JUSTICE V.K. JAIN, PRESIDING MEMBER (ORAL)

               The opposite party No.2 M/s. Adani Global Pte Ltd., obtained a Marine Cargo Open Policy from opposite party No.1 for the period from 02.2.2011 to 01.2.2012.  The said policy covered coal supplied by opposite party No.2 to the complainant from anywhere in the World to anywhere in India.  The complainant entered into a contract with opposite party No.2 for supply of non-coking coal of Indonesian origin, on CIF basis.  It was the obligation of the seller to obtain the contract of insurance with respect to the risk to the cargo, during its voyage to India.  The opposite party No.2 had a long term arrangement with Libra Shipping Services LLC, Dubai, for chartering of vessels to carry coal and iron ore.  The opposite party No.2 procured a vessel on charter, through Libra Shipping Services LLC Dubai for carrying coal to India.  The vessel so chartered by Libra Shipping Services LLC Dubai was MV RAK Carrier, owned by Delta Navigation WLL.  The vessel loaded with consignment left Indonesia on 14.6.2011.  On 4.8.2011, it came to be known through Media that the aforesaid vessel, along with Cargo on board, was sinking.  The vessel thereafter sank off the Coast of Mumbai, along with entire consignment of coal which was to be delivered to the complainant.  On intimation being given to the opposite party No.1, M/s. Trans Ocean Marine and General Survey Agencies were deputed by opposite party No.1 to assess the claim.  The sinking of the vessel was also investigated by DG Shipping, Mercantile Marine Department Mumbai.  Thereafter, opposite party No.1 appointed M/s. Navspec Marine Consultants Pvt. Ltd. as investigator into the entire incident.   The claim submitted by the complainant, in terms of the insurance policy, issued by opposite party No.1 however, was repudiated vide letter dated 22.11.2012.  Being aggrieved from the repudiation of the  claim, the complainant is before this Commission, alleging that the supply of coal being on CIF basis, the title and risk in the goods had passed on to the complainant which had an insurable interest in the goods being carried by the above referred vessel.  The complainant is seeking a sum of Rs.24,76,71,009/- from the opposite party No.1, along with interest. 

2.      The complaint has been resisted by the insurer which has taken a preliminary objection that it is not maintainable as the policy issued by it was subject to Institute Classification Class and the vessel in question did not have any classification certificate as required under the aforesaid class.  It is also alleged that the vessel was unseaworthy at the time of loading of the cargo which was in the knowledge of the insured.  It is also alleged that the complainant has already instituted a Civil Suit in the High Court of Bombay against the owner of the ship, for recovery of its loss.  It is alleged that not only the vessel had no class whatsoever, even the non-IACS class was not genuine.  It is alleged that the insured had not revealed the fact that the vessel was non-IACS classed.  It is also stated that the class was withdrawn from Lloyd’s Register and transferred by the owners to INCLAMAR Society registered at Honduras, and  having its registered office in Limmassol and the said society is not a member of the IACS.  It is also alleged in the Written Version filed by the insured that the investigations have shown that Libra is a ship chartering arm for the Adani Group and therefore, it must be considered to be acting for and on behalf of Adani Enterprises and Adani Group. 

3.      The repudiation letter dated 22.11.2012, to the extent it is relevant, reads as under:

          “The sinking was the subject matter of investigation by Directorate General of Shipping.  We had also conducted our investigation pursuant to your claim through M/s. Navspec who had submitted detailed reports.  Various information were also gathered through email correspondence with you.  The reports, documents and information, inter alia, confirm that:

1. The vessel as unseaworthy and unfit to carry the consignment even at the time of loading and that the unseaworthiness had resulted its ultimate sinking.

2. Report of DG Shipping and analysis of the voyage by Navspec, confirm that the vessel was physically unseaworthy even at the time of loading and continued to be so until it sank.

