Sathavahana Sea Foods (P) Ltd. vs Oriental Insurance Co. Ltd. and Ors.

COMPLAINT was filed, inter alia, alleging that the complainant company was promoted in 1987 with the main object of acquiring and operating two deep -sea steel fishing trawlers. Initial cost of the project was Rs. 73 lakh out of which amount of Rs. 17.6 lakh was brought by the promoters towards equity. Complainant withdrew Rs. 42 lakh out of the sanctioned term loan of Rs. 48 lakh from A.P. State Financial Corporation, opposite party No. 3. IDBI contributed Rs. 7 lakh as seed capital It was alleged that the complainant purchased a mini deep -sea fishing vessel viz. Sathavahana -1 and took delivery thereof in January, 1989. Vessel was insured w.e.f. 19.6.1989 for Marine Hull and Voyage with Oriental Insurance Company Ltd. whose Divisional and Registered Offices are impleaded as opposite party Nos.1 and 2 (hereinafter referred to as Insurance Co.). In the middle of 1991, the complainant company suffered heavy financial losses. It, therefore, asked opposite party No. 3 to pay the premium and keep the policy in force. Opposite party No. 3 paid the premium through cheque Nos. 537337 dated 31.10.1991 and 508797 dated 29.1.1992 and the cheque dated 31.10.1991 was encashed by the Insurance Company. It was pleaded that the said vessel sank when she was berthed between 2/3 jetty of Vishakhapatnam Fishing Harbour on 26.11.1991. Insurance Company was intimated of the sinking of the vessel by a telegram dated 28.11.1991. Charges demanded by outside salvage team to refloat the vessel were so high that the complainant company could not arrange them. It, thus, approached opposite party No. 3 to provide financial assistance upto a limit of Rs. 3 lakh to meet the salvage operation expenses to which the opposite party No. 3 expressed its inability. Complainant also approached the urveyor to recommend to the Insurance Company to appoint a salvage team. Complainant company started receiving threatening letters from the Traffic Manager, Vizag Port Trust. Insurance Company declined to provide funds to refloat the vessel. By the letter dated 1.3.1995, the Insurance Company repudiated the claim made for the reasons that the premium which was due on 14.10.1991 had not been paid and the complainant had failed to salvage the insured vessel. Vessel was insured for Rs. 35 lakh. Attributing negligence and deficiency in service, the relief claimed by the complainant was to issue direction to the Insurance Company to pay amount of Rs. 35 lakh along with interest at the rate of 24% per annum and pay Rs. 25 lakh towards business loss, harassment and mental agony. Direction was further sought to be issued to opposite party No. 3 to waive the entire interest on the amount advanced to the complainant company from 26.11.1991.

INSURANCE Company, opposite party Nos. 3 and 4 contested the complaint by filing separate written versions. It was alleged by the Insurance Company that the decision to repudiate the claim lodged by the complainant was conveyed through the letter dated 1.3.1995 for the following reasons: (a) Instalment of premium was not paid on due date, i.e., 14.10.1991. Accordingly, the policy had expired on 14.10.1991.

(b) Complainant had neither alleged nor proved fortuity or insured peril having acted on the vessel due to which the alleged loss had occurred.

(c) Complainant did not carry out the salvage operations in spite of repeated requests made by the Surveyor. This resulted in breach of policy condition requiring the insured to take such measures as may be reasonable for the purpose of averting or minimizing the loss.

(d) The vessel was laid up at port since December 1990 without any crew members/watch and ward. Complainant had even failed to present the alleged watch and ward to the Surveyor for inquiry and recording the statements.

(e) Log entry in the Vishakhapatnam Fishing Harbour Jetty indicated that the alleged incident was not reported to Port Quary Foreman.

