A.S.No.621 of 1994

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** **THE HONOURABLE MR.JUSTICE K.T.SANKARAN & THE HONOURABLE MR. JUSTICE P.D.RAJAN** **FRIDAY, THE 19TH DAY OF DECEMBER 2014/28TH AGRAHAYANA, 1936** **AS.No. 621 of 1994 ( ) -----------------------** **AGAINST THE JUDGMENT IN OS 203/1987 of PRINCIPAL SUB COURT,KOLLAM DATED 13-12-1991** **APPELLANT(S): PLAINTIFFS** - **------------------------** **1. MRS. MARGARRET MORRIS, W/O. THE LATE P.S. JOHN, RAJA BHAVAN, CHAVARA SOUTH.** **2. EDMOND JOHN, S/O. LAGE P.S. JOHN OF -DO-DO-** **3. EDNA JOHN, D/O. LATE P.S. JOHN OF -DO- -DO-** **BY ADV. SRI.GEORGE VARGHESE, ADV. SRI. GEM PAUL EDAM PADAM** ## **RESPONDENT(S): DEFENDANTS** **--------------------------** **1. M/S. UNITED INDIA INSURANCE COMPANY LTD., HAVING REGISTERED OFFICE AT 24, WHITES ROAD, MADRAS - 6000 014 BY ITS PRINCIPAL OFFICER.** **2. M/S. UNITED INDIA INSURANCE COMPANY LTD., DIVISIONAL OFFICE, ZENITH BUILDING, QUILON - 1 BY ITS DIVISIONAL MANAGER.** **3. CANARA BANK, CHINNAKKADA BRANCH, QUILON BY ITS MANAGER.** **R, BY ADV. SRI.K.P.VIJAYAN, ADV. SRI.V.M.KURIAN, ADV. SRI. A.V.THOMAS ADV. SRI. E.K. DILRAJ ADV. SRI. MATHEW B. KURIAN** **THIS APPEAL SUITS HAVING BEEN FINALLY HEARD ON 19-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **acd** ## **K.T. SANKARAN & P.D. RAJAN, JJ.** ------------------------------------------A.S.No.621 of 1994 ---------------------------------------------Dated this the 19[th] day of December, 2014 ## **JUDGMENT** ## **K.T. SANKARAN,J.** The appellants filed O.S.No.203/1987 on the file of the Court of Principal Subordinate Judge, Kollam claiming a sum of 1,15,700/- together with interest at 18% per annum from₹ defendants 1 and 2. The trial Court dismissed the suit. Challenging the judgment and decree of the trial Court, the plaintiffs have come up in appeal. 2. The case of the plaintiffs is the following:- A fishing boat bearing Registration No.MFV ND 843 'John Kannatta' belonged to P.S. John, the late husband of the 1[st] plaintiff and father of the plaintiffs 2 and 3. The fishing boat was insured with defendants 1 and 2 and it was covered A.S.No.621/1994 2 by marine insurance policy issued by defendants 1 and 2. P.S. John took a loan from the 3[rd] defendant, Canara Bank, for purchasing the fishing boat and the fishing boat was pledged with the bank. The fishing boat left for fishing on 16.9.1981 with four member crew. Raymond was the Syrang and Raju was the driver. Madhavan and Dasan were the deck hands. The fishing boat went as far as 27 fathoms west of Neendakara port and started fishing. By about 2 p.m., while they were engaged in fishing, the crew in the boat heard a sound in the engine and the engine stopped abruptly. The Syrang and the driver tried their level best to locate the trouble and set things right. But, they failed in all their attempts. The engine could not be started. It was getting late and the boat started tossing up and down due to sudden rise of angry waves and wind. It was raining also. At last, the crew decided to save their lives and with the help of another boat by name, “Freeda A.S.No.621/1994 3 Mol” the crew escaped after abandoning the boat, which by that time was full of water. The crew reached the shore and reported the matter to the 2[nd] plaintiff. The 2[nd] plaintiff arranged a search boat by name “Kannattayil” and with the help of the crew of the fishing boat in question, tried to locate the abandoned boat. The search boat returned by about 10 p.m. without any tangible result. On the next day also, two search boats were employed for search and the possible salvage of the vessel. But it was in vain and the vessel could not be located. It was contended that the crew reached at a conclusion that fishing boat must have capsized and lost in the sea due to angry waves and due to insured perils of the sea. All the details regarding the incidents were duly informed to the defendants in time. The plaintiffs contended that the vessel was thus totally lost due to perils of the sea. 3. All the necessary information were supplied to A.S.No.621/1994 4 defendants 1 and 2. Defendants 1 and 2 deputed one T.S. Ramaswamy as the insurance Surveyor. The vessel was insured for a total sum of 1,08,000/- against all sea₹ perils. A sum of 7,700/- was spent by the plaintiffs for₹ search operations and necessary bills were submitted to defendants 1 and 2 in that regard. Inspite of furnishing of the necessary details, the Insurance Company slept over a period of two years and finally sent a letter to the 3[rd] defendant repudiating the claim. 