Holding

The insurance policy is repudiable where the assured, acting as an agent, fails to disclose material facts such as the qualifications of master and crew, thereby breaching the implied warranty of seaworthiness under the Marine Insurance Act, 1963.

Summary

Sea Lark Fisheries, the owner of the vessel 'Sea Lark', obtained a marine insurance policy from United India Insurance through its bank. The vessel sank and the insurer repudiated the claim, alleging non‑seaworthiness and material non‑disclosure of facts such as the qualifications of the master and crew. The High Court initially held the bank not responsible for blanks in the proposal, but the Division Bench reversed that decision, finding material suppression. The Supreme Court examined Sections 19, 20, 21 and 41(3) of the Marine Insurance Act, 1963 and the Tamil Nadu Minor Ports Harbour Craft Rules, concluding that the bank, acting as an agent, failed to disclose material facts, breaching the implied warranty of seaworthiness, rendering the policy repudiable. Consequently, the insurer was not liable to pay the claim and the appeal was dismissed.

Issues considered

Whether there was material suppression or misrepresentation of facts by the assured, making the policy repudiable
Whether the vessel was seaworthy, an implied warranty under Section 41(3) of the Marine Insurance Act
Whether the insurer is liable to pay the claim
Whether the insurer's repudiation of liability was justified

Legislation cited

Marine Insurance Act, 1963s. 19, s. 20, s. 21, s. 41(3)

Subjects

marine insurancenon-disclosurematerial factsuberrimae fideiseaworthinesspolicy repudiationinsurance claimstatutory provisionsagency liabilityTamil Nadu Minor Ports Harbour Craft Rules

Judgment

[2008) 2 S.C.R. 346

A MIS. SEA LARK FISHERIES
II.
UNITED INDIA INSURANCE CO. AND ANR.
(Civil Appeal No. 803 of 2008)
JANUARY30, 2008
B 0
[S.B. SINHA AND HARJIT SINGH BEDI, JJ.]

Contract:
-
Contract of insurance - Marine insurance - Insurance of
C sea vessel - Non-disclosure of material facts - Held:
Insurance policy repudiable - Marine Insurance Act, 1963 -
ss.19,20,21and41(3)- Tamil Nadu Minor Ports Harbour Craft
Rules, 1953- rr. 31 and 32.
D Appellant owned a sea vessel. It obtained loan from
the bank. At the time of sanction of the loan, the bank
obtained insurance policy in respect of the said vessel
by handing over the signed proposal form to DW1, the
agent of Respondent No.1-insurance company, who filled
E up the particulars himself and issued the policy.
The sea vessel sunk. Claim made in that behalf,
having been repudiated by Respondent No.1, a civil suit
was filed by Appellant and the bank before the High Court.
Respondent No.1 in its written statement contended that •
F the vessel was not seaworthy. The suit was decreed by a 7'
Single Judge of the High Court inter alia holding that
though in the proposal form, DW1 left several material
columns blank, the bank could not be held responsible
for the same. On appeal, the Division Bench of High Court
G set aside the order passed by the Single Judge. ,
~
,, ;
In appeal to this Court, a question arose as to
whether there had been a material suppression of facts
to Respondent No.1-insurance company which rendered ~
the insurance policy repudiable.
~

H 346 '
'
•,

-f
MIS. SEA LARK FISHERIES v. UNITED INDIA 347
INSURANCE CO. AND ANR.

-<. 't
Dismissing the appeal, the Court A
HELD: 1.1. S.19 of the Marine Insurance Act, 1963
states that insurance is uberrimae fidei. S. 20 provides for
disclosures by the assured. The question as to whether
a particular circumstance which is not disclosed is
material or not is essentially a question of fact. What facts B'
need to be disclosed and what need not, have clearly