3. The vessel’s Classification by Lloyd’s until November, 2010 was withdrawn.

4. The vessel reportedly presented Class Certificate of INCLAMAR, besides about 21 statutory certificates which were provided to us for the above claim during May, 2012 after persistent enquiries, on the basis of which it was claimed to have been selected for charter, but most of which are found to be not genuine.

5. The Class Certificates are found to be “Interim” and strangely, more than one Certificate containing different signatures have been provided to us by you, although in the name of Akram Khader/Khander and purported to have been signed by him, but are in fact found to be signed by someone else.

6. The Class Certificate mentions, inspection of vessel at Jordan while being issued at Piraeus, Greece.The vessel was not in either of these places.Nothing about the Certificate viz., place of inspection, place of issue, the signatory etc., is genuine on the fact of it.

7. These are the various other Certificates carry the name of the signatory as Akram Khader/Khander/Khandeer, which should have raised doubts about their authenticity in the mind of any ordinary individual, leave alone a seasoned charterer.

   The information clearly confirms that vessel cannot be considered as being classed even by INCLAMAR.  The Interim Class Certificate is not worth the paper on which it is written.  The vessel thus has no certificates whatsoever for sailing international waters which reveals her unseaworthiness and by fraudulent means certain certificates are found to have been arranged.

        The information provided to us confirm that the vessels are chartered through Libra Shipping, which is part of the Adani Group and is a chartering arm for the purpose of securing vessels for shipments, while the final fixture is done with the approval of Adani Global.  Libra has stated that vessel is selected after verification, interalia, of all statutory Certificates.  Any verification in this case would have revealed the obvious defects in the Class Certificates itself that should have caused further enquiries. 

        In the background of the above and various other relevant aspects as revealed by documents, enquires and correspondences we conclude as follows:

        I         The insurance is issued on the basis that cargo would be carried by vessel classed by specified entities in terms of Institute Classification clause and not over 15 years.  Refer Marine Open Cover as well as the policy issued for the particular consignment.  The Vessel’s Class is a crucial and essential fact for the purpose of the contract.  The Vessel was not classed by any of the Societies stipulated in the Institute Classification Clause.

        As mentioned by you during correspondence that the vessel was disclosed to be INCLAMAR classed at the time of insurance.  However, for the reasons discussed above, the vessel had no valid class even by INCLAMAR.  The vessel thus had no classification whatsoever. 

        The contract of insurance is therefore, void.

        The position would remain so even if it is assumed (without admitting) that the Assured had any belief that the vessel had INCLAMAR classification.

   II   If for any reason the contract is held valid,

8. The absence of Classification by any of the entities contemplated by Institute Classification Clause.

9. The absence of even INCLAMAR class which is stated to have been informed at the time of declaring the consignment is a clear violation of the Institute Classification Clause.The cargo carried by such vessel is in breach of the said clause and cover does not apply to such vessel.

Besides the above, unseaworthiness of the vessel renders the claim inadmissible.

     In the background of the above, the Assured was privy to the unseaworthiness.  The loss therefore, stands excluded by Clause 5.1 of the Institute Cargo Clause-A of the Policy, even if the contract of insurance is considered valid for any reason.”

4.      It is not in dispute that the insurance policy was issued subject to Institution Classification Clause. It was specifically provided therein that the vessel should be as per Institute Classification Clause.  Clause 1 of Institute Classification Clause reads as under:

          “QUALIFYING VESSELS

1. This insurance and the marine transit rates as agreed in the policy or open cover apply only to cargoes and / or interests carried by mechanically self-propelled vessels of steel construction classed with a Classification Society which is:

   1. a Member of Associate Member of the International Association of Classification Societies (IACS), or

   2. A National Flag Society as defined in Clause 4 below, but only where the vessel is engaged exclusively in the coastal trading of that nation (including trading on an inter-island route within an archipelago of which that nation forms part)

      Cargoes and / or interests carried by vessels not classed as above must be notified promptly to underwriters for rates and conditions to be agreed.  Should a loss occur prior to such agreement being obtained cover may be provided but only if cover would have been available at a reasonable commercial market rate on reasonable commercial market terms.”