REPUDIATIO N on the said grounds was made after due application of mind. It was alleged that the premium cheque was received on 6.11.1991 from opposite party No. 3. Since the policy had expired on 14.10.1991, it became necessary to obtain condition and valuation survey report and fresh proposal form from the complainant. Reliance Survelliance, Surveyor was deputed to conduct the inspection of the vessel and issue a certificate in regard to the vessel''s present condition and the value thereof. In the preliminary report dated 7.12.1991, the said Surveyor reported that they sited the vessel on 11.11.1991 tied along side between Jetty Nos. 2 and 3 of the Fishing Harbour, Vishakhapatnam but could not conduct the internal survey of the vessel as no responsible person was available and the concerned director of the complainant company was reported to be out of station. Thus, the condition and valuation report could not be obtained nor any fresh proposal form was submitted by the complainant company. Cheque received on 6.11.1991 was presented on 25.11.1991 as "deposit" premium and no fresh cover was issued for want of the condition and valuation certificate report and the fresh proposal form. It was stated that it was only on 30.11.1991 that the complainant Company intimated the Insurance Company of the alleged loss. Since the vessel was without insurance cover, no liability for the amount claimed can be fastened on the Insurance Company. It was also stated that the said Surveyor, vide letters dated 4.12.1991, 20.12.1991, 23.12.1991, 13.1.1992, 3.2.1992 and 18.6.1992 requested the complainant to take up the salvage operations in order to prevent further damage to the sub -merged vessel. By the letter dated 13.8.1993, the complainant company informed that though it had approached opposite party No. 3 for financial assistance to meet salvage operation expenses, but it had declined to release the funds. Taking into account the complexity of the matter, the Insurance Company appointed Basheer and Associates as the Second Surveyor to investigate into the alleged sinking of the vessel. In its report dated 20.7.1992, this Surveyor had reported that on inquiry it was informed by the Port Authorities that Notice of Seizure was issued against the vessel on 28.8.1991 for non -payment of port dues since long and as the owner and crew members could not be located, the notice was pasted on the vessel. This strengthens the fact recorded by Reliance Survelliance, Surveyor that the vessel was unmanned at the time of casualty. In its said report, the Second Surveyor also stated that based on their investigation, interrogation and scrutiny of various records, they were of the opinion that vessel would have sunk either in early hours of 25.11.1991 or even earlier than 25.11.1991 due to sabotage/deliberate removal of underwater fitting by some unscrupulous elements/party with vested interests as the vessel remained without proper watch and ward and found laid down in abandoned state. Even assuming that the cheque dated 6.11.1991 was encashed on 25.11.1991, there was no cover at the time of alleged loss. It was stated that the log entry of Vishakhapatnam Fishing Harbour Jetty indicted that the occurrence was not reported to the Port Quary Foreman - M. Firozama. Insurance Company was not obliged to engage any salvage operations. Since opposite party No. 3 was also insured under the policy, it was equally responsible for ensuring timely salvage operations, which the opposite party No. 3 deliberately and intentionally failed to carry out. Liability to pay the amount claimed was emphatically denied. Opposite party No. 3 filed the written version on the affidavit of K. Rambabu, Deputy Manager. It was admitted that term loan of Rs. 48.63 lakh and seed capital of Rs. 7.5 lakh were sanctioned to the complainant company on 13.4.1987 for acquiring two mini fishing trawlers and the complainant took delivery of Sathavahana -I in January 1989 and the second vessel was under construction at Cochin. Sathavahana -I insured for Rs. 35 lakh with the Oriental Insurance Co. Ltd., sank between Jetty Nos. 2 and 3 in the Vishakhapatnant Fishing Harbour on 26.11.1991. It was stated that under Condition No. 21 of the loan sanction letter, it was the responsibility of the complainant to have the fishing trawlers comprehensively insured with the Insurance Company and the policies assigned in favour of opposite party No. 3. Responsibility of having the salvage operations conducted lay on the complainant and the Insurance Company. It was denied that opposite party No. 3 was to arrange the funds for salvage operations. It was further denied that complainant company is not liable to pay interest on the loan amount from 26.11.1991. It was stated that despite remitting premium for two quarters, the Insurance Company had not issued the policy cover.

