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Judgment
Kailash Gambhir, J.—By this appeal filed u/s 96 of the Code of Civil Procedure, 1908, the appellant seeks to set aside the judgment and
decree dated 30.10.2004, passed by the learned ADJ, Delhi, whereby the suit filed by the appellant against the respondent for recovery of Rs
5,30,000/- alongwith interest @ 18% and costs was dismissed.
The brief facts as set out in the present appeal are that the appellant is a registered partnership firm carrying on the business of iron and steel
merchants including the business of importing iron and steel products from various places like Europe, South Korea, Australia and other places. As
per the appellant, the standard practice of the appellant in the past has been that an order would be placed, a contract entered into on C&F terms,
the Letter of Credit opened and after that the documents i.e. Bill of Lading, Commercial Invoices etc would come for acceptance through a
nationalized bank when non-negotiable set of documents would be received by the appellant through the indenting agent. Based on the information
from the set of documents received, an insurance would be taken out and the goods would then be taken release of on their arrival at the port. As
per the appellant, the officials of the insurance company advised the appellant to avoid taking insurance in advance and take only on receipt of
documents as for adjustment of the premium or refund the insurance companies create trouble and accordingly, the appellant adopted the same as
a practice. The appellant entered into a contract dated 20.01.1982 with one M/s. Kukje Corporation of Seoul, South Korea, for the import of
200 metric tones of galvanized plain steel sheets coil of a value of US Dollar 1,05,300/- through their local agent M/s. Lakhotia International. Out
of the said contracted quantity, 84.78 tonnes of galvanized plain steel sheets were shipped by the said M/s. Kukje Corporation to the appellant
and were placed on board the ocean Vessel ""Ivory Dragon"" at Pusan, Korea, destined for Bombay. The Bill of Lading, Commercial Invoice,
packing list, rate list and surveyor certificate etc were all sent by the said Kukje Corporation to the Indian Overseas Bank, Bombay and one set of
non-negotiable documents was sent by them to the indenting agents for onward transmission of the same to the appellant and accordingly the agent
sent the same to the appellant along with their covering letter dated 13.5.82 which was received by the appellant on 14.5.1982 late in the evening.
In the morning of Monday, the 17th May, 1982(15th and 16 being Saturday and Sunday) the insurance was taken out for the said goods from the
respondent company and Marine Cargo Cover Note No. 71643 was issued and then the respondent issued Policy No. 40400/81/0057/82, dated
18th May, 1982. The appellant received a letter dated May 20,1982 stating that the vessel ""Ivory Dragon"" carrying the cargo from Korea to
Bombay sank off Phillipines. Accordingly, the appellant submitted its claim to the insurance company on 15.6.1982 and further submitted certain
particulars sought by the insurance company. The sinking of the ship was investigated by the surveyors who were both licensed by the Korean
Government as well as agents for LLOYD''s. The respondent company kept on assuring the appellant that its claim would be settled, but vide their
letter dated 11.8.1983 the respondent company rejected the claim of the appellant. As per the appellant, the respondent company is liable under
the contract to pay the money to the appellant as the insurance was taken out in good faith as per the past practice and therefore it was effective
for the entire period of transportation from Pusan to Bombay. The appellant also claims that the goods were not lost at the time the insurance was
taken out and in any case the appellant could not have been aware of it and therefore the appellant is entitled to recover the amount along with
interest.