- >-·
.>
been laid down in sub-sections (2) and (3) of s. 20
respectively. S.21 of the Act provides for the disclosure
by an agent effecting the insurance. The Bank having
acted as an agent, thus, had a responsibility to disclose c
all material facts. [Para 15] [352-D, E]
1.2. The terms of the contract of insurance being
governed by the provisions of a statute, non-disclosure
of such material facts would render the policy repudiable.
D '
Even according to DW-1, necessary particulars were
not furnished to him by the plaintiffs. How DW-1 could
act upon the purported oral representation of the
•.-4 Jli
officers of the Bank is beyond anybody's comprehension.
No reliance can, thus, be placed on his evidence.
[Para 16] [352-F, G; 354-D, E] E

1.3. Rule 31 of the Tamil Nadu Minor Ports Harbour
Craft Rules, 1953 mandates posting of a Master or Serang
and one Engineer or Engine Driver in every mechanically
propelled vessel, when used. The driver is required to F
possess a certificate of training iss1,1ed by the Department
of Fisheries. Rule 32 prescribes the method of obtaiffing
a certificate of competency as Master or Serang. Not only
did the proposal for insurance not contain the said details
but also no evidence in that behalf was brought on
G
records. [Para 10] [351-B, C, D]
·~ l,.I.
1.4. Where there has been a suppression of fact,
acceptance of the policy by an officer of the insurance

• company would not be binding on it. The Division Bench
of the High Court, having regard to the statutory H
348 SUPREME COURT REPORTS [2008] 2 S.C.R

A provisions, has rightly held that the plaintiffs suppressed
the material fact. [Para 17] (354-E, F]
_.y
.
~

2. A marine insurance policy requires an implied
warranty of seaworthiness as is evident from Sub-section
(3) of Section 41 of the Act which governs the terms of a
B contract of insurance. May be the notice repudiating the
claim did not contain any details in regard to the purported
misrepresentation of material facts but the same was not
decisive. It was for the plaintiffs not only to plead but also
establish that the vessel in question was seaworthy. There
~
.(.
-
c is no averment even in the plaint that the vehicle was
seaworthy. In view of the statutory rules, there is no other
option but to hold that the vessel was not seaworthy.
[Paras 13, 14, 17) (351-F, G, H; 352-A, C; 354-F]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 803
D
of 2008.
From the final Judgment and Order dated 7 .10.2005 of
the High Court of Judicature at Madras in O.S.A. No·. 48/1998 )I; ..,,
and Cross Objection No. 37/2005.
E Vipin Gogia, Jaspreet Gogia and K.K. Gogia for the
Appellant.
S.M. Suri and Manjeet Chawla for the Respondents.
The Judgment of the Court was delivered by
F
S.B. SINHA, J. 1. Leave granted. ...,,
2. Appellant was the owner of a Sea Vessel known as
'Sea Lark'. The vessel was engaged for fishing purposes.
Appellant obtained a loan from Canara Bank (Bank). At the time
G of sanction of loan, the Bank obtained an insurance policy from
the respondent no. 1 in respect of the said vessel. It was insured
on 12.04.1979 to cover the period from 12.04.1979 to .lif •
12.04.1980. It was later on renewed for the period 12.04.1980
and 11.04.1981. The vessel sunk on 21.07.1980. A claim was
H made in that behalf, which having been repudiated by the

"
M/S. SEA LARK FISHERIES v. UNITED INDIA 349
INSURANCE CO. AND ANR. [S.B. SINHA, J.]

respondent No. 1, a civil suit marked as Suit No. 333 of 1983 A
was filed by the appellant and the Bank before the High Court
of Judicature at Madras. Respondent no. 1 in its written
statement inter alia contended that the vessel was not seaworthy.
Several issues were framed. Issues No. 2 and 4 which
are relevant for our purpose are as under: B