VISHAKHAPA TNAM Port Trust who was impleaded as opposite party No. 4 vide order dated 9.8.2000, in its written version alleged that in the complaint no relief has been sought against it. Vessel Sathavahana -I owned by the complainant was docked in the fishing harbour of the Port Trust and moored between Jetties 2 and 3. It sank on 25/26.11.1991. On 30.1.1994, the Port Trust called upon the complainant to remit a sum of Rs. 2,21,230 towards port charges which included berth charges and wharfage, etc. qua the said vessel. After sinking, the vessel was causing obstruction in the fishing harbour and it was not being removed by the complainant. So it was put to public auction on 25.7.1995 Bid of M/s. Mehboob and Company for Rs. 90,000 was accepted. This amount was paid by the auction purchaser on 14.8.1995. After allowing adjustment for this amount, a sum of Rs. 1,80,936 along with interest was still due towards port charges, etc. against the complainant Company.

BY way of evidence, the complainant filed the affidavits of Cdr. P.B. Subba Rao, Yenappa Srinivas and Capt. Jacob Rao Palayoor on 3.8.1998. Additional affidavit of Cdr. P.B. Subba Rao dated 6.7.2005 was further filed. Insurance Company filed the affidavits of D. Prasad Rao, Branch Manager, P.S.N. Rao, proprietor of Reliance Survelliance and Jalal Bashir, proprietor of Basheer and Associates, surveyors. Opposite party No. 3 filed the affidavit of evidence of K. Rambabu, Sr. Branch Manager. Affidavit of G.R.S. Yaaji, Dy.Traffic Manager (Comml.) was filed by opposite party No. 4 Trust.

WE heard Ms. Nisha Bagchi for the complainant, Mr. Vishnu Mehra for the Insurance Company and Mr. Y.P. Rao for opposite party No. 3 and were taken through the record.

ADMITTEDLY , complainant''s claim was repudiated by the Insurance Company through the letter dated 1.3.1995 on five grounds. One of the grounds was that the policy had expired on 14.10.1991 because of non -payment of the instalment of premium which was due on 14.10.1991. Policy No. 432205/4/0/MH/92/39 dated 15.7.1991 for Rs. 35 lakh was favouring A.P. State Financial Corporation (O.P. No. 3) A/c. Sathavahana Sea Foods Pvt. Ltd., complainant. It is not in dispute that the cheque towards second instalment of premium issued by opposite party No. 3 was received by the Insurance Company on 6.11.1991 and same was got encashed on 25.11.1991. In the written version filed by the Insurance Company it was alleged that as the premium cheque was received on 6.11.1991, it became necessary to obtain Condition and Valuation Report and a fresh proposal form from the complainant Company. Reliance Survelliance, Surveyor was deputed to conduct inspection of the vessel and issue a certificate for the vessel''s present condition and the value and in its preliminary report dated 7.12.1991, the Surveyor reported that though they sited the vessel on 11.11.1991 tied along side between Jetty Nos. 2 and 3 of the fishing harbour, Vishakhapatnam but internal survey of the vessel could not be conducted as no responsible person was available and the concerned Director of the company was reported to be out of station. Fresh proposal form was too not submitted by the complainant. It was neither pleaded nor proved by the Insurance Company that it had informed the complainant that the said cheque was being encashed by it subject to submitting of a fresh proposal form by the complainant and receipt of the Condition and Valuation Report. Complainant was also not intimated about the appointment of Reliance Survelliance, Surveyor for obtaining the Condition and Valuation report. It was only through the aforesaid letter dated 1.3.1995 that the complainant was told that one of the grounds for repudiation of claim was the non -payment of the premium instalment due on 14.10.1991. Sub -section (1) of Section 64VB of the Insurance Act says that no insurer shall assume any risk in India in respect of any insurance business on which premium is not ordinarily payable outside India unless and until the premium payable is received by him or is guaranteed to be paid by such person in such manner and within such time as may be prescribed or unless and until deposit of such amount as may be prescribed, is made in advance in the prescribed manner. Sub -section (2) further says that for the purpose of this Section, in the case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the insurer. Explanation appended to Sub -section (2), which is material, provides that where the premium is tendered by postal money order or cheque sent by post, the risk may be assumed on the date on which the money order is booked or the cheque is posted, as the case may be. Since the cheque towards second premium instalment received on 6.11.1991 was encashed on 25.11.1991, the payment will relate back to 6.11.1991. In the absence of pleading and proof referred to above, the Insurance Company who had kept the cheque from 6.11.1991 till it was presented for encashment on 25.11.1991, cannot be heard to say that the risk was not covered on 26.11.1991 when the insured vessel sank.