The respondent insurance company contested the suit by filing written statement taking preliminary objection that the appellant company be put
to strict proof that it is a duly registered partnership firm with the Registrar of Firms and Mr. Purshottamdas Poddar was entitled to sign, verify and
institute the suit on behalf of the appellant company. The respondent denied in their written statement that there was any standard practice that the
appellant had all along been entering into contract of C&F terms and that the insurance used to be obtained with the respondent company after
opening of letter of credit and receipt of documents through agents. The respondent further denied that there was any such practice or there was
any sanction of law or contract and took a stand that the insurance is obtained in advance before the consignment is loaded in the ship and further
denied that their officials had advised the appellant company not to take the insurance in advance but to take the same only on the specific amount
on receipt of the documents. The respondent also denied the stand of the appellant that they started the practice of obtaining insurance later. The
respondent stated that they were not aware of the alleged contract dated 20.1.82 between the appellant and M/s. Kukje Corporation of Seoul for
the import of 200 metric tones of galvanized plain steel sheets coil and took a stand that the appellant has deliberately and intentionally not stated
as to when the said galvanized plain sheets were shipped and placed on board on vessel ""Ivory Dragon"" at Pusan, Korea by the said Korean
corporation. The respondent also disputed that the indenting agent sent the documents to the appellant vide their letter dated 13.5.82 which was
allegedly received by the appellant on 14.5.82 late in the evening. The respondents have taken a stand that nothing could have prevented the
appellant to take the insurance either at the time the consignment was said to have been booked or when the letter of credit was opened, and the
appellant could have taken insurance even on 14th, 15th or 16th May, 1982. The respondent stated that the circumstances and the manner of
obtaining the insurance clearly shows that the appellant has made an attempt to cheat the nationalized insurance company with a view to cause
wrongful loss to the respondent and wrongful gain to the appellant. The stand of the respondent in the written statement was that the insurance was
obtained on the condition that the company will not be liable for any loss if the loss occurs on or prior to 17.5.82 and in this case the loss occurred
prior to 17.5.1982, therefore the insurance company is not liable, even if the policy is deemed to be validly issued in favour of the appellant. As per
the respondent, the appellant came to know of the alleged loss much prior to obtaining of insurance and the same was obtained collusively.
Based on the above pleadings of the parties, the learned trial court framed the following issues:
Whether the plaintiff firm is a registered partnership firm and Sh. Purshottamdas Poddar was its registered partner''
On which date the vessel ""Ivory Dragon"" carrying the goods in question sank and the goods subject matter of the insurance policy lost''
Whether the plaintiff knew about the loss of the goods insured and obtained the policy by cheating the defendant.
Whether the defendant was liable, even if the loss had occurred on or before 17.05.1988'' (Note: This issue would cover the plea that the
subject matter of the insurance did not exist on the date of insurance)
Whether the plaintiff was entitled to interest'' If so, at what rate''
To what amount, if any, is the plaintiff entitled''
Relevant for the purpose of the present appeal are issues No. 2,3 and 4. While deciding Issue No. 2, the trial court came to the conclusion that
the Vessel ""Ivory Dragon"" carrying the consignment in question sunk on 16.5.82 and not on 17.5.82 at 20.30 hrs. GMT, after having taken into
consideration the survey report and the statement of facts given by Mr. K.D. Hoyung, Master of the vessel. Issue nos. 3 and 4 were decided
together by the trial court as being interconnected and the findings on both the issues were returned against the appellant and in favour of the
insurance company. The trial court after taking into consideration the cover note and insurance policy which were proved on record as Ex. P-31
and Ex. P-32, held that there is a specific clause in the contract that the respondent insurance company is not liable for any loss if the loss occurs
on or before 17.5.82 and thus held that the appellant was disentitled to claim recovery of the amount from the insurance company.
Assailing the impugned judgment and decree, Mrs. Mala Goel, Learned Counsel for the appellant has vehemently contended that the above
matter in controversy was duly investigated by the CBI and after the investigation, the CBI found nothing against the appellant but the trial court
had ignored the finding of the CBI for no reasons whatsoever. Counsel further argued that even the respondent never amended their written
statement although in the written statement the respondent took a stand that they will amend their written statement after the matter is investigated
by the CBI. The contention of the counsel was that since no such amendment was made by the respondent therefore the respondent impliedly has
also accepted the findings given by the CBI exonerating the appellant from the alleged charge of lodging a false claim against the insurance
company. Counsel further contended that the trial court has not appreciated the fact that the appellant had no knowledge about the sinking of the
ship before it had received the information vide communication dated 20.5.82 proved on record as Ex. P-33. Counsel further argued that the trial
court has also failed to appreciate that as per the past practice the appellant used to take the insurance policy only when the goods were loaded
