Dismissed

National Insurance Co. Ltd. v. Corporation Bank

Karnataka HC20 Jan 2021RSA/675/2009

Case brief

AI extract

What is this about?

In this regular second appeal, the High Court of Karnataka dismissed the Insurance Company's appeal against lower court judgments that held the insurer jointly and severally liable to pay the bank for a loss under an insured vessel where the policy contained a Bank Clause.

What did the court decide?

Appeal dismissed; judgments and decrees of the courts below confirmed; appellant liable to pay Rs.60,000.

National Insurance Co. Ltd. Vs… — Contract and Commercial Disputes | Karnataka HC (2021)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 20^TH DAY OF JANUARY, 2021

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BEFORE

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THE HON’BLE MR. JUSTICE N.K.SUDHINDRARAO

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R.S.A.No.675/2009

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BETWEEN:

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NATIONAL INSURANCE CO. LTD., REGISTERED OFFICE AT MIDDLETON STREET, CALCUTTA AND ONE OF THE BRANCHES KNOWN AS MANGALORE BRANCH I, AT RASIK CHAMBERS, 2^ND FLOOR, OPP: CENTRAL MARKET, MANGALORE-575 001, REPRESENTED BY SRI T N RAMANANDA SETTY S/O T NAGARAJA SETTY AGED 51 YRS, THE DIVISIONAL MANAGER MANGALORE DIVISIONAL OFFICE AT BHARATH BUILDING, P.M. RAO ROAD MANGALORE -01.

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…APPELLANT

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(BY SRI P B RAJU, ADVOCATE)

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AND:

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1 . CORPORATION BANK A BODY CORPORATE CONSTITUTED AND GOVERNED BY THE PROVISIONS OF BANKING COMPANIES (ACQUISITION AND TRANSFER

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OF UNDERTAKINGS) ACT, 1980 HAVING ITS HEAD OFFICE AT PANDESHWAR, MANGALORE AND BRANCHES, INTER-ALIA AT RAMA BHAVAN COMPLEX KODIALBAIL, MANGALORE-3

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2 . RAMESH S/O CHANDU, ADULT JEPPU KUDUPADI THOTA MANGALORE.

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3 . J RAMA S/O.UMMANNA, ADULT K VITTAL SHETTY COMPOUND KULSHEKHAR MANGALORE - 575 005.

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…RESPONDENTS

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(BY SRI V B RAVISHANKAR, ADVOCATE FOR R1 R-2 DELETED V/O DATED 26.10.2010 V/O DATED 1.4.2013 NOTICE TO R-3 IS DISPENSED WITH)

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THIS RSA IS FILED UNDER SECTION 100 OF CPC AGAINST THE JUDGMENT AND DECREE DATED 06.02.2009, PASSED IN R.A.No.05/2002, ON THE FILE OF THE III ADDITIONAL DISTRICT JUDGE, D.K., MANGALORE, DISMISSING THE APPEAL AND COMFIRMING THE JUDGMENT AND DECREE DATED 15.03.1994, PASSED IN OS.No.85/1990, ON THE FILE OF THE PRINCIPAL CIVIL JUDGE, MANGALORE.

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THIS RSA COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING:

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JUDGMENT

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The appeal is directed against the judgment and decree dated 06-02-2009 passed in R.A.No.5/2002 by the learned III Additional District Judge, D.K. Mangalore, wherein the appeal came to be dismissed with costs throughout and the judgment and decree dated 15-03-1994 passed in O.S.No.85/1990 by the learned Principal Civil Judge, Mangalore, came to be confirmed. Being aggrieved by the said judgment and decree, 3^rd defendant-Insurance Company has come in this regular second appeal.

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In order to avoid confusion and overlapping,

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the parties are addressed in accordance with their rankings and status as held by them before the trial court.

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Brief facts of the case of the plaintiff is,

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plaintiff bank has filed a suit for recovery of amount of Rs.92,132-10 with costs and current interest against 1^st defendant-borrower, 2^nd defendant - guarantor and 3^rd defendant- Insurance Company. The substance is that, an amount of Rs.45,000/- was borrowed by 1^st defendant by offering 2^nd defendant as surety for purchase of a gillnet boat and executed the promissory note for repayment and other documents.

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It is further stated that, 1^st defendant

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hypothecated the wooden canoe 32 ft x 4 ft fitted with imported Johnson cut board marine engine and fishing net with other necessaries. The said boat was insured with 3^rd defendant for Rs.60,000/- and policy was in force. On 12-04-1988 the said boat met with an accident and it was a complete loss and 1^st defendant made a claim in respect of the same.

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Insurance Company repudiated the same. It is further stated that defendants were due an amount of Rs.92,131-10 and hence, plaintiff bank filed the suit against the defendants.

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5. 1^st defendant though appeared through his

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counsel has not filed any written statement. 2^nd defendant filed written statement agreeing that he was the guarantor and he is not liable to pay the said amount as the boat was insured with 3^rd defendant.