FURTHER , copy of the policy along with endorsements attached Exhibit PW1/1 is placed at Pgs. 252 to 260 in Vol.I. This was filed along with the affidavit dated 2.4.1997 of D. Prasad Rao, Branch Manager. In para -2 of this affidavit it was averred that the policy was subject to the terms/ conditions and warranty attached and those formed part of the policy. Insurance premium was payable in 4 instalments. The first instalment of Rs. 26,688 was collected on 15.7.1991 for the period 15.7.1991 to 14.10.1991. The second instalment of premium was payable on or before 14.10.1991. Policy at Pg. 252 would show that the yearly premium was Rs. 1,03,250. Endorsement attached to the Policy at Pg. 253, which is material, reads thus: "This policy may be further extended upto expiry of 12 months from the commencement of the risk under the policy on payment of additional premium before expiry of the period current under the policy subsequent extension endorsement, as under: (i) for three months on payment of 30% of the annual premium on expiry of the first quarter covered under the policy; and (ii) for the balance six months on payment of 30% of the annual premium on expiry of the second quarter covered under the policy and subsequent extension endorsement."

Schedule of warranties attached to the policy at Pg. 251 would show that the amount of the second, third and fourth instalments was Rs. 25,814 each. Second instalment of premium was payable on or before 14.10.1991 while third instalment on or before 14.1.1992. Fourth instalment of premium was payable on or before 14.4.1992. It is, thus, manifest that the policy (Ex. OPW1/1) was for one year commencing from 15.7.1991 and in order to facilitate payment of premium, the insured was allowed facility to pay the premium in 4 instalments and only Extension Endorsement was to be made on the policy on payment of second, third and fourth instalments. That be so, there was no occasion for the Insurance to obtain the Condition and Value Report and of submitting fresh proposal form by the insured. Even if there was delay on the part of opposite party No. 3 in issuing the said cheque towards second premium instalment, the Insurance Company may have levied some penalty for late payment and demanded it from the insured. Delay in receipt of the cheque, thus, could not have been validly made the ground for repudiating the claim by the Insurance Company. Having reached this conclusion, the complainant cannot hold opposite party No. 3 deficient in service as regards late issuing of the said cheque by it. Decision in Pradeep Kumar Jain v. Citi Bank & Anr., II (1999) CPJ 7 (SC)=VI (1999) SLT 550=II (1999) ACC 207 (SC)=(1999) 6 SCC 361, being distinguishable on facts has no applicability to the present case.

COMING to other grounds of repudiation of the salvage operations not being carried out by the insured and the vessel being laid up at the port unattended since December 1990, it may be mentioned that the stand taken by opposite party No. 4 Port Trust is that the vessel was sold in a public auction on 25.7.1995 for a sum of Rs. 90,000 to M/s. Mehboob and Company and after approval of bid, that amount was deposited by the auction purchaser on 14.8.1995 with the Port Trust. The vessel sank on 25/26.11.1991. Vessel was, thus, sold after more than 3 years of the sinking. Complainant alleged that as it was unable to meet the expenses of salvage operations, it approached opposite party No. 3 for financial assistance of about Rs 3 lakh vide letters dated 14.12.1991 and 14.5.1992. However, the opposite party No. 3 expressed their inability to extend the said financial assistance by the letter dated 10.6.1992. Complainant further alleged that the Insurance Company also declined to undertake salvage operations. In para -6 of the joint written statement, the Insurance Company pleaded that Reliance Survelliance, Surveyor by the letters dated 4.12.1991, 20.12.1991, 23.12.1991, 13.1.1992, 3.2.1992 and 18.6.1992 (copies placed on the file) repeatedly asked the complainant to carry out salvage operations to prevent further damage to the submerged vessel. In his affidavit, K. Rambabu, Dy. Manager of opposite party No. 3 averred that there was no justification to sanction the funds required for conducting the salvage operations. Responsibility for such operations lay entirely on the complainant and/or the Insurance Company. It was further averred that it is not open to the complainant to contend that it is not liable to pay interest from 26.8.1991 i.e. the date of the incident. Along with affidavit the copy of sanction of Term loan of Rs. 48.63 lakh dated 13.4.1987 to the complainant together with the terms and conditions of sanction, has been filed. Having considered this letter and the terms and conditions of sanction of loan, there appears to be no reason to disbelieve said K. Rambabu that no responsibility was cast upon the Corporation to provide financial assistance for carrying out salvage operations and it was for the complainant to have conducted such operations. Insurance Company too was not obliged to take up such operations.

