Canara Bank & Anr vs Oriental Insurance Co. Ltd

Valmiki J. Mehta, J

These suits will also stand dismissed as per the discussion, reasoning and conclusions given while dismissing CS (OS) No. 922/2004, and which

discussion, reasoning and conclusions will apply mutatis mutandis to the facts of the present cases where the cover-note has been proved as Ex.P-1

and the Bill of Lading has been proved as Ex.PW1/3.

Goods which were to be supplied in CS (OS) No. 738/1980 were Brass Scrap Honey Grade and goods to be supplied in CS (OS) No. 739/1990

were Cloves of Zanzibar quality.

The amount claimed in CS (OS) No. 738/1980 is Rs.27,50,000/- and the amount claimed in CS (OS) No. 739/1980 is Rs.22,00,000/-.

One another aspect to be noted is that plaintiffs in these suit is the banker of the buyer and since the insurance policies have been assigned to the

plaintiff bank, therefore, it is the plaintiff bank which is suing for recovery of amounts under the insurance policies/cover notes.

The issues framed in CS (OS) No. 738/1980 and CS (OS) No. 739/1980 on 31.7.1989 are reproduced as under:-

“Issues in CS (OS) No. 738/1980

Whether Shri S.S. Bedi, who has signed the plaint was not aware of the facts of the case? OPP

Whether the plaintiff No.2 is a registered company? OPP

Whether plaintiff No.2 is carrying on business of export and import?OPP

Whether the plaintiff No.2 entered into a contract with M/s Palmex Enterprises for the import of Brass Scrap “Honey Grade†as set out in

para 4 of the plaint? OPP

Whether the plaintiff No.1 established a letter of credit in favour of the plaintiff No.2 for the sum of US Dollars 3,05,500 equivalent to Rs.25 lakhs

as set out in para 6 of the plaint? OPP

Whether the goods in question were loaded on board the vessel Ohdai for carriage to Bombay as pleaded in para 9 of the plaint? OPP

Whether the goods were lost on account of sinking of ship Ohdai? OPP

Whether the policy of insurance was not in full force and effect when the goods allegedly became total loss on account of the sinking of the vessel

Ohdai? OPD

Whether insurance policy is not valid for the reasons set out in the preliminary objection No.1? OPD

Whether the plaintiffâ€s claim is not maintainable because of the alleged fact that the plaintiffs knew or ought to have known that Shri Bhagwan

Singh Ahjula was a person of doubtful integrity and President of the company owning the vessel Ohdai and since the contract of insurance is a

contract of good faith, the insurance policy would be deemed to have been frustrated? OPD

Whether the ship Ohdai was sunk in pursuance to conspiracy, fraud or crime as stated in para 11 of the written statement, if so what are its

effect? OPD

Whether the acceptance by the defendant of additional premium to cover shipment of an old ship was not sufficient compliance with the terms of

the cover note issued by defendant No.1? OPP

To what amount, if any, is the plaintiff entitled? OPP

Whether the plaintiff is entitled to interest and if so, at what rate? OPP

Relief.

Issues in CS (OS) No. 739/1980

Whether Shri S.S. Bedi, who has signed the plaint was not aware of the facts of the case? OPP

Whether the plaintiff No.2 is a registered company? OPP

Whether plaintiff No.2 is carrying on business of export and import? OPP

Whether the plaintiff No.2 entered into a contract with M/s Bentrex & Co. for the import of cloves as set out in para 4 of the plaint? OPP

Whether the plaintiff No.1 established a letter of credit in favour of the plaintiff No.2 for the sum of Rs.20 lacs as set out in para 6 of the plaint?

OPP

Whether the goods in question were loaded on board the vessel Ohdai for carriage to Bombay as pleaded in para 9 of the plaint? OPP

Whether the goods were lost on account of sinking of ship Ohdai? OPP

Whether the policy of insurance was not in full force and effect when the goods allegedly became total loss on account of the sinking of the vessel

Ohdai? OPD

Whether insurance policy is not valid for the reasons set out in the preliminary objection No.1? OPD

Whether the plaintiffâ€s claim is not maintainable because of the alleged fact that the plaintiffs knew or ought to have known that Shri Bhagwan

Singh Ahjula was a person of doubtful integrity and President of the company owning the vessel Ohdai and since the contract of insurance is a

contract of good faith, the insurance policy would be deemed to have been frustrated? OPD

Whether the ship Ohdai was sunk in pursuance to conspiracy, fraud or crime as stated in para 11 of the written statement, if so what are its

effect? OPD

Whether the acceptance by the defendant of additional premium to cover shipment of an old ship was not sufficient compliance with the terms of

the cover note issued by defendant No.1? OPP

To what amount, if any, is the plaintiff entitled? OPP

Whether the plaintiff is entitled to interest and if so, at what rate? OPP

Relief.â€​

Issue Nos. 1 to 5, 8 to 10 and 12

These issues are not opposed on behalf of the defendant/insurance company and therefore these issues are decided in favour of the plaintiffs

subject to the clarification qua issue no.8 that decision of this issue in favour of the plaintiffs does not mean that the defendant/insurance company is

agreeing to its liability under the insurance policy and issue no.8 being decided in favour of plaintiffs is that the loss if it would have occurred was

within the duration of validity of the insurance policy. These issues are conceded for being decided in favour of the plaintiffs as defendant/insurance

company has succeeded as regards issue nos. 6 and 7 and thus suit has to be dismissed.

Issue Nos. 6 and 7

These issues would stand decided against the plaintiffs by adopting the reasoning contained in the judgment in the case of CS (OS) No. 922/2004,

inasmuch as, identical issues are involved and same arguments were urged on behalf of the plaintiffs in these suits also. It is therefore held that subject

goods were not loaded on to the ships and were not lost on account of sinking of the ships.

Issue No. 11

There is no finding required to be returned so far as this issue no. 11 is concerned, inasmuch as, while deciding issue nos. 6 and 7 it has already

been held that the goods which are subject matter of the policies never came into existence and the journey of shipment of the goods did not

commence i.e once no goods which were subject matter of the policies came into existence or commenced their journey on shipment, the insurance

policies did not come into existence and hence sinking of the ships did not result in loss of goods for the defendant/insurance company to be liable

under the subject insurance policies/cover notes.

Issue Nos. 13 to 15

Adopting the discussions and reasoning as contained in the judgment in CS (OS) No. 922/2004, and therefore having decided issue nos. 6 and 7 in

favour of the defendant/insurance company these issue nos. 13 to 15 are decided against the plaintiffs and the plaintiffs are held not entitled to

succeed by getting the money decrees as prayed for in the suits. The suits are therefore dismissed, leaving the parties to bear their own costs.