4. Defendants 1 and 2 contested the suit. The 2[nd] defendant filed a written statement, which was adopted by the 1[st] defendant as well. In the written statement of the 2[nd] defendant, they admitted the insurance. It was contended that the boat was over valued and the actual value was only 95,000/- as reported by Sri. Ramaswamy,₹ the Surveyor. With reference to the averments in paragraph 2 of the plaint, in which the actual incidents A.S.No.621/1994 5 were alleged, there was no specific denial. It was stated in the written statement that the averments in paragraph 2 of the plaint are not admitted and the plaintiffs are put to strict proof of missing. The defendants contended that the plaintiffs are put to strict proof that the alleged loss of the vessel was in the manner and under the circumstances as stated in paragraph 2 of the plaint. It was admitted that T.S. Ramaswamy was deputed as Surveyor, and he submitted a report. Sri. T.S. Ramaswamy was not able to conclusively state that the loss was caused due to operation of insured perils. The report submitted by the Surveyor would indicate that breakdown of the machinery of the vessel would not cause damage to the hull and make the vessel sink. The defendants contended that inconsistencies in the statements of the Syrang and others were noticed by the Surveyor. It was further stated in the written statement that since the Surveyor was not A.S.No.621/1994 6 able to conclusively prove that the alleged loss of the vessel was due to operation of insured perils, an investigation through 'M/s. Asia', Bangalore was arranged, who reported that the claim made by the plaintiffs is a false claim and that the insured did not act diligently. Defendants 1 and 2 contended that they are not liable to honour the insurance claim and the claim was rightly rejected on valid and reasonable grounds. The plaintiffs are not entitled to make any claim of insurance indemnity. 5. The 3[rd] defendant filed a written statement admitting that loan was granted to P.S. John on the security of the fishing boat. The insurance policy of the fishing boat was pledged with the 3[rd] defendant. The 3[rd] defendant contended that by virtue of the terms and conditions agreed upon, the 3[rd] defendant is legally entitled to receive the amount due under the insurance indemnity covered by the policy. The 3[rd] defendant admitted that it A.S.No.621/1994 7 was reported by P.S. John that the fishing boat sunk in the sea on 16.9.1981 due to sea perils. The 3[rd] defendant stated that it was not in a position to either deny or admit the statement contained in paragraph2 of the plaint. The 3[rd] defendant stated that vessel was insured against all sea perils and the policy was valid at the time of the incident. The Insurance Company had sent letter to the 3[rd] defendant rejecting the insurance claim. The 3[rd] defendant prayed for a decree in the suit allowing their claim and to adjust the insurance amount towards the claim of the 3[rd] defendant against the plaintiffs. 6. Before the trial Court, PWs 1 to 5 were examined and Exts.A1 to A11 were marked on the side of the plaintiffs. DW1 was examined and Exts.B1 to B39 were marked on the side of the defendants. The third party exhibits namely, Exts.X1 and X2 were marked at the instance of the plaintiffs. PW1 is the 2[nd] plaintiff. Syrang A.S.No.621/1994 8 of the fishing boat was examined as PW2. PW3 is the Surveyor deputed by the Insurance Company. PW4, the Port Officer, proved Exts.X1 and X2, the letters sent by P.S. John to the Port Officer, Neendakara. PW5, Lawrence, is the Syrang of the rescue boat 'Freeda Mole'. DW1 is the Divisional Manager of the 1[st] defendant. 