HAVING returned this finding, we proceed to examine the issue of the vessel being allegedly laid up at the port unattended since December 1990. In support of the case that watch and ward staff was employed for the care and safety of the vessel, the complainant has filed the affidavit of Yenappa Srinivas and additional affidavit of Cdr. P.B. Subba Rao, managing director of the Company dated 6.7.2005. In his affidavit said Sri Srinivas averred that along with others he was employed by the complainant as watch and ward and lay up crew from November 1990 to November 1991. Since March 1991, the vessel was tied up along side VPT fisheries jetty 1 and 2. On the night of 25/26.11.1991, while he was asleep on the deck along with Chenniah, he was suddenly jolted due to some severe impact and when he got up, he saw a bigger vessel passing away after hitting the vessel. Due to darkness, that vessel got away without being identified. He further averred that he noticed the sea water gushing into the engine room on both the sides of the quarter below water level. He and Chenniah rushed out of the vessel shouting and made an oral report to the Quary Foreman on duty of the harbour. Thereafter, on coming back he found that the vessel stern sunk. Vijay Bhaskar was informed as K.V. Subba Rao, was awary from Vishakhapatnam at that time. He left the company and left for Gujarat where he got a better job. In his said additional affidavit Cdr. P.B. Subba Rao averred that the complainant had intimated the Insurance Co. regarding the tie up of the vessel at a safe place in port on 19.12.1990 and the complainant had appointed six watchmen on 28.11.1990 vide Exh. CW1/7 to 12 to work in three shifts and their services were terminated on 30.11.1991 vide Exh. CW1/13 to 24 after the sinking of the vessel. On the other hand, the Insurance Company filed the preliminary/valuation report dated 7.12.1991 of Reliance Surveillance, Surveyor and the report dated 20.7.1992 of J. Basheer and Associates, Surveyor. Report dated 7.12.1991 is referred to in the affidavit of PSN Rao, proprietor of Reliance Surveillance while the report dated 20.7.1992 is connected in the affidavit of Jalal Basheer, proprietor of J.Basheer and Associates. Report dated 7.12.1991 notices that on receiving instructions from the Insurance Company to conduct inspection of the vessel and issue certificate for its present value, Shri Rao reached the site on 11.11.1991 and he found the vessel tied along side between jetty 2 and 3 of the fishing harbour, Vishakhapatnam. However, internal survey of the vessel could not be conducted as no responsible person was available and the concerned director of the complainant was reported to be out of station. Portion of the aforesaid report dated 20.7.1992 which is material, is reproduced below: "Enquiry with the attending Surveyor of M/s. Reliance Survelliance: We had requested the attending Surveyor to explain as to why the condition survey was not carried out immediately on appointment by the underwriters. The attending Surveyor had stated that he had visited the vessel to inspect her condition, but as the compartments were closed and there were none on board to assist in surveying, he had returned in vain. Later he tried to contact the insured, but as he was out of town, he was waiting for him to return back.