and after the receipt of non-negotiable documents through the indenting agent and in the present case the insurance policy was taken on 17.5.82
after the receipt of the said non-negotiable documents on 14.5.82. The counsel also argued that the trial court has also not properly appreciated
the survey report wherein it was clearly stated that the ship in question sank on 18.5.82 at 04.30 hrs. The contention of the counsel was that the
Greenwich Mean Time (GMT) is completely different from the Indian Time and thus submitted that the time and date on which the ship sank
cannot be calculated as per the GMT but the same has to be calculated as per the Indian Time. Counsel also argued that the goods which were
subject matter of import were very much in existence on 17.5.82, the time when the insurance was taken by the appellant and there is no question
of a false claim and conversion of GMT for 17.05.1982 at 20.30 is 4.30 Indian time on 18.05.1982. Counsel further argued that PW-1 had duly
proved on record the documents of contract, bill of lading and other documents besides proving on record that the said non-negotiable documents
were sent by M/s. Lakhotia International vide their communication dated 13.5.82 which were received by the appellant on 14.5.82 late in the
evening and since 15.5.82 and 16.5.82 were holidays being Saturday and Sunday, therefore, the appellant could take the insurance cover only on
17.5.82. Counsel thus urged that the goods in question did exist at the time of appellant taking the insurance cover and the insurance cover was
taken by the appellant as per the past standard practice only after the receipt of the shipping documents. Counsel also argued that the encashment
of the cheque towards the insurance premium on 19.5.82 would not mean that the policy would commence on 19.5.82 as held by the learned trial
Court as the cover note by the insurance company was issued on 17.5.82 and the insurance thus came into effect immediately on the issuance of
the said cover note. Counsel also argued that the learned trial court ought to have taken judicial notice of the time u/s 56 and 57 of the Evidence
Act as the appellant had no means to know the exact time of the sinking of the ship which could come to its notice only when communication dated
20.5.82 was received by it as the means of communication back then were not as advanced as they are today.
Opposing the present appeal, Mr. Vineet Malhotra, Learned Counsel for the respondent submitted that the judgment of the learned trial court
does not call for any interference by this Court as the same is based on sound reasoning and correct appreciation of facts. Counsel further argued
that the appellant was well aware of the fact that the ship in question had already sunk on 16.5.82 and with a view to cover up the loss the
insurance policy was taken by the appellant on 17.5.82 by suppressing the said vital fact. Counsel further argued that since the subject matter of
insurance did not exist on the date of the insurance, therefore, the insurance company has no legal liability to compensate the appellant. The
contention of the counsel was that the insurance company is not liable to pay any amount under the contract of insurance because the contract itself
was void as the subject matter of the insurance did not exist on the date of taking the insurance policy. Counsel also argued that in the cover note
and the insurance policy it was clearly stipulated that the insurance company would not be liable for any loss which had occurred on or prior to
17.5.82. Counsel further argued that the date of shipment of the said goods was 31.3.82 which date is duly mentioned on the indent letter issued
by M/s Lakhotia International, proved on record as Ex. P-24, but the appellant took no steps to take the insurance cover till 17.5.82, till when the
ship had already sunk in the midstream. Counsel placed reliance on the statement of facts submitted by the Master of the said ship which is a part
and parcel of the survey report proved on record as Ex. P-36, which clearly states that the vessel ""Ivory Dragon"" had actually sunk on 16.5.82.
Counsel thus states that the trial court rightly placed reliance on the said statement of the Master of the ship who was the prime witness to have
known the actual facts with regard to the exact date and time of sinking of the said ship. Counsel submitted that it was clearly proved on record
that the appellant had taken up the insurance cover fraudulently after the ship carrying the subject goods had already sunk and thus is not entitled to
any relief.
I have heard Learned Counsel for the parties at considerable length and given my thoughtful consideration to the pleas advanced by them.
The balance of the entire controversy rests on the determination of the question as to when did the ship in question, the ""Ivory Dragon"" sink. The
main argument canvassed by the counsel for the appellant was that the ship had sunk on 17.5.82 at 20.30 hours GMT which corresponds to 4.30
hours on 18.5.82 as per the Indian Time and therefore the insurance policy taken by the appellant on 17.5.82 was valid, legal and binding on the
insurance company and the appellant entitled to the recovery of the said amount. Counsel for the respondent on the other hand took a stand that
the ship in question in fact had actually sunk on 16.5.82 and not on 18.5.82 as per the claim of the appellant. The appellant has however feigned
complete ignorance with regard to the personal knowledge about the exact time and date when the vessel in question carrying the consignment
ordered by the appellant had sunk and has only claimed knowledge about the sinking of the said ship through the communication dated 28.5.1982
sent by M/s Lakhotia International Ltd. which was proved on record as Ex. P-34, informing the appellant that the vessel in question sunk off at 13-
10''N, 113-55''E on 17.5.82 20.30 hrs GMT, and also vide letter dated 20.5.82 sent by the Intermodal Transport & Trading System Pvt. Ltd.
informing the appellant that the said vessel had sunk off Phillipines in the morning of 18.5.82.