7. The trial Court held that the fishing boat had the necessary insurance coverage at the relevant time. It was held that the boat was lost in the sea. The ownership of the boat is also not disputed. That immediate information was given to the concerned by the predecessor-in-interest of the plaintiffs is also not disputed. There is no specific denial of the case of the plaintiffs, in the written statement filed by the 2[nd] defendant. In **Josita Antony** v. **New Indian Insurance Company** **Limited** [2006(1) KLT 393], it was held by a Division Bench that the written statement should contain specific denial A.S.No.621/1994 9 of the pleadings in the plaint. If denial of fact is not specific but evasive, the said fact shall be taken to be admitted. The written statement must deal specifically with each allegation of fact in the plaint. When a defendant denies any such fact alleged in the plaint, he must not do so evasively. In the event of non-denial, the admission itself being proved, no other proof is required. 8. In **Raghunathan. K** . v. **The National Insurance Company Limited and others** [2004(1) KLJ 401], a Division Bench of this Court held thus: “7. A contract of insurance may be defined as a contract whereby one person called the “Insurer” undertakes in return for the agreed consideration, called the “premium” to pay to other person, called the “assured”, a sum of money or its equivalent, on the happening of a specified event. It is a fundamental principle of insurance law that the almost good faith must be observed by each party. This rule has been clearly stated by Lord Mansfield in Carter v. Boehm (1966), 3 Brr. 1905 at page 1909 as follows: “Insurance is a contract upon speculation. The special facts, upon which the contingent chance is to be computed, lie more commonly in the A.S.No.621/1994 10 knowledge of the insured only: the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstance in his knowledge to mislead the underwriter into a belief that the circumstance does not exist, and to induce him to estimate the risque as if it did not exist. The keeping back such a circumstance is a fraud, and therefore the policy is void. Although the suppression should happen through mistake, without any fraudulent intention, yet still the underwriter is deceived, and the policy is void, because the risque run is intended to be run at the time of the agreement. The governing principle is applicable to all contracts and dealings. Good faith forbids either party by concealing what he privately knows, to draw the other into a bargain, from his ignorance of that fact, and his believing the contrary.” As per insurance law the onus of proving that the loss was caused by a peril insured against lies upon the assured. Unless he discharges the onus, the claim must fail. In Gorman v. Hand-in-Hand Insurance Co. (1877), I.R. 11 C.L. 224 (fire insurance, Ross v. Hunter (1790), 4 Term Rep.33 (marine Insurance) Mac Donald v. Refuge Assurance Co. 1890, 17R. (Ct. of Sess) 955 (personal accident insurance) Macbet & Co. v. King (1916), 115L.T.221 (marine insurance) stated that the assured is not, however, required to prove the cause of the loss conclusively. All that he need do is to establish a prima facie case. In Nobel's Explosive Co. v. British Dominions General Insurance Co., (1918) W.C. & Ins. Rep. 106, Ibid at page 108 Lord Guthrie said as follows: 'Outside the region of mathematics, A.S.No.621/1994 11 proof is never anything more than probability. It is for the Court in each case to say whether the probability is so slight, or so equally balanced by counter-probabilities are so strong and so one-sided as to amount to legal proof. The abstract possibility of mistake can never be excluded.” In many cases direct evidence as to the cause of the insurance is not always available and accordingly the success or failure of the claim depends upon whether the onus of proof, upon the materials before the court has been discharged.” 