Then after the casualty, when again appointed as Damage Surveyor the attending Surveyor had visited the site of incident on 2.12.91 and found the vessel in partly submerged condition. There were no crew members or any watch and ward around the site of incident. When asked by the attending Surveyor from Cdr. P.V. Subba Rao, he was told that there were two watch & ward persons on board, who were absconding. The insured was neither able to trace out the watch and ward nor could give their addresses. We had obtained a letter to this effect from the attending Surveyor. (The copy of letter No. RS/92/PSN/78 -91/L.98 dated 26.6.1992 at Annexure C'').

Our Enquiry with Visakhapatnam Port Trust Fishing Harbour Official: We had contacted Dock inspector, Fishing Harbour, Visakhapatnam on 25th and 26th June, 1992 to take stock of the incident and also to peruse the Jetty Log Book entry about the incident. The Dock Inspector was reluctant to show us the log book, except that he had maintained that the casualty had taken place on 25th November, 1991. When insisted he had asked us to contact the Asstt. Traffic Manager, V.P.T. and get his approval.

We had contacted Asstt. Traffic Manager Mr. Pappa Rao, who had in turn replied in the same manner as of Dock Inspector. Then we had contacted the Traffic Manager and Deputy Traffic Manager Mr. Dattu Raju on 26th June, 1992, who had given permission to peruse the Log book of fishing jetty. On scrutiny of the Asstt. Quary Foreman Fishing Harbour'' Log Book we had observed that the log book entry made by Asst. Quary Fore -man Mr. M. Firozama during his duty at 2200 hrs in IIIrd shift on 25th November, 1991 had in between entries, and after the routine entry, again re -entry found made on the page No. 31 of book No. 610 (Log book with effect from 26.10.1991). The entries in log book of Finger Jetty (Trawlers) found as under: V.P.T. A.Q.U.F.S.F.H. Log Book No. 610, page Nos. 30 and 31 (with effect from 26.10.1991) 25.11.1991 1st Shift (from 0600 Hrs. To 1400 Hrs) Mr. K. Satyam on duty at0600 Hrs -OK Relieved Sri P.V. Rao (AQF) Staff on duty 1. Sri N. Appa Rao (Serang) 2. K. Nooka Raju IV - Tindel Attended routine work Handed over charge to Shri G. Haranath and broke off Duty at 1400 hrs. Sd/ - (K. Satyam) 25.11.1991 IInd Shift (From 1400 hrs. to 2200 hrs. G. Haranath AQF on duty at 1400 hrs. at reliever Sri K. Satyam AQF. Staff on duty: 1. C.H. Sunny Babu -Sarang 2. S. Raja Rao -Tindel 3. M. Simhachalam -Sarang Attended as usual routine work. Charge handed over to Sri ........................ and broke off duty. Sd/ - (G. Haranath) 25.11.1991: IIIrd Shift (from 2200 hrs. to 0600 hrs.). Log report of M. Firozama -AQF. On duty at 2200 hrs. and relieved Sri G. Haranath AQF. Staff on duty. 1. Sri K. Nooku Raju -Sarang marked muster for the F/craft other then VPT and FVSM Boats. Prepared usual statement F/T F.J -2. Attended to usual work. Note: Sd/ - M. Firozama

After this usual entry, again another entry below found entered thus: "Informed by telephone to DTM (S) and D.T.M. (G) about the sinking of F/T Sathavahana -I''. The people around the area at F/J -2 informed that the F/T Satavahana -1'' was sunk in 1st shift at 0930 hrs on 25th November, 1991 itself. As there is no reliever informed to Q.F. (Control) and broke off my duty at 0800 hrs. Sd/ - M. Firozama, AQF".