"2. Whether the defendant is liable to pay the suit claim?
4. Whether the defendant is right in repudiating liability
under the policy?"
c
3. The suit was decreed by a learned Single Judge of the
High Court inter alia on the premise that one Hemchandra Babu
who was the agent of the insurer and who had filled in the form,
kept blanks therein for which the Bank could not be held
responsible. An appeal preferred by the respondent no. 1 D
against the said judgment, however, has been allowed by a
Division Bench of the Madras High Court.
4. Appellant is, thus, before us.
5. Mr. Vipin Gogia, learned counsel appearing on behalf
of the appellant, inter alia submitted that the Division Bench of E
the High Court committed a serious error in passing the
impugned judgment insofar as it failed to take into consideration
that the question as to whether the Master of the ship had the
requisite qualification or not having not been raised in the written
statement, the plaintiff- appellant did not have any opportunity F
to meet the same.
6. Mr. S.M. Suri, learned counsel appearing on behalf of
Respondent No. 1, on the other hand, supported the judgment.
7. The question which arose for consideration in the suit G
as also before the Division Bench of the High Court was as to
-.. ~ whether there had been material suppression or mis-
representation of facts, the relevant details whereof had not been
furnished to the insurer. Admittedly, as against the column
relating to particulars of Master and Crew, the following were H
350 SUPREME COURT REPORTS [2008] 2 S.C.R.

A required to be indicated:
"Particulars of Master and Crew:-
1. (a) Is the vessel in charge of a (a) Yes
qualified master?
B (b) State his qualifications (b) ...
(c) How long has he been-in (c) ...
your employ?
(d) Will he live abroad the Vessel (d) ...
c
(e) If not incharge of a qualified (e) ...
Master state brief details of the
person who will be in charge of the
vessel"
D 8. An application for insuring the vehicle was filed by the
Bank. It supplied some information to the agent of the Insurer
being one Hemchandra Babu. He examined himself as DW-1.
It has been admitted by the Bank in its representation before
the Chairman and the Managing Director of Respondent No. 1
E - company that there had been some omissions; explanation,
however, in respect thereof was sought to be furnished in the
following terms:
"Naturally this marine policy was also passed on to United
India Insurance. The signed proposal form was handed
F over to the agent and in all occasions, he filled up the
particulars himself and issued the policy. He is almost a
daily visitor to our branch for his business. In this case,
only that as the party was away from Madras, we
suggested to accept the premium and issue the cover
G note and that we would give the proposal form as soon as
party returned. However, as suggested by the agent, we
signed the proposal to enable him to issue the policy on
12.4.79, so that there would be no break in insurance
cover. Nothing was kept away from him ... "
H
'
J MIS. SEA LARK FISHERIES v. UNITED INDIA 351
INSURANCE CO. AND ANR. [S.B. SINHA, J.]

9. Any information which could be furnished by the Bank A
--t to the insurer was only on the basi~ of the information received
by it from the appellant. The Bank could not have any
independent information in that behalf. We have noticed
hereinbefore that several columns which were material for the
purpose of entering into a contract of insurance were left blank. B
10. The Division Bench of the High Court has noticed Rule
31 of the Tamil Nadu Minor Ports Harbour Craft Rules, 1953
.... r which mandates posting of a Master or Serang and one
( ~

Engineer or Engine Driver in every mechanically propelled
vessel, when used. The driver is required to possess a c
certificate of training issued by the Department of Fisheries.
Rule 32 of the said Rules prescribes the method of obtaining a
certificate of competency as Master or Serang. Not only did the
proposal for insurance not contain the said details but also no
evidence in that behalf was brought on records. D
11. The submission of the learned counsel that the appellant
was not allowed to furnish information cannot be accepted as
.... such a plea was not raised in the plaint.
12. Mr. Gogia submitted that the survey conducted by the E
insurance company established that the vessel was seaworthy.
The inspection report is dated 17 .04.1980. A survey was
conducted by a surveyor (we don't know at whose instance) on
25.11.1979 at 6 p.m. For what purpose such a survey was
conducted is not known. Why a report was submitted after more F
... than four months from the date of conducting the survey is also
beyond our comprehension.
13. A marine insurance policy requires an implied warranty
of seaworthiness as is evident from Sub-section (3) of Section
41 of the Marine Insurance Act, 1963 (for short "the Act") which G
· governs the terms.of a contract of insurance. It may be true that
~
the notice dated 9.11.1981 repudiating the claim did not contain
any details in regard to the purported misrepresentation of
material facts but the same was· not decisive. It was for the
plaintiff not only to plead but also establish that the vessel in H
352 SUPREME COURT REPORTS [2008] 2 S.C.R.

