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The Shipping Corporation of India Ltd. Vs. the Metal Box Co. of India Ltd. and anr. - Court Judgment

LegalCrystal Citation
SubjectInsurance
CourtChennai High Court
Decided On
Case NumberO.S.A. No. 57 of 1972, against order of N.S. Ramaswami J., in C.S. No. 3 of 1968
Judge
Reported inAIR1977Mad101
ActsSea Act, 1925
AppellantThe Shipping Corporation of India Ltd.
RespondentThe Metal Box Co. of India Ltd. and anr.
Cases ReferredCanada Rice Mills Ltd. v. Union Marine and General Insurance Co.
Excerpt:
.....of unforeseen happenings is not insisted upon. where there is an accidental incursion of sea water into a vessel at a part of the vessel, and in a manner, where sea water is not expected to enter in the ordinary course of things and there is consequent damage to the thing insured, there is prima facie a loss by perils of the sea. any accident that should do damage by letting in sea water into the vessel should be one of the risks contemplated. it is not necessary that damage should be occasioned by extraordinary violence of the wind or waves and it is enough if there is an accidental incursion of sea water into the vessel in a manner where sea water is not expected to enter in the ordinary course of things and there is consequent damage to the thing insured. therefore, the loss..........the cargo had been loaded and such entry of sea water was possibly through storm valve cover. the learned judge framed seven issued, the important one being issue no. 2, which is as follows-"was the damage due to peril of the sea, and if so is the defendant liable for the same ?"the learned judge has referred to the evidence of d.w. 2, who deposed to the effect that the fracture of the overboard discharge value cover on scupper would not normally occur and that would happen only under very exceptional circumstances by force of the sea, and is of opinion that it is not of much help. the learned judge did not place much reliance on the clearance certificate granted to the vessel at the port from which it last sailed stating that he vessel was sea-worthy. the learned judge observed that.....
Judgment:
1. This appeal is preferred by the defendant in C. S. 3 of 1968, the Shipping Corporation of India Ltd., against the judgment and decree of N. S. Ramaswami J. That was a suit filed by the Metal Box Co. of India Ltd., for payment of a sum of Rs. 23,769, with interest. The plaintiff imported certain quantity of tin plates from Japan. The goods imported had been insured with the New Zealand Insurance Co. Ltd., which is the second plaintiff in the suit. When the ship arrived at the Madras Port on 30-12-1966, it was found that the consignment of the plates were wet. A survey was made and it was found that quite a number of tin plates were damaged. After the surveyor's report, the first plaintiff made a claim for damages to the extent of Rs. 1, 23, 769. The Insurer, the second plaintiff, accepted the claim of the first plaintiff and paid the said amount. The suit for recovery of the said amount is based on the ground that the damage to the goods being while the good were carried by the ship, it was due to the fact that the defendant had not taken proper and sufficient care of the goods. The defence to the suit is that the damage was due to perils, dangers and accidents of the sea or act of God. According to the defendant sea water had entered the particular hatch in which the cargo had been loaded and such entry of sea water was possibly through storm valve cover. The learned Judge framed seven issued, the important one being issue No. 2, which is as follows-

"Was the damage due to peril of the sea, and if so is the defendant liable for the same ?"

The learned Judge has referred to the evidence of D.W. 2, who deposed to the effect that the fracture of the overboard discharge value cover on scupper would not normally occur and that would happen only under very exceptional circumstances by force of the sea, and is of opinion that it is not of much help. The learned Judge did not place much reliance on the clearance certificate granted to the vessel at the port from which it last sailed stating that he vessel was sea-worthy. The learned Judge observed that D.W. 2 in cross-examination concerned that the Mercantile Marine Department issues the clearance certificate merely on the basis of the records communicated by the Master of the ship and without the departmental people making an inspection of the ship before issuing the clearance certificate. At this stage, we may say that we are unable to reject the clearance certificate and agree with the learned Judge that the vessel was not sea-worthy. We would take into account the evidence of D.W. 2 that the fracture of the overboard discharge valve cover on scupper would not normally occur and that could happen only under very exceptional circumstances by force of the sea. Apart from the evidence of D. Ws. 1 and 2, the learned Judge referred to the log book of the vessel, Ex. D-7. Against the dates 14-12-1966, 15-12-1966 and 17-12-1966, the log book entries show that the vessel was rolling and pitching moderately and sometimes heavily, that there was pounding and straining due to rough sea and swell and that hold vents were being attended to, but such an attention was restricted due to continuous drizzle etc. On arrival of the ship at Madras Port, the Chief Officer of the vessel informed the Captain that sea water was leaking into the tunnel recess from the flange of scupper pipe located between frames Nos. 12 and 13 of the stud. The report of the surveyor that sea water had found access during the voyage between Wakamatau and Madras via Singapore is accepted by all parties concerned. In Ex. P-19, the survey report it is stated that the cause for the damage was contact with salt water. The surveyor recommended that storm valve situated between frames Nos. 18 and 19, through which it was feared that sea water might have found an entry in No. 5-L hold 'should be fitted with new cover and stud in place of cover which was cracked and stud which was broken and valve should be blanked till permanent repairs can be carried out in Bombay at which place the lower hold will be free of cargo. The learned Judge, on the entries found in the log book, came to the conclusion that it is fairly clear that there was difficulty in respect of the overboard discharge valve in hatch No. 5 and that it was possible, that sea water had entered through its valve cover. But, according to the learned Judge, it is not possible to hold from the evidence on record that water should have entered the hatch only through the above said valve and by no other means. As the defendant has not chosen to place any reliance regarding the examination of the vessel at Bombay port at a later point of time, the learned Judge proceeded to observe that there was nothing to show that water could not have entered the hatch as a result of the hatch not having been properly closed, as there was no entry anywhere that the hatch was found properly closed before it was opened. Hence again, we are unable to accept the view of the learned Judge that water would have entered the hatch as a result of the hatch not having been properly closed, for, there is hardly any evidence to that effect.