Note: The above entry found cancelled and another entry on the next page on the top border area entered as under: (since the next day duty person (26.11.1991) had already filled in the page No. 32.) "During my round at 0445 hrs, it is found that F/T Sathvahana -1 which is under port custody sunk at .J -2. The same was informed to Q.F. (Control) DT.M 9(G) and DTM (S) on phone. Sd/ - M. Firozama"

25.11.1991 Remarks: Please note that the Assistant Quary Foreman had also put the date after signature, when such practice was not found anywhere in the log book. That too a wrong date. (i.e. His entry for 26th November, 1991 as 25th November, 1991. Since he had resumed on duty at 2200 hrs on 25th November, 1991, 0445 hrs should be on 26th November, 1991). We had again checked another Fishing Jetty Log Book which was normally maintained by Key Jetty Asst. Quary Foreman for Mechanised boats. The details were as under: Log Register No. and Other Particulars : 2119 Vizag Port Trust A.Q.F.S. F.H. Log Book (From 26.10.91 to 29.12.1991) 25.11.1991: IIIRD SHIFT "log report by P. Venkata Rao, AQF on duty at 2200 hrs and relieved to Sri C. H. Appanna, AQF. Staff on Duty: -Shri K. Nooka Raju - Quary Sarang. Attended as usual shift work. Handed over charge to Shri K. Satyam AQF and broke off my duty at 0600 hrs. Note: After the usual entry, there was in between entry found with small letters with different ink as below: NB: During in my round, at 0445 hrs and it is found that F. T. "SATHAVAHANA -1 is sunken condition and the same was informed to DTM (G)/OF (Control) by phone message".

Note: Again there was mistake in writing the date. (25.11.1991 date was written in place of 26.11.1991 according to the timing noted). Enquiry from Sri M. Firozama, Asst. Quary Foreman who was on duty on 25.11.1991 in IIIrd Shift: Sri M. Frozama AQF, was on sick leave due to an accident during our visit to vizag. We had visited his house, to ascertain the reason for in between entries and double entries, etc He had refused to discuss with us about it. If any details required from him he had said that he would tell only in presence of his senior officials.

Enquiry with another Asstt. Quary foreman, Sri P. Venkat Rao, (AQF) who was on duty during third shift On 25.11.1991. When we enquired about the reason for double entry/in between entry in the log book by him, he was very apologetic and said that at the instance of Asstt. Quary Foreman Mr. M. Firozama, the entry was made later.

Enquiry from the nearby vessels at the site of sinking at Fishing Harbour Finger Jetty Nos. 2 and 3. We had made inquiry from the nearby vessels which were laid up alongside jetty since long, regarding circumstances under which the vessel MFV. SATHAVAHANA -I'' had sunk and the actual date and time of casualty. One person by name Shri Vijay who was kept as watch and ward on board vessel MFV. SAGAR MEXICANA -II'' which was secured astem vessel Sathavahana had no crew members or watch and ward on board. It was lying since long secured along side jetty No. 2, unattended. Theft and pilferage was going on during day and night by some unscrupulous elements. Once when he intervened, he was threatened of his life on knife point by the gang who were robbing from the vessel MFV. ''Sathavahana -I'' ...............................................

Conclusion: Based on our investigation, interrogation, and scrutiny of various records, we are of the opinion that the vessel MFV. SATHAVAHAN -1'' would have sunk either early hours of 25th November, 1991 or earlier than 25th November, 1991 due to sabotage/deliberate removal of underwater fittings by some unscrupulous element/party with vested interest as the vessel remained without proper watch and ward and found laid up in abandoned state. The vessel''s sinking due to deterioration/wear and tear of Hull structure cannot be ruled out fully due to poor maintenance for want of finance as evident from various letter correspondences of the insured expressing their inability to salvage the vessel due to poor financial position."

