LexM/S RAJANKUMAR AND BROTHERS (IMPEX) versus ORIENTAL INSURANCE COMPANY LTD.
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A B C D E F G H 163 M/S RAJANKUMAR AND BROTHERS (IMPEX) v. ORIENTAL INSURANCE COMPANY LTD. (Civil Appeal No. 971 of 2014) FEBRUARY 07, 2020 [MOHAN M. SHANTANAGOUDAR AND K. M. JOSEPH, JJ.] Insurance: Marine insurance – Open cover insurance – Claim for insurance in respect of insured cargo – Denied by insurer – Consumer complaint alleging deficiency in service – Complaint dismissed by NCDRC – Appeal to Supreme Court – Held: Marine Cargo Cover Note as well as Marine Insurance Policy stated that Institute Classification Clause (ICC) was one of the warranties/ terms of insurance – The subject vessel was neither in compliance with the ICC, nor had the insured given prompt notification to the insurer about such non-compliance – It is also not proved that such breach was waived by the insurer – Hence, the insurer rightly repudiated the insurance claim – Marine Insurance Act, 1963 – ss. 35(3) and 36(3). Marine Insurance Act, 1963: ss. 35(3) and 36(3) – Nature of promissory warranty and its waiver – Held: Automatic consequence of a breach of warranty, is discharge of insurer’s liability – Such discharge of liability does not require any express conduct or representation from the insurer – However, waiver of breach of warranty can be done by way of incorporating certain terms in the insurance contract or the exclusion clause in the Institute Cargo clause or by a representation or conduct of the insurer. Dismissing the appeal, the Court HELD: 1.1 The Marine Cargo Cover Note as well as the Marine Insurance Policy stated that the Institute Classification Clause (ICC) would be one of the warranties/terms of insurance. Additionally, Clause 6 of the Cover Note prescribed that the [2020] 6 S.C.R. 163 163 A B C D E F G H 164 SUPREME COURT REPORTS [2020] 6 S.C.R. subject vessel needed to conform to the current ICC, in the absence of which, the insurance cover would be subject to payment of an additional premium. [Para 5][177-A-B] 1.2 The ICC is drafted and issued by the Joint Cargo Committee of the Lloyd’s Marketing Association (a premier marine insurance market in London) in consultation with insurance and shipping interests. It is commonly understood that this ‘classification’ relates to the seaworthiness of the vessel in which the cargo is carried. The ICC 01/01/2001 imposes two requirements to ensure that the vessel complies with a certain minimum standard of seaworthiness. The first is a classification requirement which requires that the vessel should be classed with a Classification Society which is a Member/Associate Member of the International Association of Classification Societies (‘IACS’) or, in the case of vessels engaged exclusively in coastal trading, a National Flag Society. The second is an age limitation in respect of the insured vessel. [Para 5][177-B-D; 178- E-F] 1.3 An underwriter/insurer would usually trust the quality of, and be prepared to issue a reasonable premium for, a vessel classed with an IACS member society. On the other hand, the insurer may demand a higher premium, or deny insurance cover altogether, for a voyage in respect of a vessel classed by a non- IACS member society. Hence, the ICC prescribes classification with a member of the IACS as the baseline for ensuring that the policy involves less risk for the underwriter. [Para 5][179-E-F] 1.4 NCDRC has relied on the older version of the ICC, i.e. the 1978 version. The 1978 version of the ICC was replaced by the ICC 13/4/92, the ICC 1/8/97, and the ICC 01/01/2001. The ICC 01/01/2001 is the most recent version of the ICC, and the one which is relevant for the purpose of the present case. The most recent version of the ICC, i.e., ICC 01/01/2001 does not help the appellant’s case inasmuch as it is stricter in its import. English jurisprudence stipulates two requirements to avail of such ‘held covered’ provisions - first, ‘prompt notification’ to the underwriter, and second, the availability of cover at reasonable A B C D E F G H 165 commercial market rates. However, the wording of the ‘held covered’ provision in the ICC 1978, did not expressly state these requirements, leading to the apprehension that it may be interpreted to mean that cover could be obtained in all cases, without any precautionary measures being followed by the assured. Hence, it appears that in order to avoid any confusion, the ICC 01/01/2001 has been drafted to expressly incorporate the aforesaid two requirements. Under the ICC 01/01/2001, the assured must immediately inform the insure
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