Supreme Court of India
ORIENTAL INSURANCE COMPANY LTD.versusM/S OZMA SHIPPING COMPANY & ANOTHER
- Citation
- 2009 INSC 1076
- Decided
- 25 August 2009
- Disposal
- Disposed off
- Bench
- DALVEER BHANDARI
Holding
The valuation fixed by the insurer’s surveyor under a valued policy is conclusive, obligating the insurer to pay the full insured sum.
Summary
The appellant Oriental Insurance Company insured Mis Ozma Shipping Company's vessel for Rs 21.5 lakh after its own surveyor valued the ship at that amount. The vessel sank with cargo, and the insured claimed the full sum. The insurer offered only Rs 15 lakh, alleging the valuation was excessive. The National Consumer Disputes Redressal Commission directed the insurer to pay the entire insured amount with interest, which the insurer appealed. The Supreme Court held that under Sections 29 and 68 of the Marine Insurance Act, 1963, the value fixed by a valued policy – determined by the insurer’s surveyor – is conclusive and the insurer must honour the agreed sum, rejecting the claim of overvaluation. The Court dismissed the appeal, ordering payment of the full amount with interest within six weeks.
Issues considered
- Whether a valuation made by the insurer's appointed surveyor is conclusive under Section 29(3) of the Marine Insurance Act, 1963.
- Whether the insurer can lawfully reduce the claim amount on the ground of alleged overvaluation after a total loss.
- Whether the insurer is liable to pay interest on the delayed settlement as directed by the Consumer Commission.
Legislation cited
- Marine Insurance Act, 1963s. 29, s. 68
Subjects
marine insurancevalued policytotal lossinsurer liabilityconsumer protectionvaluationinterest on delayed paymentclaim settlement
Judgment
[2009) 13 (ADDL.) S.C.R. 573
ORIENTAL INSURANCE COMPANY LTD. A
V.
MIS OZMA SHIPPING COMPANY & ANOTHER
(Civil Appeal No. 6289 of 2001)
AUGUST 25, 2009
8
[DALVEER BHANDARI AND HARJIT SINGH BEDI, JJ.]
Marine Insurance Act, 1963: ss.29, 69 - Entire vessel
with cargo insured for a sum, after due valuation by surveyor
of insurance company - Premium demanded paid by C
insured - Vessel sank with the cargo - Liability of insurance
company - Held: Insurance company has to pay entire
insured sum - Attitude of insurance company of avoiding
bona fide claim needs to be curbed - Insurance.
D
Respondent no.1 was the owner of a sailing vessel.
The surveyor appointed 6y appellant-Insurance
Company inspected the vessel and certified that market
value of vessel was Rs.21.50 lacs. The premium amount
was accordingly fixed by insurance company and paid E
by the respondent 1. The vessel sailed loaded with goods
on 23.4.1988 and sank with entire cargo.
Respondent 1 lodged insurance claim. Insurance
company agreed to settle the claim for Rs.15 lacs.
Respondent 1 filed complaint before the National F
Commission. National Commission directed the
insurance company to pay value of entire vessel Rs.21.50
lacs with @ 12% p.a. from 4th April, 1991. Hence appeal
by insurance company.
G
Disposing of the appeal, the Court
HELD: 1. When the valuation of the vessel was
carried out by the Surveyor of the insurance company
573 H
574 SUPREME COURT REPORTS [2009] 13 (ADDL.) S.C.R.
A who came to the conclusion that the value of the vessel .....
would be Rs.21.50 lacs then the Insurance Company
should not hesitate to pay the amount which was
'
legitimately due to the complainant particularly when
there was no dispute that the entire vessel with cargo
B insured with the appellant sank while the vessel was
sailing. (Paras 15] (578-E]
2. The insurance companies in genuine and bona
fide claims of the insurerd should not adopt the attitude
of avoiding payments on one pretext or the other. This
c attitude puts a serious question mark on credibility and
trustworthiness of the insurance companies. Incidentally
by adopting honest approach and attitude the insurance
companies would be able to save enormous litigation
costs and the interest liability. The tendency of
D approaching th~ Apex Court in every such case also
needs to be effectively curbed. [Paras 17 and 18] (579-B-
C]
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
E 6289-of 2001. ·
From the Judgment & Order dated 25.4.2001 of the
National Consumer Disputes Redressal Commission in
Original Petition No. 79 of 1995.