SINCE we have returned the finding above of the vessel not being without an insurance cover, we need not scrutinize on which date the vessel sank. At this juncture, reference is required to be made to the appointment letters of M.V. Narsumhulu, V.R. Solomon, T.P. Subbiah, G.V. Rama Rao, Y.P. Srinivas and M.K. Chenniah who were allegedly employed as watch and ward on the vessel, their termination letters and the vouchers regarding -payment of the amount shown therein towards full and final settlement to the above persons. Appointment letters are dated 28.11.1990 while termination letters are dated 30.11.1991. Payment vouchers are dated 30.11.1991. To be noted that these were filed sometime in October, 1996 and not with the complaint and only the affidavit of Y.P. Srinivas Rao out of the said person has been filed by way of evidence. With reference to repudiation letter dated 1.3.1995, letter dated 17.6.1995 was sent by the complainant under the signature of said Cdr. P.B. Subba Rao, to the Insurance Company. In sub -para (d) of this letter it is mentioned that the watch and ward staff was absconding since the date of occurrence. That being so, there was absolutely no occasion to have made payment of the amount shown in the payment vouchers on 30.11.1991 to the said watch and ward staff None from the watch and ward staff was produced in connection with the inquiry before the Surveyor. In this background, we are not inclined to place any reliance on the aforesaid affidavit of Y.P. Srinivas Rao and the letterss dated 28.11.1990/30.11.1991 and vouchers dated 30.11.1991. In regard to in -between entries and double entries in the log -book noticed in the said report dated 20.7.1992, it was submitted on behalf of the complaiannt that the entries were made by the staff of opposite party No. 4 Port Trust over whom the complainant did not have any control and the complainant, therefore, cannot be made answerable for any improper notings or insufficient language used. Complainant had not filed any application for summoning either M. Firozama, Asstt. Quary Foremand or P.V. Rao, Asstt. Quary Foreman for the purpose of seeking clarification regarding in -between/double entries in the log -book. Complainant cannot get away of the report on ground of its having no control over the staff of the opposite party No. 4 Port Trust. Also considering the report dated 7.12.1991 and the discussion made above, we have no hesitation in returning the finding that the vessel was laid up unattended at the Port much before the occurrence took place. Despite aforesaid letters dated 4.12.1991, 20.12.1991, 23.12.1991, 13.1.1992, 3.2.1992 and 18.6.1992 from Reliance Survelliance, Surveyor, the complainant had failed to take up the salvage operations and had allowed the vessel to be sold in public auction for a sum of Rs. 90,000 as against the insured amount of Rs. 35 lakh after 3 years of the incident. Belated plea taken by the complainant that it was neither reasonably nor economically possible to salvage the sunk vessel being without any merit is repelled. Sub -section (4) of Section 78 of the Marine Insurance Act, 1963 provides that it is the duty of the assured and his agents, in all cases, to take such measures as may be reasonable for the purpose of averting or minimizing a loss. Such was also the condition of the policy Obviously, the complainant had violated the provision of Section 78(4) and the terms of policy by leaving the vessel unmanned and not carrying out salvage operations and the Insurance Company was, therefore, fully justified in repudiating the claim on both these scores. This discussion would also cover the ground of the incident having not been reported to the Port Quary Foreman.

LEGALITY of the last ground of repudiation at S.No. (b) in the repudiation letter dated 1.3.1995 need not be gone into now.

IT is pertinent to mention that the final survey report of Reliance Survelliance is dated 28.8.1993 while the claim was repudiated by the Insurance Company on 1.3.1995. For delay of more than one and half years in repudiating the claim, the Insurance Company has not furnished any plausible explanation. Insurance Company was supposed to take decision in the matter at the most within 3 months of the submitting of the final survey report. In view of the finding recorded above of the Insurance Company having validly repudiated the claim on two grounds though the complainant is not entitled to the reliefs claimed in the complaint against the Insurance Co. but for the deficiency in service in communicating the decision of repudiation of claim after more than 1 years of the submitting of final survey report, we deem it just and proper to award a sum of Rs. 50,000 as compensation to the complainant.

FOR the foregoing discussion, the complainant must be held to have not made out case for waiver of interest on loan amount from 26.11.1991 for not providing the funds for taking up salvage operations and allowing the policy lapsed by not timely making the payment of the premium instalment which was due on 14.10.1991, by opposite party No. 3.

ACCORDINGL Y , the complaint is disposed of with direction to the Insurance Company to pay amount of Rs. 50,000 as compensation to the complainant within 5 weeks from the date of this order. Complaint against opposite party Nos. 3 and 4 is dismissed. In the circumstances of case, the parties are left to bear their own costs. Complaint disposed of.