5.      It would thus be seen that either the vessel should have been classed with a Classification Society which is a Member or Associate Member of the International Association of Classification Societies (IACS) and if the cargo was carried by the vessel which was not classed with a Member of Associate Member of IACS, the insurer was required to be notified promptly to enable it to give rates for insuring the cargo which is carried in a vessel which was not classed with a Member or Associate Member of IACS and to impose conditions, if any, desired by it for insuring such a cargo.

6.      It is not in dispute that INCLAMAR with which the vessel MV RAK Carrier was classed was not a Member or Associate Member of the International Association of Classification Societies. (IACS), therefore, Clause 1.1 of the Institute Classification Clause did not apply.  Since the  vessel was not engaged in the coastal trading of a particular Nation, it was also not covered by Clause 1.2 of the Institute Classification Clause.  Therefore, the insurer,  was under a mandatory obligation to inform the insurer that the vessel MV RAK Carrier was not classed with a Member or an Associate Member of  IACS and to ask it to give rates for insuring the cargo being carried in a vessel which was not classed with a Member of Associate Member of IACS. If the aforesaid is duly notified to the insurer it enables the insurer to decide whether to insure the cargo which is to be carried in a vessel not classed with a Member or Associate Member of IACS and if it decides to insure such a cargo it can also determines the rates which it will charge for insuring such a cargo and the condition it would like to impose while underwriting the risk.  The contention of the learned senior counsel for the complainant is that a list of IACS Members and Associate Members is available on IACS website at www.iacs.org.uk as noted in Clause 6 of the Institute Classification Clause and therefore, once the insurer was informed that the vessel was classed with INCLAMAR it was for the insurer to go to the website and find out whether the vessel was registered with a Member or Associate Member of IACS or not.  The learned senior counsel for the complainant has in this regard drawn my attention to the letter dated June 14, 2011 sent by opposite party No.2 to the insurer where the name of the vessel, the year of built as well as the name of the Class is specifically stated.  However, in my view, it was not sufficient for the insured to merely intimate the aforesaid particulars to the insurer.  The insured, in my opinion, was required to expressly notify to the insurer that the cargo will be carried in a vessel, which was not classed with a Member or Associate Member of IACS.  Had that been done, the insurer would have been in a position to decide whether to grant the insurance cover in respect of the cargo to be carried in such a vessel or not.  In the event of the insurer deciding to insure the cargo to be carried in a vessel not classed with an IACS member it could also have charged a higher premium besides imposing such conditions if any, as it might deem appropriate.  In my opinion, the letter dated June 14, 2011, does not in any manner convey it to the insured that INCLAMAR with which the vessel had been classed was not a Member or Associate Member of IACS.  The terms of insurance given in the letter of opposite party No.1 dated June 14, 2011 specifically referred to Institute Classification Clause.  Therefore, either the vessel should have been classed with a Member or Associate Member of IACS or the insurer should have been notified in advance that the Society with which the vessel was classed was a non-ICAS society.  That having not been done, a misrepresentation as regards the class of the vessel was made to the insurer and therefore, the contract of insurance was voidable at the option of the insurer.