F P. Seth, Manjeet Chawla (for Sudhir Kumar Gupta) for the
Appellant.
Girish Ananthamoorthy (for P.P. Singh), Praveen Gautam
(for Pramod B. Agarwala) for the Respondents.
G The Judgment of the Court was delivered by
DALVEER BHANDARI, J. 1. This appeal is directed from ~ .
the judgment dated 25th April, 2001 passed by the National
Consumer Disputes Redressal Commission, New Delhi in
H Original Petition No. 79 of 1995.
ORIENTAL INSURANCE COMPANY LTD. v. OZMA 575
SHIPPING COMPANY & ANR. [DALVEER BHANDARI, J.]
2. The brief uncontroverted facts in nutshell are as under:- A
~ )
Respondent No.1, Mis Ozma Shipping Co. is the owner
of a sailing vessel. The same was insured on 14.12.1987 for
a sum of Rs.21,50,000/-. A total premium of Rs.40,832.50 was
paid for the period covering 14.12.1987 to 13.3.1988. The
B
insurance was extended from 14.3.1988 to 13.6.1988 by
paying a premium of Rs.30,383/-.
.f 3. It may be pertinent to mention that before issuing the
policy the Surveyor appointed by the appellant Insurance
Company thoroughly inspected the vessel and issued a c
valuation certificate. The Surveyor after inspecting the vessel
certified that the market value of the vessel was Rs. 21,50,000/
-. The Surveyor gave a very comprehensive report and took
note of the fact that a major over-hauling of the engine and
accessories and reconditioning and painting of the Hull had D
-4. been carried out during 1987. It may be pertinent to mention
that the Surveyor had considered all relevant factors in its
report.
4. Sections 29 and 68 of the Marine Insurance Act, 1963
E
are relevant in connection with the present controversy involved
in this case. It would be appropriate to set out both these
sections:-
-f "29. Valued Policy:- (1) A policy may be either valued or
unvalued. F
(2) A valued policy is a policy !Afhich specifies the agreed
value of the subject matter insured.
(3) Subject to the provisions of this Act, and in the absence
of fraud, the value fixed by the policy is, as between the G
..... .. insurer and assured, conclusive of the insurable value of
the subject intended to be insured, whether the loss be total
or partial.
(4) Unless the policy otherwise provides, the value fixed H
576 SUPREME COURT REPORTS [2009] 13 (ADDL) S.C.R.
A by the policy is not conclusive for the purpose ,of
determining whether there has been a constructive total ""'
loss.n
Section 68 reads as under:-
B "Total Loss- Subject to the provisions of this Act, and to
any express provision in the policy, where there is a total
loss of the subject matter insured-
(1) if the policy be a valued policy, the measure of
+
c indemnity is the sum fixed by the policy;
(2) if the policy be an unvalued policy, the measure of
indemnity is the insurable value of the subject- matter
insured."
D 5. It is clear from the section 29(3) that the .value fixed by
the policy between the insurer and the assured is. conclusive
of the insurance value.
6. The vessel sailed from Beypore to Kavarati loaded with
E goods at around 3 p.m. on 23.4.1988. The said vessel sank
with the entire cargo.
7. Respondent no.1 lodged the insurance claim with the
appellant insurance company on 16.5.1989. The appellant
insurance company immediately deputed the Surveyor and ;,..
F carried out the spot survey. The Surveyor submitted the report
advising carrying out proper investigation. The appellant
insurance company agreed to settle the claim of respondent
at Rs. 15 lacs.
G 8. Respondent no.1 filed a complaint before the National
Consumer Disputes Redressal Commission (For short, the
'National Commission'). The complainant prayed that the ~
...
insurance company be directed to pay the entire insured
amount of Rs.21,50,000/-with 18% rate of interest from the date
H of calamity i.e. from 23rd April, 1988 along with the
ORIENTAL INSURANCE COMPANY LTD. v. OZMA 577
SHIPPING COMPANY & ANR. [DALVEER BHANDARI, J.]
compensation and costs. A
9. The appellant insurance company submitted before the
National Commission that the valuation report of the Surveyor
of Mis Ozma Shipping Company was not correct because the
value of the said vessel was not more than Rs.15 lacs,
8
therefore, respondent No.1 is not entitled to an amount more
than Rs.15 lacs.