It is not in dispute between the parties that the appellant had taken the said insurance policy vide insurance cover note issued by the respondent
on 17.5.82 and the two propositions that emerge out of the conspectus of facts is that if by 17.5.82, the vessel had not sunk then certainly the
appellant could legitimately maintain the claim against the respondent for the alleged loss of consignment but if the said vessel had already sunk
prior to 17.5.82, then certainly the recovery suit filed by the appellant could not have sustained. The trial court has placed reliance on the statement
of facts submitted by the Master of the ship, K.D. Hoyung, whose statement formed part of the survey report proved on record as Ex. P-36 over
the survey report and the two letters dated 20.5.1982 and 28.5.1982 which stated that the ship sunk on 17.5.1982 20.30 GMT. Undoubtedly,
Master of the ship was the prime witness with regard to the exact facts leading to sinking of the said ship and therefore the date and time indicated
by the Master of the said ship cannot be disbelieved. In his statement, the Master of the ship has clearly disclosed that the vessel ""Ivory Dragon
actually sank at 0430 hours on 16.5.82 in approximate position Lat 13-10''N, 113-55''E. It is beyond the comprehension and understanding of
this Court that once the Master of the ship had stated the said date of 16.5.82 as the date when ship sank then how in the survey report the date of
sinking of the ship could be shown as 18.5.82. The surveyors in the survey report could not have introduced their own date, ignoring the date of
sinking as stated by the Master of the ship. The learned trial court, therefore, has rightly observed that there is a manipulation in the date mentioned
in second last line of page no. 2 of the survey report to make the same as 18.5.82 as opposed to 16.5.1982. this Court therefore does not find any
reason to upset the said finding given by the learned trial court placing reliance on the statement of the said prime witness who actually witnessed
the sinking of the said vessel carrying the consignment in question. The argument of the counsel for the appellant that the said vessel had sunk on
17.5.82 at 20.30 hrs GMT which corresponds to 4.30 hours on 18.5.82 Indian time thus cannot sustain as the vessel in fact had actually sunk on
16.5.82. It is also a fact that in the survey report the date of sinking of the ship is stated to be 18.5.1982 at 0430 hours where it is not stated to be
at GMT or at IST and if this is taken to be as GMT as the entire report talks in terms of GMT, then it is to be converted to IST in which case the
contention of the appellant would be totally belied that the ship sank at 17.5.82 at 2030 hours GMT. It is thus quite manifest that the appellant has
built a concocted and fabricated case to extract money from the respondent on false claims. It is thus quite explicit that the appellant had taken the
insurance cover when the said goods were already lost due to the sinking of the said vessel carrying the consignment in question and hence the
subject matter of the contract did not subsist at the time of entering into the contract which makes it a void contract. The findings on Issue no. 1
have been thus correctly decided by the learned trial court and the appellant has not been able to persuade this Court otherwise.
this Court also does not find any illegality or perversity in the findings arrived at by the learned trial court on the Issue nos. 3 and 4. The
issuance of the cheque by the appellant on 19.5.82 which is dated as 16.5.1982, (which was admittedly a Sunday) certainly proves the point that
the appellant was well aware of the said fact of sinking of the ship otherwise there was no explanation by the appellant as to why the need arose to
issue the cheque on 16.5.82 when the cover note was taken by the appellant on 17.5.82. The cover note proved on record as Ex. P-31 and the
insurance policy proved on record as P-32 clearly stipulate that the respondent insurance company will not be liable for any loss if the loss occurs
on or before 17.5.82. The insurance policy is in the nature of a contract between the parties and the liability of the insurance company to
compensate for the loss could arise only when the goods that are insured under the policy had existed at the time of taking the said policy. The
learned trial court has rightly observed that in the light of the specific clause in the insurance policy clearly stipulating that the insurance company will
not be liable for any loss if it occurs on or before 17.5.82, then the appellant could not have filed a claim for the losses which had already occurred
prior to 17.5.82. The findings given by the trial court on the Issue nos. 3 and 4 also do not call for any interference and the same are accordingly
upheld.
Therefore in the light of the above discussion, this Court does not find any merit in the present appeal and the same is accordingly dismissed.