7.      The learned senior counsel for the complainant drew my attention to a letter dated June 25, 2011 sent by opposite party No.1 to the insurer while obtaining insurance policy in respect of another consignment.  It was pointed out in the aforesaid letter dated June 25, 2011, only the name of the class i.e. Inter Maritime Certification Services was given without expressly stating therein that the aforesaid Society was not a Member or Associate Member of IACS, but despite that the insurance cover in respect of the aforesaid consignment was granted by the same insurer.  I have perused the insurance policy annexed to the aforesaid letter dated June 25, 2011.  The policy clearly shows that an additional premium of 0.08 plus 0.015% was charged for non-classed vessel.  On the other hand no such premium has been charged in the policy which the insurer had issued for the consignment in question.  This would clearly show that as far as the consignment subject matter of the letter dated June, 25 2011 is concerned, the insurer had been informed in one manner or the other or had otherwise come to know that the vessel had been classed with a non-IACS society.   The insurer having come to know of the aforesaid fact and having charged premium for insuring the cargo to be carried in a vessel classed with a Non-IACS society, it decided to issue the insurance cover granted by it.  But, as far as the present case is concerned, the complainant despite being under a mandatory obligation to notify to the insurer that the vessel was not classed with a Member or Associate Member of IACS did not bring the aforesaid fact to the notice of the insurer and the insurer also did not come to know of the said fact from any other source as is evident from the fact that no additional premium was charged for insuring a cargo which was to be carried by a vessel classed with a non-Member of IACS.

8.      In fact even the alleged class of the vessel with INCLAMAR is highly suspicious and seriously doubtful.  As per the Class Certificate produced by the insured, inspection of the Vessel was carried out at Jordan.  The vessel however, was not in Jordan at the time the said inspection was allegedly carried out.  Later on, INCLAMAR alleged that the vessel was inspected at BATAM Port in India.  However, there is no port by this name in India.  If this is so, the class certificate issued by INCLAMAR was a false document.  It is also pointed out by the insurer that the name of the person, who allegedly inspected the vessel for INCLAMAR was spelt differently in different documents.  His name was spelt as Akram Khader/Khander/Khandeer and his signatures on different documents were not identical.  If the vessel did not have genuine class even from INCALAMAR, as appears to be the case on account of the aforesaid contradictions and discrepancies, it would not be covered under Institute Classification Clause and that by itself would invalidate the insurance cover.

9.      Though, this is also the case of the insurer that Libra Shipping Services LLC, Dubai was part of the Adani Group and the aforesaid company was privy to the fact that the vessel, at the time it sailed from Indonesia was not seaworthy.  No evidence has been led by the insurer which would prove that Libra Shipping Services LLC Dubai was a part of the Adani Group or was in any manner connected with the opposite party No.2 Adani Global Pte Ltd.  There is no evidence of any part of the equity of Libra Shipping Services LLC Dubai being owned by opposite party No.2 or any other company or entity of Adani Group.  A perusal of the letter dated 01.10.2008 written by opposite party No.2 to Libra Shipping Services LLC Dubai would show that the opposite party No.2 had entered into long term arrangement with Libra Shipping Services LLC Dubai for chartering of vessels in respect of coal, Iron ore cargo.  According to the insurer, the vessel in respect of as many as 350 cargos were chartered by Libra Shipping Services LLC Dubai for Adani Group / Adani Global Pte Ltd.  That, however, does not make Libra Shipping Services LLC Dubai a part of the Adani Group.  As noted earlier, there is no evidence of any equity of Libra Shipping Services LLC Dubai being owned by Adani Group or a company entity or individual controlled by Adani Group.  Therefore, even if it is presumed that Libra Shipping Services LLC Dubai was privy to the vessel being unseaworthy, the said knowledge cannot be imputed to opposite party No.2.

10.    For the reasons stated hereinabove, I hold that the repudiation of the clam was justified on account of a misrepresentation / active concealment made by the opposite party No.2 to opposite party No.1, as regards the class of the vessel, by not disclosing that the vessel had not been classed with a Member or an Associate Member of the International Association of Classification Societies, and thereby giving an impression that the vessel was classed with a member of IACS.  Moreover, even the alleged class of the vessel with INCLAMAR does not appear to be genuine and is highly suspicious.   The complaint therefore is liable to be dismissed.  The complaint stands dismissed accordingly with no order as to cost.  

Later on Ms. Ananya De, learned counsel for the opposite party has appeared and she has been apprised of the order, so passed.