and was held up at another port It sailed for the Indian port B 
thereafter. It was, however, immobilised on reaching the high seas but 
eventually returned back to the originating port. While at the originating 
port, the ship was arrested at the instance of one of the owners of the cargo 
and was detained there. 
The foreign court discharged the order of arrest and the ship C 
eventually proceeded again to the second port. At the second port, the ship 
became stranded and therefore, it offloaded its cargo and did not resume 
its journey. The appellant, however, with a view to minimising its losses 
due to non-delivery, received a certain sum out of the sale proceeds. 
A claim by way of constructive total loss was raised by the appellant 
with the respondent-Insurance company on 12.8.1989 which was repudiated 
by the respondent on 1.4.1991. The appellant filed a suit before the High Court 
on 7.8.1992 praying for a decree for a certain sum with interest. A Single 
Judge of the High Court decreed the suit. 
Aggrieved thereby, the respondent filed an intra-court appeal before 
the Division Bench of the High Court. The High Court allowed the appeal 
holding that the suit was barred by limitation, that the policy of insurance 
was not an all-risk policy and that the policy did not cover constructive 
total loss. Hence the appeal. 
The following questions arose before the Court:-
1. Whether the suit was barred by limitation? 
2. Whether the policy of insurance was an all-risk policy? 
3. Whether the policy covered constructive total loss? 
4. Whether exclusion clauses in the policy are applicable in the facts 
of this case so as to repudiate the claim of the appellant? 
.Allowing the appeal, the Court 
D 
E 
F 
G 
H 
142 
SUPREME COURT REPORTS [2006] SUPP. 10 S.C.R. 
A 
HELD: 1.1. The actual repudiation was made on 1.4.1991 and, thus, the 
suit having b
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