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Insofar as 3^rd defendant is concerned, it

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denied the responsibility and contended that it is not liable to make good the loss as the violation of terms and conditions of insurance policy renders the contract of insurance as void ab initio.

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The learned trial judge framed as many as 11 issues and one additional issue and after considering the oral evidence of PW1-Sudha Pai, PW2-

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B Vishwanath Pai and documentary evidence of Exs.P1 to P13 on behalf of plaintiff as no oral or documentary evidence are produced by the defendants decreed the suit of the plaintiff for Rs.92,132-10 holding that defendant Nos. 1 and 2 are jointly and severally liable to pay the said amount with future interest at 14 1/2% per annum on Rs.91,840-22 from the date of suit till the date of payment and also holding that 3^rd defendant out of the suit claim is liable to pay an amount of Rs.60,000/- within three months and if it is failed to pay the same, then it is liable to pay interest at 14 ½% p.a. from that date till the date of payment of Rs.60,000/- and thereafter, the remaining amount

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is payable by the defendant Nos. 1 and 2 jointly and severally with interest.

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Being aggrieved by the said judgment and

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decree, 3^rd defendant insurance company preferred an regular appeal before the learned III Additional

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District Judge, D.K. Mangalore, in RA No.5/2002 which came to be rejected. Against the said judgment and decree, 3^rd defendant Insurance Company has presented this appeal.

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This court while admitting the appeal on 1511-2010 framed the following substantial questions of law;

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Whether the appellant who was the insurer in respect of a shipping vessel could be held liable by the respondent banker who had financed the purchase of the shipping vessel on the footing that the insurance policy issued by the appellant had been furnished as security for the loan availed by the insured?

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Whether the suit having been filed for recovery of the amount, covered under the insurance policy could be recovered even after repudiation of the contract of insurance by the appellant prior there to as against the claim of the insured?

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Learned counsel Sri. P.B. Raju appearing appellant/ insurance company submits that there is no agreement between the appellant and the bank and the policy was issued for causalities such as loss, theft or otherwise and the liability cannot be equated as joint and several.

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Learned counsel Sri. V.B Ravishankar for plaintiff- bank would submit that the perception of liability covers insurance company as well and it is liable along with other defendants who are the borrower and guarantor.

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Learned counsel for plaintiff-bank would further submit the very purpose of Ex.P10 policy is to meet and make good the loss suffered by 1^st defendant.

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Insofar as Ex.P10 copy of the Insurance Policy is concerned, its details are as under:

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Name of the insurer: National Insurance Company limited.

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Name of the assured: M/s. Corporation Bank

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Rambhavan Complex,

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Policy No. : 602306/4100132 R/4100065 Date : 17-2-1988

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Sum assured : Rs.60,000/-

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Here it is necessary to mention paragraph

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10 of the policy which reads as under:

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“ Warranted free from loss arising form any weapon of war employing atomic or nuclear fission and/or fusion or other like reaction or radioactive force or matter.”

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Further Bank clause in the policy is as under:

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‘BANK CLAUSE’

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ATTACHED TO AND FORMING PART OF MARINE HULL POLICY No. Dated:

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The insurance under the within policy is subject to the following clause:- It is hereby declared and agreed that the Insured’s Hull described in the schedule of this policy is pledged to Corporation Bank R.B.Complex Kodial bank(herein after referred as the pledge) and it is further declared and agreed

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that the said pledge is interested in any moneys which but for this endorsement would be payable to the insured under this policy in respect of the loss or damage to the said hull(which loss or damage is not made good by repair reinstatement or replacement) and such moneys shall be paid to the pledge of the full and their receipt for such loss or damage shall be a full and final discharge to the company in respect of the loss or damage.

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Save by this endorsement expressly agreed nothing herein shall modify or effect right or liability of the insured or the company respectively under or in-connection with this policy, or any terms provisions or conditions thereof.”

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The moot point that would arise for

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consideration is, whether the insurance company is liable?.

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In the ordinary circumstances, if the 1^st defendant had insured motor boat suffered causality which either getting drowned or damaged, the amount of loss can definitely claimed against the insurance company to the amount not exceeding Rs.60,000/-.

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At the same time, when the amount is given by the bank to the borrower who has to ultimately pay the amount, the simple principle is, insurance company is to make good the loss. In the event of not insuring the motor boat, 1st defendant would have borne the burnt. Here to the extent of policy amount assured, insurance company is liable to pay and it cannot say by its investigation found the foul play by 1st defendant unless there is a concrete evidence of fraud, mis representation or other negative tactics of making a false claim. In the circumstances, I find there is no infirmity or illegality or perversity in the judgments of both the courts below and I concur and affirm the same. The substantial questions of law are answered accordingly.

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In the result, the appeal filed by the insurance company is dismissed confirming the

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judgments and decree passed by both the courts

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below.

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Sd/JUDGE

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tsn*

National Insurance Co. Ltd. v. Corporation Bank

Case brief

What is this about?

What did the court decide?

National Insurance Co. Ltd. v. Corporation Bank

Case brief

What is this about?

What did the court decide?

What the court decided

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