2. Regarding the question of law, the learned Judge proceeded to state as follows-

"Assuming that the entire damage to the goods was only due to sea water entering the hatch as a result of one stud holding storm valve cover was broken and storm valve cover was cracked and storm valve flap was in closed position, as claimed in the written statement, still the question is whether it is due to perils of sea or act o God, as contended by the defendant.''

The learned Judge found that there was no proper pleading to the effect that there was heavy weather or rough sea during voyage resulting in the damage. The learned Judge may not be correct in his reading of the pleadings. In the written statement in paragraph 14 it is stated that during the voyage in question the vessel had experienced heavy weather and rain, in respect of which protest was noted by the Master at Madras, The position of law, according to the learned Judge, is that it is necessary for the defendant to prove that the damage was due to the act of God, or it must have occurred independently of human action and man must have been an event which the ship owner could not have avoided or guarded against by any means which he could reasonably be expected to use. The learned Judge further found that even the log book entries did not show that there was any violent storm during voyage and that all that was stated was that there was heavy weather and rough sea. The learned Judge was of the view that heavy weather or rough sea is nothing abnormal in a sea voyage and they are normal incidents of such voyage and that, in the circumstances, the damage to the goods was not due to perils of the sea or act of God as claimed by the defendant.

3. We find ourselves unable to accept the view taken by the learned Judge on the question of law. The position is stated by Scutton in his book 'Charter Parties and Bills of Lading' at page 224, Article 84, under the heading 'Perils of the Sea' thus:--

"Any damage to the goods carried caused by sea-water, storms, collision, stranding, or other perils peculiar to the sea or to a ship at sea, which could not be foreseen and guarded against by the shipowner or his servants as necessary or probable incidents of the adventure."

This view has been subsequently modified and the requirement of unforeseen happenings is not insisted upon. The leading case on the point is Canada Rice Mills Ltd. v. Union Marine and General Insurance Co., 1941 AC 55 = (AIR 1941 PC 68). The Privy Council in that case had to consider the purport of the words 'perils of the sea'. In that case, a ship was carrying a cargo of rice. On arrival at the port of discharge, it was found that the rice had heated, and on a claim by the appellants in that case under the policy to recover loss sustained, the special jury found that the rice was damaged by heat caused by the closing of the cowl ventilators and hatches from time to time during the voyage. It was also found that such closing was the proximate cause of the damage and that the weather and sea during the time the ventilation was closed were such as to constitute a peril of the sea. At page 67 the Privy Council refereed to the view of the reasoning of J. A., who was of the view that there was no peril of the sea because, in his opinion, the weather encountered was normal, and such as to be normally expected on a voyage of that character and that there was no weather bad enough to endanger the safety of the ship if the ventilators had not been closed. The Privy Council holding that these were not the true tests, observed that where there is an accidental incursion of sea water into a vessel at a part of the vessel, and in a manner, where sea water is not expected to enter in the ordinary course of things, and there is consequent damage to the thing insured, there is prima facie a loss by perils of the sea. In coming to that conclusion the Privy Council referred to the decisions in Wilson Sons and Co. v. Owners of Cargo Par the Xantho, (1887) 12 AC 503, Hamilton Fraser and Co. v. Pandoff and Co., (1887) 12 AC 518 (527), and Thames and Mersey Marine Insurance Co. v. Hamilton Fraser & Co., (1887) 12 AC 484 (502). The decision in Wilson Sons and Co. v. Owners of Cargo Par the Xantho, (1887) 12 AC 503 was cited with approval as authority for the meaning of the words 'perils of the sea' and the Privy Council extracted the following passage at page 68 of the report:--

"The purpose of the policy is to secure an indemnity against incidents which may happen, not against events which must happen. It was contended that those losses only losses only were losses by perils of the sea, which were occasioned by extraordinary violence of the wind or waves. I think this is too narrow a construction of the words, and it is certainly not supported by the authorities, or by common understanding."