A question was seaworthy.
In the plaint, it was merely stated:
"10. The plaintiffs had issued a notice through their counsel
dated 7 .1.1983 calling upon the defendant to make the
B payment. Though the said notice was received and
acknowledged by the defendant, so far has not made any
payment. On the other hand the defendant had sent a
reply dated 15.3.83 raising incorrect and unsustainable
contentions."
c 14. There is no averment even in the plaint that the vehicle
was seaworthy. In its written statement, Respondent No. 1 stated:
"7 ... The defendant submits that even the answers which
are handwritten were not filled by Hemachandra Babu or
any other person acting on behalf of the defendant. .. "
D
15. Section 19 of the Act states that insurance is uberrimae
fidei. Section 20 provides for disclosures by the assured. The
question as to whether a particular circumstance which is not
disclosed is material or not is essentially a question of fact. What
E facts need to be disclosed and what need not, have clearly been
laid down in sub-sections (2) and (3) of Section 20 respectively. ·-
Section 21 of the Act provides for the disclosure by an
agent effecting the insurance. The Bank having acted as an
agent, thus, had a responsibility to disclose all material facts.
F The insurance policy was marked as Ext. D-18. It was also
referred to in the plaint. We have noticed heretobefore the
material part thereof.
16. The terms of the contract of insurance, thus, being
G governed by the provisions of a statute; non-disclosure of such
material facts would' render the policy repudiable. For this
purpose, we may notice the depositions of DW-1, which are in
questions and answers form, which read as under:
"Q. See the particulars of "Master and Crew". Then there
H is a heading "general". Under the first heading, the answer
M/S. SEA LARK FISHERIES v. UNITED INDIA 353
INSURANCE CO. AND ANR. [S.B. SINHA, J.]

to the question is "Vessel incharge of qualified master" A
-r
What is the answer?
A: Yes.
Q. Under the heading "general" there are three questions.
Was any information furnished to you with regard to the
8
questions?
A: They have not furnished any information for the three
_, 't questions.
....
*** *** ***

Q. You said the proposal form was typed at your office. c
Did you carry the information to your office?
A: I noted down the particulars in a paper and took them
to the office.
Q. You would have had a discussion with the bank officials D
about what are the information required.
A: I have the proposal to them and whatever information
,I( they gave, I noted down in a paper.
Q. Do you have a paper in your possession?
E
A: No.
Q. How did you note the information given in the paper
wise or generally?
A. Column-wise.
F
Q. You find at the top of the proposal "10.05 Meters" has
been mentioned. Is it correct?
A: Yes.
Q. When was this writing in "ink" made?
A: After typing it, I took it back to the bank and asked them G
: to check the information whether they are correct."
~
*** *** ***

Q. You got the name of the owner of the Board from the
Bank either orally or in writing. H
354 SUPREME COURT REPORTS [2008] 2 S.C.R.

A A: Orally.
By Counsel:
Q. Are you in the habit of accepting oral represen~ation?
A: Yes
B Q. So if my learned friend says that the insurance was
issued only on the basis of the proposal is it incorrect.
A: No, it is not incorrect.
Q. Are you the accepting authority?
C A: My branch manager is the accepting authority.
Q. What did you do after taking the proposal to the branch
manager?
A: I showed the proposal to the Branch Manager and he
o .asked me to issue the policy."
Thus, even according to DW-1, necessary particulars were
not furnished to him by the plaintiff. How DW-1 could act upon
the purported oral representation of the officers of the Bank is ><· '
beyond anybody's comprehension. No reliance can, thus, be
E placed on his evidence.
17 .. Where there has been a suppression of fact,
acceptance of the policy by an officer of the insurance company
would not be binding on it. The Division Bench of the High Court,
F in our opinion, having regard to the statutory provisions, has
rightly held that the plaintiff suppressed the material fact.
Moreover, in view of the statutory rules, the court would have no
other option but to hold that the vessel was not seaworthy.
18. For the reasons aforementioned, we are of the opinion
G that there is no infirmity in the impugned judgment. The appeal
is dismissed. In the facts and circumstances of the case,
however, there will be no order as to costs. .;Jf <

8.8.8. Appeal dismissed.

H