9. In the facts and circumstances, particularly when the defendants cannot be attributed with the knowledge of the actual incident, which happened in the high seas, we do not propose to accept the case of the plaintiffs that due to non-denial of the averments in paragraph 2 of the plaint, the facts stated therein must be deemed to have been admitted. However, going by the principles laid down in Raghunathan's case (supra), it is to be considered whether the prima facie case has been established by the plaintiffs to show that the vessel was lost in high seas in the circumstances pleaded. A.S.No.621/1994 12 10. The Court below held that the report of 'M/s.Asia', Bangalore cannot be accepted in evidence. The other material, which is available is the report of the Surveyor deputed by defendants 1 and 2. He also could not conclusively say whether the vessel was lost in high seas as alleged. It is true that the Surveyor stated that stoppage of engine need not necessarily result in sinking of the vessel. Another circumstance relied on by the defendants was that on the particular day, the weather was quite normal. But, the oral evidence adduced by the Port Officer shows that the state of affairs in high seas cannot be predicted with reference to the materials collected on land. Even Ext.B19 weather report shows that on 16.9.1981, the date of the alleged incident, the weather was cloudy. The specific case of the plaintiffs is that sea was rough and it was raining and when the engine stopped working, the vessel was filled with water and the crew A.S.No.621/1994 13 escaped in another boat with great difficulty. There is no material to disbelieve the evidence adduced on behalf of the plaintiffs. The plaintiffs contended that there was every likelihood of an un-propelled and defunct vessel being sunk in the sea due to synchronisation of waves. The Court below did not accept this theory, in spite of the evidence of PW4 in that regard, only on the ground that there is no satisfactory pleading or proof on that aspect. The evidence of PW4 would suggest that sinking of the vessel may take place in such circumstances. But, it would depend on many factors. The question is whether the evidence adduced on behalf of the plaintiffs would prima facie show that sinking of the vessel at high seas due to stoppage of the engine of the vessel and due to unfavourable weather conditions on that day would have taken place as alleged. There is nothing to disbelieve the case put forward by the plaintiffs in that regard, A.S.No.621/1994 14 particularly in the absence of any material to indicate otherwise. 11. The Court below picked holes in the evidence adduced on behalf of the plaintiffs and negatived the claim put forward by the plaintiffs. In the nature of the pleadings and in the nature of the events, which were pleaded and proved, and also in view of the fact that the incident took place at the high seas, we do not think that the findings arrived at by the Court below are justifiable. On a re-appraisal of the evidence on record, we are inclined to accept the case put forward by the plaintiffs that the vessel was lost at high seas in the manner alleged. 12. Though a contention was raised that the valuation of the vessel at 1,08,000/- was on the higher₹ side and the Surveyor had suggested the valuation of the vessel at 95,000/-, the Court below did not accept the₹ case of the defendants that the vessel was over valued for A.S.No.621/1994 15 the purpose of insurance. 13. The Court below rejected the contention raised by the defendants that the vessel was not a registered vessel at the relevant time. The contention that due to non-registration, the plaintiffs are not entitled to make the insurance claim, was also rejected. The Court below rejected the case of the defendants that the plaintiffs are not the legal heirs of deceased John. Similarly, the contention that the suit is barred by limitation was also negatived by the trial Court. 14. On the basis of the findings rendered by us, as above, which are in variance with the findings of the trial Court, the suit is liable to be decreed. We set aside the judgment and decree of the trial Court and grant a decree in favour of the plaintiffs for a sum of 1,15,700/-₹ (including 1,08,000/- being the amount of insurance and ₹ ₹ 7,700/- being the cost of search and salvage) together A.S.No.621/1994 16 with interest at 6% per annum from the date of suit till realisation. The appellants/plaintiffs also will be entitled to proportionate costs. **K.T. SANKARAN, JUDGE.** **P.D. RAJAN, JUDGE.** acd A.S.No.621/1994 17