In Hamilton Fraser and Co., v. Pandoff and Co., (1887) 12 AC 518, where a rat had gnawed a hole in a pipe, whereby sea-water entered and damaged the cargo, there was no suggestion that the ship was endangered, but the damage to the cargo of rice was held to be due to a peril of the sea. There are many contingencies which might let the water into the ship besides a storm and, in the opinion of Lord Halsbury in the case cited above, any accident that should do damage by letting I sea into the vessel should be one of the risks contemplated. It is clear therefore that it is not necessary that damage should be occasioned by extraordinary violence of wind or waves and it is enough if there is an accidental incursion of sea-water into the vessel in a manner where sea-water is not expected to enter in the ordinary course of things and there is consequent damage to the thing insured. In Mountain v. Whittle, 1921-1 AC 615, which is referred to by the Privy Council, a house boat, the seams of which above the water line had become defective, was towed in fine weather and in closed water in order to be repaired. A powerful tug was employed, and this caused a bow wave so high as to force water up into the defective seams. There was no warranty of sea-worthiness. According to Lord Summer, sinking by such a wave seems to be a fortuitous casualty; whether formed by passing steamers or between tug and tow, it was beyond the ordinary action of wind and wave, or the ordinary incidents of such towages. In summing up, the Privy Council stated that it could not be predicated that where damage was caused by a storm, even though its incidence or force was not exceptional, a finding of loss by perils of the sea may not be justified.

4. The law therefore, is very clear that the loss need not be due to extraordinary violence of the wind or waves and in this case there was heavy weather and rough sea, and the vessel was rolling and pitching moderately and sometimes heavily and there was pounding and straining due to rough sea and swell, as evident from the entries in the log book Exhibit D-7. Hence, the decision in Canada Rice Mills Ltd. v. Union Marine and General Insurance Co., 1941 AC 55 = (AIR 1941 PC 68) would apply to the facts of the present case.

5. This decision was followed in Meter and Co. Ltd. v. Licences and General Insurance Co. Ltd., (1944) 1 All ER 341. In the later case, a consignment of china clay on its voyage from Liverpool to Bombay via the Cape of Good Hope was found damaged due to contact with other cargo in the vessel. The log entries, while the vessel was rounding the Cape, showed that she encountered 'strong wind', 'rough seas' and 'swell' and the vessel was described, at different times, as 'plunging', 'pitching heavily' and 'labouring and straining heavily'. It was, however, common ground that this weather was such as was normally to be expected on a voyage round the Cape at the material time. Upon this it was argued that there was nothing abnormal or unexpected in the weather experienced on such a voyage, that there was nothing fortuitous in what occurred, and that the damage was solely due to the ordinary action of wind and waves and there was no peril of the seas. Repelling this contention and referring to the three cases of the House of Lords reported in 12 Appeals Cases (1887) 12 AC 503, (1887) 12 AC 518 and (1887) 12 AC 484) and the later decision of the Privy Council in Canada Rice Mills v. Union Marine and General Insurance Co., 1941 AC 55 = (AIR 1941 PC 68), Tucker, J. as he then was, observed thus-

"I think it is clearly erroneous to say that because the weather was such as might reasonably be anticipated, there can be no peril of the seas. There must, of course, be some element of the fortuitous or unexpected to be found somewhere in the facts and circumstances causing the loss, and I think such an element exists when you find that properly stowed casks, in good condition when loaded, have become stored in as a result of the straining and labouring of a ship in heavy weather".

Tucker J. also relied on an early case. The Catharine Chalmers case (1875) 32 LT 847 decided in 1874, observing that its correctness on this point had never been questioned. In the earlier case, the evidence before the Court was that during the voyage the vessel in question met with 'bad weather' and although not badly damaged, the ship 'strained' very heavily. On this evidence, it was argued that there were no 'extraordinary' perils affecting the ship and cargo. It was further urged that 'straining' was an ordinary peril which every ship must undergo and which is contemplated by a shipowner as one of the contingencies of every voyage and it is a contingency against which the ship-owner was bound to provide. Rejecting this contention and finding that the damage was caused by the peril of the sea, the Court observed-

"I am unable to draw a distinction forced upon me between ordinary and extraordinary perils. In truth it may be said that the way in which the cargo was stored was more or less a cause of the damage; but I am of opinion that the evidence shows that the cargo was towed in the ordinary way, and if the bad weather had not occurred, and the straining had not taken place, the cargo would, I think, have arrived without damage, and, consequently, the proximate cause of the damage must be taken to have been the perils of the seas."

In the present case, the rights of parties are governed by Art. IV, sub-section (2)(c) of the Schedule to the Indian Carriage of Goods by Sea Act, 1925. The Article runs as follows-

"2. Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from (a) ... ... ... (b) ... ... ... (c) perils, dangers, and accidents of the sea or other navigable waters."

6. Thus, the words are wide enough, if not broader than the words which the Privy Council was construing in Canada Rice Mills Ltd. v. Union Marine and General Insurance Co., 1941 AC 55 = (AIR 1941 PC 68). We, therefore, find that the view of the learned Judge is erroneous. We allow the appeal and dismiss the suit with costs. In this view, it is unnecessary to go into the quantum of damages.

7. Appeal allowed.


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