10. It was stated by the appellant company that in the
proposal form it was nowhere st~ted that it b_a.d·remodeled and
reconditioned the vessel by spending a sum of over Rs.5 lacs C
in the year 1989 and it was alleged for the first time vide order
dated 28th February, 1990.
11. According to the appellant insurance company the
market value of the vessel would decrease year after year and 0
it could not enhance to such an exorbitant figure by mere
reconditioning, painting and remodeling. The insurance
coverage was obtained for a higher sum insured than the actual
cost by deliberately concealing the material facts. These pleas
of the appellant company are totally devoid of any merit when E
the Surveyor appointed by the insurance company found the
value of the vessel as Rs.21,50,000/- and the appellant
company accepted the insurance premium on Rs.21,50,000/-
. According to the National Commission, as the Surveyor took
note of the fact that a major overhauling of the engine and
accessories and reconditioning and painting of the Hull had F
been carried out during 1987, there seems to be no justification
from deviating from that figure.
12. There are following undisputed and uncontroverted facts
in this case:- G
-
(I) vessel sailed form Beypore to Kavarati loaded with
goods on 23.4.1988 and according to the Surveyor
after inspee;ting the vessel he certified the market
value of the vessel as Rs.21,50,000/-.
H
578 SUPREME COURT REPORTS [2009] 13 {ADDL.) S.C.R.
A (II) The premium was admittedly paid on that amount.
011) The said vessel sank with the entire cargo.
13. The National Commission held that on consideration
of the relevant factors the valuation of the vessel was valued
B as Rs.21,50,0007~. On the basis of the valuation, the insurance
premium was paid on the amount of Rs.21,50,000/-. The
National Commission also came to the definite finding that the
complainant was not guilty of ~ny concealment of facts.
c 14. On consideration of the totality of the facts and
circumstances, the impugned judgment of the National
Commission is absolutely correct and the National Commission
was fully justified in directing the insurance company to pay the
value of the entire vessel Rs.21,50,000/- with interest at the rate
of 12% per annum from 4th April, 1991.
D
s:
1 It may be pertinent to mention that when the valuation
~
'
of the vessel had been carried out by the Surveyour of the
insurance company who came to the conclusion that the value
of the vessel would be Rs.21,50,000/- then the Insurance
E Company should not hesitate to pay the amount which is
legitimately due to the complainant particularly when there is
no dispute that the entire vessel with cargo insured with the
appellant sank while the vessel was sailing from Beypore to
.,..
Kavarati.
F
16. We have heard the learned counsel for the parties and
carefully perused the impugned judgment. In our considered
view no interference is called for. We make it clear that in case
the entire amount in the sum of Rs.21,50,000/- has not been
paid to the respondent company, the same would be paid as
G
expeditiously as pos~ible and in any event within six weeks from
the date of communication of this judgment. If some amount has ~ "'
been paid by the appellant insurance company to respondent .....
No.1 in that event they would ensure that the adjustment of that
amount is done and the remaining amount be paid to
H
ORIENTAL INSURANCE COMPANY LTD. v. OZMA 579
SHIPPING COMPANY & ANR. [DALVEER BHANDARI, J.]
respondent No.1 within six weeks from the date of this A
..... ~·
judgment along with interest.
17. Before parting with this case we would like to observe
that the insurance companies in genuine and bona fide claims
of the insured should not adopt the attitude of avoiding
B
payments on one pretext or the other. This attitude puts a
serious question mark on their credibility and trustworthiness
of the insurance companies. Incidentally by adopting honest
t approach and attitude the insurance companies would be able
to save enormous litigation costs and the interest liability.
c
18. The tendency of approaching the Apex Court in every
such case also needs to be effectively curbed.
19. The appeal being devoid of any merit is accordingly
dismissed with costs which is quantified at Rs.25,000/- to be
D
also paid by the appellant Insurance Company to respondent
~
~
No. 1 within six weeks from today. The appeal is accordingly
disposed of.
D.G. Appeal disposed of.
E
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "marine insurance"Sign in to search