SITHA VEDANAYAGAM vs NEW INDIA ASSURANCE CO. LTD.

AFTER hearing Mr. Joseph Vellapally, Sr. Advocate, appearing on behalf of the Appellant and Mr. S.M. Suri, learned Advocate for the Respondent Nos. 1 & 2, we are of opinion that the contention advanced by the Appellant''s Counsel by placing reliance on Section 29 of the Marine Insurance Act, 1963, has to be upheld. The said Section clearly postulates that where the policy issued by the insurer is a ''Valued policy", in the absence of fraud, the value fixed by the policy is, as between the insurer and assured, conclusive of the insurable value of the subject intended to be insured". The policy in question in this case has been produced before us and forms part of the paper book of the case. It is clear therefrom that it is a "valued policy" and the Insurance Company had accepted the valuation given by the Complainant and the policy makes specific mention of the valuation as Rs. 2,70,000/-.

THE subject matter of the insurance in the present case was a country boat and in support of the valuation given in the proposal the insured had produced before the Insurance Company a valuation report dated August 29, 1989 prepared by an approved Surveyor. The Insurance Co. on being satisfied with the said valuation report decided to accept the proposal and it was thereafter that it issued the policy for a valuation of Rs. 2,70,000/-. Unfortunately, the boat encountered high seas and was sunk on 23.9.1989 resulting in the total loss of the subject-matter of the insurance. As a result of salvage operations Hall of the boat was recovered. Immediately after the occurrence of the mishap, intimation was given by the insured to the Insurance Company and a claim was also preferred against the Insurance Company for reimbursement of the loss sustained by the insured as a result of the mishap. The Insurance Company took the stand that under the terms of the policy it was bound to pay only the market value of the boat on the date of occurrence of the loss and that it was not governed by the valuation of the boat as fixed in the policy. Based on the above stand, the Insurance Company offered to the insured an amount of Rs. 1,33,650/- which alone, according to it, was payable under the policy. This offer was not accepted by the insured and a complaint was preferred by him before the State Commission, Pondicherry seeking recovery of the full insured value of the boat from the Insurance Company together with interest and compensation for the inconvenience and harassment caused to him.

THOUGH the contention based on Section 29 of the Marine Insurance Act had been specifically raised by the Complainant before the State Commission, unfortunately the State Commission has totally omitted to deal with the said important aspect. Instead, it proceeded to assess the valuation of the boat with reference to a survey report which was prepared at the instance of the Insurance Company subsequent to the occurrence of the accident. On the basis of the said approach to the case the State Commission has thought it fit to fix the value of the boat at Rs. 1,64,000/-which was the quotation submitted by a boat builder at Nagapatinam in response to an invitation issued by the Surveyor for submissions of quotations for building a similar boat. In addition to the said amount of Rs. 1,64,000/- the State Commission has also held that the Complainant is entitled to an amount of Rs. 5,000/- by way of salvage expenses. The State Commission took the view that since an amount of Rs. 1,33,650/- had been offered by the Insurance Co. to the Complainant on 11.2.1990 the Complainant was entitled to be awarded interest only on the difference between Rs. 1,64,000/- and Rs. 1,33,650/-. Accordingly the State Commission, by the operative part of its order, directed that a total amount of Rs. 34,100/- with interest thereon from 11.2.1990 till the date of full payment is made by the Insurance Company to the Complainant.

AGGRIEVED by the said decision rendered by the State Commission, the Complainant has preferred this appeal. Reference has been already made to the provision of Section 29 of the Marine Insurance Act. In our opinion under the said provision in the case of a Valued policy'' like the one in the present case the Insurer as well as the Insured are tied down by the agreed valuation fixed at the time of entering into a contract of insurance and it cannot be contended by either of them that the valuation as on date of the contract was either more or less than the figure mentioned in the policy as the agreed value. The Counsel appearing for the Insurance Company vehemently contended before us that under the terms of the policy the Insurance Co. is liable to pay to the Complainant the market value of the boat as on the date of occurrence of the loss. In the present case it is to be remembered that the date of the contract of Insurance was 29.8.1939 and the loss took place on 23.9.1989 which was within one month thereafter namely on 23.9.1989. During this period there could not have been any change in the value of the boat. Under the aforementioned Section the only ground on which to go behind the agreed valuation fixed at the time of entering into contract of insurance is that a fraud has been played by the Opposite Party at the time of entering into the contract. There is not even the slightest allegation of fraud in the pleadings filed before the State Commission much less there is no evidence to indicate that any fraud was practised by the Complainant when the agreed value was fixed. Such being the case, in our opinion the Insurance Co. is precluded from contending that the market value of the boat as on the date of occurrence of the loss which was a date very proximate to the date on which the contract of insurance was entered into, was anything other than what was mentioned in the contract of insurance namely Rs. 2,70,000/-. The Insurance Co. has not adduced any evidence whatever to show in between the date on which the contract of insurance was concluded namely 29.8.1989 and the date of occurrence of the loss namely 23.9.1989, there was any variation, much less any fall, in the market value of such boats. Such being the legal and factual position, we hold that by virtue of Section 29 of the Marine Insurance Act the value of the boat has to be taken for the purpose of contract of insurance to be Rs. 2,70,000/-. The Complainant is entitled to recover the said amount from the Insurance Co. since there was a total loss of the boat as a result of the mishap that occurred. We are also unable to agree with the view taken by the State Commission that the Complainant is entitled to be paid interest only on the balance amount left after deducting the sum of Rs. 1,33,650/- which had been offered by the Insurance Co. to the Complainant on 11.2.1990. The Complainant had rejected the said offer and in consequence the said amount had throughout remained in the hands of the Insurance Co. and was available to it for utilisation and investment. In these circumstances it will be permitting an unjust enrichment by the Insurance Co. if it is absolved of the normal liability to pay interest. The resultant position that emerges is that the Complainant is entitled to recover the sum of Rs. 2,70,000/- plus a sum of Rs. 2,500/- being the figure arrived at after deducting salvage value of Rs. 2,500/- from the amount of Rs. 5,000/- which has been allowed to the Complainant by the State Commission as salvage expenses. There will be accordingly an order directing the Insurance Co. to pay Rs. 2,72,500/- to the Complainant with interest at 18% from 31.1.1990 (after allowing four months, period as the reasonable period within which the Insurance Co. should have taken its decision on the claim) until the date of actual payment. The Appellant will also be entitled to recover Rs. 3,500/- by way of costs from the Insurance Company. Due credit will be given to the amount of Rs. 1,83,675/- which is stated to have been paid by the Insurer to the Complainant''s Bank Respondent No. 3 on 16th September, 1992 and from and after the said date interest shall be calculated only on the balance amount that remained payable to the Complainant under this order and not on the full amount mentioned above.